#52 Commentary on Riegel's PEM IX

Source:  E. C. Riegel's Private Enterprise Money Chapter Nine.

The Chapter is entitled, HOW THE EXCHANGE IS TO BE ORGANIZED. It is subtitled, ORGANIZATION STATE-WISE OF A PRIVATE ENTERPRISE MONEY SYSTEM EITHER BY THE LEADERSHIP OF THE GOVERNOR OR THE INITIATIVE OF BUSINESS MEN 

Our first point of departure from Riegel, based entirely on subsequent history and further research, as by the passage of time things are revealed, is that we have nothing productive to expect from any government representative, who in any case would be superfluous to the independent exchange enterprise.  Our reliance must instead be among ourselves, primarily among those variously described as the John Galts (and Jane Galts); those with skills and wealth (that which is capable of providing income), who do not see a future in the present system and wish to participate in an alternative one that stands a chance of eventually outlasting and supplanting the existing one. The balance of our comments will hence be addressed to these people as the potential leadership required for the establishment of exchanges.

There are several reasons why organizations of Valun Exchanges should be state-wise. It is natural for us to think, both economically and politically, in terms of state areas. The state is our primary political unit. Our state constitutions are written on a pattern of supremacy; with towns, cities, counties and other local units receiving their grants of power from them, rather than direct from the citizen. The sovereign power of the citizen rises to the state government; and from there it is delegated upward to the federal government, and downward to subdivisions. We are, first of all, citizens of our respective states; and this implies citizenship also in local and national governments.

Riegel is first of all speaking of course to Americans, who would be familiar with the landscape of their political sub-divisions. These apparent geographical subdivisions would differ from place to place around the world, but in America, we also understand the hazards imposed these days on interstate commerce. We point out to all, that these laws and regulations, whatever may be their justification, intent or purpose, regarding exercise of commerce, were put in place to benefit the monopolists against everyone else, extending, to the breaking point, the limits of mercantilist / corporatist infrastructure, that in any case you have no guarantee that any product brought to you from another state or country is going to be any better than the same thing produced locally, etc. which you might actually get for a lower price, were such available. We therefore suppose that indeed organizations initially formed within each state make the most sense. What we can hope for is that independent exchange units will spring up within each state, who would accept Valuns from each other within each state, and we would see this as an objective ahead of getting distant IE's to trade Valuns across state lines. The current V-Check proposal, under The pre-paid V Check makes this objective easier. Riegel continues,

The thirteen original states were nations that agreed to enter a league of nations, called the United States, in which the citizens of each would participate in the election of the lower house of Congress; and the state legislatures would elect the members of the Senate. To remove the greatest element of disturbance between nations, the states agreed to set up no trade or immigration barriers at their borders. To effect solidarity, they agreed to delegate to the federal government the right to declare war and make treaties with other nations. To promote internal trade and unity, they agreed to abstain from making anything but the money unit of the federal government, legal tender in their realms. The intent, however was to remain sovereign powers; the Federation was not a merger

We regret to inform Mr. Riegel that indeed the federation was a merger, in fact, it should more likely to be considered at present, a hostile takeover.

When, by the revolution, the thirteen colonies became independent states, each had its own money unit; and thus exchange between the states was foreign exchange, requiring translation of one unit into another. The advantage in abolishing this multiplicity of monies was obvious, but the implications involved in surrendering the money issuing power to the federal government was not comprehended. The gain to all in uniformity of money unit was visualized; the loss in sovereignty thereby suffered, was not; We now realize that the money power of the private citizen is in fact his sovereignty; and that in yielding it he yields his sovereignty. Thus the transferring of the money power from the states to the federal government was the transferring of the citizens' sovereignty to the national government, and the reducing of the state to the status of a subordinate. 

As we've been saying all along, the founders of the American Constitutional republic did not know what they were doing when it came to money. Anyone, and I do mean anyone, who asserts otherwise is hereby notified as being either a clown or an idiot. Take your pick. Most leaders the world over today remain just as ignorant. The average person too is adverse to knowing much about money, believing all sorts of superstitions concerning it, including that money itself is evil or perhaps the agency of evil.

Without first recognizing that one is enslaved by a thing, one cannot begin to seek to extricate oneself from it. Most believe themselves ensnared in one way or another by money. They do not look upon money as their friend, but usually as their enemy. This blog asserts that all real money is an extension of one's private property and to the extent that money does not represent this, it is illegitimate as money, regardless of whether it is in fact used as money, for trade will find a way and use any handy means to make exchange possible.

The simplest apparent solutions we have seen to the “money as enemy” superstition, such as a volunteer society that runs without money, are certainly not going to go anywhere. No, getting rid of money in any society leads to tyranny. But before it reaches that stage, that society will break down into squalor first. The problem isn't money, as this blog proclaims, but rather who gets to issue it and therefore to control its flow and use.

