IX
HOW
THE EXCHANGE IS TO BE ORGANIZED
ORGANIZATION
STATE-WISE OF A PRIVATE ENTERPRISE
MONEY
SYSTEM EITHER BY THE LEADERSHIP OF THE
GOVERNOR
OR THE INITIATIVE OF BUSINESS MEN
There
are several reasons why organizations of Valun Exchanges should be
state-wise.
It
is natural for us to think, both economically and politically, in
terms of state areas. The state is our primary political unit. Our
state constitutions are written on a pattern of supremacy; with
towns, cities, counties and other local units receiving their grants
of power from them, rather than direct from the citizen. The
sovereign power of the citizen rises to the state government; and
from there it is delegated upward to the federal government, and
downward to subdivisions. We are, first of all, citizens of our
respective states; and this implies citizenship also in local and
national governments.
The
thirteen original states were nations that agreed to enter a league
of nations, called the United States, in which the citizens of each
would participate in the election of the lower house of Congress; and
the state legislatures would elect the members of the Senate. To
remove the greatest element of disturbance between nations, the
states agreed to set up no trade or immigration barriers at their
borders. To effect solidarity, they agreed to delegate to the federal
government the right to declare war and make treaties with other
nations. To promote internal trade and unity, they agreed to abstain
from making anything but the money unit of the federal government,
legal tender in their realms. The intent, however was to remain
sovereign powers; the Federation was not a merger.
When,
by the revolution, the thirteen colonies became independent states,
each had its own money unit; and thus exchange between the states was
foreign exchange, requiring translation of one unit into another. The
advantage in abolishing this multiplicity of monies was obvious, but
the implications involved in surrendering the money issuing power to
the federal government was not comprehended. The gain to all in
uniformity of money unit was visualized; the loss in sovereignty
thereby suffered, was not;
We
now realize that the money power of the private citizen is in fact
his
sovereignty; and that in yielding it he yields his sovereignty. Thus
the
transferring of the money power from the states to the federal
government
was the transferring of the citizens' sovereignty to the
national
government, and the reducing of the state to the status of a
subordinate.
The
political money system implies that the citizen will abate his
natural money issuing power, and make the criterion of his exchanges
and the regulation of the money system entirely dependent upon the
government that he recognizes as the money power. By making the
federal government the sole money issuing power, the individual
states transferred the fealty of their citizens to the national
government, because they became thereby dependent upon its money
power. The citizen having thus had his fealty transferred to the
national government, it was taken from the state governments – and
the latter are now dismayed by the increase of federal power and the
commensurate subordination of state power.
What
has actually transpired is a reversal of the intent of the federal
plan whereby the national government was to be dependent upon the
states for grants of power. The national government, through its
money power, is now supreme and in reality holds the state
governments, in subjection to it. Federal
fiscal policy now determines the bounds of state sovereignty.
It
took many years to reveal this structural weakness, because, in the
earlier days of the federation, the economy depended more upon the
private issuance of money through the banking system, and thus
federal fiscal power was dormant. The policy of the federal
government up to 1932 was to leave to the banks the function of
supplying money. During the Jackson administration, with the
abolishment of the United States Bank, government participation in
money supply reached its lowest point - with the government confining
itself to the mere minting of gold and silver coins at a seigniorage
charge to any one who brought the metal to the mint.
BAD
BETTER THAN NONE
These
were the days of wild-cat banking by state authorized banks - when
the paper circulation was almost wholly private bank notes issued by
irresponsible banks that relied on the old goldsmiths' law of
averages, and issued far more promises to deliver gold or silver than
their resources would permit. As we have previously pointed out,
money will and must manifest itself in bad form if it cannot emerge
in good form; and this alternate method has by no means been adverse
to the development of industry. The wild-cat banking era was a very
prosperous era as has been every era of money expansion. To be sure,
they have all been followed by reaction when the falsity of the basis
of issue was discovered, but the net result has been beneficial. Man
must have easy exchange if he is to progress; and even if he must be
deceived into it it is nevertheless better for him. Nothing is so
adverse to man's progress as lack of exchange; and the most faithful
money system, if inadequate, is worse than a faithless one that
induces exchange.
President
Jackson's idea of confining the government's participation in the
money system to the mere certifying of fineness and weight of gold
and silver coins was the original concept of government function when
political money began, and from that modest participation to the
almost exclusive money issuing function of the present day
government, is a very wide swing of the pendulum. Experience has
shown that both the conservative and the extravagant policies are
evil; and that median policies merely partake more of one evil than
the other.
Had
the Jackson policy, of letting the economy depend upon private money,
been accompanied by strict regulation and examination of banks, the
result might have been worse because there is an inherent dishonesty
in private money under the political money system. For a bank to
issue credit payable in government dollars that are not available is
just as dishonest as is the issuing of currency notes payable in gold
coins that are not available. But the dishonesty cannot be
eradicated; because to authorize banks to make loans payable in "bank
dollars" is to give them the power to expand the money supply
indefinitely, with no corrective action such as follows in the
periodic deflation or depression phase of the business cycle as the
result of loans in "dollars."
