Saturday, January 31, 2015


A Criticism of Henry Dunning Macleod's New Work on Bimetallism.

In the interest of completeness, this essay which concludes Kitson's great work, intellectually toys with concepts that very rarely see the light of present conversation on matters concerning money and monetary systems. We trust that something may be learned from its inclusion here, which shall bring this series to a close on this blog.

Under the title of "Bimetallism," H. D. Macleod, the well-known economist, has presented an epitome of the various arguments which monometallists urge against bimetallism, and on this account, if on no other, the work is interesting, since it sets forth in a brief space the positions occupied by these two antagonistic monetary schools. Mr. Macleod is a forceful, fervent writer, who is not afraid to push an argument to its logical ultimatum, and, as a general rule, he insists upon doing so, with results altogether surprising.

No writer has done so much to expose the absurdities underlying orthodox economy, and especially the present monetary systems, or to make of the science a rediictio ad absurdum, as Mr. Macleod. It is true that he is quite unconscious of his achievements in this line, achievements which are the very opposite of his intentions. Like Samson Agonistes, in slaying his enemies he has slain himself. I have shown in the chapter on Wealth how, by following the ability to exchange as the sole definition of wealth to its logical conclusion, he is led to categorize rights-of-action, debts, mortgages, personal qualities, etc., as wealth; the result of which brings him to the absurd paradox that it is possible for a nation to destroy wealth without being any the worse off, and to create wealth by the mere fiat of law. To the two well-known factors of production, labour and land, Mr. Macleod adds two more, viz., law and ink. Because written documents are frequently used in exchange as tokens or symbols of wealth, Mr. Macleod imagines them to be what they represent. He mistakes the shadow of a thing for the thing itself. He confounds shadow with substance, the ideal with the material.

Most people believe that their own labour does not represent wealth. Perhaps they have been mis-educated to think otherwise. Likewise they are seemingly unaware that their skill to do anything implies a potential wealth. Most understand land to be wealth, especially where it is used for activities that encompass more than mere dwelling upon it. As we have consistently argued, true wealth is anything capable of generating an income stream, a livelihood. We distinguish this from mere “stuff” any of which may be exchanged for something else in the market for “stuff” but may not be actively marketed as product for sale. When a huge mega-corporation competes against a town of mom and pops and drives them out of business, they are destroying wealth, no matter how much wealth they may be replacing it with. Most economic models never consider impacts like this as destructive, nor do they reckon that the perpetrators of this casual destruction of wealth bear the real responsibility for this destruction. Were real law to be in force, those ruined or dispossessed of their livelihoods by these so called “progressive” or “structural advances” would have every right to seek redress against them in the nearest court. Instead, the kind of law most practised is against such people as being backward or reactionary and in support of the bigs who have control of the monetary system and game it to their liking, all the while pretending that their concern is with the widest possible consensus of consumers, the collectivist ideology which supposedly pits the group, any large amorphous intangible group will do, against the individual, especially one standing in the way of obvious “progress,” or actually, the usurer's profit.

A story is told by Proudhon of a French peasant, who, having confessed that he had stolen his promissory note from the man who made him the loan, was advised by his priest to return the money immediately if he expected absolution. The man replied in astonishment, "No, that would be unfair to me. I will give him another note.” It would appear from this that Mr. Macleod is not the sole discoverer of the "great juridical principle" that mere promises-to-pay are wealth. (Mr. Henry George and his Single Tax friends fall into a similar error regarding “land-values.” Land-values do not constitute any part of the national wealth. Their destruction would leave a nation none the poorer. The land would be none the less fertile or more restricted in area than before. Land-values are fictitious, but a tax is always collected in wealth, and wealth is always produced by labour. So, in pursuing this ignis fatuus, land-values, Single Taxers must inevitably tax the very class whose cause they champion — labour.)

We have already seen, and we believe this to be Kitson's irrational prejudice against land owners, that he would do anything to rid mankind of the notion that land is worth anything. He also has the usual irrational notions that if land were somehow to be redistributed, that greater economy would result. We understand that the many vagaries of history have resulted in the present land ownership, but we cannot support or suggest any violent changes at this point would result in anything better as the fairly recent history of totalitarian regimes shows.

In the contention between the advocates of gold and silver coinage, science can take no part. Exactly! Recognizing, as we must, the physical impossibility of any commodity functioning as money, — so long as it has an independent commodity value and existence, — ^gold and silver, neither separately nor collectively, can furnish a scientific basis for any monetary system. We totally agree and further we hope that it is understood that our proposal to use them as a means of exchange between our money and theirs does not in any way imply such. This I have fully demonstrated in this work. It will, however, be instructive to observe the hopeless difficulties into which the advocates of metallic coinage inevitably fall.

"The whole of this vast controversy," says Mr. Macleod in his preface, "is reducible to a single, simple and definite issue. Supposing that gold and silver are coined in unlimited quantities, and a fixed legal ratio is enacted between them, (i) Is it the fixed legal ratio enacted between the coins which governs the relatlve value of the metals in bullion? (2) Or is it the relative value of the metals in bullion which governs the relative value of the coins ? (3) And if it be found impossible for any single country to maintain gold and silver coined in unlimited quantities in circulation together, at a fixed legal ratio, is it possible for any number of countries combined to do so by an international agreement?"

"This," he says, "is the whole gist of the controversy, and all facts and arguments adduced must be directed to establish one or other of these points."

From 120 years ahead in the future, and after the Rothbards and others have come and gone, is there any sense in addressing the lunacy of these questions? Oh my, what blockheads!

These very questions which Mr. Macleod propounds show at once the gross absurdities involved, and utter ignorance displayed, in this contention.  The absurdities can be made clearer by an analogy.

Supposing a yard-stick made of silver and a foot measure of iron.

(1.) Is it the fixed ratio of the foot to the yard which determines the relative co-efficients of expansion of silver and iron?

(2.) Or is it the relative co-efficients of expansion of the metals that determine the ratio of a foot to a yard?

(3.) And if it be found impossible for any single country to maintain the exact ratio of one to three between a foot measure made of iron and a silver yard-stick, under varying temperatures, is it possible for any number of countries combined to do so by an international agreement?

"The bimetallists," he adds, "maintain the first of these propositions, the monometallists maintain the second. To the third proposition the bimetallists reply in the affirmative; the monometallists reply in the negative."

"Our business," he adds, "is to investigate which of the parties is right in their contention."

I shall show that both parties are wrong, and are contending over a question that neither of them fully understand. I shall also show that as between monometallism and bimetallism the latter system is unquestionably fraught with less danger to the welfare of nations. No human law can possibly govern the exchange relationship of commodities. The natural law of supply and demand alone governs value. They cannot reasonably do so, whether that is considered monetized value or real value. Laws can, however, artificially alter values by limiting supply and demand. Thus gold enjoys an artificial value which it could not do but for law. So that whilst governments cannot fix values or absolutely control them, they can materially affect them by affecting supply and demand. And further, why should they be doing this, unless it is to favour the interests of someone in a privileged position who may benefit from the enforcement of said law?

The "relative value” of the metals in bullion does undoubtedly govern the "relative value " of the coins, but in the very opposite manner to what Mr. Macleod supposes. The more valuable a metal is in bullion, the less valuable it is for coinage. Why? Because it refuses to function as a coin.  It insists upon becoming bullion. Whether Kitson likes it or not, he has just proved Gresham's law to be real: the “bad” money, the cheaper something is as used for money, the more it will tend to drive out of circulation the “good” money, the more expensive. Now, I contend that the first requisite of a good coin is that it shall properly discharge the functions of a coin, and that is to facilitate exchange, to circulate, and to remain in circulation. Agreed! A race-horse is an admirable creature, but everybody will admit that it would be worthless for street-car purposes. The common road-horse is a much cheaper animal and an infinitely better horse for this work. So it is throughout the entire industrial world; utility determines value. But strangely enough, monometallists cannot see that this law governs coins and money, the same as all other things. "Money is as money does," says Francis A. Walker, and history proves that, under free competition, dear money (the more expensive), like all commodities, must give place to the cheaper. This, Gresham perceived, only he could not see that the cheaper was the better money. We see here, quite plainly that Kitson really does agree that Gresham's Law is a real one, despite Gresham's prejudices, exactly as we see it; the cheaper substance money is made of will drive out of circulation money made of more expensive substances; paper will drive out of circulation any specie, period! And swipe cards and bitcoin may be even cheaper, which doesn't mean they are the best solution, only that they are cheap and by any stretch of the imagination, easier to use, especially for long distance transactions, than clunky chunks of metal. This is a real law and no fake law made by any body of legislators is ever going to change it.

No material can be a useful substance out of which to coin money, that is continually urging the coin to commit suicide. Gold is continually causing coins to undergo dissolution by transforming themselves into bullion. Now bullion is not money, it is not coin. The coin vanishes the moment it becomes bullion. A metal that is good as bullion is not necessarily good for coinage. Silver is far less liable to play the truant and leave us in the lurch, than gold. It is not so disposed to run abroad and create a stringency in the home market. "But" exclaim the monometallists in alarm, "gold would be driven out if silver were coined freely." Well, what of it? At the present time, without any free silver measure, gold leaves the country when the nation appears to be most in need of it, and it has to be bribed and pampered and flattered in order to get it to return; so that it seems inevitable that gold must travel. But suppose gold disappears entirely from this country and silver takes its place? What then? We should have a metal that would not be liable to vanish, and one far more serviceable than gold. "But" say the monometallists, "the country would be flooded with silver, and all nations would pour it in upon us." If you don't get all the foregoing, best reread it again until you do. The point is that the discussion is hooked on the idea of money being a commodity and then attempting to store some intrinsic value into it in hopes of avoiding price inflation due to an excessive expansion of this commodity so called money, whether it be of silver, gold or anything else, even paper or just numbers in accounts on computers. Again, what blockheads! The solution is to forever destroy the concept of money as a commodity by adopting a fixed point in time and a fixed transaction at that time as the basis for any and all future units of money. Then it doesn't matter how much or how little of this money is in circulation, nor are we tempted to think in terms of commodity economics when considering the relative value of a dozen eggs to an ounce of gold.

Let us examine this assertion. We will acknowledge that under the free coinage of silver gold would disappear. What would happen next? Foreign merchants would hardly consent to ship silver here unless they received something in exchange. In order to become loaded with silver, we should, therefore, have to export an enormous quantity of other goods, — which ought to please our friends the protectionists, — and this would continue until it was no longer profitable to import silver. Now, the immediate effect of a free coinage law would be to increase the price of silver, and secondly to decrease the price of gold, owing to the law of supply and demand. The fewer the nations demanding gold the less will be its purchasing power (Because gold nominally undergoes no change many suppose it remains invariable. Its variations are, however, registered in all other commodities, and it fluctuates enormously as I have shown in the chapter on Credit. These fluctuations are largely due to the employment of credit). Silver could not fall below its present price unless its production was vastly increased. All this is basic commodity economics, very well known and used to this very day by speculators, who reap profits from changes in the prices of various things and actively seek to create price changes in order to make profits, as they profit whether prices are rising or falling using various leveraging techniques unknown or unavailable to most of us; devices known as options and derivatives. Attempting to outlaw this activity has always proved futile because at this point all said money is likewise nothing but another commodity. Until THAT changes, there is no immunity from commodity speculation.

Another effect would be to replace credits very largely with cash. In Kitson's day, “cash” would have been silver or gold coins, not the “notes” of some bank. Today “cash” is considered the notes of a central bank or even as debit cards which offer no anonymity in their transactions. Today fully 95% of business is done upon credit, and only 5% in cash. If the commerce of the United States was transacted upon a cash basis, it would require more than all the silver coin in the world. Italics appear in the original. By increasing the quantity of coin in circulation, merchants would not require to ask for long time payments, but would seek to gain the advantage of prompt cash settlements; hence, business would be healthier and bankruptcies fewer. Production would be cheapened and exchange enormously facilitated.

We have referred to this before in our paper on markets, preferring a black market (no credit allowed) over all others. But at that time, we didn't fully comprehend the concept of “split barter.” We didn't fully understand that ALL completed transactions are barter, whether money is used or not, and since that is the case, ALL money (whatever it is made of) is evidence of debt; evinces incomplete transactions. Our idea of “settlement of a transaction” needs vast reorientation, as we have been hoodwinked by our own invention; money. When we pay a bill with money, what we are doing is arranging the terms of barter for the person or organization that sent us the bill. Though the law considers the transaction settled, it really isn't. They will take the money we paid them and buy something they need, thereby completing the transaction; settling it; it's still barter with money functioning as intermediary. We are used to thinking that a transaction is “settled” when we pay it, but settlement of that transaction does not occur until the money we paid is in turn spent for something that person or organization actually needs. 

