Charles Lindbergh
Banking and Currency


As already indicated, I believe that the remedy is necessarily two-fold :

First, and concurrent with the establishment of a new system, the old system should be so amended that some of its most serious administrative defects will be diminished.  It should then serve as a vehicle for carrying out the equitable relations and obligations already existing as a result of the legitimate business based upon it.

Second, an entirely new system should be instituted which shall be founded upon the natural demands of commerce and trade and divorced from personal favor or property preference.  This new system should be the basis for the establishment of a permanently solid and equitable means of exchange.

In order to completely accomplish the latter, we will have to cease monetizing gold, silver, or other metal or commodity.  But that prohibition would not prevent, nor should we desire to prevent, the use of these metals as a means of exchange.  The Government, on being paid the cost of stamping, may properly stamp the weight and quality on any commodity of commerce and let it pass in exchange on a basis of its own intrinsic value.  Anyone who demands more than that privilege for the use of a metal or other commodity is intentionally unfair to the rest of us, or ignorant.  In most cases it is because the persons accept seeming facts without actually understanding the conditions which surround them.  If the owner of gold, silver, or other commodity, whether it be wheat, corn, or other produce capable of being stored and preserved, desires to pay the Government the expense of the operation, there need be no objection to our Government giving a certificate of ownership transferable on delivery.  If it is done in one metal or commodity, it should be applied to all commodities practicable to be handled, and the person holding the certificate should be able to secure that commodity upon presenting the certificates of ownership and paying the costs of storing.  The transaction would then cancel the certificate.  But we have a complete, and I claim an indisputable, right, as sovereign citizens, to deny to holders of gold the present privilege of having their gold monetized by government stamp.  To so stamp gold and make it legal tender is simply to decrease the value of our labor, and of our property—if we have any, unless we also possess gold enough to offset, which most of us do not.

The owners of gold claim that it has an intrinsic value which makes it the most practicable commodity to use as money.  Because of its small bulk it is a convenient commodity to ship and store.  But, it can be used as a means of exchange without making it legal tender.  The Government could still st the owners of gold ask anything more, they, in effect, admit that it becomes more valuable with the legal tender privilege than without.  They would not demand it if that were not true.  It cannot be made legal tender except by governmental act.  A governmental act is the act of the people and there is no reason why the people should stamp gold or any other commodity that belongs to individuals with a special privilege.  This results in a tax against themselves.  Let gold be weighed and tested and given credit only for what it is.  Existing coins will retain their legal tender while in circulation, but when the Government acquires any such their legal tender character will be removed and after that bullion should be stamped with its weight and quality and should become an article of commerce standing on its own merits.

If the owners of gold are correct in their statement that gold circulates on its intrinsic value, instead of partly on that and partly on the additional value it acquires by reason of the demand created by the legal tender stamp, it is useless for them to ask that it be made legal tender, and if gold is not commercially worth what it circulates for as legal tender, then the owners are unjust in asking the public to support the value added to gold by the government stamp.  Let them take whichever side of that proposition they wish.  In the one case the legal tender quality would be useless.  In the other it would be a burden placed upon the public and supported for the benefit of the owners of gold.

To cease monetizing gold or metal is to drop a practice long indulged in for the benefit of the money loaners.  The people have become accustomed to paying them for the credit supported by themselves.  I cannot say that it can be entirely stopped.  There are many practices that injure the people generally, but are nevertheless followed.  I simply call attention to certain facts that cannot be successfully disputed.  I know, and so does any careful student know, whether he admits it or not, that the fact that the Government stamps legal tender privileges on gold creates an increased and artificial demand for it, and consequently a merchantable value that is very much in excess of what it would be if the gold did not have impressed upon it this legal tender privilege.  In my judgment, the value that gold would possess if it were demonetized would not exceed ten per cent of its present cost.  It now partakes of the character of monopoly.  Every additional cent of credit given to it above its intrinsic worth as an article of commerce, by reason of the Government’s stamping it legal tender, is first extorted from the people’s own credit, next accumulated in the form of so-called “capital,” and after that becomes the basis for charging them compound interest for generations—perpetually—if they shall not emancipate themselves by an abandonment of this false practice.  As far as the principle is concerned, there is no difference between the Government stamping gold as legal tender and giving the owner the advantage of its increased value, and the same stamping process being applied to plain paper.

Under the present practice all value in excess of what gold is actually worth as an ordinary article of commerce is fiat—credit added to it by the people.  If the same stamp were affixed to paper it would all be fiat.  It is simply a question of degree, and neither can be extended to the individual as a free privilege without robbing the people of all that is added by their credit.

The whole problem simply reduces itself to a question of how long the people desire to remain industrial slaves to a false system.  The gold owners ridicule fiat green backers, yet they themselves are fiatists.  If they are not, why do they object to gold circulating on its own commercial merits ?  Why do they wish to coin it with any other designation than its weight and fineness, and why force the people to take it as legal tender ?  They are inconsistent in claiming a special privilege for gold.  If gold is worth all they claim for it, it needs no extra function.  If, on the other hand, it is not able to retain its present relative value without being legal tender, then that is positive proof that it should not be made legal tender.  In the one case it is unnecessary, in the other case it is unjust.  The Government will have to cease monetizing gold or any metal as soon as the people generally realize its present imposition on them.