The
Jackson policy of private money was later implemented by strict
regulation of the banks. This long effort to make a virtue out of a
vice culminated in the Federal Reserve System, and reached its climax
and denouement in 1929 showing that the wild-cat banking was no
worse, with its irresponsible issue of currency notes, than is the
modern banking method of issuing check writing power based on false
promises to deliver government dollars.
In
1932 the exploded Jackson policy was abandoned; and then began the
new government policy which is rapidly approaching its collapse.
Under this policy, of unlimited money-issuing power, the government
asserts over the community a financial dictatorship which
subordinates not only the citizen but all the other divisions of
government. All become suppliants to it and there is no thwarting of
its power short of exhaustion through total inflation. It is a policy
of buying acquiescence. As outlined in previous studies, local
governments as well as citizens become suppliants to it and therefore
subjects of it.
MONEY
POWER IS SOVEREIGNTY
The
states, to recapture their independence and sovereignty, must look to
their citizens who, in turn, must assert their sovereignty by
exercising their inherent money power. It was right that the states
should have surrendered their money power; but they should have
surrendered it to their citizens, and not to another government. At
the time the federation was formed the nature of the money power was
not understood; and it was not realized that it is the essence of
sovereignty. But we know now that it is and if we wish to preserve
the federation and also home rule, we must now deal intelligently
with the money power.
While
the states have surrendered their money power, their citizens have
not. The citizens have merely failed to exercise their natural powers
against which there is no prohibition in either state or federal
constitutions. This is not a political issue - requiring legislation
or repeal of legislation, or constitutional amendments, or any
official action - but it is, nevertheless, a profound political
movement; because, as the people assert their money power, their
natural intimacy with their state and local governments asserts
itself – since there is no other power that can step between.
Today, the federal government stands between the citizen and local
government, and thus alienates him.
If
our states are to develop their individuality and counter the
stereotyping influence of a monetary dictatorship, if local
government and private enterprise are to work out their natural
virtues, if democracy is to prevail in business and government, and
if our federal republican system is to survive, we must meet our
problems by dealing with their fundamental causes - the political
money system.
To
accomplish these broad and vital aims, the Governor or some other
public official should take the leadership of this cause within his
state. In the absence of this, leadership must be taken by private
citizens. It offers an incomparable opportunity for public service.
While
the money issuing power is inherent in every man, it can be realized
only by a pact among many. Therefore, the individual is helpless, and
organized action is necessary. The method of organizing a Valun
Exchange should be no different from organizing any other cooperative
movement. It requires only the concurrent action of a sizeable number
of persons and corporations who share its aims – and this, of
course, requires propaganda.
The
first essential is the organizing of a "Money Plan Committee"
to sponsor the propaganda. This committee should be composed of not
less than 12 persons of as conspicuous standing as possible. The
larger the number, the better. If possible each county or at least
each congressional district should be represented.
It
should locate in the largest metropolitan center in the state which
should also be the location of he Valun Exchange when organized.
Funds should be raised by contribution. The press, radio, mails and
forums should be utilized to apprise the public of the plan to
organize a state Exchange to carry on money exchange by the valun
nonpolitical, private enterprise money system.
After
a reasonable amount of publicity has been had, "The Valun
Exchange of the State of _________" should be incorporated as a
non-profit membership corporation. It should provide the following
officers: President, several vice Presidents, Secretary, and
Treasurer and a Board of Directors of five or more, with the officers
as ex-officio members of the Board. The officers and directors should
be named by the Money Plan Committee, to hold office for the first
six months after beginning of operations - after which the first
members' meeting and election should be held. Nominal salaries should
be paid to all officers and directors, pending a resolution to be
presented at the first members' meeting setting salaries for the
ensuing 12 months. The organization of the exchange should be in
strict democratic form, with one vote for each member whether
individual or corporation.
INCOME
OF THE EXCHANGE
The
Exchange should depend for its income and expenses upon a charge for
check clearance. The fee for membership should be nominal and the
same for individuals and corporations. The membership subscription
should pledge the member to abide by the rules of the Exchange as
adopted by the Board and the obligation to pay a charge for each
check cleared as may be determined by the Board. All persons residing
or transacting their business within the state would be eligible to
full membership. Each county in the state should elect to the annual
meeting of members a delegate who would be empowered to cast the
entire vote of his county.
The
membership drive should begin only after adequate advance publicity
has been had and should not require more than 60 days to complete.
Every chamber of commerce, as well as other organizations, should be
enlisted in the drive; and quotas should be set for each county. It
is essential to enroll the farmers as well as urbanites. The larger
employers should be enlisted to enroll their employees.