"But what of those who have promised payments in gold?" The answer is that they would have to purchase gold in the markets of the world as they do today; and they would find this easier to do than now, since gold would be cheaper, i. e. less silver would buy a given quantity of gold than now. A further result would be to put an end to this insanity of trying to do the impossible, — of attempting to redeem one hundred millions of credit with one million of gold, and thus giving the holders of gold absolute power over the lives and fortunes of millions of men. The power of gold — the most iniquitous, inexcusable, insatiable privilege ever possessed by man, a privilege that exists solely through the operation of human laws — will be completely broken in the country that adopts free silver coinage. What he was saying here by quick changes of commodities; dollars for gold, is still the same. Bretton Woods was a secret assembly to create a secret and special agreement as was Jekyll Island prior to the foisting upon the American public and the world of the Federal Reserve system. These were by no means meetings of people like you and me to enact policies determined for the good of people like you and me. Hence, as we continue to say, none of THEIR money is or ever can be YOUR money. You only have temporary use of it and as long as you do, you are THEIR slave. Understood?

"But what would the dollar be worth?" "What would become of the standard of value?" screams the monometallist. As to the worth of the dollar, the same thing would happen with dollars as happens with any other commodities. See, right here he's telling you that all the money you know of is treated as a commodity. THAT's the problem! Increased supply would cheapen them and diminished supply enhance them. Free silver would unquestionably cheapen dollars, — a consummation devoutly to be wished. We hail bounteous harvests of wheat, of corn, of agricultural products with delight, and devote one day every year for national thanksgiving. An abundance of commodities, a plentiful supply of good things is what we, as a nation, are eager to provide. Why, then, should we regard a plentiful crop of dollars with dismay? When wheat is plentiful it sells for half the price it does when there is a scant crop. Wheat today sells for one-fifth of what it did in 1S65; but no one has petitioned Congress for the enactment of a law to restrict the growth of wheat. But later on they did, didn't they? To the sixty-five million consumers America's population was much lower in 1895, fifty cent wheat is a boon, although to the million or so producers it is disastrous. And as J. B. Say says, "The well-being of consumers constitutes the  well-being of society." But the truth is that the depreciation of wheat is due to a restricted gold currency. Nothing has happened in the production or actual demand for wheat to cause this fall of prices to fifty cents. This is the result of the increased value of money, due to the restriction and contraction laws. Here we catch a glimpse of the true inwardness of the opposition to a free silver coinage measure. It comes from the usurers not the wealth producers; that is, from the bankers and money-lenders, who tax away from society all the increased productiveness that invention and labour create. And make no mistake, ladies and gentlemen, these same people are right now at the helm behind the scenes, and have been since at least 1815 (Congress of Vienna). They dictate to captive governments around the world what they may and may not do. Popular democracy and representative governments are a mere sham; the curtain behind which they pull strings and swing levers. Any government that does not go along with their diktats is labelled a “rogue” state. They not so secretly hate the common people upon whom they feed. They have and shall strip the common people of everything and place upon the world a tyranny and call anything that stands against them “terrorism” which has its root meaning in “from the earth.” It's long past time to wake up for these people have managed to gain control of everything, including science, so called, so called education, etc. They have foisted a false science called ecology on everyone, insisting that unless you have a place within THEIR world, you are a “useless eater” and should jolly well just go off somewhere and die quietly. What links every last one of these people together is their reliance upon usury and its evil cousin, commodity speculation.

An increase in the supply of money, which free silver coinage would necessarily cause, would make monopolization of the currency far more difficult than at present. Prices could not be manipulated quite so easily, nor would labour be so readily exploited. Yes, but this was just a stop gap measure. The free silver movement didn't solve anything because it never dealt with the fundamental issues; money as just another commodity and usury.

Whilst competition is continually cheapening production, whilst inventions and discoveries are making labour more productive, all this surplus creation of wealth -understood as mere “stuff” here- is taxed away by the money monopolists, by means of their "standard commodity." It is not the landlord class, as Henry George and his followers falsely assume, that tax labour most heavily; it is the money power. Kitson got that one right 120 years ago. It is this power that controls both labour and land, by controlling the land-holding class, as is evidenced by the enormous quantity of land held under mortgage and which is continually increasing. Nothing has changed since then now has it? And into the hands of the money power, the land must inevitably fall. Italics in the original (It is strange that land reformers are so absolutely blind to this fact. One never hears of Money-Lords begging for land on which to employ their wealth. But landlords are continually becoming indebted to the money power for the use of money. In other words, land is far more plentiful and more readily procurable than money. And today money is made more essential to men than land.) This sounds more sensible than his foregoing pronouncements concerning the private ownership of land, which we consider an absolute and incontestable human right and an absolute assertion of responsibility; a prime requirement for a sound economy.

It is somewhat amusing to see how eagerly the monometallists insist upon regarding money as a commodity, on the one hand, and how, on the other hand, they refuse to allow the natural law governing the production of commodities to operate upon this particular one. If money is a commodity, there is no earthly reason why money should not be exposed to free competition, just as wheat, cotton and corn are. On what grounds of either justice or expediency should the banker be protected in his industry, more than the farmer and mechanic in theirs? Emphasis ours! And now observe: By prohibiting free competition in money, every industry is compelled to pay an enormous tribute to the persons controlling it, since it is by money that all commodities are compelled to gauge themselves. Every man who engages in business must come under this yoke which laws, restricting the production of money, have placed upon the shoulders of industry. It is impossible to escape this form of slavery, except by becoming a part of the money power. If you can't lick them, seek to join them. That too has been a trend over the last forty years or so. It will not work of course, because their ship, their bandwagon, their bus, was only intended for a chosen few, not the common people. Elitists tend to think of themselves as preparing a kind of Noah's Ark for the next deluge, the failure of their own system. Not just anyone can get aboard.

Every man is compelled, under our present monetary system, either to bear this yoke, or form apart of it himself. He is forced to become oppressor or be oppressed. Quite so, and this has happened to a greater or lesser extent, with those who tended to side with the more “Liberal” or “progressive” side of the “built for ready made consumption by the masses” political dichotomy; choose either side, right or left, red or blue, as long as it is a part of their prescribed dialectic and they have you where they want you, you become another unwitting dupe, another useful idiot of their schemes. But make no mistake, at base it is all about money; their money, not yours, and that certainly includes bitcoin.

But what of the standard of value? Let Mr. Macleod himself answer. In Vol. I., page 184, of the "Theory of Credit," he says, "A standard of value is impossible. That unfortunate confusion of ideas between value being the quantity of another commodity which any quantity will purchase, and the quantity of labour embodied, as it were, in the commodity itself, which is chiefly due to Adam Smith and David Ricardo, has not only led to that mischievous expression "intrinsic value," the source of endless confusion in economics, but also the search for something which very slight reflection would have shown to be impossible in the very nature of things, namely, an invariable standard of value." . . . On page i86 he says: "But value is a ratio; and it is impossible in the nature of things that a single quantity can measure a ratio." On page 184 he also says, "Value is a mental affection;" and on page 187, "Value then, like colour, sound and odour, only exists in the human mind. There is neither colour nor sound nor odour in external nature. They exist only in the human mind."

Taking either of these different definitions of value, what sense is there in the expression "standard of ratio," or "standard of odour," or "standard affection of the mind?" Equally meaningless is the expression, a "measure" or "standard unit" of ratio! And yet after these definitions, Mr. Macleod coolly informs us that money is a measure of value; (Theory of Credit, Vol. I., p. 186.) that a certain coin can be the standard unit of money, and that this coin is gold. Hence gold is the standard unit or measure of value!! But a coin is a single quantity, and he has already proven that a single quantity cannot measure a ratio (p. 186). How will he reconcile these conflicting statements? To talk of "measuring" a ratio is sheer nonsense. Ratios are expressed, not measured. Further, as I have shown in the chapters on Value (included here) and the Standard of Value , ratios can be expressed only by numbers. You cannot express them by metals. Gold and silver, when placed side by side, give no expression of ratio. It is not until an exchange occurs, a barter transaction, and the metals are weighed and their weights expressed in numbers, that a ratio can be thought of, let alone expressed. This gives us the rationale for basing our proposed Value Unit on a simple barter transaction between dollars and gold (and silver) on a specific date. We decided on this rather than Riegel's original plan, to use a specific dollar at the close of business in one year and deriving the initial ratio; 1 dollar = 1 Valun, which would have made us rely on the change in purchasing power of dollars only, a far more difficult task to quantify precisely by the way, when we need at this time a far more universal basis for exchange between their money and ours. By adapting the precious metals to this use, we slay two dragons at once. 

If one ounce of gold exchanges for twenty ounces of silver, the value is not expressed in terms of the materials gold and silver, but in the ratio of the numbers of ounces, 1 to 20. Gold is not, never was, and never can be a measure of value. Italics in the original. It would be just as rational to say that gold was a standard of equality or the unit of distance, as to call it the standard measure or unit of value. Values are, as Macleod shows, ideal. It is nonsense to set up a substance as a standard or measure of the ideal!! Of course, since any ideal is frankly not even real. 

When this fallacy, this preposterous delusion is knocked on the head, we may hope for a scientific monetary system, and an end to financial and industrial fiascos and failures. It would take an end to usury to accomplish that.

I have given what I believe to be valid arguments in favour of the free coinage of silver, as opposed to the gold monometallic system. Not that I consider free silver a complete solution of the money question. Far from it. It is a step, however, towards liberty, towards sanity, towards national prosperity. Underlined in the original. It wasn't, because usury was and still remains the principle problem.

I have said that laws cannot fix values, although they can and do affect them. The fixing of values, as spoken of by bimetallists, I understand to mean the equalizing of the purchasing power of coins, so that gold and silver dollars have exactly the same purchasing power. And this is, of course, true. Not only is this true, but paper, which is "intrinsically valueless," — to use the common term — may also have the same purchasing power, as is evidenced by our greenbacks. Macleod also shows this by admitting credits as money. He says in his preface to "Bimetallism": "It appears by the last official accounts that with a reserve of gold amounting to £4,866,511, the Scottish banks are able to support £92,240,356 of banking credits. These ninety-two millions of banking credits have exactly the same effects in all respects as an equal quantity of gold."

Whatever may be the legal ratio of coinage, or the denomination of the notes issued, experience, in this country at least, shows that gold coins, silver coins and greenbacks all have precisely the same purchasing power. The value of the metals in bullion has nothing whatever to do with the question. All that this determines, is whether this or that or both metals will remain in circulation. Exactly so.

The author of "Bimetallism" has unwittingly furnished a complete and unanswerable argument against the gold basis, and a sufficient reason for abolishing it, in the following sentence:

"To use a homely illustration, the vast amount of credit, by means of which all commerce and trade is now carried on, may be compared to a schoolboy's humming top, which, however large it is, revolves on a very minute axis. At the present day gold is nothing but the minute axis upon which the whole of the colossal system of credit revolves." (Page 123. Bimetallism.)

This is precisely the condition which I have described at length in thechapter on Credit. As Mr. Macleod aptly shows (although he does not so explain it), the gold currency basis is a gigantic scheme of swindling, by which the leading bankers of the world control all its wealth and industry. Emphasis ours! This is precisely why we chose precious metals as the basis for our exchange between our money and theirs. If we tried to erect another monetary system without precious metals, the elites through their willing accomplices, the “Austrians,” the hoodwinked Libertarians, the “gold bugs” etc. would simply sway public opinion their way and there could be no fundamental change! There are out there those whose prejudice against precious metals BLINDS them to this fundamental reality. Therefore consider what Kitson says here from 120 years ago. It's still the same. This gold axis — upon which colossal credits rest — revolves in their hands. And upon these credits rests the commerce of the world. So, by the simple device of controlling and monopolizing gold, the bankers of Europe control the world. They have power to cause the top to revolve and to cease revolving at will. These men, who spin not, make the entire industrial world spin or cease spinning at their pleasure, a fact that this country has experienced only too often. Mr. Macleod holds this system up as a model of perfection. He maintains that gold is not scarce since credits form a part of the currency. He either ignorantly or intentionally overlooks, the fact, that as soon as the supply of gold is "cornered" that "this colossal system of credit" vanishes, and down falls the entire industrial structure. (For instance, suppose in the case of the Scottish Banks above cited, a clique should corner the £4 million of gold — as happened in this country on Black Friday? What becomes of the £92 millions of credits?)   

