Friday, April 19, 2013


[3 May, 2013: That these essential works do not go out of circulation. Please read and distribute widely.]

by E. C. Riegel

Editorial Preface

1) Storm Winds of Inflation
2) A Monetary Rationale
3) Banking and Business Cycles
4) Legal Counterfeit
5) The Hazard Ahead
6) Toward a Natural Monetary System
7) Credit and Banking Under Monetary Freedom
8) Omnibus Reform
9) Economic Democracy
10) New Vistas

1) What Do You Mean By "Dollars?"
2) Credit Limits Under the Valun System
3) Relativity of Values
4) The Future of Gold
5) Manarchy

Selected Correspondence 

Editorial Preface (Spencer H. MacCallum)

I MET E. C. RIEGEL in New York in 1953, on a visit up from Princeton where I was an undergraduate. "Uncle Ned, " as his intimates called him, was a friend of my grandfather, Spencer Heath, and both were residents of Greenwich Village. Occasionally they would meet at the apartment of Mr. Riegel's friends, Major and Mrs. Ivan Firth. Here I met him, some months before his death. He suffered from the effects of Parkinson's disease, which made him appear older and more frail than his 74 years. My grandfather regarded Mr. Riegel as a genius for his understanding of the nature and functioning of money as a human and social institution. It was clear, however, that this old man had not revolutionized the world with his ideas and could not now do so. The idea formed and grew in my mind that I should keep in touch with Mr. Riegel and the Firths, who were not much younger than he, in order to preserve his papers from being lost after his death. As to what might be done with them, I had no idea at the time. An intuition told me that they should be preserved.

When "Uncle Ned" died some months later, his papers went to his friends, Ivan and Gladys Firth. I kept in touch with the Firths through my grandfather for the next ten years. Then, in 1963, in the same year that my grandfather died, Major Firth died also. Gladys decided to move from her small apartment to still smaller quarters; moreover, it had been Ivan and not she who had understood and valued "Uncle Ned's" ideas. The papers were at the point of being discarded. Here was the moment I had foreseen. I paid Gladys Firth five hundred dollars for Mr. Riegel's intellectual estate, and in moving from her apartment, she did an excellent job of collecting together every scrap of paper that related to him.

With the papers safely in my possession, there was no pressure of time to look into them, and ten more years went by. With the papers had come a small stock of soft-cover books, The New Approach to Freedom, published by Mr. Riegel in 1949. I passed some of these to friends. Within this circle was Harry Browne, who was so much impressed with Mr. Riegel's explanation of the free market that he caused some excerpts to be reprinted and circulated. Years later, he mentioned it favorably in his best-selling book, You Can Profit from a Monetary Crisis - and there is where this story really begins.

As a result of its mention in Harry Browne's book, a flurry of mail orders came in which threatened to put The New Approach to Freedom out of print. I decided to reprint it, and this seemed a good time to look into Mr. Riegel's papers to see if there might be some other material that should be included in the new printing. I began by sorting what correspondence had survived and arranging it chronologically, and reading it. I be-came completely absorbed. Toward the last years, there began to be mention in his letters of a book-length manuscript, Flight from Inflation: I tried to finish the correspondence in the orderly fashion I had started out, but gave it up and plunged into the other papers to see if the manuscript would be there. It was. I read it through with mounting excitement, sometimes having to get up and walk around to work off superfluous energy so that I could go on reading. Except for the statistical data and illustrations, the book was not in the least dated, Not only was it not hurt for having lain undiscovered for twenty years, but in the light of world events, its relevance was more immediate now than when it had been written. I determined to bring it into print.

Could it be a commercial success? Perhaps not. How could one promote a book that was more than twenty years old and written by an unknown author who was no longer around to be interviewed and do all of the endless things that go into a successful book promotion? On the other hand, the sheer human interest and the factual circumstances, together with the substance of the book, might lend itself to a different kind of treat-ment.