Riegel equated money power with sovereignty. We needn't go that far, since the word sovereignty has lots of problems associated with it that fast become needlessly political. We'd rather suggest that individual money power, by which is understood to be the right of any individual to issue money, is a natural extension of oneself, associated directly with one's private property or personal effects or assets. We assert that the money power ranks right up there with any of the other natural rights of man, and that ALL government issue is a usurpation of that right. All you statists out there who advocate one form of state issuance of money or another; you are hereby chastened as being the champions of continuing tyranny rather than offering any hope for the future. In the credit clearing system proposed by this blog, one issues money with the understanding that one is willing to accept the same in return from others; the money one issues is thereby cancelled (destroyed) by receipt of the same from others.

The political money system implies that the citizen will abate his natural money issuing power, and make the criterion of his exchanges and the regulation of the money system entirely dependent upon the government that he recognizes as the money power. By making the federal government the sole money issuing power, the individual states transferred the fealty of their citizens to the national government, because they became thereby dependent upon its money power. The citizen having thus had his fealty transferred to the national government, it was taken from the state governments – and the latter are now dismayed by the increase of federal power and the commensurate subordination of state power.

Riegel and we, make clear that without taking back the money power from government (and or their private bank supporters), any hope of reform of government is really a joke. It isn't even a very good idea to waste one's time and energies dealing with the present government on any level to attempt any change from what it's “investors” intend their government to do for them. Most people have got to get it through their heads that the idea that they themselves are the government rather than the elected officials and the bureaucracy, is at least a deception and frankly amounts to an outright lie. No, of course you people out there are not your governments. Your governments do not work for you, they work for the elites who pay them. Too bad if you're not among them; you're just a nobody.

What has actually transpired is a reversal of the intent of the federal plan whereby the national government was to be dependent upon the states for grants of power. The national government, through its money power, is now supreme and in reality holds the state governments, in subjection to it. Federal fiscal policy now determines the bounds of state sovereignty.

Regardless of how many “free state” activist movements get started out there, we frankly admit that since Riegel's statement is certainly true, that likewise any attempt to recover real state sovereignty or even establish real local sovereignty is impossible.

It took many years to reveal this structural weakness, because, in the earlier days of the federation, the economy depended more upon the private issuance of money through the banking system, and thus federal fiscal power was dormant. The policy of the federal government up to 1932 was to leave to the banks the function of supplying money. During the Jackson administration, with the abolishment of the United States Bank, government participation in money supply reached its lowest point - with the government confining itself to the mere minting of gold and silver coins at a seigniorage charge to any one who brought the metal to the mint.

There are many out there who insist that merely returning to this version of the “good old days” would suffice to restore optimism, prosperity and happiness far and wide. Riegel and we would not be here if we agreed.

BAD BETTER THAN NONE

These were the days of wild-cat banking by state authorized banks - when the paper circulation was almost wholly private bank notes issued by irresponsible banks that relied on the old goldsmiths' law of averages, and issued far more promises to deliver gold or silver than their resources would permit.  

We sincerely hope by now that everyone understands the problems with this; what is known as fractional reserve banking. This blog advocates a sound alternative that solves many problems with the present system at a single stroke. Another misconception most people will have to overcome is the idea that money must be a commodity, when what we are saying is that absolutely no commodity on the planet can serve as money without itself affecting the prices in which people trade. As Riegel saw it and as we see it, money as an independent measure of value standing apart from all transactions, requires one to think instead of what that independent measure tells them about the prices of everything, rather than allowing a changing quantity of money to determine what prices shall be now and in the future. 

As we have previously pointed out, money will and must manifest itself in bad form if it cannot emerge in good form [Gresham's Law]; and this alternate method has by no means been adverse to the development of industry. The wild-cat banking era was a very prosperous era as has been every era of money expansion. To be sure, they have all been followed by reaction, when the falsity of the basis of issue was discovered, but the net result has been beneficial. Man must have easy exchange if he is to progress; and even if he must be deceived into it, it is nevertheless better for him. Nothing is so adverse to man's progress as lack of exchange; and the most faithful money system, if inadequate, is worse than a faithless one that induces exchange.

We observe that all of this is manifestly as true today as at any time in history.

President Jackson's idea of confining the government's participation in the money system to the mere certifying of fineness and weight of gold and silver coins was the original concept of government function when political money began, and from that modest participation to the almost exclusive money issuing function of the present day government, is a very wide swing of the pendulum. Experience has shown that both the conservative and the extravagant policies are evil; and that median policies merely partake more of one evil than the other.

Notice he did use the word evil and of course we agree.