Free silver coinage would at least displace some of this credit, and so prevent the entire collapse of the structure when gold vanished. If a Japanese juggler seriously proposed to suspend Mr. Macleod upon the end of a rod resting upon his chin, and to carry him about wherever he might desire to travel for the remainder of his days, such a proposition would be not a whit less rational than the present scheme of balancing the world's industries upon a minute axis of gold, controlled by a gang of jugglers! We accept that it is, and so are dollars, euros, yen, etc. What we require is a reliable means of exchange between that universe and ours. There is no other logical solution; it must be gold (and silver) at some point in time close to their highest retail value in terms of dollars (and other currencies).

From the standpoint of the gold monopolist, such a scheme is unquestionably perfection. No system emanating from the human brain has ever succeeded in placing within the grasp of man such frightful power, such absolute control over the destinies of mankind as the gold standard! (The gold standard is a device of the bankers for measuring everybody else's corn with their bushel. Thus all the wealth of the world is measured entirely by its purchasers instead of its producers — who have no say in the matter.) That being so, why was Rothbard so keen on re-establishing it? Who did he ultimately support? Who do the Libertarians ultimately support? Who do the John and Jane Galts ultimately support? Who owns the vast majority of the gold mines on earth? Who monopolizes the gold? Getting the picture yet?

The whole of this vast controversy is reducible to a single, simple and definite issue: Do men, when exchanging goods for money, exchange them  in order to obtain a certain amount of a particular metal, or merely for a certain amount of general purchasing power? Is it the actual metal men require in exchange^ or merely the power which will enable them to acquire other commodities? If it is the metal they want, then the contention in favour of a metallic currency must be accepted as correct. But, as I have elsewhere shown, this is a barter system, pure and simple. The exchange of one commodity for another is barter, even though that one be gold. Money does not enter into such transactions. If it is general purchasing power that men seek, metallic currency is the greatest absurdity of modern times. Now every authority, ancient and modern, who has ever written upon this subject, distinctly states that coins are only taken for their purchasing power, as a means to an end; and no one has stated this more clearly than Mr. Macleod in his "Theory of Credit." He quotes writer after writer to show that money is an "order," a "token," a "ticket" or "counter," and that coins are merely orders on society, that they are not taken to consume but to exchange, to pass along. Very well then, but if ALL transactions are reducible to barter, and they are, then the intermediary; money, can have any form imaginable and need not have any “intrinsic value,” and in fact if it does, the commodity represented participates in the exchange and complicates rather than simplifies the terms of the transaction. Kitson said just now that the use of gold (or silver) amounted to barter, but even the use of any money is still splitting the terms of barter between buyer and seller. No matter what, settling of exchange transactions involves barter of one person's property for another's.

"Money," Macleod says, "is in reality nothing more than the right or title to demand something to be paid or done," and so on. (Theory of Credit, Vol I., p. 12) Money is the demand to settle a barter transaction.

Turning to his last work on "Bimetallism/* on page 25, speaking of the errors of Mr. Lowndes, Macleod says, "He totally failed to see that when persons exchange their goods for silver coin they do so to obtain a certain amount of fine silver bullion, and that it is perfectly indifferent to them what number of pieces of money it is contained in."

The bimetallists can wait until Mr. Macleod reconciles these contradictory assertions before seriously considering his breathings of slaughter. It is very amusing to read the following sentence from one who is forced to admit that, but for human laws, gold would be driven out of circulation, "Thus it was made manifest that human laws, even though sanctioned with the direst penalties, were wholly ineffectual to control the laws of nature." (P. 106.) If gold be the natural standard of currency, as he and other writers assert, why do they oppose any measure which allows silver to compete freely with gold? Nature has given us a very simple rule by which to judge of the fitness of things, the superiority of one thing over another; and that rule is free and unrestricted competition which leads inevitably to the survival of the fittest. The opposition of monometallists to this competition is a confession of failure. Moreover, the Gresham Law, as we have seen, is an assertion of the fact that gold is less fit for currency than silver. And they are both less fit than paper, or swipe cards, or mere numbers on accounts in some computers.

In reading the writings and speeches of monometallists, one fact stands out most prominently, and that is they utterly lose sight of the principal function of money. From a perusal of Mr. Macleod's work, the conclusion one naturally arrives at is, that the whole end and aim of government, of industry and of life itself, is to maintain "a perfect system of coinage." He says the chief business of a government is to establish such a system. Now I submit that a "perfect" industrial system is far more valuable to a nation than any coinage system — industry being the sole creator of wealth. Mr. Macleod inverts the natural order of things. He says that since the coinage law of 1816, England has enjoyed the most perfect system of coinage ever devised by the ingenuity of man, and has been entirely free from all coinage troubles. From our distance, we can't help but regard all of these ideas as hopeless, backward and misguided. The chief purpose for any state is the protection of its citizens in terms of their life, liberty and property. This must apply to each individual citizen first and foremost. The rights of any collective or group do NOT supersede those of the weakest individual or the state is totalitarian; a despotic tyranny. Matters applicable to due process matter to any people under any state; control over the nature or disposition of money does not. It's like suggesting that the state's responsibility extends to the establishment of standards of measurement, such that (and this has actually been enacted occasionally) a yard is the same as a metre. They are close, but they are not the same thing and any “law” saying that they are is an absurdity. It is likewise the case that “laws” attempting on one hand to suggest that GMO corn is the same as non-GMO corn and yet they are distinct when it is determined that a farmer has GMO corn growing in his field regardless of how that seed got there. Why are these said “laws” so devised? To aid some people's interests over other people's, showing a distinct disrespect for real law and a favouritism toward some as opposed to others. Whenever any state does this, they become an anti-state, a despotism, etc. Most people do not require a textbook to see these things. When a state cannot do its job; to protect the rights of its individual citizens to life, liberty and property, most who can vote with their feet and depart for places which can.

An African chief is said to have one of the most remarkable huts in existence. It is composed entirely of human skulls!! If Mr. Macleod will tell us what the coinage act has cost England's workers, how many human souls it has damned to maintain it, we may better judge of its perfection. Certain it is that monometallism has cost the universe more blood, greater loss of wealth, more suffering, than all the natural calamities that ever happened. The attempt to reach this "perfect" standard cost the United States the ruin of seventy thousand of her merchants in less than ten years (1868-1878), and converted a million of workmen into an army of tramps. It is quite possible to stamp out poverty and discontent and establish universal peace, by exterminating the human race. Order may be preserved by the same methods under which peace finally reigned at Warsaw. The general opinion of humanity seems to be, however, that "perfection" in coinage may be purchased too dearly, and some day the world will wake up and learn with terror and amazement what sacrifices she has made, and how much she has had to pay in order that England might enjoy "a perfect system of coinage." Should we seriously ask ourselves how much certain people really understand who talk up a great storm about precious metals as opposed to paper, created by GOVERNMENT fiat money would solve things? Do they not understand the fundamental realities behind the scenes? Don't they care? Perhaps they don't. Perhaps they have accepted the present rationale for economics as a real science which therefore assures them that being selfish and mean is their right to enjoy their freedom, etc. We're here to tell them that they are not only VERY SADLY MISTAKEN but unless they change course, it could very well cost them their lives! You do not want to be on the Titanic called Mystery Babylon which has no lifeboats for any but the elites, when it finally sinks.

The "great authorities," which Mr. Macleod cites at length in support of his present position in favor of the gold standard, need influence no one. Oresme was a bishop and a courtier, and his writings upon money show him to have been incapable of perceiving its true nature. He continually confounds the ideal with the material — money with its commodity. The same may be said of Copernicus and the other so-called "authorities." In fact, Mr. Macleod might as well quote Thales as an authority on the science of electricity, or Hero on the expansive force of steam, or Roger Bacon as an authority on chemistry, as Oresme and the others upon monetary science.

One question in connection with this discussion needs to be cleared up. It is always taught in text books and writings bearing upon this subject, that some staple commodity, such as gold, is essential in order to preserve a record of debt, and that if a fluctuating commodity be selected, an injustice is liable to be done to creditors. It will be observed in all the writings of economists upon this question, that the interests of creditors are considered to the utter exclusion of those of debtors. They never inquire whether this or that system may work injury to the debtor class; so long as creditors are amply protected they seem to think all is satisfactorily settled. The basis of all modern systems, which corrupts every state, are USURY and THE PROTECTION OF USERERS and nobody else! Similarly, protectionists have a single eye to the interests of manufacturers, and are blinded to those of the much more important class, viz., consumers, and yet the consumers outnumber manufacturers more than ten to one. But behind most manufacturers stands the same people as above; USERERS and their class. Since manufacturers are beholden to them, they are the convenient shield behind which USERERS exert FORCE upon states.

If dollars are commodities, as metallists say they are, why should they not fluctuate as well as other commodities? Why should the law step in and by restricting their supply and forbidding competition prevent their price from falling below a certain limit, whilst it places no limit upon their advance? Why should the bankers' commodity be protected beyond that of any other producer? It is said that if dollars became cheap nobody would want them, and industry would become paralysed. They might as well say that farmers would stop raising wheat because the markets were over-stocked with agricultural machinery! Money is the tool of commerce and becomes useless only when it ceases to circulate, and that is why gold is the very worst material for money purposes. There would be no danger of silver going out of circulation, unless paper was placed in competition with it. Its commodity price and the government stamp would always save it from going out of circulation.

Again, why should a money creditor be protected against loss more than any other kind of creditor; creditor of land, of houses, of machinery, etc.? If I lend my house for a term of years, or my horse, or any other commodity save gold alone, I am merely paid for its use, and the same commodity is returned to me irrespective of the variation in price that it may have undergone during the term of the loan. For instance, my house may have fallen fifty per cent during the term of its rental. The law does not protect me against such loss, nor can I compel my tenant to pay me for this loss. So it is with all other commodities, save the bankers'. Is there any valid reason, dictated by justice or expediency, why the money creditor should always be protected against loss more than any other man? Or why money-debtors should have to make good these differences in valuation more than any other kind of debtor? It is true that nominally the money-debtor is only expected to return the same amount of money plus the interest, and hence it is argued that the money creditor is getting back only the amount of his loan with fair interest. But whilst the money nominally has undergone no change, in reality it has, by changing its purchasing power, which is really registered in terms of other commodities.

This I have fully demonstrated in the chapter on Credit. And these variations in the purchasing power of money which affect prices so disastrously, causing enormous losses to debtors, is due to the fact that whereas free and unlimited competition is allowed in production of all other commodities, money remains free from competition — its supply remains restricted irrespective of the growing need and demand of commerce. (Actually, it has since Kitson's day been the goal of all big corporations to restrict competition (John D. Rockefeller said that competition was a sin. Theirs is of an arrogance too awesome for most people to ever even imagine.)

Take an illustration: Suppose a man owed me 100 bushels of wheat a year or two ago, which at that time was worth say ninety cents per bushel; and supposing he gave me a due bill for that amount of wheat, and I now desired its redemption. The price of wheat today is fifty cents; what is the real amount of the debt? One hundred bushels of wheat, or the price of 100 bushels of wheat? The price this year or the price at the time the debt was incurred? If the debt was merely 100 bushels of wheat, the debt is, in strict justice, settled by the return of the 100 bushels, irrespective of price. If, however, I was shrewd enough to make the debt in terms of money, I have gained eighty bushels by holding the note. I gave but 100, I get back 180. Now if I had loaned for one year the price of the wheat, viz., $90.00, the law would have forbade me to exact more than six per cent, viz., $5.40, I should then have received $95.40 in money; but in wheat my gain is in this case ten and four-fifths bushels, reckoned at fifty cents per bushel. But the eighty bushels represents $40.00, or a gain of forty-four and one-third per cent reckoned in money, or eighty per cent valued in wheat!!

Let us examine this matter closely. Suppose we go back twenty-five or thirty years and imagine the same loan, viz., $90.00, made at that time with wheat at $2,00 per bushel. The wheat value of $90.00 in 1864 was forty-five bushels. At six per cent, I should have received in thirty years in interest alone $162.00 in gold; so that in this year of grace, 1894, the principal and interest amounts to $252.00, or about 275 per cent of the original loan!! Extortionate as this may appear, it is a mere bagatelle compared with the farmer's commodity. In 1894 $252.00 will purchase 504 bushels of wheat. So that by lending the equivalent of forty-five bushels of wheat thirty years ago, allowing the interest to accumulate, and drawing both principal and interest now, I get back the equivalent of 504 bushels of wheat. In other words, I make more than 1,000 per cent profit!! Italics in original. If I had loaned forty-five bushels of wheat at six per cent interest, I should receive during the thirty years in principal and interest 126 bushels; but by the simple device of lending the price of forty-five bushels, I receive in principal and interest during exactly the same period 504 bushels!