You may say that some losses would be suffered in a readjustment.  That will of course be admitted, but the losses would not begin to equal those that are continually taking place now.  The excessive interest and expense of maintenance resulting from the use of the false system under which we operate is so great that, notwithstanding all of the modern inventions that have immensely increased the people’s productive energy, most of us fail to secure the ordinary advantages that are due from this civilization to every honest, industrious person.  The interest, dividend and rent charges alone, compounded as they are now, are absolutely sure to keep the greatest number of us in want, and many of us in misery.

I do not say demonetize gold.  I simply say cease to monetize it.  Coin no more metal with the legal tender character attached, except that required for small change.  Our gold will circulate in foreign markets on its weight and quality equally well without the legal tender attachment as long as foreigners will use it for their legal tender.  Gold will do that as an article of commerce, and foreign nations may convert it into their own legal tender if they like, but any nation that uses gold as legal tender alter a great nation like our own ceases to do so will be adding additional burdens to the present burdens of its people.  Whatever gold we have in excess of what we need for the sciences and arts, we can dispose of for such articles of commerce as we actually require, and it will be that much to our advantage as against the present practice of hoarding it.  We have more gold than any other nation, and if we cease to monetize it, the other nations will soon do the same.  The common intelligence of the people generally has reached a point where they ought to take the lead in forwarding a plan which will prove the use of any commodity as legal tender to be a fallacy, and result in the eventual discontinuance of such a practice.  America should lead in doing this.

Let us consider in concrete form the effect that the money-loaners’ dollars (which, by the way, are the dollars that we use) have on the cost of things,—and when I say cost, I mean the expenditure, in human toil, necessary to acquire the necessaries, conveniences, advantages and luxuries appropriate to human life.  I shall not burden anyone with detailed figures, because a mere statement will satisfy those who are sufficiently interested to study the present practices in the light of their own observation and experience.  I have examined the table of prices of various staple articles for a period covering forty-five years and have come to the conclusion that the money loaners’ dollar is not a measure fitted to the requirements of a people desiring equitable relations between each other.  It is simply a gambling dollar, and prices are regulated by a manipulation of it instead of by the intrinsic value the commodities possess as articles of necessity.  The people who are engaged in useful occupations producing commodities or serving other necessary demands of society are prevented from making the natural interchange of their products and services, because of the injection into their commerce of a fake currency and banking system, by the use of which speculators and financiers, so called, are able to pillage on all the exchanges.  The system built up by these pillagers is an unnatural and unjust one.

It often happens that the aggregate value in money of a large quantity of a useful commodity will command less in one year than that of a smaller quantity brought in another year.  Who, for instance, will claim that 3,000,000,000 bushels of wheat (supposing that to be the world’s crop) is worth less in the aggregate for food and seed than 2,700,000,000 bushels, other things being equal, except money, which seldom is ?  No one claims that 3,000,000,000 bushels of wheat is actually worth less than 2,700,000,000.  It is a fact, however, that the lesser quantity will often sell for as much, and sometimes more, than the larger quantity.  A difference of ten cents a bushel will accomplish that result, if the 3,000,000,000 sold for 90 cents and the 2,700,000,000 sold for one dollar.  Illustrative of that fact, let me quote the following from The Saturday Evening Post of March 15, 1913 :

“The Vicious Circle.

“We harvested bumper crops last year, you remember.  May wheat at Chicago is worth ten cents a bushel less than a year ago;  corn and oats about fifteen cents less.  Yet commodity prices, as a whole, have declined scarcely at all.  The index number, which compounds the price of many leading articles, is almost as high as ever, which means the cost of living is still about at the top notch.

The bumper crops stimulated trade in many lines—and that usually brings higher prices;  while wheat went down, iron and steel products went up.  What you saved on flour you lost on the pan to bake it in.  And Wall Street echoes with complaints that investors, spurred on by higher cost of living, are demanding more interest, thereby raising the cost of manufacturing and transportation.  This higher cost must be offset by higher prices, to overcome which investors must demand still more interest.

Meanwhile labor, so to speak, chases its own tail, demanding higher wages, which result in higher prices that consume the increased wages—which naturally induces a demand for still higher wages that result in still higher prices.”

Every farmer knows that a difference of ten cents a bushel between the price a commodity brings in one year and the price it brings the following year is not uncommon, but the railways charge full price for shipping every bushel, and the larger the crop the more they get, while the farmer must handle the additional wheat and get less for it.  A farmer having the equivalent of 300 bushels of wheat to sell in a year when crops are generally abundant expects to receive a little less per bushel than he would receive per bushel for 270 bushels in a year when crops were not abundant, but he does not expect to give away the 30 bushels difference because he has more wheat than the year before.  If that were to be the result, it would pay him, from his own individual financial standpoint, to burn up a part of his crop, when it was abundant.  In fact, the cotton farmers of the south started to do that a few years ago when there was a large crop, and the price was very low.  If the credit of the people had been coined into their own money instead of into the moneyloaners’ money, no thought of so destructive a nature would ever have occurred to the cotton growers or to any other producer of commodities.