Had the Jackson policy, of letting the economy depend upon private money, been accompanied by strict regulation and examination of banks, the result might have been worse because there is an inherent dishonesty in private money under the political money system. For a bank to issue credit payable in government dollars that are not available is just as dishonest as is the issuing of currency notes payable in gold coins that are not available. But the dishonesty cannot be eradicated; because to authorize banks to make loans payable in "bank dollars" is to give them the power to expand the money supply indefinitely, with no corrective action such as follows in the periodic deflation or depression phase of the business cycle as the result of loans in "dollars."

There's a lot in this paragraph. The inherent dishonesty of a private “bank note” money under a political money system allows banking and finance to engage in various kinds of “carry trade,” where foreigners are able to use the internal money system of a country in which to trade goods that may not even see their inevitable sale in that country. Loans in “dollars” make of the political money a brand name that can be used to elicit trust. This is one way bankers grow rich while producing nothing of value ... and this is routinely defended as “capitalism,” which it certainly is, but this practise is not free enterprise and has nothing whatever to do with it.

The Jackson policy of private money was later implemented by strict regulation of the banks. This long effort to make a virtue out of a vice culminated in the Federal Reserve System, and reached its climax and denouement in 1929 showing that the wild-cat banking was no worse, with its irresponsible issue of currency notes, than is the modern banking method of issuing check writing power based on false promises to deliver government dollars.

Got that? The central banking model is no better at protecting against booms and busts than wildcat banking was, because they are essentially the same thing, based on the same models and ideas.

In 1932 the exploded Jackson policy was abandoned; and then began the new government policy which is rapidly approaching its collapse. Under this policy, of unlimited money-issuing power, the government asserts over the community a financial dictatorship which subordinates not only the citizen but all the other divisions of government. All become suppliants to it and there is no thwarting of its power short of exhaustion through total inflation.  

Though it will take longer than Riegel thought to reach the “Weimar meltdown” stage, inflation is essentially what causes all commodity based monetary systems to die, whether they are metals based or paper based. The “gold bugs” out there will instantly rush to insist that their metals will never die (even though all of it has human bloodshed associated with it) and that when all else fails, everyone will want to exchange things for their metals. We tell them to their faces that they are ignorant of history: 

1. They never mention the better than 100% inflation that destroyed whole classes of the upwardly mobile in Europe during the 16^th century due entirely to the import of mass quantities of gold into Europe from the New World during that same period. In the ensuing period, a nice long and profitable (to the bankers) thirty years' war was waged, that had about as much point as do the current wars for resources and markets.

2. They never mention how that those with more of these metals than others used their power to slow or stifle trade, as was done routinely by bankers in the late Middle Ages, as their weapon of choice to force acceptance of usury.

3. Austrian economics is based entirely on usury as a cornerstone of its philosophy, so they see nothing wrong with attempting to call back that which was never created. Therefore ALL their variations on these themes are fraudulent. Gold bug resistance to being lumped in with usurers is hereby rejected.

4. Gresham's law nevertheless always holds, so cheaper means of exchange will always drive out of circulation more expensive means. One of the cheapest known means of trade is the “carry trade” using another's money to trade goods one has, or even hopes to have, for promises to deliver other goods one either has, or is promised to have delivered. Documents describing such transactions are the basis of all forms of “acceptances,” which are all credit contracts, these days all recorded as paper instruments or electronically, which in the distant past were recorded on clay tablets or even in stone, the practise is that old.

It [unlimited government money-issuing power] is a policy of buying acquiescence. As outlined in previous studies, local governments as well as citizens become suppliants to it and therefore subjects of it.

Basically, we are as much hooked to government issued money as is any hard core drug addict to his drug of choice. Since this state of affairs cannot rightly be considered freedom, in order to break free of it, one must assert one's own money power and reduce reliance on government money to the point where it is only used to pay taxes. 

MONEY POWER IS SOVEREIGNTY

The states, to recapture their independence and sovereignty, must look to their citizens who, in turn, must assert their sovereignty by exercising their inherent money power. It was right that the states should have surrendered their money power; but they should have surrendered it to their citizens, and not to another government. At the time the federation was formed the nature of the money power was not understood; and it was not realized that it is the essence of sovereignty. But we know now that it is and if we wish to preserve the federation and also home rule, we must now deal intelligently with the money power.

Yes, the states should have done this or should have done that. But why didn't the people know any better than to have let the states assume powers that could never rightfully be theirs? Because the people were never advised, taught or considered important enough to know better, because money power is a power that no one can deny, that the strong have ever used against the weak, etc. Money in one form or another has enabled the rise and fall of nations and civilizations. In all recorded history, the same mistakes were made over and over and over again. The strong and the cunning have always won at the expense of everyone else, when one might wake to discover that the money power was and still is the people's all along.