Again, let us take the main product of the South, viz., cotton. In 1864 cotton was worth $1.30, whilst today it is worth only about eight cents per pound. Ninety dollars in 1864 was worth sixty-nine pounds of cotton. The cotton value of $252.00 is the equivalent of 3,150 pounds of cotton in 1894, or a profit of nearly 5,000 per cent!! And yet we have laws against usury!! These laws, to reiterate the popular conception of usury as too much interest, restricted the money lender's take to perhaps 5% or 6%.

Now I have taken two extreme cases in order to show how insidiously and yet how greedily this "perfect" gold standard eats up the wealth of nations by juggling with prices. Usury's evil cousin, commodity speculation. But what we have seen happen in the case of these two commodities, happens to a greater or less extent in all others. (See the chapter on Price, where this system of swindling is fully exposed.) Let it be understood that these profits and payments are not imaginary. Every farmer who incurred a debt in 1864 and is compelled to pay it this year, must pay back at least four times the amount of his produce which his debt represented at the time it was incurred, even though he pay no interest. If he pay principal and interest all together, he must pay from ten to fifty times more than the original debt valued in his own produce. And now observe: The only means the farmer has of procuring dollars, is by producing and exchanging whatever agricultural product he may be cultivating, such as wheat, corn, cotton, etc. Similarly with all other producers. Men do not raise dollars, but commodities, the prices of which are determined by the dollar monopolists, so that the more men cheapen production, the more real wealth they produce, the heavier grow their debts. Under the reign of this golden standard (that Rothbard, Rand, the “Austrians,” various said Libertarians, etc. seek to return us to), "the flowers of industry are woven into none but funeral wreaths. The labourer digs his own grave." Here is the explanation of that paradox of wealth which we considered in the chapter on that subject — that increased productiveness tends to poverty. Is it any wonder that our producers look with alarm upon any tendency to over-production, when the abundant creation of wealth means destitution and beggary for them? Underlined in the original. Let not the reader suppose the illustrations here given far-fetched or unreal. Every dollar which this nation borrowed during the war -Lincoln's War; the Civil War here-, the farmers, mechanics, merchants and wealth producers have had to pay, and are now paying interest upon to the total amount of hundreds and even thousands per cent, reckoned in their own products, viz., commodities. It is for this reason the government finds it necessary to tax both production and consumption, to maintain tariffs and play the highwayman at every shipping port upon its coasts. -so what's the difference in said VAT's; “Value Added Taxes?” Right, it's the same scam and not one thing has changed in these past 120 years, just more wars fought for the same reasons; to make bankers rich and poor men die- And when we reflect that not a single grain of this borrowed gold seized a ship, captured a fortress, or fired a shot, that it per se took no part in either feeding or clothing men, nor assisted in any degree in stamping out rebellion, we must see how, in incurring a gigantic gold debt, the authors of these measures added insanity to crime. (Of course the reader will see that I here refer to the metal gold, not its purchasing power. But this purchasing power existed before the gold was borrowed. It consisted of the nation's credit. Those who argue that the nation could not have existed without this gold, forget that it was the national credit that bought the gold. If the gold speculators find this credit good enough for them, why was it not good enough for every other merchant? The nation could have purchased all its supplies during the war on credit -as in reality it did, since its credit was all that it had to offer for gold- without the interference of the interloper — gold. It would thus have avoided the burden of a gradually increasing debt— which gold always becomes. Italics in the original and emphasis ours: and you still want to believe the said “Austrians?” The war debt is today from twice to twelve times as great, measured in our most staple forms of wealth — agricultural products — Note that to us, agricultural products, except for the seed for next year's crop, cannot be considered wealth and our distinction is quite important in its implications notwithstanding that its money value has been reduced nearly one-half. In 1865 the debt represented about 1 billion bushels of wheat, or about1.7 billion pounds of cotton. After paying back an equivalent of more than 3.5 billion bushels in principal and interest, we still owe to-day the equivalent of more than 2 billion bushels, or more than 12.5 billion pounds of cotton. In other words, after having actually paid the debt in its wheat value three times over, and its cotton value fifteen times over, we still owe twice the amount of the original debt in wheat, and twelve times its amount reckoned in cotton!! Is it any wonder the gold manipulators are in love with their standard? Is it any wonder our farmers remain poor?)

It is easy to see that this system of wholesale plunder and brigandage, which the wealth-producers are subjected to, is due to a restricted and monopolized currency. Every exchange in modern commercial affairs is a conversion of special into general purchasing power. Money, whether in the form of coin, notes or credits, represents general purchasing power. Now, every producer is engaged in the production of special purchasing power, represented by commodities. The value of every man's product is gauged by the amount of general purchasing power in active use in the country. It matters not how eagerly one man may desire the products of another, he cannot obtain them unless he possesses money. So that men producing different kinds of wealth, the exchange of which would result in the satisfaction of their wants, are prevented from doing so simply from want of this tool of exchange, — money — which, but for law, they would create themselves. Exactly so! Here again, Kitson mirrors what Riegel was later to enunciate; the real issue behind and beyond everything political is and has always been the issuance of money; who gets this power or controls it has the control over everything else. Therefore, we witness starvation in the midst of wealth. Hence it is that the farmers of the Dakotas burn their corn for fuel, whilst the coal miners of Pennsylvania and Virginia are starving for bread, and the railroad companies go into bankruptcy through insufficient traffic. This is the natural result of what Macleod calls "England's perfect system of coinage.” Note that either with or without a gold standard, control of the issuance of money by the same people results in exactly the same results. Nevertheless, Kitson is on a roll- Observe, now, the manner in which the gold standard cuts both ways. By restricting general purchasing power, consumption is restricted, making fewer purchasers. Competition is therefore confined to producers. This tends to make the competition of production keener, fiercer and more cruel than where competition exists among both buyers and sellers. And this destructive competition eventually leads to combines, trusts and organizations to restrict production, in order to raise prices. -as indeed must be the end result since USURY is the universal wolf at everyone's door that must be paid. This is the true cause of that modern movement known as the era of trusts, a movement dictated by the laws of self-protection to producers. And this restricted production causes idleness, and turns working men into beggars, tramps and thieves. The contraction of the United States currency which has occurred during the war -as if that was not one of its intended purposes-, has produced an army of two million tramps. -while today we may have ten times that number. The general prosperity of a country is dependent upon the creation of a large fund of general wealth, consisting of all desirable commodities; and the larger this fund, the happier and more prosperous must that community possessing it become, under proper conditions. Note our difference; if wealth is ONLY that capable of providing a living, an income, then mere “desirable stuff” isn't the objective, but rather a large fund of general wealth, consisting of desirable means to earn a living. Our distinction is important!

Hence, by restricting the issuance of money, by clinging to this gold standard, we are restricting the production of wealth immeasurably, impoverishing ourselves, and making it more and more impossible to pay our debts. Understood? The “gold bugs” have NO solution. Theirs has been tried and has FAILED every time it was used. Anyone still advocating it is an idiot! We'll do better restricting the use of gold (and silver) to vehicles for exchanging their money for ours, not the other way around either, until their money becomes worthless, as it inevitably will. What then of these “precious” metals? They will be reduced in value to the stones under our feet!

The natural operation of this gold standard is bad enough; but when we remember that the natural limitation to the supply of gold is still further limited by those who control it, who cause it to appear and disappear at will, how inconceivably injurious this "gold axis" is to our welfare, all must admit. What, then, are we to understand from those who insist upon the necessity for a “standard of values” as a question of honesty between debtor and creditor — a standard which, as we have seen, in thirty years has had the power of taxing away our most staple form of wealth, viz., wheat, at the rate of 1,000 per cent of the original loan?! (I have shown in the chapter on Money how an invariable ideal unit of purchasing power can be obtained — by divorcing money from the material — by abolishing the so-called standard of value. Silver will of course fluctuate, and cause money to fluctuate, as gold does, and therefore cannot form an invariable unit. All we can do is to use it as a makeshift, as a stepping-stone to the ideal. So long as people insist upon regarding money as a comnodity, they must allow competition free play in this as in all others. The variations in prices which I have illustrated are due to two causes, viz., cheapened production and contraction of the money supply. It is this contraction which is the cause of all industrial depression, that free silver will partially remedy. Silver dollars will go up and down as all other commodities do; but they will not drop out of sight on the one hand, because the supply can never exceed the demand when cash replaces credit (as it will do to a large extent), and its supply will prevent future panics caused by its disappearance in the other direction, through monopoly. Gold varies also continually, but its supply being always scarce, its general tendency is ever upward. Silver would always remain in sight, varying between the two limits of vision. Gold disappears — but always in one direction — and that when commerce is moat in need of it. Hence those constant disturbances in business under which the world groans ! ) As we have witnessed over the intervening 120 years, silver is at least 20 times more plentiful than gold and less easy to monopolize, yet it is still a commodity and behaves just as gold does; a silver standard is no better than a gold standard and we propose to use silver as an exchange vehicle exactly as we propose for gold.

To further elucidate this subject, let me point out one feature that the advocates of a standard entirely overlook. Money represents at any given time certain quantities of wealth. Read mere “stuff” here. When a man borrows gold, he borrows in reality whatever comtnodities he happens to purchase with it. He does not hoard it or make of it a work of art; he exchanges it. And when he needs it again, in order to discharge the debt, he must go through the reverse operation and exchange his products for gold. Pay attention, because this is exactly the system Murray Rothbard and the “Austrians” want us to return to. Now supposing, between the time of his borrowing and discharging the debt, gold has appreciated. The commodities that he bought, and which were virtually what he borrowed, may not purchase one-tenth part of the gold. What must he do? He must procure the gold even at the sacrifice of his home and his life's savings. And if we trace the operation still further, and suppose that with the sacrifice of the man's home he discharges the debt in gold, and thus sustains his reputation for honesty; in the hands of the loaner, what becomes of the gold? He, like the borrower, does not want the gold itself; he merely wants its purchasing power. So that this "honest standard," which, so far as the material itself is concerned, undergoes no change, has caused the ruin of the borrower, and grown from a comparatively trifling burden to one of enormous magnitude. This cloud which is at first no bigger than a man's hand, finally covers the heavens and ends in a deluge of bankruptcy.

The fact is, that gold currency is built upon the most gigantic system of usury ever conceived. So gigantic, so appalling is it, that its advocates dare not have it exposed; and hence they are compelled to set up this fiction of a "standard of value" and an "honest" currency, as a matter of self-preservation to avoid discovery! For it is morally certain that if the truth were generally known, the gold standard would be swept out of existence, and its authors and advocates consigned to eternal execration. Whether this system was a creation of the human mind for accomplishing what it has done and is still doing, or whether it is an accidental product of civilization, the fact remains that the system necessitates eternal indebtedness. (Monometallists tell us we must not trifle with the gold standard, or else it will cause a loss of confidence and we shall not be able to borrow any more gold! Thus every attempt to escape from the necessity of borrowing they strive to check. They make borrowing and indebtedness virtues, instead of showing what they really are — national curses.) It makes redemption impossible. Maybe some of the people who attended the secret meetings at Jeckyl Island, Georgia prior to the FORCING through of the Federal Reserve Act, knew this. From then on, the gold standard was buried even though it continued until 1971. But it had been superseded by Bretton Woods and other international bankers' agreements by then anyway. What all idealist adherents to the euphemistic “gold standard” claim they want is an end to price inflation. But that didn't happen even while we were on a “gold standard” so who is kidding who? Meanwhile, behind the scenes are the bankers and financiers, who as a class prefer that nobody recognizes them, for they know that were more to know, their situation might be a good deal more precarious. So many outright lies have been deliberately concocted to steer some elements of a gullible public one way, whilst another element is steered in an opposite direction, creating the dialectic they can use to manipulate public opinion to suit themselves. It's been going on now for quite a long time and shall continue to do so as long as the game goes on and the music continues. Our position is “come out of her, my people, lest you be implicated in her crimes.” It's time to start something else in parallel with their system; monetary lifeboats for a time when their system goes down and they plead with the world, or more likely threaten FORCE, for just more of the same.

Dante's inscription may well be written over this gold system, “All hope abandon ye who enter here."