In order to have a true measure of value we require a commercial measure regulated by the service value of things.  That would mean a natural exchange as distinguished from our present artificial one.  To make gold legal tender is artificial and not natural.  It is because it is given an artificial value that it can be manipulated by the speculators against the general welfare.  If the Government would supply storage facilities and accept for storage such products as could be practically and successfully stored and preserved, and then issue certificates of ownership to the owners therefor, these certificates would automatically equalize with each other and keep prices adjusted to natural conditions if they all formed a basis on which loans could be secured.  The owner of gold, for example, would be given a certificate stating the amount and fineness of gold he had deposited and that he could secure its return upon the presentation of the certificate.  Take an example from the present practice with relation to gold.  At the close of business February 18, 1913, there were government gold certificates outstanding for $1,085,902,189, representing $880,741,390 gold coin and $205,160,779 gold bullion.  These certificates are being circulated as money and the holders of them can secure the gold at any time they desire to present the certificates.  The only thing that is wrong about that practice is that the gold is made legal tender by the Government.  Any other serviceable commodity capable of practicable preservation should have equal rights with gold.  But none should be monetized—made legal tender—because whatever is monetized has an artificial advantage.

Let us note a few things which would unquestionably forecast a betterment of conditions to be brought about through the establishment of an exchange system based upon commercial value regulated by the service value of things.  For example, take ten commodities, gold, silver, wheat, corn, cotton, rice, wool, iron, wood in its various forms, and one more commodity selected by yourself, to complete the ten.  Let us assume that this tenth commodity is your own industrial product, whether it is labor or whatever it may be.  Now, let us see how these will work in conjunction with each other on a measure of their commercial service.  Before doing that, however, in order to clearly fix the control, we should think for a moment about the way in which the prices of these commodities are now regulated by the money loaners’ dollars.

The money owner lets you have his dollars created on your own credit, and he charges you interest which in a few years doubles his principal.  In 100 years at the rate of 6%, the principal grows from $1 to $340.  If the rate of interest be increased to 7, 8, 9 or 10% (which is not an uncommon rate for farmers and others to pay in new sections of the country) the accumulated interest, over a period of time, must necessarily be enormously greater.  (See interest table in chapter on Interest, Dividends and Rent.)  We do not have to live a hundred years, however, to get the practical results of the present financial system.  We already have it in the form of an increased cost of living.  Our present system has been in operation in its most aggravated form for more than fifty years, and we are now bearing a large part of the burden which it creates.  Most of us have erroneously believed that the tariff is principally to blame, while in reality it is the financial system, and we cannot avoid its results whether we borrow money and pay interest or receive or pay money in selling and buying goods, and what is more, we will continue to get the same results as long as we allow the speculators and the financiers to use the same system.  If you are a capitalist yourself, your advantages by reason of that fact will offset your disadvantages, and still leave you a balance on which to tax the rest of us, and you may thank the present piratical banking and currency system for it.

Let us now revert to our consideration of the establishment of a system of exchange based upon commercial value regulated by the service value of commodities, as well as the service value of the labor expended in the production and in the establishment of those things necessary to our common welfare.  We will suppose that legal tender money is used when it is necessary to liquidate taxes, judgments, and other obligations of a character requiring the use of legal tender, and that in that case it is supplied by a government which coins its own credit—that is, the credit of the people—and pays it out for services rendered to the Government, and loans when that may seem necessary for the general welfare.  This legal tender could and would be used generally.

In order to provide an index as a basis on which to establish values, let us divide the commodities before referred to into numbers and assume that the general requirements of gold and silver are 100 each ;  wheat, corn, cotton, rice, wool, iron, and wood 10,000 each—a total of 70,200, and labor 10,200, or equal to all of the others (since it is practically responsible for their production in serviceable form).  I do not, of course, claim that the relative demand for the commodities and services is in the proportion named by the figures, nor that the prices of each would be the same, because there would naturally be a difference in their service value, as well as in the cost of their production.  I use these figures merely to illustrate the principle, and have left out land, as I wish to consider that by itself.  Let us further assume that the figures named represent the normal demand, and that each represents a service to mankind that corresponds to his demand.  If this were all true these commodities would, as long as their production holds the same ratio, command prices in the same proportion to their relative cost of production.  Certificates of storage could be issued upon them.  The holders, as long as the certificates were unencumbered, could transfer the title and secure proper prices for them from those who were in need of the commodities represented by the certificates, but if they did not sell, and found it necessary to have money, these certificates would also furnish the basis on which the government could issue loans, legal tender of government issue, in case of demand.  I think, however, that we would discover before long that very few loans would be necessary.  If they were they would, in effect, create asset currency instead of credit currency.  Asset currency would properly belong to the party owning the assets, and he would be required to pay the Government for making it currency.  Credit currency belongs to the people as a body.  It is this failure to use the principles governing the two kinds of currency, in the practical operations of commerce and trade and in the functions of government, that renders our whole social system a false one.  There would be no tariff problem at all if we had a proper financial system.

There should be no legal tender other than that issued by the Government, and no individual ought to be able to obtain it without giving its equivalent in return.  If such were the case the problem of interest (as a disturbing factor) would cease, and a new era would dawn upon the world.  The present difficult problems created by our arbitrary and ridiculous banking and currency system would then give place to natural selection.  I use the term “natural selection” in its scientific sense, because we cannot run the Government in the interest of the people unless we follow the supreme laws that will unquestionably govern in the end.  When we do there will be no choking up of the system by the arbitrary acts of the financial kings, for they are but a product of the arbitrary and unnatural practices that the people have fallen into the habit of using as a means of conducting their business, nor will the majority of men be paying penalties in the form of over-work, worry, and discouragement.