The
membership enrolment should state whether the applicant is employer
or employee; and, if the latter, the name, business and location of
the employer. If employer, the nature of the business and the number
of employees should be stated.
Each
employer should agree to pay his employees in all valuns or all
dollars, or part in each as each employee requests; but each employer
should, for his own convenience, undertake to have his employees
agree upon a uniform method of handling the payroll. Study No. 6
outlined how "Valun Currency Counters" will supply exchange
of valuns for dollars, or vice versa, for persons finding themselves
short on one and long on the other.
MINIMUM
REQUIREMENT
The
Exchange should not begin to function until the three trades
essential to life are well represented, namely; food, clothing and
housing. A complete cycle should exist in each. By this is meant that
the food and clothing industries must have ample retailers to accept
valuns from employees and the retailers must in turn have wholesalers
who accept from them, and manufacturers who accept from wholesalers,
and farmers who accept from manufacturers and packers. Farmers must
in turn have local stores or mail-order houses to trade with.
Landlords must have suppliers who are members. If these three lines
are well represented, the ordinary processes of exchange will cause
the system to ramify and expand naturally.
A
condition precedent to opening and operating the Exchange would be
the determination and adoption of the valun unit. This was dealt with
in the previous study.
While
the valun will circulate mostly among members, it will not be
confined to them - as there will develop naturally an outer rim of
dealers who will accept them because they know that they can either
pass them to some member of the Exchange, or sell them for dollars to
"The Valun Currency Counters." These outer rim acceptors
will sooner or later join the Exchange so that they may enjoy its
facilities.
When
the Exchange opens, each member will receive a check book and will be
entitled to draw checks within his debit limit – in accordance with
the rules of the Exchange as outlined in Study No. 7. For currency
in bills and coins they will present checks to the Valun Currency
Counter in their neighborhood.
Any
person or corporation or institution outside the state would be
entitled to part or credit (Class B) membership. The distinction
between debit or full (Class A) membership and credit or part
membership is in the power of the debit or full member to overdraw
his account; while the credit, or part member, can draw checks only
if he has a credit balance on his account. These two classes of
members will hereafter be called Class A and Class B. The reason for
the class B is to permit membership anywhere outside of the state
without the necessity of the Board passing upon the debit power to be
extended to such members. As Exchanges are opened in the states of
such members, they could transfer their account to the local Exchange
and thus
classify as a class A member.
As
Exchanges open in other states they would be joined with existing
Exchanges for clearing purposes under central control - as will be
explained in Study 10.
Members
could not, of course, switch their business completely from the
dollar to the valun at the outset. Therefore they would be obliged to
quote prices and buy and sell in terms of dollars with nonmembers,
while utilizing the valun in all dealings with members.
Business
with the Exchanges would be transacted entirely by mail - making it
unnecessary for members to visit the Exchange or to have more than
one Exchange in a state. Valun Currency Counters would be in trade
neighborhoods - thus obviating branch Exchanges, and minimizing the
overhead cost of the system. The Exchange could be located in a loft.
The cost of operating the Exchange would be minimized, and thus the
pro rata charge for check clearance would be small. There would also
be a small charge for converting checks into currency, or vice versa,
but these fees would go to the private dealers authorized to operate
Valun Currency Counters.
NO
ATTACK UPON POLITICAL MONEY
The
departure from the political money system does not contemplate any
attack upon it, nor any interference with those who wish to continue
to use it exclusively. The purpose is merely to demonstrate that a
more stable and equitable unit can be established by private
enterprise; through which its users will gain command over their
economic and political affairs. If this can be demonstrated,
accretion to the valun system, and attrition of the dollar, will
automatically determine the issue. It is believed that ultimately
political money will be abandoned everywhere because of lack of use.
State, city, town, county and district governments, as well as the
national government, would be entitled to membership in the state
Exchanges; but, as explained in Study No. 10, they should be allowed
only class B membership.
As
the valun system develops within a state, the state government will
retrieve the power and prestige it has now lost to the federal
government; and the two would fulfill their respective functions with
neither having control over the citizen. Both would have to win his
support by service because the sole method of taxation of both would
be on a cash basis. No financial finagling would be possible. This
would give the state government a fair break, and destroy the
bureaucracy that has harassed both it and private enterprise.
The
Governors of our forty eight states are unanimous in their
denunciation of federal bureaucracy and centralized government. There
is in fact a Governors' rebellion against these conditions but the
rebellion will be futile unless the attack is directed against the
fundamental cause - the political money system. The states cannot
maintain their sovereignty so long as the federal government controls
the supreme governing power - the money power. There should be a
common cause between state officials devoted to the preservation of
home rule and business men devoted to the preserving of private
enterprise. There must be political and economic statesmanship to
bring the general protest against prevailing conditions to a
successful consummation. The states rights movement, to accomplish
its purpose, must aid the citizen in invoking the money power.
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