While the states have surrendered their money power, their citizens have not. The citizens have merely failed to exercise their natural powers against which there is no prohibition in either state or federal constitutions.

We can no longer be absolutely sure of this as much has transpired over the years. We know of some basic limitations imposed on alternative monetary systems, all of which we regard as strictly speaking unlawful, but which we must nevertheless be aware of. Therefore we want to make Riegel's points absolutely clear:

This is not a political issue - requiring legislation or repeal of legislation, or constitutional amendments, or any official action - Ah, but of course inevitably it will become such.

but it is, nevertheless, a profound political movement; because, as the people assert their money power, their natural intimacy with their state and local governments asserts itself – since there is no other power that can step between.  

We ultimately want this kind of direct control, which can only happen when the people exert their money power regarding taxes and expenditures.

Today, the federal government stands between the citizen and local government, and thus alienates him.

The other partners in the evil triumvirate that have accomplished the systematic alienation of the people have been the corporations and the banks.

If our states are to develop their individuality and counter the stereotyping influence of a monetary dictatorship, if local government and private enterprise are to work out their natural virtues, if democracy is to prevail in business and government, and if our federal republican system is to survive, we must meet our problems by dealing with their fundamental causes - the political money system. 

Hence, 

To accomplish these broad and vital aims, the Governor or some other public official should take the leadership of this cause within his state.   

NO! Absolutely not! Not just no, but hell no! Politicians might have been better in Riegel's day, but we doubt it.

In the absence of this, leadership must be taken by private citizens. It offers an incomparable opportunity for public service. 

We agree. So how about starting a local steering committee to promote the VEN proposal of this blog, to discuss it and suggest implementation in your local area? How about canvasing your local community for businesses that wouldn't mind supplementing their revenue using an alternative “private” money along with their present “public” money?  

While the money issuing power is inherent in every man, it can be realized only by a pact among many. Therefore, the individual is helpless, and organized action is necessary. The method of organizing a Valun Exchange should be no different from organizing any other cooperative movement. It requires only the concurrent action of a sizeable number of persons and corporations who share its aims – and this, of course, requires propaganda. 

Another big departure from Riegel, who couldn't have known better than we are able to know today, corporations shall be forbidden membership in our exchanges as they defy three principles that we intend on promoting:

1. The end of limited liability enterprises that can run over anyone and anything without facing the consequences for their actions.
2. The end of absentee ownership schemes where the person with idle money expects (demands) a return (yield) on their “investment” which can be withdrawn or sold at any time.
3. The state chartering (recognition) of such businesses to enhance their legitimacy, akin to allowing banks the “carry trade” use of a national currency to underscore the legitimacy of a trade. 

The first essential is the organizing of a "Money Plan Committee" [steering committee] to sponsor the propaganda. This committee should be composed of not less than 12 persons of as conspicuous standing as possible. The larger the number, the better. If possible each county or at least each congressional district should be represented.

OK, so here are your marching orders. Go out and start talking Riegel's Valuns to as many of these John Galt (and Jane Galt) individuals as you possibly can. These are going to be the members of your steering committee. Not only will they sponsor the propaganda, they'll be paying for the V-Checks as advertising, supplying a reasonably circulating money, without breaking any of the usual public laws enforcing the present means for the PTB to enforce their “free range slavery.”

It [the steering committee] should locate in the largest metropolitan center in the state which should also be the location of he Valun Exchange when organized

We're departing from this too. Start at the county level if you live in a rural county or a town if that town is above 20,000 people, or a city of any large size. Your IE should encompass a large enough population to eventually support its own circulation of Valuns in the two forms, electronic and checks (V-Checks and Private Checks).  

Funds should be raised by contribution. The press, radio, mails and forums should be utilized to apprise the public of the plan to organize a state Exchange to carry on money exchange by the valun nonpolitical, private enterprise money system.

We don't intend as much fanfare as this, at least not to begin with. Riegel's monetary system needs to work out its kinks and wrinkles locally first before it ever attempts to earn a broader circulation. Therefore here's a proposal:

Get three adjacent rural counties (all in the same state) to form a Valun Exchange Network (VEN) composed of three independent exchanges (IE's) each headquartered on private property belonging to prominent business leaders in each county. In each major business district in these geographical areas, Valun counters are organized and set up to be open limited hours to handle the Valun exchange needs of its private IE members. Each Valun Counter (VC) would earn its keep from transaction fees it shares with the managing IE.

Public money raised should all be spent as legitimate advertising expenses of all businesses concerned, as there would be ads on the reverse sides of all circulating V-Checks and all signs and propaganda would further sales through advertising the proposed use of Valuns.

After a reasonable amount of publicity has been had, "The Valun Exchange of the State of _________" should be incorporated as a non-profit membership corporation. 