In order that we may understand more clearly the practical working out of the proposed new system, let us revert to our nine commodities—plus labor.  To labor we have given the figure 70,200, to gold and silver 100 each, and to the others 10,000 each, making the total of the commodities 70,200, or equal to those of labor’s products.  Labor is not in the ordinary sense a commodity, but is superior, and a service of the highest order.  In order to make our statement clear, we may as well distinguish it by its true name—labor.  Suppose the nine commodities, at some one time, all fall ten points short of being sufficient to supply the demand.  The owners of those commodities would of course demand higher prices, but the shortage would increase the demand for labor in order to bring the amount of the commodities produced up to the normal.  In such a contingency the price of labor and the price of the nine commodities would all increase, and as between these ten, it would simply be a problem of increasing the production to the normal demand.  Assuming that other things were normal, the greatest activity would prevail in the production of the nine, and the natural order would be to bring the amount of these up to the normal, and consequently would create a demand for labor.  After that investment would follow.  It would draw from among the other fields of production, and the equilibrium would be secured.  The increased demand for labor, on which production depends, would enable those who worked to draw higher wages, and thus help to overcome the effect of the increased cost of the nine commodities.  On the other hand, those who chose to remain idle, and those who engaged in other fields of labor, but who required the commodities in which the shortage continued, would find the cost of living to them increased as long as the shortage continued, but as we have just observed, if we were to adjust to the supreme law of natural selection, the equilibrium would quickly be secured.

Let us take another illustration.  We will say that the production of the nine commodities is raised ten points above the normal.  At such a time the prices would relatively decrease on all, and since the supply would be greater than the demand, less labor would be required in their production until the supply of these articles again became normal.  When a system of exchange is established which is based upon service value instead of on credit and fiat, as it is under the present system, all parties supplying the things in general demand will be prepared for such a contingency, because under that system there will always be enough demand for their products to make all of the industrious prosperous.  It does not, however, happen in actual experience that all things increase or decrease relatively the same in their production or demand.  Consequently, their prices measured with each other will vary relatively with the varying production and demand.  Under the system of exchange which I suggest, prices will automatically adjust to the existing conditions, because whenever there is a shortage or excess in the amount of an article of necessity, that article will advance or decrease in price in the proportion of its shortage or excess, and therefore enlist more energy when a shortage occurs and less when there is an excess in order to bring the amount produced to the normal.  That is true even under the present system, but with the money placed in the arbitrary control of the money loaners the principal loss falls on the plain producers and consumers because of the monopoly control of money and credit.  Under an exchange system regulated by service value and not by the money loaners, the increased or decreased cost created by the demand for the articles that are scarce or plentiful at the time would be consistent with the general supply of all things.  For instance, when other things were normal, there would be no such thing as the aggregate money value of a large crop being less than the aggregate value of a small crop.

Everything would automatically and equably adjust in so far as it is possible for anything of human creation to do so.

The illustrations that I have given serve only to familiarize us with the principles involved.  I desire to carry these into a somewhat more concrete form by taking examples from conditions that occur in actual production and consumption.  Still using our nine commodities as our index, and including labor as the tenth, let us suppose that wheat falls short ten points in production, thus making the per unit demand sharper.  That being a food product and the supply of and demand for food products being normally the same otherwise, all food products would rise in price when measured with all other commodities in which the demand and supply remained normal, because wheat being the commodity in which the shortage occurred, other food products would be required to take its place as food.  Therefore, wheat, corn, and rice would all cost more per unit than they had before and wheat would cost the most.  The result would be that these cereal foods would be worth more per unit when measured with the commodities in which there was no shortage in the amount produced.  As measured with the commodities which we have considered, we will merely say as an illustration, that, when all are considered commercially the shortage in the amount of the cereal wheat would decrease from the normal 10,000 to 9,500, but while with the stronger demand the total decrease in price value would not be equal to the decrease in the volume, it would demand more per bushel but less for the whole crop.  The extra necessity of supplying the food loss in wheat would cause the cereals rice and corn, which remained normal in volume, 10,000 each, to exceed the normal in their price value, and we will say that they would raise in value from 20,000, their total normal price, to 20,500, and thus, as between the three cereals named, the result would be that the 9,000 wheat would command 9,500 of the commercial value, whereas when the value was 10,000 normal, the normal price was 10,000 while the 20,000 corn and rice, normal in quantity but sharper in demand to make up for the food loss in wheat, would command 20,500 in commercial value.  It naturally follows that the commercial value of the three cereals measured with each other alone, would total the same, or 30,000, but the food supply would be short 1,000 bushels of wheat.  The commercial food supply would be that much short or less valuable in any true measure, and as measured with the amount of all commodities, respectively, their value would be short and would not command the normal—30,000 in price, but the unit price of all three cereals would be higher.  There would follow an immediate demand upon the farmers to make up the supply of wheat.  The increased price of that commodity would cause the great est effort to be applied to its production.  The demand would adjust the amount of production (of course, assuming natural conditions for raising wheat about the same).  The same would be true of a decrease of or increase in any other of the commodities.  But, the moment you monetize the metals gold and silver, these being commodities that are peculiarly under the control of but a few persons, an arbitrary condition is created and the equilibrium is immediately destroyed.  Then the artificial demand for the gold and silver gives to its owners the power to manipulate the prices of all the other commodities in their own selfish interests, and to make this worse, the Government has delegated to the money loaners the privilege of coining the people’s credit and selling that to the people, thus practically forcing them to buy it in order to carry on the business of the country.

The reader will not be misled by my use of certain commodities as a means of illustrating the principles involved in our study.  I use them only for that purpose, and the reader himself must develop a method of his own if he wishes to go into further details on that point.  My purpose is to show that our present system is in error, which I have already done, and also to show that it cannot be amended so as to make it a good system.  I believe I have shown that also.  We can, however, make such amendments as will render it practicable for us to use it preliminary to the establishment of an entirely new system based upon a plan which will serve the true purposes of exchange.  We shall have to provide the latter before our social relations can even approximate social justice.