One fact should be borne in mind by every reader of Mr. Macleod's book. Whenever he speaks of national or universal bankruptcy, which he predicts free silver coinage would result in, he speaks merely for the money brokers and speculators, whose wealth is the result of controlling the standard. That goes for ALL academic economists including the said “Austrians.” A recent suicide was heard to exclaim, "I am about to blot out the universe," so the bankruptcy of these gold speculators seems to them universal. It is said by economists that the gold standard has existed in all ages, and that the general opinion of mankind favours its adoption, and should, therefore, be accepted. My answer is that every nation has had this standard forced upon it by legislators acting in the interests of the moneyed class. Now THAT'S the truth! Anyone claiming otherwise is either an intentional liar, or some stooge clown who parrots the smart sounding remarks of other clowns and idiots. Got that? Believe me, I know. I used to do it myself! It didn't mater one whit whether the money tokens were made of gold, brass or paper just as long as THEY controlled them. That also was FORCED on all nations. It has not been adopted in any nation by the popular vote, nor as a rational system, from choice. It has been established either by the force of the governing class, as in Great Britain, or by trickery and fraud, as in the United States; and with the repeal of those laws the standard would die a natural death. So far as England is concerned, getting other nations to adopt her system has resulted in draining their treasures into her lap, and has won her far more extensive conquests than all the achievements of her armies and navies combined. The gold standard achieves for England more than a successful war could do, without its dangers and expense. One could have asked the average Englishman of those times whether knowing this made him feel even the tiniest amount better about himself or his lot in life. Surely the same could be asked of the average Englishman of today as nothing much has changed in 120 years.

Today, every nation but China (China is now offered a gold loan as the price she must pay to stop the present war with Japan. Just as soon as she becomes enslaved to the money-power, the Christian nations of the world will insist upon a cessation of bloodshed — but not until then.) is sending a stream of wealth to the shores of England, as interest upon borrowed gold. England's sway is far more despotic, absolute and extensive, under this gold standard, than was the power of ancient Rome with her armies. Those who imagine the prevalent use of gold a satisfactory argument in favour of its continued existence, should reflect that at the time slavery was under discussion, forty years ago, the same argument was far more applicable to that institution than to gold at this time. Every argument founded upon historical precedent favoured slavery's continuance. No system had been so universally practised in all ages of the world, as slavery. The ancient civilizations of Egypt, of Greece and Rome were built upon it. It was the very foundation of their social structure. It was proven to be permissible, if not commanded by divine authority, as taught by Moses and the Prophets. It was practised by the most enlightened and most advanced nations of the earth, right up to the present time. Philosophers and statesmen of the inductive school, who looked with contempt upon a priori reasoning, predicted that the world could not exist without this ancient institution. Justice, however, finally triumphed, and the result was that in solving the ethical problem, nations discovered they had solved an economic question with it. The gain to morality was found to be an economic advancement. Yes, it was adduced by certain observant men among the moneyed class that it was just as easy to cause people to become willing slaves through perpetual indebtedness as it was to make of them actual slaves, and cheaper too in that debt slaves are no one's direct responsibility.

I have now, I think, shown the errors and misconceptions of both monometallists and bimetallists, the unscientific nature of both systems, and the impossibility of solving this question, save by destroying the commodity-value of money, and thus reducing money to its proper sphere, its natural function, as a medium of exchange. But as between these two schools there cannot be a moment's hesitation in deciding which is the better system, which will tend more to national wealth and prosperity, and stop this continued borrowing of gold and the creation of irredeemable obligations, which denudes us of all our surplus wealth. Free silver coinage will enable this nation to again achieve national independence, which a body of men, either ignorantly or treacherously, sacrificed to the gold power during, and shortly after, the war. That's Lincoln's War – the Civil War. Then, when that standard had run its course, they embarked upon the credit standard with the Federal Reserve note and started another war -the First World War- to profit from their new system. It will increase the volume of money and enable debtors to honestly meet their obligations. Gold, as I have shown, creates debts, and then prevents men from settling them. It places mankind in perpetual bondage. It is a prison gate that only opens inward. Its victims are permitted to enter, but never to escape. -like the Hotel California.

Not only are the factors of well-being and of progress rendered impotent by the gold standard, but the factors of evil minister to its exploiters. Wars, State extravagance and political corruption all serve to build up this pyramid of irredeemable debts which almost every nation is now adding to, and upon which the gold octopus feeds. Is there ANY difference whether it's gold, silver or paper? No, NONE! The real villains are USURY and COMMODITY SPECULATION, not the basis or intrinsic value of the money. One can be stopped by simply abandoning it, and letting it fall. The other can probably at best be sidelined until governments adamantly do what all worthy states must do; protect the lives, liberties and properties of their citizens by making all such racketeering criminal and prosecuting those who engage in it. Will any such thing happen tomorrow? I wouldn't hold your breath.

In vain men toil, in vain they produce, so long as this tape-worm of society exists. All our surplus wealth which should go to form a national store, all our surplus creations we must sacrifice as a peace offering to this insatiable cormorant. In vain science prosecutes her voyage of discovery, and art labours to convert the discordant and hostile elements of nature into a system of usefulness and harmony. In vain temples of learning are reared and libraries founded. All these institutions, all these achievements that have for their object the advancement of learning and the raising of labour to a higher state of efficiency, serve but to strengthen and nourish this octopus, and give it a firmer grasp and a stronger hold on society. It is beyond interesting that Kitson should have chosen the octopus to describe this perpetual conspiracy. It is a symbol used from his time right up to the present to describe the oligarchic elite and its minions. In vain ministers preach the gospel of peace and righteousness. In vain peace societies are established. The gold standard means inevitable war. So does ANY standard these same people put forth. It is USURY that is crucial, not of what money is composed, as long as they control it. Nations cannot possibly exist long under it. They don't really care about national communities either. In fact they'd prefer a great mish-mash of peoples and cultures to any coherent national identity that can challenge them.

The children born of it are fire and sword,
Red ruin and the breaking up of laws."
Quote form Idylls of the King by Alfred Lord Tennyson

Repudiation is inevitable. Let us clearly see this. It is not a threat. It is an inevitable result. It cannot be avoided. Nations must strangle this monster or it will strangle them. The gold debts of the world can never be redeemed. Freedom, therefore, can only be secured by repudiation. We agree with this and the process is already beginning. Although gold does not enter in the slightest degree into those things that sustain life, or into the maintenance of life itself, by building industry upon this fickle basis our civilization is in danger of being swept away. This question, this money question, is the supreme problem of the hour. It always was and it continues to be right up to the present moment. It is not a mere abstract question of economics. It does not merely concern statesmen and students of finance. It is the greatest moral, the greatest social question which mankind has ever had to consider. It concerns the lives, fortunes and happiness of every human being in society, and of generations yet unborn. All other questions sink into insignificance compared to this one. We quite agree. It is the fin di secle (close of the 19th century) problem, and our answer to it will determine the character of the drama we shall shortly have to witness, and upon which the curtain of the twentieth century is about to rise.

We have just been through the most turbulent century in human history where all the warfare casualties were easily attributable to failure to address this problem seriously. We still haven't done so and the forces that caused by calculation or deliberate intentions, cost the lives of hundreds of millions of human beings, lies fairly well exposed to candid view. We doubt whether ANY real progress was made since Kitson's time. Certainly technology has advanced in the direction of allowing us to kill more people far more quickly and even to make life on this planet unsustainable, all without having to deal with some extraterrestrial threat such as an incoming asteroid or comet. Our political leadership is frankly moribund. Those who really control the levers of power are those who control the issuance of money. We can't even contemplate taking this power away from them without inciting more senseless violence. The only conceivable solution involves starting something new in parallel with the existing system as a lifeboat system for not if but when their system fails. Since it has in the past, it will in the future. Governments around the world cannot run unimaginably huge debts to central bankers forever. Sooner or later their thing shall crash. What then? Will billions of people starve or die due to lack of money? That's absurd! We had better figure out what OUR money will be and RIGHT NOW! 

Monday, January 26, 2015



The time has come for the wise to choose their course, and prepare for reconstruction." — Proudhon.

This chapter shows somewhat better than any other, how similar were the solutions offered by Kitson and Riegel. In particular, we draw attention to their reliance on the notion of a dollar as a suitable means for continuance of a new money system. With all due respect, even in 1895, dollars were not universal money and even after the Bretton Woods attempt to make of them such, due to the underpinnings of the entire system in usury and spurious debt to certain special people called bankers, rather than arising naturally out of anyone's and everyone's actual need to split barter and trade, there is no reason why a dollar, any dollar, need be used further as any kind of standard unit for new money. Besides which, the monopolists have had laws and regulations passed against doing so; they claim to own the very use of the word “dollar” as some others now claim to own the name Riegel for a proposed unit of money. In fact Riegel guessed as much when he described his as a Value Unit or Valun, even though his idea was to base its exchange rate at inception on some known dollar. Again, Kitson and Riegel had nearly identical views of money units being units of purchasing power rather than units of any “intrinsic” value, which both agreed no money can ever possess and scientifically be called money. We will use this chapter to once again outline our proposal as we compare it with the ideas Kitson presented 120 years ago.

We are now in a position to solve for all time this question, so stupendous in its results, so far reaching in its consequences. During the course of this investigation, we have seen that the one great obstacle against which the science of economics has always to contend, is law. No matter what may be the branch of its investigation, no matter how strongly it may dictate the righteousness and wisdom of a certain line of action, in its progress it is invariably brought to a final standstill by the lawmakers' edict, "Thou shalt not." Our view is that “law makers,” so called, who act to cause laws, edicts, policies, statutes, judgements, regulations, etc. to gain FORCE in society, who act against nature are NOT making law, they are in fact making lawlessness and sooner or later their acts by FORCE shall fail. We have indicated our doubts concerning any law attempting to monopolize money for example. Oh, they can try and succeed for a long time, bringing poverty and misery in their wake, and not care about the consequences of their senseless and brutal actions, but eventually it will fail. We have therefore in this series, issued a call, indicated a need for all true students of law, lawyers, to become actively involved in alternative solutions to the present monetary system, because we want any new system to be lawful in the sense of being in accord with the laws of nature, rather than the diktats of certain special interests.

We have seen that the precariousness of supporting life, that which causes most of our anxiety, that raises the question in the minds of millions as to whether life is really worth the living, in fact, that which necessitates economy, is the scarcity of the means of living. It is this very issue that stands athwart and opposed to the phony science of ecology, as well as the phony social science known as economics. We want it broadly known by the vast majority of humanity, that those who stand for such “science” are merely apologists for the notion that certain special people, elitists, have determined that the best thing for the vast majority of humanity would be to go off somewhere and die quietly, without molesting their privileged existences. Indeed in their “public” schools, they teach “the masses” guilt for their mere existence. Is it much wonder then that suicides are at epidemic proportions, especially in the developed world? You see, most people do act realistically to the presence of arrayed FORCE and tragically actually do as they are told.

And we have also seen that the tendency — nay, the economic goal of civilization — is to increase these means, bringing them nearer to nature's gifts; in the language of Adam Smith, “to enable the people to provide a plentiful revenue for themselves.” Even Smith did not say, to government, to bankers, to some elitists who live from the poisoned fruits of usury, no, for themselves. In short, the object of economics may be said to be to abolish scarcity, so far as the means of living are concerned. Indeed, and in order to do that, Riegel set forth his ideas as “private enterprise money,” not “public” money, not government money, not banker money, not usurer's money, no, PRIVATE money belonging to each private individual human being. He also was able to determine, as was Kitson before him, that such money could and would ultimately be universal in scope, as it could be easily spread. It might become public in the sense of everyone using it, but it would always emanate from private sources.

We have also seen that the evils of our monetary system may be summed up in that one word, scarcity, a condition arising solely from the operation of restrictive laws, — laws which give to the few absolute power over the lives and fortunes of the masses. We have every reason to ask and wonder whether such “laws” are in accord with natural law or are they really only arbitrary edicts of FORCE to make certain people's lives more worthy than others for no apparent reason than that they have control over the levers of monopoly money in society. That's a question perhaps for astute lawyers to pursue. The operation of these laws is utterly opposed to the aim of civilization. They tend to restriction instead of to freedom, to the limitation of supply instead of to a condition of plenty.

The solution of the money question, like the solution of the tariff question, is to be found in the removal of all restraints which governments have placed upon exchange and its mechanism. It is, in short, but enlarging the field of human liberty. It would be, except that those who acquire their wealth and privilege through unjust means then have leverage and liberty many times that of any average man or woman and therefore exercise their liberty to cheat, swindle and otherwise pauperise whole societies under cover of their supposed freedom to action, denied to others.