Here was a man who had devoted his life idealistically to understanding money, although he never had any of it nor any interest in acquiring it-a man who had died, alone and old, in a cold-water flat in New York City, working painfully to the end to complete a manuscript which then lay unsuspected for more than twenty years until it was timely for it to be discovered. An unmailed letter from the last months discloses how he had worked painfully, trying to hit the right keys of his old typewriter and unable to make corrections because he could not control his shaking hands to make legible pencil marks on the paper.

I began a light editing of the manuscript, then did more, and then some more, as my interest in the subject matter grew and deepened with a careful reading of his other writings. In time, I engaged a talented friend, George Morton, to try his hand at improving the structure. He took me at my word, reorganizing the structure and cutting it drastically. It was excellent pruning. I then grafted into the restructured manuscript new materials-fresh expressions and amplifications of his ideas-drawn from the rest of Mr. Riegel's papers consisting of a number of books and more than 150 essays.

Editing Mr. Riegel's work was an audacious task for one without any formal training in economics. I was trained in social anthropology, however, and had an appreciation for social systems and institutions. As an anthropologist, Mr. Riegel's analysis of the institution of money strikes me as elegant. Doubtless it will be debated whether the subject of his analysis is properly called money. Whatever the conclusion of that debate, however, there can be no doubt that he has analyzed an important feature of advanced exchange systems. I personally find with Mr. Riegel that money is the apt word to describe this phenomenon, which represents the culmination of a developmental sequence in the history of exchange.

Those things now commonly called money are prior steps in that progression. I would regard the steps also as money, but money in its less developed forms; primitive money. Mr. Riegel's concept differs so strikingly from conventional ideas of money that it will be painful reading and mental adjustment for some people. Yet that may be one of the great and lasting values of this book-that it provoked its readers to think fundamentally about a subject that has long been taken for granted.

There is so much in Mr. Riegel's papers that did not find its way into either The New Approach to Freedom or this volume, that I should like to offer the reader in this Preface some of the perspective I have personally gleaned from studying the rest of his papers-perspective on Mr. Riegel as a person as well as on the development of his thinking.

Mr. Riegel's sense and grasp of individualism was intuitive and unerring. It was not a retreatist or “go-it-alone” philosophy; he was fully aware that individualism flourishes best in a rich social context. He had a balanced perspective on the healthy interdependence of individuals and institutions; at least those institutions which are voluntary and nonpolitical. His unfailing principle was that freedom of exchange is the foundation of all freedoms. To enlarge exchange is to liberate the individual; to circumscribe it is to enslave him. The crucial question for him, therefore, was to discover which institutions have the effect of freeing exchange and which have the effect of restricting and narrowing it. His final conclusion would be that the single most restraining influence on freedom of exchange is our presently socialized monetary system.

On the way to that conclusion, however, he was to pass through a number of steps. In the 1920's, he crusaded against restrictive credit practices; a theme explored and developed in The Credit Question, written in 1926, and in a provocative little essay, "Infidelism In Business." In 1928, he incorporated The Consumers Guild of America, which continued into the 1940's, when it was succeeded by The Valun Institute for Monetary Research. The purpose of the Consumers Guild was to simplify buying and raise the dignity of the consumer, and it opposed anything that would suspend or restrain the consumer's right of bargain. Through the Guild, Mr. Riegel mounted virtually one-man war to make America safe for the consumer, producing four books in the first two years: Barnum and Bunk: An Exposure of R. H. Macy & Co.; The Yellow Book; The Three Laws of Vending; and Main Street Follies.

During the decade of the 1920's, Mr. Riegel had given his attention to the man-in-the-street in his role as consumer. The stock market crash and ensuing depression shifted his focus. He now became concerned, on the one hand, with understanding the causes of the crash and the depression, and on the other hand with the practical question of promoting recovery-the need of the common man to get on his feet again.

With respect to the causes of the crash and the events preceding it, Mr. Riegel now resumed an investigation he had begun a few years earlier into the freedom of choice of the average citizen not only as consumer, but as investor and speculator. From this investigation, he had become acutely sensitive to the danger of the invisible partnership between the business community and the various levels of government.