All mentally well-balanced persons know that we are not governed by the true principles of social justice when we make the main aim of our social existence the gaining of money.  Such a condition of action has resulted from the use of a false money standard,—a gambling standard.  I think we realize this and are therefore prepared for the most important part of our study,—the actual study of a system which will straighten out our social tangles.

The principal reason for the general scramble and scrap for money is that it is hard for those who need it the most to get it.  As long as the people generally are in dire need of it, and but a few of the people control it, this scrap and scramble will continue to the loss of the many and the gain of the few, but if we establish a system that will make it easy for the industrious to obtain money by means of their applied labor, or other valuable thing to give in return or as security for it, we shall remove the gambling element from money, and the general scramble for it (simply in order to control it) will cease,—cease, because every person will know that it may be had when he needs it if he can return value for it.  The inducement will then be for all to get into a position to be able to provide a product for exchange purposes, and instead of having a lot of speculating parasites, we shall have men and women who are willing to enter into useful, practical industry of the highest and most economic order, because at all times properly applied industry may obtain money when it is needed.  Of course it would not absolutely destroy speculation and gambling in money because money would unquestionably have value, and, therefore, people who did not care to earn it would speculate to get it without if they could, but industrious people would be independent because they could get money in return for their own industry, and they would not be compelled to deal with the speculators as they now are.  Neither the farmer, the wage earner, nor other persons engaged in performing a service of general value, would be compelled to pay a rate of interest that, in and of itself, destroys his efficiency as an independent person.  When money primarily serves the purpose of facilitating exchanges it will be serving its true purpose.  Then any one should be able to get it who can return value for it, and primarily the Government must fill the office of furnishing it.

Stating the same thing in another way, in order to reach the same conclusions from a different viewpoint, money should simply serve to make exchanges, and be cancelled when it has fulfilled its purpose the same as checks are used and cancelled.  When a person does not wish to make an exchange he needs no money, and will care for none if he knows that he can secure it readily when he needs it.  The bankers are now supplying that service by means of the clearing of checks.  These checks serve as a kind of money, but unless you can deposit the actual money with your hanker, you must make terms with him in order to be able to draw checks on his bank.  If you are financially responsible he will make you a loan.  You give him your note and he will credit you on his bank books with the amount of your note.  But the price he charges you makes the accommodation too expensive, and therefore the fact that the banks furnish that accommodation, does not remove the element of speculation nor the desire on the part of the people generally to secure money simply for the satisfaction of having it.  When one has money he can use it without paying someone else for its use, and while he is not using it he can loan it and charge the borrower according to the same interest method that the banks use, but with this difference ;— the banker can loan mere credit when the borrower himself is good for the credit.  The bank makes the borrower’s credit merchantable by accepting and honoring it in the borrower’s checks, but individuals can loan actual money only.

The bankers have a true system of clearing exchanges.  As an example of that I call attention to the fact that in 1911 there was cleared through the one hundred and forty Clearing House Associations $92,420,120,092.  There scheme is a good one for taking care of the exchanges of the country and it helps the country as long as we have not a better one.  By its use only $47.80 of actual cash is required in order to handle each $1,000,000 (of checks on the banks) that passes through the clearing houses.  But unfortunately for us, the fees the bankers charge for putting our own credit on their books, before we are even enabled to draw checks, is so great that the people generally are over-burdened by reason of it.  That is shown in the chapter on “Interest, Dividends and Rents.”

Of course these exchanges should go on wherever they serve the general welfare, and since we ourselves have not provided a better method, we are under obligations to the bankers for having honored and made current and merchantable our own credit.  But since these exchanges relate to our business and are used directly by most of us at some time, and indirectly by all of us all of the time, we should establish a system that will give us the least costly service.  The main thing for us to do is to eliminate most of the interest charges and make it practicable for the human family to thrive by industry, by having industry available to all people who wish to be and are industrious.  That does not mean that the banks should be superseded by new exchange agents, but it does mean that the banks should be required to adjust to a new system that will cost the people less.  It means also that there would be fewer banks, because under any economic system of exchange there would be no more necessity for several banks in cities of less than ten or twenty thousand people than there would be a need for several post-offices in towns of that size.

Let us take up the discussion from still another viewpoint in order that no one shall possibly misunderstand.  Money as such is not a thing of prime necessity.  It is merely a convenience which enables us to make such exchanges as we may wish without the cumbersome handling of property.  It is comparable to a due bill that is due to the holder from a person having something to sell which the owner of the money desires to have.  The money is turned over to the owner of the property or to the person rendering a service after which the latter becomes the owner of the money.  That is, the due bill, which is collectible again from any other person who has property to sell or service to render that the holder of the money or due bill may wish to buy.

The banks have taught us to use checks instead of the actual money, and it is true that they cash these, but, as we observed before, we cannot draw checks until we have arranged with our banker, and in order to make that arrangement, unless we have the real money, we must pay him interest at a rate that makes the greatest number of men poor and a few enormously rich.  The fact that the bankers can make exchanges that represent hundreds of billions of dollars annually, when, as a matter of fact, there never was at any one time as much as $1,700,000,000 in all of the banks combined (and of the money they do actually hold which is approximately $1,500,000,000, two-thirds of it or more is lying dead in their vaults as reserves and is never used).