At present, all forms of state recognition are suspect. Therefore since we do not want to be bound by public law regarding any membership issues, why should we seek their recognition for such subjection? Again, the very simplest forms of business combinations registered at the local county or city clerk's office should suffice. If a dozen people decide to form an independent exchange, they would form it as a profit making business, therefore subject to taxes, and use a “Doing Business As” (DBA) to give it a name such as The People's Valun Exchange of _________ County in the State of ____. Just because a business is set up to make a profit, doesn't necessarily guarantee that they will make a profit or indeed may ever need to pay taxes.

The other issue is that of setting up the support organization, International Value Exchange Society (IVES). This really would be a not for profit organization that serves the needs of its member IE's. For the moment, we would consider that for each independent exchange, a representative to IVES should be selected along with the rest of the usual board members and officers. 

It [each independent exchange] should provide the following officers: President, several vice Presidents, Secretary, and Treasurer and a Board of Directors of five or more, with the officers as ex-officio members of the Board. The officers and directors should be named by the Money Plan [steering] Committee, to hold office for the first six months [year] after beginning of operations - after which the first members' meeting and election should be held. Nominal salaries should be paid to all officers and directors, pending a resolution to be presented at the first members' meeting setting salaries for the ensuing 12 months. The organization of the exchange should be in strict democratic form, with one vote for each member whether individual or corporation [business].

We would really like to place people on notice that we fully expect them to want to earn Valuns rather than “public” money. Therefore we'd suggest that initial salaries, if any remuneration is offered, should represent a minimal investment in “public” money supplemented by pay in Valuns. While we're at this, we can begin to address the simplest means of affecting the complementary payment mechanics enabling the recognition and understanding of labour and credit contracts as proposed on this blog.

INCOME OF THE EXCHANGE

The Exchange should depend for its income and expenses upon a charge for check clearance. 

We began by suggesting a fee as small as one tenth of one percent for any movement within the system representing a transfer of Valuns from one member account to another or for V-Checks.

The fee for membership should be nominal and the same for individuals and corporations [businesses].  

Membership fees should be in “public” money of course and should be limited to raising enough of this money to get the alternative system up and running. This “public” money would assuredly reside either as cash or in an account with the name designated on the DBA. These IE membership fees should additionally slide away from the “public” money side and rely more and more on Valuns only, over a period of perhaps five years. 

The membership subscription should pledge the member to abide by the rules of the Exchange as adopted by the Board and the obligation to pay a charge for each check cleared as may be determined by the Board. 

Yes of course, but before we get there, we should adopt the one tenth of one percent rule. If transaction costs need to rise, then these boards will determine those rates for the exchange.  

All persons residing or transacting their business within the state would be eligible to full membership.  

We'll say that all persons who have passed OUR domicile requirements would be eligible for membership as an individual A member or business B member within the geographical area denoted by the independent exchange, usually at a county or town level, rather than a state level. Ultimately there would be a state roster of IE's, because the first goal of the entire movement, since that's what Riegel has called it, is state empowerment through local commerce. 

Each county in the state should elect to the annual meeting of members a delegate who would be empowered to cast the entire vote of his county.

Of course.

The membership drive should begin only after adequate advance publicity has been had and should not require more than 60 days to complete. Every chamber of commerce, as well as other organizations, should be enlisted in the drive; and quotas should be set for each county. It is essential to enroll the farmers as well as urbanites. The larger employers should be enlisted to enroll their employees. 

These days, we can use more up to date methods of canvasing, market research, etc. It amounts to the same thing; getting out there and contacting real people and getting them to come aboard and use Valuns. 

The membership enrolment [drive] should state whether the applicant is employer [B member] or employee [A member]; and, if the latter, the name, business and location of the employer [B member for whom the A member works]. If employer [B member], the nature of the business and the number of employees should be stated.

The details can and should be as sparse as possible. Our intent is to help not to be nosey.

Each employer should agree to pay his employees in all valuns or all dollars, or part in each as each employee requests; but each employer should, for his own convenience, undertake to have his employees agree upon a uniform method of handling the payroll. 

To begin with, we can't anticipate anyone from the beginning wanting to be remunerated only in Valuns. What we think is preferable is to have some sort of projected complementary payments in Valuns handled by each IE using the labour contracts and self-financing by employees proposed on this blog. Briefly restated here, each employee would be supplying Valuns to his employer ahead of the time his employer would be paying back those Valuns to the employee for work the employee provided. We want to have as little impact on present payroll procedures as possible, therefore much of the work of each IE will involve making these transactions on as timely a manner as possible. 

Study No. 6 outlined how "Valun Currency Counters" will supply exchange of valuns for dollars, or vice versa, for persons finding themselves short on one and long on the other.