Specifically, he saw the trade association movement, stripped of all pretense, as constituting virtual warfare against competition. How did this relate to the problem of how the normal investment motive of middle-class America became corrupted into the excesses of Wall Street speculation? The answer he published in a preliminary booklet in 1931, The Indictment of the Better Business Bureau Conspiracy. While The Indictment, like so much of Mr. Riegel's writing of this period, is badly marred by polemics, one cannot help but admire his rejoinder to one critic that the trouble with intolerance is that there isn't enough of it-for so much of what goes on in the world.

The Indictment was only a prelude to the extraordinary piece he wrote the following year, The Camorra of Commerce. The Camorra is a responsibly documented expose of the role of the Better Business Bureau, after 1922, in collusion with the Investment Bankers Association and the New York Stock Exchange, to protect the Bureau's members from competition. Prominent among its members were Wall Street brokerage firms and companies listed on the Exchange. The means of protection was selective enforcement of the blue-sky laws, in which the Better Business Bureau played a key role under President Hoover's "neighborhood enforcement" policy.

As Mr. Riegel develops his indictment, it becomes increasingly reasonable that this may, indeed have contributed to the stock market crash by eliminating alternative investment opportunities for the average man and thereby channeling his investment funds into speculative Wall Street issues which were, in effect, exempted from the blue sky laws. Nor did this conspiracy to harass small enterprisers and discourage prospective entrants into business facilitate recovery from the depression. Oddly, considering the toughness and determination of its author, this hook went no further than galley proofs. On the cover of Indictment appears this statement (slightly edited):

“The usurpation of legislative, judicial, or police powers, by private organizations, or the illegitimate influence upon public officials exercising such powers, constitutes invasion of the citizen-consumer's civil rights. Such invasion, whether it springs from commercial, financial, professional or political interests, will be fought by The Consumers Guild to the limit of its powers.”

Apparently it was in focusing on the problem of recovery from the depression, together with his long-standing interest in consumer credit, that Mr. Riegel first conceived his highly original monetary ideas. Recovery depended upon the ability of small businessmen to finance and readily exchange their products, and this greatly depended, in turn, upon the facility of the monetary system.

Much of Mr. Riegel's attention in those depression years was focused on the difficulties experienced by the small enterpriser in obtaining commercial bank loans, and with the injustice of charging interest for such so-called "loans" of newly created money. His reasoning is made clear in the present volume, so that space need not be taken here. Much of his writing in this period grappled with what he called financism and the extent to which small businesses were disadvantaged by the banking monopoly over the power to authorize the issuance of new money. Suffice it to say, Mr. Riegel believed that if the common man could exchange his product freely-and be dealt with justly in financing his enterprise – we would have more than a recovery from a depression; we would enjoyed cultural renaissance.

In the mid 1930's, Mr. Riegel wrote The Meaning of Money and The Valun Discourses and Monographs. By now he had conceived the basic outline of his concept of money, with its implication that the single reform that could bring most leverage into the service of individualism and freedom would be the separation of money and state. His work thereafter, to the end of his life, dealt with various ways of promoting that separation.

In the depression years, he pursued this goal through a comprehensive program of reform which he called the Radical Right Movement [!]. This embraced three complementary programs, The Duocratic Institute of the World, Americans of the Radical Right, and The Consumers Guild of America. During these years, he also took particular exception to the New Deal and to Roosevelt's actions which were leading to United States involvement in the war. The Consumers Guild published a series of four provocatively titled booklets in 1936 (Roosevelt Revalued; Are You Better Off?; Brain Trussed; The Franklinstein) and two more in 1941 (Quarantine the Aggressor in the White House; The Fifth Column in America).

By 1941, Mr. Riegel believed that the feature of the political monetary system that posed the greatest single threat to human freedom was its provision for deficit public spending. In Dollar Doomsday, written in the fall of that year, he predicted that the dollar would never again be stabilized and that the deficit spending inaugurated a decade earlier would culminate in global inflation. It is his lucid analysis of this threat that makes Flight From Inflation timely today. From 1941 onward, he vigorously pursued the inflation theme in his writings as the most likely way of influencing monetary reform.

After World War II, and the publication in 1944 of his most widely read book, Private Enterprise Money, Mr. Riegel made the acquaintance of Major Ivan Firth and his wife, Gladys. Major Firth was a friendly critic and deeply interested in the money question. As friends and neighbors, he and Gladys were invaluable to "Uncle Ned" in his last years.