We are under obligation to the banks for teaching us this economy in the use of money and credit.  But after all, as we observed before, the credit is supported and maintained by the resources of the people and the daily application of their energy.  The banks have simply filled the office of making it current and merchantable.  We do not owe that tribute to the bankers, and thanking them for the good that they have done, but for which they have been well and even over paid, we are now prepared as a people in our national capacity to pass the necessary laws, and to perform the governmental function laid down by the Constitution, “To coin money, regulate the value thereof” (and “of Foreign coin” when used in our country), in behalf of all the people of these United States.  We should profit by the example of the banks in copying somewhat after some parts of the system they have used for making exchanges, but as a Government we ought to furnish the advantage to all of the people on equality and with the least expense practicable.  The Government can do what the banks are doing and save to the people as much as the banks make in excessive dividends, besides the still greater profits that are made on speculation on the side.

The Government shall “coin money and regulate the value thereof.”  That is the Constitutional provision.  The great special interests have been sticklers for following the Constitution whenever it has blocked the way to the people’s progress if that might in any way interfere with the practice of the interests, but whenever the special interests find it to their advantage to follow any practice profitable to them, the fact that such practice may be in contravention to the Constitution and the laws does not in the least embarrass or hinder them, as long as the people do not invoke the law.  When the people do, every possible dilatory tactic is resorted to by the interests to delay compliance.  The consequence has been that the Constitution has often been used as an instrument of obstruction to prevent the people from enforcing their rights.

Now, I have called attention to the absolute right and sovereign power vested in the people themselves, to “coin money and regulate the value thereof.”  No Constitutional amendment is required to be adopted by three-fourths of the States.  It can be done right now, and why delay ?

What I am proposing will cause such a howl to come from the special interests as has not been heard for a very long time.  The “standpat” press will jump into the breach for them, and howl for “sound money”—the money that “sounds” good to them, because of their special interest.  When you see the “standpat” papers doing that, go back a few pages in this book and read the circulars,—Quotations “B,” “C,” “D” and “E.”  Then give such credit to the howl as you believe it to be entitled to.  No ! it is too late now for them.  This time they brought “the last straw,” and we caught them before they were able to put it on us.  “Sound Money” will be the song that will be sung to you by every advocate of the special interests.  I have shown, and they have already stated and proved, that what they have in the past called “sound money” is not “sound.”  By doing that they save me the trouble of inserting herein a chapter of evidence that I had gathered to prove what they now admit.  By that admission they disclose the fact, and it is a fact, that they have defrauded all of the people by their so-called “sound money.”  Their kind of sound money has enabled them to become wealthy and independent, but it has prevented the people generally from doing what they have a right to do and should have done, namely :  retained the fruits of their own labor.

The kind of exchange that we should use is the kind that anybody who has value to give can get without paying usury.  That kind will be the sound money of the people-the honest money.  Those who wish gold may have it, there will be nothing to prevent their buying it.  We, the people, on their presenting it, will stamp its weight and fineness for anyone who will pap the costs of doing so.  We will do that to insure to the people who wish the gold the amount the Government stamp certifies that there is in any given piece of the metal.  That is honest, and to do anything more is dishonest to the people, but the Government could not say that it was legal tender and thereby give it a special quality that it did not possess in itself.  We can do the same with any commodity that it is practicable to use as a thing of exchange.  The demand for commodities of all kinds will be in proportion to the service they may render to the people and no one should complain when absolute justice is to be done.  As a consequence the Government would create no more “commodity” money, either for itself or for the people, because it would not only be unjust to do so but unnecessary and ridiculous.  When anyone wishes commodities let them buy them as such.

Everybody knows that we must have some money, and now the question arises as to what kind it shall be.  “Honest money,” of course, instead of what we have now and are told is “sound money,” whereas in truth it is the opposite of “Honest money,” and should have been named accordingly.  We want a kind of money the buying and selling properties of which remain respectively constant.  In other words, we want a kind of money that will buy the exact equivalent of what it cost us to get it.  We want the kind of money that serves the same office among the people in their commercial and social relations with each other as the drafts and checks serve in the business transactions entered into by the bankers.  We do not intend that the bankers shall have a better system for themselves than we have for ourselves.  We expect to pay those whose duty it will be to help make the exchanges.  The bankers will be able to give as effective and valuable service in this other up-to-date system as they have given us heretofore, but the past service has been altogether too expensive and therefore not sufficiently effective.  We have no prejudice to vent upon the bankers.  As the system stands they serve the people, generally, the best they can.  There are always, of course, a few isolated exceptions.  But the time for us to do for ourselves what the bankers are doing for themselves, is here and now, and we should hasten to adopt a system of exchange under which it will cost the people no more to make their commercial exchanges between each other than it costs the banks to make exchanges between the bankers and their cash customers.  It is just as simple for us as it is for them, and we have the indisputable right.  We owe it to ourselves, to our children, and to all posterity to have an efficient, self-sustaining, and effective system.

The people are the Government.  Therefore the Government should, as the Constitution provides, regulate the value of money.  There is no other real sovereign power, because all authority emanates from the people.  Money is the means of exchange among all people.  Its regulation is absolutely a governmental function, and the Government has no natural inherent power that enables it to impart to money any other property or quality than that of making it the agent of exchange.  Let us see how that could be done if we were to apply the principles that should govern.