Again, for our members only, not the general public, we do not want their “public” money except as a means to purchase precious metals which we intend to hold against the need to raise adequate “public” money wherewith to pay taxes. In the process these metals are retired from use as money. Valun Counters will enable members to cash in their dollars for Valuns, will enable members to transfer their Valuns to other members, to write personal checks against their accounts or to purchase V-Checks. They will not enable them to cash in their Valuns for dollars without presenting a valid tax bill.

MINIMUM REQUIREMENT

The Exchange should not begin to function until the three trades essential to life are well represented, namely; food, clothing and housing. A complete cycle should exist in each. By this is meant that the food and clothing industries must have ample retailers to accept valuns from employees and the retailers must in turn have wholesalers who accept from them, and manufacturers who accept from wholesalers, and farmers who accept from manufacturers and packers. Farmers must in turn have local stores or mail-order houses to trade with. Landlords must have suppliers who are members. If these three lines are well represented, the ordinary processes of exchange will cause the system to ramify and expand naturally.

The cycles Riegel mentions are business specific and each deserve critical review here or elsewhere. Each will have its own credit requirements which must be known and critically examined.

A condition precedent to opening and operating the Exchange would be the determination and adoption of the valun unit. This was dealt with in the previous study.

In that study, Riegel says, “We should be careful not to borrow mental attitudes from the autocratic political money system which we are undertaking to renounce.” Understood? We are ultimately to renounce the “public” money system, formally declare one's abandonment of (a claim, right, or possession). Synonyms: reject, refuse to abide by, repudiate. We must get it through our thick heads that ultimately all “public” money deserves the fate of Weimar Deutschmarks, as trash blowing in the streets.
 

While the valun will circulate mostly among members, it will not be confined to them - as there will develop naturally an outer rim of dealers who will accept them because they know that they can either pass them to some member of the Exchange, or sell them for dollars to "The Valun Currency Counters." These outer rim acceptors will sooner or later join the Exchange so that they may enjoy its facilities.

We had originally intended that Valuns would circulate openly as notes and coins along with any “public” money. But given the nature of public laws favouring their monopolists, the less prominent V-Checks might circulate outside the VEN, but in order for them to be of use to any business, they sooner or later would become IE members.

When the Exchange opens, each member will receive a check book and will be entitled to draw checks within his debit limit – in accordance with the rules of the Exchange as outlined in Study No. 7.  

For currency in bills and coins they will present checks to the Valun Currency Counter in their neighborhood.

Eventually, perhaps, but in the meantime, Valuns would exist in two forms, as electronic entries in accounts of IE members and as checks.

Any person or corporation [business] or institution outside the state would be entitled to part or credit (Class B) membership.
 
Credit membership or Class B membership assumes one will be operating a “going concern” or “for profit” business that will owe taxes on its profits to some state. Such members do not have money creation power, but rely for that on their A member employees, who would include management or officers of the same concern. 

The distinction between debit or full (Class A) membership and credit or part [Class B] membership is in the power of the debit or full member to overdraw his account; while the credit, or part member, can draw checks only if he has a credit balance on his account. 

We also hope all understand that an alternative money system is not the basis for conceiving more fun and interesting ways to make money to buy real things and services from others from nothing.

These two classes of members will hereafter be called Class A and Class B. The reason for the class B is to permit membership anywhere outside of the state without the necessity of the Board passing upon the debit power to be extended to such members. As Exchanges are opened in the states of such members, they could transfer their account to the local Exchange and thus classify as a class A member.

Imagine that there are the following exchanges set up and operating:

Deaf Smith County, Texas
Oldham County, Texas
Randall County, Texas

Les is a farmer in Deaf Smith County who sells to DK in Oldham County and Ben in Randall County. Les is an A member of his exchange. DK is an A member of his exchange and Ben is an A member of his exchange. But Les may decide to operate in both the Oldham and Randall exchanges with an account at each exchange for which he'd be a B member, having an account which must always retain a positive balance. As an A member in his own exchange (Deaf Smith), Les would be able to overdraft his personal A member account, but he'd have to keep his B member accounts at the other exchanges in the black. If DK moved to Deaf Smith County, he'd be eligable to change his account from Oldham to Deaf Smith and become an A member of that exchange. He could retain an account in the Odham exchange but he'd be a B member there. One cannot be an A member of more than one exchange.

As Exchanges open in other states they would be joined with existing Exchanges for clearing purposes under central control - as will be explained in Study 10.
 