It was at this time, also, that Mr. Riegel met Spencer Heath, who became a friend and a source of inspiration to him. Prior to their meeting, Mr. Riegel had conceived the ultimate social ideal to be the separation of commerce and state into two "houses " of democracy, one economic and the other political. The latter would be limited and controlled by the former, which in its turn would develop in a wholesome manner and continue so because of its freedom from the pervasive effects of state-imposed controls.

This was Mr. Riegel's concept of duocracy, which he promulgated in the 1930 's and later called bicameral democracy. He was troubled, however, with political democracy, which seemed to him to harbor internal contradictions. Spencer Heath resolved this, with his suggestion that the free market, unfettered, might in the natural course of its development bring a purely contractual business administration to the tasks that, for want of any alternative, are now assigned to the state. Hence the state did not have to be any part of an ultimate social ideal. The present volume, therefore, entertains the possibility that the state will wither away as evolving commerce brings its functions increasingly and then wholly within the framework of voluntary exchange.

Through all of Mr. Riegel's writings, one theme stands out, and that is the ideal of democracy and faith in the common man. While, as a social reformer, his driving motivation was to advance the lot of the common man, his deep conviction of the dignity and worth of the individual forbade charity; it forbade, in fact, everything but justice - and justice, he insisted upon with a consuming passion. He had an intuitive, sure sense of justice. He knew the feel of it. He had a certain conviction that all the common man requires is honesty and straight dealing from his fellows and within his social institutions.

Mr. Riegel's advocacy of pure capitalism was based on the conviction that the only way of obtaining justice for the common man was to be completely free exchange. He exposed all big business/government alliance as conspiratorial against the common man. But he did not criticize the profit motive or oppose bigness as such; he opposed only the unfairness of enleaguing with government to disadvantage the public. To him it seemed demonstrable that the root of socialism in the United States lay not in anything so exotic as Marxist ideology, but in the efforts of American businessmen to escape competition. He traced the massive build-up of government in this century directly to businessmen seeking unfair trading advantage. He saw the league of big business, government, and finance, as tending to bring about an aristocracy in America, a privileged class that was diametrically at odds with his ideals of democracy and justice.

The image of Edwin Clarence Riegel that emerges from his papers and letters and from an interview with Kathryn Barnes, of Indianapolis, a distant cousin and the only remaining family link, is inspiring in many ways. He was born in Cannelton, Indiana, in 1879, during his father's term as treasurer of Perry County, but his home was in Tell City, a predominantly Swiss-German settlement. The family name was Zuckriegel. His grandfather, an army officer, had refugeed from Innsbruck at about the time of Carl Schurz. His mother, Kathryn Dusch, was an accomplished musician. For some years she was principal of The Bailey Company School of Music, the largest conservatory in Cleveland. Later, with the help of her husband, Peter Zuckriegel, she opened her own school of music in Louisville.

Edwin left home about 1894 and went to New York City. His only brother, Oscar, a few years his senior, was a successful salesman in the clothing industry. The two brothers differed radically in temperament, Oscar looking for success-and finding it-in rather conventional and material terms, Edwin in the pursuit of an all-compelling, ideal vision of social justice for the common man. Some letters which Oscar saved show a brotherly love tempered with rivalry in which Edwin, against well-intentioned pressure from Oscar, resolutely defended his own unconventional life. In one of these letters, Edwin wrote his brother:

“I don't want a job, I want no boss; I will be free and independent. I am working for certain ideas and ideals and hell itself will not swerve me from them. I may shift from one course to another, I shall employ whatever strategy seems best to me, but I shall face in one direction.”

Certainly as a libertarian in New York City in the 1930's and 1940's, Mr. Riegel was a lonely man philosophically. He held no academic degrees or distinctions that I have been able to discover. At speaking engagements, he introduced himself as a “non-academic student of money and credit.”