Having acknowledged the right of all men to life, we have to acknowledge their right to support life; in fact, the one implies the other. But laws that restrict trade, that interfere with the issuance of money, deny this right. "Commerce," says Proudhon, "exists only among free men.” We can transpose this aphorism and assert that men are only free where commerce is free; and as we have seen, commerce is only free where the mechanism of exchange is free. Practically considered, two distinct operations are necessary; one of demolition, the other of reconstruction.

The work of demolition consists merely in abolishing that fiction known as the standard of value, and repealing all laws relating to the issuing and tendering of money. In other words, the solution of the money question will be found in free exchange; exchange freed front tariffs and taxes of every description, unobstructed by custom houses and licensed banking houses, by law makers and usurers. Get it? If you don't, go back and consider everything that went before this point. Then you'll see whether you are part of the problem or could be part of the solution. Our message remains, “come out of her, my people, lest you be associated with her crimes.”

The ground must be entirely cleared of all the dirt and rubbish which now obstruct it, in order that a strong and stable edifice may be reared in place of the present rotten and unstable one. We have been slowly learning of late years a truth which wise men recognized long ago: that the more restricted the powers and functions of governments, the better for society. Of all the powers that have been conferred upon sovereigns or states, that of regulating and controlling the currency is by far the most dangerous and most menacing to the liberties of the people. There is probably nothing of greater importance to our present civilization, than freedom in exchange. Riegel writing nearly 60 years later certainly thought so, and so do we.

Life is dependent upon industry, and industry is dependent upon ability to exchange the products of industry, and this, under our present industrial system, is dependent upon the mechanism of exchange, i. e., money.

Those who see in the present system of tariffs the evils, oppression and unjust privileges which its operation gives rise to, and who fail to perceive the inequity in a governmental control of the currency, are strangely blind to principle. Of what benefit is it to a nation to abolish its customs houses, so long as the medium of exchange is left to the control of a few government licensed banking houses? Tariffs are taxes levied upon certain special commodities, and affect special exchanges; but a restricted currency, whether it be limited by the supply of a special commodity such as gold, or by the arbitrary rulings of a government, is a tax upon all exchanges, a burden placed over the entire field of industry. Unrestricted commerce is impossible with a restricted currency. In other words, free trade is only possible with free money. All so called trade agreements are anything but free. Their intention from the outset is to restrict trade, not make it free. So it is likewise with many kinds of enactments that claim to support or promote something they in fact seek to restrict or even extirpate. It's simply part of the double-speak of modern public opinion making, that all had nefarious roots in the greedy hearts and minds of certain “special” men.

The prevailing idea that a nation's currency must necessarily be restricted in volume, is entirely due to the fallacy that money is necessarily something valuable; or, as it is commonly stated, money must be "intrinsically valuable,” — a fallacy which, as we have already seen, is attributable to a false conception of the term value. Money is not, scientifically speaking, a thing of value; it is not wealth. It is the symbol of wealth, the evidence of debt, a convenient means of reckoning and expressing the values of commodities. Money is not a standard of value, nor a measure of value, neither is it a commodity. It is a common denominator of values and a measure of purchasing power. We accept these statements as both Kitson and Riegel understood them. However why quibble? In most people's minds, purchasing power and value in a trade are equivalent concepts. When Riegel described a Value Unit, he was describing a means to measure values in a trade; purchasing power in a trade. He never implied that the money itself contained in itself any value, and this is the same sense in which Kitson understood it.

I have shown how impossible it is, scientifically speaking, to make of money a commodity. I have shown how physically impossible it is to make of any material a common denominator of values. Gold can no more "measure" values than a bushel basket can square the circle.

And now let us see what would be the effect of demolishing the standard of value. The one great result it would accomplish, would be to divorce money from its unnatural alliance with the precious metals. The only plea urged by economists and legislators for basing money upon specie, is that it is necessary to do so in order that money may perform the function of a standard of value. Abolition of this so-called function, removes at once all necessity and every excuse for the specie basis. The question arises, what then will take its place? What will the monetary system be? To begin with, the nomenclature would be the same. A dollar will still remain the monetary unit; but instead of being determined by a certain fixed weight of gold, it will simply be a unit of purchasing power. It would represent no fixed amount or quantity of any particular commodity. Its power would be represented in all commodities. Goods would still be prized by the dollar system. The market reports would be printed in similar terms as now, the only difference being that prices of commodities would not be subjected to the fluctuations of gold or silver. These metals might be hoarded, exported, imported, cornered or thrown upon the market with the utmost impunity, without affecting the prices of any other commodities in the slightest degree. Every commodity would then stand upon its own base. A general fall or rise in prices would be utterly impossible. At the present time, under our present inequitable and unscientific system, the price of every commodity is dependent, first, upon supply and demand of commodities themselves; and second, upon supply and demand of money. Very well then, just replace the word “dollar” in everything above, with Valun (or whatever else it ends up becoming known as) and everything else would stand the same. All the commodities prices would be in Value Units and a valuable private enterprise service might actually produce reports on commodities as markets for them emerge. One would never have to assess these prices in terms of how many Value Units were in demand or in existence because every last one of these units would be issued with the same purchasing power as any of the others, thus defeating commodity basis for money once and for all. That was Riegel's intention and it was Kitson's too. We would predict that commodities would be subject to far less variation in price due to speculation than at present. To those who claim otherwise, let me just point out that the business of commodity speculation is precisely to move prices rather than to keep them stable, as speculators make no money when prices never change. Arguments to the effect that speculators perform a valuable economic service in keeping prices stable are entirely bogus, misleading and mere excuses for people getting paid to do nothing but gamble with money, theirs and that of others living off the proceeds of usury and chicanery, rather than real production.

Variations in these two classes (money and commodities they price) may occur separately or simultaneously, and the fortunes and lives of men are affected far more by the second than the first. The former are controlled by the latter, and bankers control to a large extent the destinies of producers and merchants. Today, a merchant may find the value of his stock suddenly diminished one-half, without any change having taken place in the cost of production or supply of the goods themselves, merely through the conjoint action of a number of bankers in cornering the supply of money. Observe, for instance, how the cornering of gold precipitated the general panic known as Black Friday! No cornering of commodities could possibly create a general panic, so long as money is not confined to any particular commodity. Correct! Notice that in our proposal, gold and silver are used only for purposes of exchange with other money. Within the Value Unit sphere of prices, operative in a Valun Exchange Network (VEN), their prices float about as required by supply and demand relative to the fixed purchasing power of each Valun as established at inception.

Under the system I propose, variations in supply and demand of money could have no effect upon prices, because the supply would always be ample to meet the demand. By making all commodities equal, that is, putting them on the same footing, all would be alike able to be monetized. Industry, trade and commerce would then assume their natural position and would become independent of finance. This would be most likely within the VEN, especially concerning labour which would all be self-financing. A Value Unit earned into existence would in fact be YOUR money, not that of some bank or some state or some fake commodity like bitcoin.

The fortunes of manufacturers and merchants would cease to be the shuttlecocks of money brokers and speculators. Again, getting Wall Street the City of London, Frankfurt and other such places off the necks of everyone everywhere would be a great relief to the human race.

A dry-goods merchant would find it as easy to monetize his stock, and the builder his house, as the gold miner his gold. With freedom to monetize all commodities alike, the monopolization of money would be as impossible as the monopolization of all commodities. Further, the supply of money would be so abundant that interest for the use of money would rapidly disappear. Interest is only possible with a restricted currency. Since usury as we have defined it would not be legal within the VEN, any caught would be thrown out perhaps forever, such would definitely be a thing of the past. There would likewise be no way to profit from usury or live off its proceeds, so people would actually have to work for a living.

In the chapter on Purchasing Power, I showed how an invariable unit of purchasing power may be provided. The operation of estimating the relation of all commodities in terms of these units, involved, as we saw, the use of an endless number of figures. By using the dollar method, this difficulty vanishes. The exchange relations of all goods are now expressed in terms of dollars and cents. It is only necessary, therefore, to abolish the standard of value in order to make the dollar an invariable unit of purchasing power. As we said, just substitute Valun for dollar and it all holds; the Valun method, etc.

But, I am asked, what is a dollar apart from its gold basis? Simply an arbitrarily selected unit of purchasing power, in simple multiples or fractions of which the exchange relations or values of all commodities may be expressed. Such a dollar is merely ideal. By selecting any commodity, its power is at once made known by the quantity of the commodity which it will purchase. The ideal dollar is invariable, inasmuch as it does not fluctuate, per se, from supply and demand. The gold dollar, the commodity dollar, is continually varying. The way to stop the variation of course is by selecting the TIME that such a currency unit starts; its inception. Our experiment began on 2 November, 2011, an easy day to remember at $1,738.09 for an ounce of gold or a bid price of $2,160 or $2.16 the Valun. Edwin Vieira, an intelligent lawyer, in Pieces of Eight, understood the Constitutional dollar to be a silver coin (not gold) of 371.25 grains of silver and that would have sufficed for an adequate definition if Congress had stated that all future references to its purchasing power were to reflect changes back to the last day of business in 1792. Without the TIME basis, this so called Constitutional dollar is nothing but a token made out of some commodity the value and purchasing power of which is determined by some speculators in far away foreign cities, not where dollars are actually required, spent and saved. It has come to our attention that a proposal to make the Valun's day of inception correspond with gold's highest price in dollars would be the most logically consistent choice for its inception. That date was 5 September, 2011 when gold topped $1,900 an ounce. That would have made for a Value Unit at $2.375 at inception and a comparable exchange value over $3 today. We aren't far off as it is. What makes up for the difference is the fall in the prices of gold and silver since their highs in late summer of 2011; simply put, gold and silver do not buy as much as they did back then, so anyone wanting to trade for a Valun today would have to pay the difference in more gold or silver, since no exchange within the VEN would or could keep dollars or any other public money. Again, gold and silver per se have no interest for us except as a means of exchange with all other money, period! Proposed Value Units are not “backed” by any precious metals the exchanges would acquire, nor are any tokens representing Valuns to be exchanged for any gold or silver coins. If you want to buy and hold gold and silver as a speculative investment, then do that, but don't expect Valuns to be the same thing.

Although to many this idea of what the dollar should be may seem novel, a few moments' reflection will show them that almost all people, outside of bankers and money dealers, do, in practice, use dollars in this ideal sense, although unconsciously. Not one person in ten thousand ever stops to think of what a dollar is, expressed in gold. All they think of is its purchasing power, expressed in the particular commodity they need, and as they do not need gold, they never think of ascertaining the gold value of a dollar. "How much of this can I buy with my dollar, or how much of that?" is the question that immediately concerns them. That's the same question we're asked, and when we tell them that on our experimental basis, one Value Unit equals nearly 3 of their dollars, they can form some idea of what one is worth in terms of purchasing power.

Neither do the merchant and store-keeper bother their heads about the so-called "intrinsic value" of money. In fact, it is doubtful if one man in ten thousand could tell from memory how many grains of gold the dollar represents. It is only the money speculators and usurers who are really concerned on this point, and who use it from time to time to intimidate the public and create a panic. Exactly! Don't want inflation, panics, etc. Switch to Value Units, help form the VEN and make it work with all your purchases, and so doing, help drive certain forms of absentee ownership businesses with no  responsibility for their actions, from the face of the earth. Or, just look at your wallets and swipe cards and admit that none of it was or ever can be really yours and admit that you are a dutiful slave of their system. Bow down and take it, etc. and when they're through with you, please just go off somewhere and die quietly, as it is your ecological duty to mother earth to do, etc. (what rubbish!)