Every dollar that the Government must pay is collected from the people themselves.  In other words, they pay for it.  When the Government spends $1,000,000,000 it collects $1,000,000,000.  It spends and collects more than that amount annually.  It collects it from the people and pays it out to individuals from whom it is presumed that it gets the equivalent in value for what it spends.  To say that it does get an equivalent in value is a very violent presumption under present conditions; for, however true the presumption is legally, it is far from the truth in practice.  Let us study that statement a little.

A “middle-man” slipped into this game.  I term it a game because he got in, for that is what it amounts to.  The “middle-man” is the money loaner and banker.  The Government pays the $1,000,000,000 which it has collected from itself—that is, from the people.  A considerable sum included in that is interest.  This interest is paid to the “middle-man,” but for the Government to pay interest is an absurdity.  After an analysis of that statement we will be compelled to admit that the payment of interest by the Government is an absurdity.

We can easily understand the true meaning of exchange, and at the same time the true purpose of money, if we use the business of the Government itself as an example.  For convenience rather than for exactness of the sum (although it is approximately correct) we will say that the Government pays out every ten or eleven months $1,000,000,000 and collects that sum from itself ;  that is, from the people, in approximately an equal period of time.  That is virtually what happens.  Now, will someone in all of these United States tell the people why the Government—the people—pay interest on such a simple proposition ?  They get the service, or whatever it may be that is to be paid for, and tax themselves to pay for it, but they add to the tax a sum of interest, and for that they get no consideration.

Suppose the Government should issue its legal tender notes to those performing services or furnishing material to the Government.  These notes would draw no interest, but they would be legal tender.  A person who performed a service for which the Government owed him $50 would get this legal tender in payment.  It might be a $50 certificate or ten of $5 each, or some other amount, if desired.  The certificates would be proof that the bearer had given the service and that the people had certified to it and therefore owed it.  The way to pay the tax, for that is what it amounts to, would be to get these certificates and in order to do that we would have to pay for them in the goods or services we had for sale that the bearer might be in need of.  These certificates would be obtained by those owing taxes and tendered to the Government in payment.  They would be in demand generally for the very reason that that could be done.  One transaction would cancel the other and the certificates would be cancelled as rapidly as they were tendered to the Government in payment of taxes, on exactly the same principle that men deposit their earnings in banks and draw checks on the accounts, and the checks are cancelled by the banks when paid.  It is as simple as A, B, C.  The banks are carrying on this system among themselves and those who deposit cash at a very small cost, a business that is “on all fours” exactly on that principle.  Therefore, I repeat, let us profit by the example of the banks.  Let us call them in to serve us on the true principles of exchange and pay them for the value of their services, but not permit them to be our masters in the world of commerce nor to appropriate as a private enterprise for selfish purposes, or for any purpose at all, the functions that are properly those belonging to the Government itself.  Let the Government issue all the legal tender and circulate it (but without the necessity of indorsement), according to the present manner of the passing of checks between the customers of banks and the banks themselves.

I have already shown in the chapter on “Interest, Dividends and Rents” that our system of finance is “self-extinguishing,” whereas it should be “self-sustaining.”  No one with intelligence can honestly deny the truth of that statement.  This chapter is designed to show how a system of finances may be made self-sustaining and also how to adopt a financial system that will give us a money that will command as an article of purchase an amount equivalent to what it cost us to get the money.  In the last paragraph the true principle is exemplified in regard to the business that is to be transacted between the Government and the people in their individual capacity.  The people have business with each other individually in which the Government has no share or direct interest.  These are private transactions and for the handling of these there is also required a convenient means of exchange.  The same principle that underlies the transactions between the Government and the people in their individual capacity underlies the transactions between individuals privately, with this difference :  the Government is the sovereign power and the citizens the sovereigns, and therefore through their sovereign power (the Government) they may create the money that facilitates the exchange, but may not do so when they deal with each other, because each is a sovereign with no authority over the other.  Therefore, they must act collectively—that is, by their sovereign power when fixing the medium of exchange.

Now we must not forget that money is a mere representative.  In its true purpose it is like a tax, as the illustration in our last paragraph shows.  But when it is used and applied to transactions between individuals it becomes voluntary in so far as such things can.  The citizen will not lose sight of the fact that every service merits the return of an equal service.  The laborer should receive the value of his labor, and the employer the value of the service he renders.  The party who was served obtained the results and should pay for them in all cases.  He should pay for them with an amount of money that represents an equal service given by him to the party from whom he got it, and that party again should have given an equal value and so on.  Now, while it is not possible to have the deals between individuals work out with such absolute justice as the statement contemplates for the basic law, the basis for the medium of exchange should be on that absolutely just basis.  God has created man according to a consistent principle.  The failure of men to measure up with each other on an equal plane physically, mentally and spiritually is not due to a failure of the principles of Creation.  So, too, laws which men have made for government in the interest of the general welfare, should be made according to a consistent principle, in order that no indictment shall lie against the law because men fail in the practical application of it to measure the transactions between them with absolute justice.  Co-lateral laws may be provided to remedy the infractions as far as possible.  We can come the nearest to securing justice in our social relations if the basic law is right, and in this problem of money the law should be based on the principle of simple exchange, the giving of an equivalent for its equivalent, which is absolutely impossible under our present laws.  In fact, our laws now negative any such possibility and our social evils cannot be remedied as long as they stand as they are now.  The only true and honest course for the people themselves to take is to go directly to the roots of the evil and devise a system of financial laws which shall be based upon the true principles.