Mr. Riegel never enjoyed a regular income. He was no stranger to walking about Manhattan for lack of bus or subway fare. His life of dedication did not permit conventional habits. When he needed funds to live in his Spartan fashion, or to pay his constant printing and publishing bills, he would apply for a sales position at the most fashionable department store, where he was invariably well received because of his distinguished personal bearing.

A vignette sheds further light on Mr. Riegel's character. He did not care for his middle name, but let himself be known as E. C. Riegel. Among his effects, I have his Social Security card. The card evokes in the imagination the scene that must have taken place when he applied for it and the Social Security clerk instructed him to write out his full name. He refused, and Social Security insisted. The card, as issued, carries the rest of the story: his full name appears as “Edwin Controversy Riegel.”

His correspondence reveals, often entertainingly, a personal trait not unrelated to the above, that is that he never permitted himself to be put down or brushed aside. The occasional official of a corporation or university or government bureau who attempted it invariably had occasion for second thoughts. Mr. Riegel tolerated no hypocrisy or personal evasion of responsibility in such situations. He was adept at picking up the “put down” and turning it aside or handing it back to its source, and he would do so urbanely, without losing sight of his guiding ideals and objectives.

In a June wedding ceremony in 1905, Edwin married Blanche Ellis Beach. It seems fitting with his life that, despite the conventions of the time, the dissolution of their marriage seven years later was a civilized one and they remained friends. Edwin's life was too ascetic, too devoted, and too idealistic, for a conventional marriage relationship. It would have been a rare partner who could have shared such a single-minded life. Throughout Mr. Riegel's papers and correspondence, the reader glimpses his integrity, his uncompromising individualism, his gentleness, his toughness, and his resilience. It has been a rare privilege to have known him through the editing of this book.

Spencer Heath MacCallum
San Pedro, California August 1, 1978

Notes on the Editing of this Book

Since editing always involves some revisions to an author's work, and since a reader may therefore wonder to what extent he is reading the editor rather than the author-especially where the editing was done after the author's death-it is only good manners and scholarship to give some explanation of the nature and extent of the liberties the editors took with the manuscript.

In editing throughout, the emphasis was on pruning and on rearranging, so that the actual words as they appeared would be Mr. Riegel's even when the organization was not. Rearranging frequently entailed splicing-in phrases, sentences, paragraphs and whole sections from his writings elsewhere. By carefully pruning, arranging, and splicing, it was seldom necessary to write even brief connectives of our own.

Some stylistic editing was done, however, partly to moderate what would otherwise come across as polemical and distract from the ideas. For example, Mr. Riegel was fond of the word perversion in connection with government, as in “government perverting the money supply," or "the perversive effects of inflation." In the course of editing, these examples became “government diluting the money supply,” and "the destructive effects of inflation." Also, where Mr. Riegel used money as an adjective, a usage Webster does not recognize, we changed it to monetary. Thus "money system" became "monetary system " throughout. We also followed the precedent set by Mr. Riegel in The New Approach to Freedom but not adhered to in this text of substituting the term “personal enterprise" for “private enterprise."

The reason for this is explained in Mr. Riegel's words from a brief essay, "Labor Money:” The term private enterprise has come to be thought of as applying to employers and excluding employees. This is a misconception, but because of the prevalence of this idea, we shall use the term personal enterprise. Corporations and partnerships are assemblies of individuals, but the activating force in all economic affairs is personal. There is no incentive other than personal. We are all personal enterprisers and we are all capitalists, because each of us is equipped with the tools of production, even if we have only education and experience.

Updating of statistics and illustrations was not attempted, since it in no way affects the central thesis. Moreover, it would have been unfair to Mr. Riegel, since if he were writing today, undoubtedly he would in many cases employ different figures and different illustrations as being more appropriate to the changed circumstances.

It should also be noted that the "Selected Correspondence" has been subjected to editing along with the rest of the text. In a very few cases, material was added from other places to strengthen a point Mr. Riegel was making in a letter. Hence his letters are to be considered as a literary device to present different facets of his thought in his own words and may not be taken in every case as historical documents evidencing what was said on a certain date to a certain person. Some brief selections from elsewhere in his unpublished writings are also included in this section and are identified as "Random."