Evidence of the use of ideal money is furnished from experience, in this and other countries, by the inconvertible note currency. "Governments," says Francis Walker, "have frequently issued paper money without adequate provision for its redemption in gold and in silver, without such redemption, in fact, taking place, and sometimes without redemption being promised, and yet that paper money has circulated as rapidly as gold or silver would have done, has been taken as freely in exchange for commodities and services, and even in some instances has maintained an actual value equal to that of the amount of the precious metals to which it was nominally equivalent: The paper money of Massachusetts, for the greater part of the period 1690 to 1710 20 years only; the paper money of Russia for the twenty years following 1768; the so-called continental currency of the American revolution which was deliberately sabotaged by British (Bank of England) counterfeiting and for NO OTHER REASON, for a year and more after the first emission; the paper money of Prussia for no inconsiderable period of time, all circulated freely, even without discount in specie." And again he says, "The so-called greenbacks of the American Civil War, never, from 1862 to the close of 1878 16 years, lost their currency in the smallest degree. At their price they were always taken readily, eagerly. Men never sought to avoid their use by taking gold at a premium, or by resorting to barter or credit." This last statement is remarkable, owing to the fact that the United States government dishonoured this currency by the famous — or rather infamous — exception clause, refusing to accept it in payment for duties and interest on bonds. The reason being of course that the BANKERS holding those bonds did not own that money, it was not theirs, so they would not take it. Are you getting the point yet? ... And now, having dissolved the immoral partnership of bankers with the government, on what basis will they in future operate? How and by whom will money be issued? How shall it be redeemed? The first thing to be said is this: that with the field entirely free and untrammelled by legislative obstructions, there is room for the best possible financial system to grow up which will be the natural outgrowth of industry. The best, most useful, most stable institutions have grown up under the least restricted conditions. Such institutions, coming into existence under perfectly natural conditions, must necessarily be better adapted to the wants of men than artificial hot-house methods of governmental institutions. Certainly, but there's only one problem; certain people who think themselves superior to “the masses” will not have it so. They must control where they cannot possibly command. And they have and they will until people everywhere wake up to the reality of their situation and JUST SAY NO.

It is difficult — in fact unnecessary — to predict what banking system would take the place of the present National banks were they swept away. At this point we do not advocate ANY political action whatsoever to sweep anything away. We advocate “come out of her, my people” as the only just solution. Good systems of finance, like all good social institutions, are things of growth, and they conform naturally — if let alone by law-makers — to the needs of the people. What those needs will be ten, twenty, fifty years hence no man can foretell. To arbitrarily fix a system of banking which is incapable of variation or adaptation to social growth, is like the Chinese method of keeping their women's feet encased in children's shoes. 
No offence intended to any modern Chinese. 
Banking methods should adapt themselves to the requirements of trade, and not trade to the fixed systems of bankers. Banking should exist to facilitate commerce. Under our present system, commerce exists for the benefit of bankers and is compelled to adapt itself to their whims and opinions. Numerous plans have been proposed to supplant the present system, and there is no question but that experience would soon determine what system was best fitted for the conditions. The scheme which appears to me the most scientific, most capable of variation and expansion, and in accord with the principles I have described, is that known as the Mutual Banking System. This system is a co-operative plan by which the members of a community organize themselves into a Mutual Banking Company, the business of which consists in issuing notes, or paper money upon goods which are pledged for its redemption. Every member of the community may become a member of the company, providing he has acceptable goods and desires to monetize them. (It is evident that certain goods are by their nature more difficult of monetization than others. Thus goods readily perishable, such as fruit, vegetables, dairy products, etc., are less available than houses, steamships, machinery, etc. With the destruction of commodities, money issued upon them would have to disappear. Money would not long remain in circulation after the wealth of which it was the symbol had ceased to exist.) Every member of the company agrees to accept its notes in payment for services and commodities. No regular rate of interest for borrowed money is exacted, but a charge just sufficient to defray the running expenses of the bank. In other words, there is no bank stock and therefore there are no dividends. 
Everything here is what we expect each of our independent exchanges within the VEN to do. Riegel never got into it much, but Kitson summarized quite a lot here. The only difference is this: accepting commodities in exchange for Valuns would be apart from the business of accounting and transaction clearing, therefore it would be distributed among various separate private entities that would each have accounts within a local exchange and each such exchange of Valuns for commodities would be summarized in the form of standard debt instruments; a bill out to a year, a note out to seven years and a bond out to forty-nine years, the fiftieth being a jubilee year. In all instances, commodities would have to pre-exist; we are not going into the hazardous business of issuing Valuns for commodities that may exist in the future or for crops that have not yet even been planted. Self-financing methods for agricultural production as for labour may be entertained as required; the individual farmer might even be considered analogous to an individual artisan craftsman who is paid up front a certain percentage and the rest at harvest.

Return of the bank notes borrowed releases the goods pledged. These bank notes would be issued as now, in units, multiples and fractions of the dollar. Present monopolistic law in this regard would disallow the creation of any coins or of anything that is to be circulated having less purchasing power than a dollar. The smallest fraction likely would be the ½ Valun, then the 1 Valun, 2 Valun, 5 Valun and 10 Valun. These would take the visible form of V-Checks which would be advertising on one side and the standard design for each exchange on the other, all approved by the proposed International Valun Exchange Society or IVES. There would be so many designs that counterfeiting any of them would be a frustrating undertaking. We will not have ourselves set up like the American Continental or the French Assignat, both deliberately destroyed by Bank of England counterfeiters! They would constitute money in the strictest sense; that is, they would be merely the medium of exchange divided into units of purchasing power. This system would place all commodities on an equality with gold. In other words, it would do for commodities what it was once supposed republicanism would do for a nation, provide equality of conditions and of opportunities for all its members. Yes, recall that Riegel was a Democrat, not that it ever mattered, as he regarded all political activism as a waste of time. Too bad he didn't see past the appeals to public approval of attempting to gain the support of bankers and politicians. They have made their own deals and shall sink or swim by them. The way anyone becomes socially irrelevant is for more people to stop listening to them. Such has already become their fate to a great extent, so much so that it is a recognized trend.

Mutual banking (See " Mutual Banking " by Wm. B. Greene. Published by New England Labour Reform League) is not a very modern idea. It was proposed years ago by Beck, Proudhon and others. The former suggested the application of what is known as ''Credit in Account," the latter "Bills of Exchange.” In attempting to solve this gigantic question, I disclaim any intention of inventing a banking system. I claim that the money problem will be solved as soon as governments cease monopolizing and interfering with the currency. Repeal of all laws prohibiting and restricting the issuing of money, would call into existence numerous systems, competition among which would lead to the survival of the fittest, which is the natural solution of the banking and currency question. Well, 120 years has passed. We have endured many fallacies, lunacies and follies brought on by bankers wielding tremendous clout over governments to see it their way and do as they are told, or else. In this way, millions of people have died, perhaps more in the last century needlessly dying than in all the other centuries of recorded history combined. And their projected philosophers, apologists and opinion makers continually dare to proclaim that wars were the reslt of religious conflict (the usual target for blame) when in fact it was the bankers who masterminded these schemes in order that they reap profits while other men died. The real tragedy is that men so willingly went along with it rather than seeing that war is a scam, revolution is also a scam, and that behind it all are the merchants of death who know they'll manage a way to escape to reap the profits and live lavishly while other people's lives and property are sacrificed. So we are about devising another banking system, except we'll call it an exchange system as banking is not even a word that belongs to us to use. Even the word exchange may be subjected to the usual phony intellectual property garbage that plagues the world today, as we move forward. After all, there are people with their interests out there who seemingly are in positions to demand that they own the words we use and are therefore entitled to some consideration for their use, astonishingly STUPID as that is!

That strenuous objections will be urged against the repeal of laws relating to currency, and the taking from governments the power to issue and control money which I have herein advocated, is both natural and inevitable, since it means nothing less than the dethronement of gold, of money monopoly and privilege. It will be the old Temple of Diana question over again: "Sirs, ye know that by this craft we have our wealth and our craft is in danger to be set at naught." To those also who believe in the paternalistic functions of government, protectionists, socialists, nationalists and greenbackers, this proposal will be met with ridicule. Like the Parisian in the 17th century, who, hearing it said that Venice was governed without a king, died from laughter at the absurdity of the thing; so the idea that money can be issued and circulated without the force of law, will seem to many preposterous. Freedom seems preposterous to those conditioned to be slaves. The story of Plato's Cave comes immediately to mind and yes, there are more people who would rather exist in Plato's Cave than try freedom outside it. Will it take another 120 years, or do we even have that long before the existing follies of the present world destroy us all?

To those, however, who can regard the subject calmly and dispassionately in the light of reason which contrary to sceptics we have not yet even tried, they will see nothing visionary or impracticable in the suggestion. They will see how the great industries of the country, the manufactures, means of transportation, facilities for insurance, etc., are operated successfully by individuals, corporations, and voluntary associations, to a degree of perfection so far unattainable by any form of government. Recognizing that the perfection of these various operations is due to free competition among individuals and groups of individuals, and to the absence of restriction regarding voluntary associations, they will naturally infer that a similar standard of perfection should be reached in regard to money and currency, providing free competition among bankers and banking systems, be permitted. Nay, more, they will recognize that since present governmental control of the currency is the true cause of the insecure and unstable system of credit upon which at least 95 per cent of the business of this country is now transacted, and that the uncertainty and insecurity surrounding modern commerce is entirely due to this unreliable basis, that abolition of governmental restrictions will lead to the adoption of a sound and stable foundation for exchange, and of a system that will be naturally fitted for, and adapted to the growth of trade and industry. I certainly wouldn't count on it. For one thing, since at least 1913, the year the Federal Reserve system came into existence, government has become the property of the banking monopoly. This was a fact that Riegel, Kitson and all idealists on the subject of money neglect to be reminded of and therefore much of what they say concerning implementation or who should be involved or what should be done about it is frankly rubbish! Talk is cheap, action is dear and the right action, potentially priceless or lethal depending on whose toes are pinched or ox is gored. Whole categories of business go by the board and are expected to survive simply because they have succeeded so far. Far too much is simply taken for granted, per usual. But what of those who live from usury? Those are people who assume they have rights and privileges that will ultimately be challenged as the bigs devour each other in order to survive, for Kitson was right concerning usury, as both a practice and a system; it devours itself.

Today money, in the form of credit notes, are issued by individuals and firms to an enormous extent, most of which consist of promises to do the impossible; viz., to redeem them in a certain commodity, or a certain special kind of money, the supply of which is far less than that necessary to meet the demand. The result is, as I have already shown, that the world is constantly in danger of financial panics. All that is necessary in order to precipitate a panic is for a certain proportion of the creditor class to demand of the debtor class fulfilment of its obligations. It is precisely analogous to those panics that the cry of "fire" gives rise to. And just as the chances for and horrors of panics increase, as the number and size of building exits are reduced, so the danger and devastations of financial panics are relatively great, the more the currency of nations is limited and restricted. The truth of this is hardly ever touched upon in the lengthy and pompous productions of professional academic economists, who I suppose would prefer students to assume that these great debacles never happen or happened to someone else long ago or far away and that nothing of the like may ever happen again. I can remember my own days as a young student of economics, when I certainly thought as much. Well, these events did happen and they destroyed countless lives of real people, some of whom had real stories to recount of what happened to them, even if they were bewildered concerning what actually caused them. All it takes to cause the music to stop is either someone saying, “I have no more money to pay you,” or “I will no longer take your money,” and then terrible things begin to happen as a rude Rube Goldberg chain reaction of real events unfolds until where once stood an apparently impervious economic edifice now stands nothing, where only smoke and ash remains. And yet, things might have been different and better and still could be, if it weren't also true that people stubbornly and stupidly tend to rebuild the same institutions on the same shoddy models as those that went before and proved fatal to society, basing them on structural impossibilities like fractional reserve lending, absentee ownership corporations, limited liability, intellectual property, government monopoly of money issue, and especially at the base of it all, usury.

It will be objected that by giving to the people full control of the currency with the right to issue money, the chances for dishonesty will be enormously increased. What will prevent banking institutions from issuing money far in excess of their ability to redeem? That's exactly what fractional reserve lending is. What difference if the notes are those of the local bank or of a national bank or the central bank? It is always just the same. In reply, it may be asked, what is it that today prevents individuals and corporations from over issuing promissory notes, and incurring liabilities beyond what they can properly discharge? This too is done all the time; obligations are assumed when there is no guarantee that a single soul will live to see tomorrow, let alone have a job, let alone be able to pay back what's owed. The error was not to separate these lending activities from the transaction clearing process to begin with. The other was to lend what one didn't have to lend, that's cheating and swindling on the part of the lender. Kitson says - First, their honesty. Second, the fear of the shame and disgrace that dishonesty incurs upon individuals in all civilized communities. Under the guise of law, officials are now able to practice dishonesty without reaping the penalty and stigma which would otherwise attach itself to them, were they acting as individuals or as private bodies. Third, difficulty in incurring liabilities beyond a certain limit, which is gauged by their credit. Under free conditions, whilst there would be no physical force to restrain one from attempting to make excessive issues, at the same time there would be no power compelling people to accept them. At the present time the legal tender act virtually compels acceptance of government currency, but in the absence of governmental interference, persons would be free to refuse payment in a form that was not entirely satisfactory. This would lead to as much discrimination the correct use of the word, not its more modern interpretation and care in financial transactions as is now shown in the purchase of commodities. It would lead to a better public sentiment, and stimulate a greater demand for honesty than now prevails. Kitson said earlier that one cannot expect an honest monetary system where people are dishonest, and since that is absolutely true and there's no way around that folks, even a specie based one could be rendered dishonest simply by dishonest tendering of faked specie that might not even be detected until it was melted down years later, as with the tungsten core gold bars and similar capers; those involving “whizzing” of gold coins (less often with silver) and then collecting the minute fractions for further smelting into more gold coins. If purchasing power to buy “stuff” is worth it to someone to steal, where there is the will, there will be a way. However that may be, all of it is and will always be criminal activity, which is to say that despite the same be countenanced by “laws” that exclude “privilege” or “the too big to fails.” Hence and by no coincidence, Kitson continues:

To make right conduct the sine qua non of commercial success, is the surest means of establishing the practice of right conduct. A people, who seek to become virtuous by force of law, will end by becoming a nation of hypocrites. On the other hand, it is but too well known that legislation creates and perpetuates the necessity for dishonest practices. There is scarcely a law passed that does not create some crime. Tariff laws produce lying and deceit; liquor laws corruption and adulteration; game laws murder; Sunday laws promote drunkenness, disease and death, and so on. Acts which in themselves are not immoral are made offences by law.