Central control?  The concept runs counter to freedom.  Sorry Riegel, we'll have far less of that.  The only central control we're interested in is for universal identification of the Valun and authentication of all legitimate exchanges, members and transactions. In fact the decision as to whether transactions across exchanges shall be accepted shall always reside with the local exchanges, not with IVES, except in cases requiring resolution. But the IVES is never to be in any position to impose its will or even the will of the majority on any single exchange. If for instance an exchange believes they are being swamped by transactions from other exchanges whose policies for allowing members to emit Valuns are not in accordance with widely accepted VEN policies, they may act to suspend transactions pending resolution through IVES. It must be their right to protect themselves from sabotage efforts whether inside or outside their exchange.

Members could not, of course, switch their business completely from the dollar to the valun at the outset. Therefore they would be obliged to quote prices and buy and sell in terms of dollars with nonmembers, while utilizing the valun in all dealings with members.

What we fully anticipate happening is for members to display a sign somewhere that they are a member of their local exchange and will accept Valuns. Prices in Valuns will normally be before taxes. One pays for one's items in Valuns and pays the taxes in “public” money. An example might be a bill for $150 or 53 Valuns with a tax of $12. If you had 53 Valuns in V-Checks, you'd tender those and $12 for the tax.

Business with the Exchanges would be transacted entirely by mail - making it unnecessary for members to visit the Exchange or to have more than one Exchange in a state.

We could do things this way, but we don't use the mails for these things much anymore. Of course we could. Riegel makes the distinction between an exchange, a general clearing house of transactions that could be set up in the capital of each state all right, and a Valun Counter, which would be a local outlet of the statewide exchange. We're not seeing it that way, as most successful alternative money systems run within far more local channels where they would want that kind of oversight. We'd also want to maximize the number of designs of each business operating locally or regionally rather than statewide (for larger states). Therefore we're suggesting that each exchange be formed for an area within a range of population able to support it in a smaller area, a county or town, perhaps a city, and that the Valun Counters would then operate as local branches of each exchange. These branch operations would share the revenue stream (in Valuns) from transactions passing through each counter. 

Valun Currency Counters would be in trade neighborhoods - thus obviating branch Exchanges, and minimizing the overhead cost of the system. The Exchange could be located in a loft. The cost of operating the Exchange would be minimized, and thus the pro rata charge for check clearance would be small. There would also be a small charge for converting checks into currency, or vice versa, but these fees would go to the private dealers authorized to operate Valun Currency Counters.

The details need working out.

NO ATTACK UPON POLITICAL MONEY

The departure from the political money system does not contemplate any attack upon it, nor any interference with those who wish to continue to use it exclusively. The purpose is merely to demonstrate that a more stable and equitable unit can be established by private enterprise; through which its users will gain command over their economic and political affairs. If this can be demonstrated, accretion to the valun system, and attrition of the dollar, will automatically determine the issue. It is believed that ultimately political money will be abandoned everywhere because of lack of use. 

All of this is as expected. 

State, city, town, county and district governments, as well as the national government, would be entitled to membership in the state Exchanges; but, as explained in Study No. 10, they should be allowed only class B membership. 

We are prepared eventually to approach governments, local and state governments first, with the possibility of B membership in local exchanges. However we will probably approach government workers and their labour representatives first. We happen to regard certain members of society, who usually work for governments and are paid by them, as providing genuine service to our communities. These people will of course be entitled to apply for A memberships and even receive complementary compensation in Valuns for work that they perform for their local communities, many that have been unable or unwilling to pay their workers more in “public” money. Yes, these would be labour contracts, though they would not involve employers since those would be the governments. Instead these compensations and contracts awarded to public workers would be looked upon as agreements between said individuals and their local communities represented by the local IE. 

As the valun system develops within a state, the state government will retrieve the power and prestige it has now lost to the federal government; and the two would fulfill their respective functions with neither having control over the citizen. Both would have to win his support by service because the sole method of taxation of both would be on a cash basis. No financial finagling would be possible. This would give the state government a fair break, and destroy the bureaucracy that has harassed both it and private enterprise. 

We are under no illusions that such changes can or will happen easily or without violence or bloodshed, as much of that has already led to our present situation and of natural course, scores must and will be settled. However that may be, we shall instigate no violence nor advocate it; we shall not call for any legal or social action against those we consider criminals. Our attitude has remained the same, we wish to renounce them, to move away from them, to disentangle ourselves from them, to have no more to do with them, to shun them. That too is our right. We have the right to associate with whomever we choose and to disassociate from anyone we choose, for whatever reasons. We allow everyone else their right to do the same. We are not interested in any calls for the use of FORCE to get anyone to do anything they do not want to do. We stand opposed to all that as inherently inhuman and unworkable. 

The Governors of our forty eight states are unanimous in their denunciation of federal bureaucracy and centralized government. There is in fact a Governors' rebellion against these conditions but the rebellion will be futile unless the attack is directed against the fundamental cause - the political money system. 

We could not imagine such a denunciation now. Everyone has been conned into accepting the “funny money” from the Fed. 