The major deletions from the manuscript include a chapter on "The Index Dollar," an idea which Mr. Riegel had advocated for some time as a way of mitigating the full force of the inflationary storm, a chapter on "Currency Reprint," in which he proposed a defensive maneuver against the possibility of communist governments in the Cold War undermining the United States economy by engaging in wholesale counterfeiting of dollars abroad, and a chapter entitled "socionomy," exploring a voluntary, contractual approach to financing community services as an alternative to taxation.

Beyond these points, the reader may be reasonably assured that he or she is reading the authentic E. C. Riegel. Mr. Riegel's original papers contain much of interest and value that did not find its way between these covers. The Heather Foundation, Box 48, San Pedro, California, 90733, maintains these papers available to the public and invites their use.

Spencer Heath MacCallum and George Morton


THIS BOOK PRESENTS a new concept of money, one which promises greater freedom and a broader base for democracy. It points up the futility of the political ballot-and the facility of the monetary 'ballot'-for the attainment of human aspirations. It elucidates an evolution that has progressed unobserved since the inception of monetary media and that is now coming to an end in what appears, on the surface, to be a world calamity.

What man does not understand, he fears. But today's disturbances, which many take to be omens of approaching adversity, are in fact, signs of a departing perversity, the perversity of political power over money. In this, the decay of the old order, all schools of economics and politics, unconscious of the meaning of money, are vainly striving to preserve the politically based monetary system. Such attempts will fail and chaos will ensue unless fresh insights are brought to the problem. This book is the first to depart from the traditional concept of money as an instrument of the state. It is the first to propose that money and state be separate.

It is not necessary to attempt to alienate society from the declining system, nor to conduct any crusade against it. The flight from inflation that has already begun, and that is gaining momentum, is the popular movement away from the decaying system and, in itself, represents a search for a stable monetary medium. In times past, many national inflations have reached the point of extinction of the local monetary unit. In each such crisis, there remained other political monetary units to which flight could be taken. But in this world crisis, as I see it, there will remain no stable politically-based unit to which the panicky will be able to flee. There will be a total inflation of all existing monetary units.

To avert the chaos and catastrophe inherent in a moneyless world, I visualize the emergence of a nonpolitical monetary system to which business will resort for self-preservation. I see an orderly transition from the old order to the new. But an orderly transition will require the leadership of businessmen and bankers in organizing an operating system to which everyone may turn.

While such a program will require the separation of money and state, and the restoration of the monetary system to the sphere of personal enterprise, it also will offer the greatest protection for the state from violent revolution and the attendant hazard of its capture by non-democratic forces. Inflation to the point of panic is a confession by the state of its inability to maintain order. It is a clear call for help from the citizenry.

Scholars have never understood the social service of money. There has never been, therefore, an adequate appraisal of the contribution made by money in the revival of civilization's march after the stagnation of the thousand years of the Dark Ages. The Renaissance, a great shifting forward in that march, coincided approximately with the liberation of money from its embodiment in things of intrinsic value, such as gold and silver, to intrinsically valueless paper carrying only a promise of value to the bearer. This transformation was, I believe, a fulcrum upon which the incentive to advance lifted society forward and made it more mobile than at any previous time.

Coincident with its liberation from tangible materials, however, the monetary medium was thrust into captivity by the state under the false belief that, to assure credibility for a medium of no intrinsic value, the state had to sponsor and control it. This unnatural association has limited the good that might have flowed from a free monetary system, and has magnified the evils that afflict the economy. For the regulation of money is inherent in the competitive trading process, and politics is alien to it. Yet the state has continuously distorted exchange by its attempts to substitute synthetic controls for natural. It has brought the political monetary system to its certain doom by employing it, through the process of inflation, as a tax-collecting device.

What effect the envisioned second and final liberation of money-this time from bondage to the state-may have upon human behavior is possibly beyond imagination. With the passing of nationalistic monetary units, there will remain no reason for the polyglot monetary system that exists in the world today. A single, worldwide monetary language will unify the world's peoples on the economic plane. New vistas of human advancement will open under the new order that will surely arise following the separation of money and state and the abandonment of the false political means in favor of the economic means of realizing social objectives.

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