"The garden of the laws," says Séverine, "is full of ironical plants of unexpected flowers; and by no means its slightest charm is this subversion of the natural order, whereby appear at the end of stems and branches fruit just the opposite of that which is promised by the essence of the tree or bush. The apple-tree bears figs, and the cherry-tree medlars; violet-plants yield sweet potatoes, and hollyhocks salsify. It is delicious."

We want it understood that just because dishonest lawyers have given the practise a bad reputation down through the centuries doesn't mean that lawyers as a group are not particularly suited to seek the truth. We seek those who are honest to help bring about the lifeboat solution this blog and its ideas represent. Under free conditions, the war between honesty and dishonesty — between the powers of light and of darkness — may be waged with full assurance that the powers of good will prevail. Under our present legalized systems, the conditions strongly favour trickery and the activities of rascals. The chances are in favour of the evil succeeding. Look at the extremely wealthy classes of today. Are they conspicuous for honesty and integrity? Are they very noble in character? And do they owe their possessions to adherence to sound ethical principles? On the contrary, are not the most wealthy usually conspicuous for the questionable methods by which they have achieved their riches? Would anyone in their right mind out there be able to say with any seriousness that hedge fund managers who are worth billions, acquired their wealth by honest means, or that said required actual productivity of anything worthwhile?

Would it not provoke a smile to be told by a modem plutocrat that "honesty was the surest means for acquiring wealth?" Of the great fortunes that have been amassed during the last fifty years, there is not one that may not be traced, directly or indirectly, to some special privilege created by law by which individuals have been furnished with the power to exploit their fellow citizens. Instance the tariff laws, which by checking imports and cutting off foreign competition, have permitted manufacturers to reap enormous profits; instance land grants made to railroad contractors; franchises and monopolies granted to street car companies, to gas, water, and electric light corporations; and lastly to national banks, by which the few are permitted to use the nation's credit by paying a low rate of interest, whilst charging the public whatever their exigencies — which bankers strive to raise to the highest degree possible — compel them to pay. Look, too, at the history of the railroads in this country! What else is it than a history of plunder, brigandage and blackmail, committed by men under the immediate protection of law! That more and more people know these realities brings both lawyers and law itself into low repute. Ultimately, even though it has gone on now for a couple hundred years at least, it cannot end well.

Speaking of the dishonesty that characterizes public affairs -and this from 120 years ago, proving it was just the same as today, and the protection the law affords to those guilty of immoral acts, Mr. Isaac L. Rice says, in the Forum, October, 1893: "All our public affairs having become permeated with the poison of dishonesty, it necessarily has affected our quasi-public relations as well. Indeed, our great public corporations, such as railroads, are in themselves species of communities, of which the security holders are the citizens; and in these communities the right to steal under certain legal forms and sanctions has, in certain directions, become fully recognized.

Whatever frauds are perpetrated under advice of counsel or by resolutions duly passed by a majority vote at a regularly constituted meeting, security holders have long since come to regard as unobjectionable, or at least as beyond the reach of successful attack. Limited liability. Here, too, the line between private honesty and public honesty is sharply drawn. Many a director who would exercise the most scrupulous care, if any of his constituents had appointed him trustee in a private matter, has not the slightest hesitation to vote in his own private interests for acts that, from a moral point of view, are nothing less than sheer robbery of those who have confided to him the management of their corporate affairs.

"Indeed, quite frequently, as soon as a board of directors is elected, it considers itself the absolute owners of the property, to manage or mismanage as its private interests may dictate. These private interests sometimes are in such direct conflict with the interests of the corporation as to involve it in bankruptcy. Whenever this happens, the courts are appealed to in order to continue in irresponsible power the very men who have now administered their trust. And the courts generally entertain favourably such an appeal, as they have gradually succumbed to a growing custom not to enter into any inquiry in such cases as to the causes bringing about the bankruptcy. In fact, the courts are in such cases considered as little more than instruments for registering the wishes of those whose dishonesty is responsible for the ruin of the corporation.'' Both underlined and italiized in the original.

Here we find recognition of the fact that under protection of and by virtue of law, men will commit acts which in their relations with each other upon matters not affected by law, they would be ashamed of committing. May we not say with Thoreau that "law never made men a whit more just, but by means of their respect for it, even the well-disposed are daily made the agents of injustice!"

It is notorious that of all debts contracted by men, none are paid more promptly nor with less effort to evade, than those debts that the law refuses to recognize, viz., gambling debts. Oh, but this has changed as debts representing bets on speculations; derivatives are given higher priority than more classically “senior” that is honest debt. The necessity for taking all affairs pertaining directly to industry and finance out of the hands of the government, out of the power of legislators — in short, reducing government to its sole rightful function of administering justice, of protecting life and property, is well given by the same writer, Mr. Rice, in the following words: "It seems paradoxical to say that the individuals composing a nation may in the main be honest, while the nation in its public capacity may be dishonest. But the paradox vanishes when we remember that in its public capacity a nation is represented by its rulers, and these may be dishonest while its constituents are honest. In the struggle for political preferment many factors enter into play, and not the least of them is the political apathy of the electors occupied with their private affairs, who drift more or less carelessly with the current, forced into devious channels by the energy of dishonest demagogues.

"We are the fortunate possessors of a land of inexhaustible resources, able to maintain in prosperity a rapidly increasing population, and should therefore enjoy continuous progress and prosperity, with only occasional reactions when the development may have become over-rapid. Why, therefore, are we subjected to panics so frequently recurring with growing intensity, so that we seem to be beset by adversity, rather than in the enjoyment of that prosperity which, in view of natural conditions, ought to be our portion?

"To me the reason seems clear. Notwithstanding the well established fact that in our private capacity we are an essentially honest people, and indeed our private honesty stands unexcelled among all peoples, the same cannot be said of us in our public capacity; and this deficiency in public honesty begets want of confidence, and want of confidence is the cause of all commercial panics."

The solution we must naturally infer from this is, to take away from public bodies the privileges and monopolies they now enjoy by law, privileges which permit them to reap the rewards without having to bear the social responsibilities which should accompany all such privileges. By repealing those laws under which such privileges are maintained, individuals and corporations undertaking business will be compelled to shoulder all the responsibilities pertaining thereto, and will therefore be held accountable by the public for their conduct. We too call for an end to limited liability, but don't hold your breath.

In conclusion I claim to have demonstrated:

1st. That the present orthodox system of political economy is a false and fraudulent system, and is based upon principles utterly fallacious and immoral. Yeah we know, and after 120 years, much is just the same.

2d. That the true science of economics, dealing as it does with economic conduct, is essentially a moral science, and its principles must agree with those of ethics. We agree and hopefully this blog will be consistent with that.

3d That an ideal standard of distribution is as important in economics as is a moral standard in the science of ethics. Maybe, but we disparage the use of the word “ideal” on philosophical grounds as inappropriate to describing the real world. This is not necessary. A better distribution would result from an honest monetary system but would gradually appear over time, probably not too much time either.

4th. That a scientific definition of wealth must be in positive terms. The usual definition in terms of the ability for exchange leads to a contradiction. We agree, but Kitson never saw it completely our way; true wealth can only be that which provides an income; there is a distinction between that which is capable of providing a living and mere “stuff.”

5th. That values are ideal creations, abstract relations, and cannot possibly be "measured” nor can they be expressed save by numbers; hence, gold can neither measure nor express values. Agreed, but the word “abstract” is certainly preferable to the word “ideal” any day. Furthermore numbers can and do help people measure their choices in pursuit of what to purchase all the time. It's “as close as we please” without actually saying we are measuring any value with our money. We routinely understand this as “getting our money's worth,” even though our money has no “intrinsic” value; what we are constantly seeking is how to close a transaction with our money for either goods or labour that we sold (opened a transaction with) to obtain that money.

6th. That a standard of value is an absurdity — a nonentity. Agreed. The best we can ever hope to achieve is a reference transaction, a “Figure 1,” a “compared to what” that involves some other money at a specific point in time; the inception point of our Value Units, every last one of them!

7th. That whilst there is no such thing as an invariable unit of value, there may be an absolutely invariable unit of purchasing power. I have shown how such a unit may be obtained. Riegel and Kitson both sought to use a specific dollar at a specific time as a standard. Through experience we understand that a monetary language must be far more universal than that and at the same time slay the dragon of precious metals at the same time. There's only one way to do it, by choosing as our reference transaction, a specific date at which a specific quantity of gold (and silver) sold for a specific number of dollars (or any other currency) and make that equal to 1,000 Value Units. As time changes and the speculators have their way with dollars (and all other currencies) and specie (silver, gold, platinum, whatever), since everything else is a commodity, the number or quantity of these to exchange for a Value Unit may change, while the Value Unit remains invariant to its own price structure; how anything is monetized in Value Units.

8th. That in omitting the element of TIME from their definition of a unit of purchasing power, and instituting a material unit — a commodity unit, economists have left the industrial world at the absolute mercy of a clique of speculators, whose incomes are derived from alternately depressing and stimulating production. Agreed! This is a fundamental truth reinforced by this blog and the reason for suggesting something else.

9th. That money is not, scientifically speaking, a part of the national wealth, but becomes wealth to individuals only by the power which its monopolization gives to its holders to exploit industry. Agreed! This also is a fundamental truth reinforced by this blog.

lOth. That the monopolization of money is due solely to special laws, restricting and prohibiting the issuance of money except by privileged institutions. Agreed! This too is a fundamental truth reinforced by this blog.

11th. That the Gresham Law is a ridiculous fallacy. Disagree, and Kitson should have known better too. Gresham intended it to be assumed that “good” money was the more expensive which would of course be driven out of circulation by “bad” money, but in fact when restated, “cheap money drives out of circulation more expensive money,” it becomes a natural law right away and quite incontestable!

12th. That money can properly discharge the functions of a medium of exchange, and a just standard of deferred payments, only by being freed from its unnatural alliance with specie, and being legally unrestricted. Agreed! This too is a fundamental truth reinforced by this blog.

13th. That financial panics, under our present usurious, monopolistic, monetary system are inevitable. Agreed! They may not only be inevitable, they may be necessary in order to keep the same terrible old system going.

14th. That the parent of interest and the cause of poverty, involuntary idleness, over-production, general rises and falls in prices, is a monopolized currency. Agreed! We offer a solution that accomplishes a few things right from the start that assures that all the money actually belongs to those who issue it, that makes savings a matter of greater personal importance since no money is ever involuntarily used as a “reserve” to base usury lending practices, thst provides a money free from the commodity speculator, that ultimately would end war.

15th. That since these evils which afflict society are directly due to laws, under the fostering care and protection of which they have grown to their present gigantic proportions, their removal is possible only by abolishing all laws restricting, hampering or interfering in any way with the issuance of money. We are willing to work alongside the present system until that system fails once more. Then we will be in a position to have our say, our day and our way! Not until. Those who have figured it out, and they are few, are admonished to help us right now, especially lawyers.

16th. Finally, since the power to issue and to control the currency of nations has been arrogated by governments and always employed by them as a means of enriching a privileged few, and as an instrument of oppression against the people, this power should be taken from them and revert to the people to whom it rightfully belongs. Agreed! But this too requires political action and there can be NO COMPROMISE with the present system, therefore the only reasonable course is “come out of her, my people.” Mystery Babylon shall certainly fall. We look forward to that day, but we shall do nothing whatsoever to hasten it as we have no power nor seek any in that regard.