The states cannot maintain their sovereignty so long as the federal government controls the supreme governing power - the money power. There should be a common cause between state officials devoted to the preservation of home rule and business men devoted to the preserving of private enterprise.  

Forget it, because now we have corporations and banks who are big enough not to care about local matters, that are only concerned with their bottom lines, because they have “investors” who must see returns on their idle money which they assume is working, when in fact it is not, since it may be pulled at any time from the enterprise due to the bids and asks of speculators. 

There must be political and economic statesmanship to bring the general protest against prevailing conditions to a successful consummation. The states rights movement, to accomplish its purpose, must aid the citizen in invoking the money power. 

Fat chance of that! Again, we suggest that all of this appeal to the political is simply a waste of time and resources. Don't get sidetracked into thinking that any government or their representatives can provide any leadership in these matters. Only the John (and Jane) Galts out there, who recognize that the system is set up not to benefit any but the entrenched elites, who understand that nobody really has a future in the present system unless it be slavery, only these private individuals are in themselves capable of providing any real leadership capable of moving this enterprise forward.

Looking forward to hearing from you.

David Burton

dpbmss@mail.com

[12-31-13: I'm having an issue with these words:

"absolutely no commodity on the planet can serve as money without itself affecting [contributing to] the prices [of things, labour, etc.] in which people trade... money as an independent measure of value standing apart from all transactions, requires one to think instead of what that independent measure tells them about the prices of everything, rather than allowing a changing quantity of money to determine what prices shall be now and in the future."

How on earth can money be independent from transactions?

To begin with, I want to say that just as does every student of academic economics, the idea that money would not best be understood as a quantity came as a considerable shock to me. It took me a while to get it.   But as Riegel really did make clear, whatever was chosen as a basis for a Valun would be something that did not change in price at all relative to everything else. However much the absolute quantity of any of that money in potential circulation might have on prices, would thereby have absolutely nothing to do with it. Prices based on whatever this “Figure 1” value happened to represent in Valuns would find their price levels and as Riegel believed, tend to remain stable within narrow ranges, what he described as “price relativity,” that can only have any meaning when the measure of value is itself immovable.

Over and over, Riegel said, you can only create money by buying something, and can only back money by selling something. Are not ALL ITEMS being traded the basis for money?

Indeed they are, but the Valun that is used to measure them for price is always chosen to represent, if you like, a fixed transaction of value at a specific time. Whatever that is, it does not change regardless of how many Valuns might be in potential circulation.

You see, the whole matter of money supply and circulation (quantities of something used as money which thereby becomes a commodity) being involved with price inflation or deflation is ultimately true, though the process certainly took far longer than Riegel predicted, and it has done so entirely due to that extra money (pools of liquidity) being sequestered away in assets that had relatively high liquidity relative to cash; stocks and bonds, and where a strategy of “buy and hold” over periods of many decades prevailed for much of the lengthy period between the late 1940's and the present. To wit, just because the Fed (and any or all of the other central banks) might be cranking out dollars (or whatever) like mad in whatever way they choose to do that (paper, electronically, etc. etc.) does not necessarily mean that these excess dollars ever show up at or near the bottom, where they could really cause dramatic price increases. As indicated by stock market performance, this is where most of those extra dollars (etc.) are still going.

Of course the price of goods and services will change over time. Items demanded in low quantities must be priced high. Items demanded in high quantities must be priced low. If too many are produced, the price has to go down. If not enough are produced, the price has to go up. As items fall out of desire, the price goes down. If items continue to fall out of desire, they are replaced with something better. These matters seem immutable.

Yes, they certainly are immutable (the basis for a real economics) and how much better to judge prices when one uses a monetary unit that does not change relative to what it measures? It seems we would soon get more reliable prices over the long run for what things were really worth to the buying public.

I do agree, if we adopt Riegel's idea, that valun supply comes from overdraft, the specific valun supply, at any given time, would have no impact on prices.

The valun supply would be a result of collective desires. And those collective desires, should affect prices, no? Any comments? 

Yes, all this would be true and collective desires would affect prices. Here's the thing though; at every stage of production, and this is pretty bonehead business academia, what one inevitably develops is a production plan to determine, if possible, the best efficiency of scale to price. You try and hit that maximum efficiency target for maximum profit. And yet, out there in the public are other currents of wants and needs for things or services that fluctuate over time. We've all seen and read about manias for this or that that occurred in history, where for instance there was a time when the bulbs of certain tulips were theoretically priceless. What we most need to determine is the best means of defeating price speculation throughout the entire economic system, elimination of price bubbles as a primary objective. We would propose to serve this key objective by making VEN participation difficult or impossible for a host of businesses that use projections of financial leverage to do business.

Thank-you for your questions.]