All commodities, including gold and silver, are purely and naturally articles of commerce, and their respective owners have the right to receive such return for their exchange as their respective values measure in other commodities or money according to the agreement of the parties so dealing.  Because gold generally, and silver in some instances, have been made legal tender the whole system of social intercourse has gone far astray from the true road which leads to the highest progress of which men are capable.

There is no remedy for the social evils in the standardization of any commodity as a dollar.  No commodity can be made an honest standard for money.  No honest money can exist except that which is representative, which must be the Government dollar.  It must be the representative of exchange only.  Any other action that may be taken will not stand long because the present increasing general intelligence will render that impossible, and it will cost the people dearly while it does stand, in exactly the same way that we are paying now for what was wrongly made the standard heretofore.  We have already noted the principles that should truly govern in the transactions entered into by the Government and the people in their individual capacities.  We have seen that every dollar to be paid by the Government for a service rendered to it is to be collected in the form of some tax from the people.  The principles naturally governing the exchanges between individuals rests upon the same principle as that governing the exchanges between the Government and individuals.  One transaction presumably offsets the corresponding related transactions.  But in the transactions of government there is no element of commercialism.  The Government is not in business for profit, and presumably, it does those things only that are necessary in order to maintain an effective government.  It needs what it buys, and there is nothing left over that it does not require for the use of the Government.  But it is otherwise with individuals.  They transact business, and work for profits as well as to maintain their existence.  That may be stated as a general rule, for there are very few who do not seek in some way to stack up a fortune, notwithstanding that comparatively few are successful.  But some are successful, and these have an excess over and above what they require for their ordinary existence.  What they have in excess of what is necessary for their ordinary requirements is extra.  That is what we call capital—what is left over after all of their other exchanges are complete.

Now as long as we recognize capital to be consistent with our social existence, in principle, we shall have to recognize it as separate and removed from the ordinary exchanges.  As soon as a person has more than he can use, and more than it is necessary for him to sell as a means of securing money with which to buy what he wishes to use, and puts that excess on the market for the sole purpose of obtaining money without intending to use the money in exchange for some necessary or desired commodity or service, he retires that much money from serving its true purpose.  Money created for the purposes of exchange should be in constant activity.  It should be issued as rapidly as needed and retired as rapidly as used, somewhat on the principle governing the use of cheeks, but the Government should serve as the issuing agent in the case of money.

I think the statements I have made thus far show the distinction between the Government paying for its purchases or for services rendered to it on the one hand, and on the other the dealings of individuals with each other.  In the case of the Government the dealings are absolutely cancelled.  That is, the Government pays a dollar and it must collect a dollar in return.  It acquires no capital as the term is ordinarily understood.  It can issue a currency for its purposes with absolute consistency with out ever paying a dollar of interest.  In fact, it is inconsistent for it to do otherwise, because its business should be on the basis of pure exchange—a service to the people and a tax to pay the cost of the service.  In the dealings of individuals with each other, capital must be taken into consideration in our calculations.  Therefore in the settlement of this problem it will be more difficult to deal with private exchanges than with the exchanges that take place between the Government and individuals.

I therefore advocate a commodity exchange that may be used to relieve the burdens that capital places upon the current exchanges that take place from day to day in the commerce that is a result of the daily activities of men and the necessities of life.  The commodity exchange may be selected by the capitalist himself according to his own wishes.  If he wishes gold, the Government, on being paid the cost of the process, could certify to the weight and fineness of such as shall be presented.  The same could be done with any other article that is capable of being treated in a like manner.  Then the capitalist could use whatever it might be in trade if he liked.  It could be passed from one to another, but it would not be termed dollars nor would it be legal tender.  It would be designated by its weight and would stand on its own merits.  Its value in true money would depend on the service it rendered in supplying the real needs of men.

The actual money could be issued by the Government in order to facilitate exchange.  Its value ought to be fixed be the Government as the Constitution provides, after which it should pass current as checks now do, but with this exception :  the makers of checks can be known to only a very limited number of persons, while the Government is known to all, and therefore the Government money should pass for full credit with all people.  All of the money that business demanded would be supplied and the purpose of the money would be to steady and equalize the prices of all commodities and services so that those engaged in any kind of enterprise, work or occupation that was of service to humanity might be enabled to command their share in the proportion of the demand for the service performed.  No greater sums of money would be required to carry on the natural commerce, as distinguished from the present speculative commerce, than it would be necessary for the producers to use in exchanging the surplus of their particular kind of products for other kinds of products that they might require and that were the products of other producers.  It would not change the general practice of paying with checks.  The money would be deposited in the banks and checked on in the same way that it is done now.  The banks would serve as the clearing agencies and would be paid for their services as such.  They would, however, be compelled to adjust to a new basis.  Under such a system they would not be our masters nor would they be in control of the industrial and social conditions of the country, but would simply be our equals.  Then all people could act on an independent basis.  Money would no longer be hoarded, but would be kept in motion because no more would be issued than was reasonably required.  If all people having the industry or the means could secure it when it was needed, the aim and ideals of life would not be governed by the dollar.  Production and not speculation would control the material conditions of men.  All men would then be on an equality in so far as that is possible, and the incentive would be toward becoming truly industrious instead of toward becoming speculative parasites.  After that the modern inventions and new methods of application that so immensely increase the productive capacity of the people generally would inure to the general welfare, instead of centralizing into a few hands the products of men’s activity and allowing it to be made the basis on which to compound interest dividends and profits by the rule of geometrical progression and ultimately levied as a toll upon the people generally.