Government and Value

GOVERNMENT AND VALUE IN. a letter. to the. London Herald of Anarchy, Mr. J. Greevz Ptsher asserts that HsovernlTIent does not, . and never can, fix· the value of gold or any other commodity'" and cannot even affect ·such vdue except by the ~light additional demand which it creates as a consumer.· It is true that government cannot fix the value of a commodity, because its influence is but one of several factors that combine to govern value. But its' power to atfece value is out. of all proportion to. the ex ten.tof its consumption. Government's consumption of com modities. is an almost· infinitesimal influen~e upon value in compari$on with its prohibitory power. One of the chief factors in the constitution of value· is,. as Mr. Fisher himself states, utility; and. as long as governments exist, utility' is largely .dependent upon· their arbitrary" decrees. When gov ern.rnentprohibits the manuf~cture and sale. of liquor,. does it not thereby reduce the value· of everything that is used in such manu.facture and sale? If government were to allow theatricalperfoqnances on Sundays, would not the value of every building that contains a theatre. rise? Have not we, here in America, just seen the McKinley bill change the value of.·nearlY every article that .the people use? If .government were to decree that all plates shall be made of ·tin, would not the value of tin rise and the value of china fall? Unques tionably .. Well, a precisely parallel thing occurs when gov, ernment decrees that all money shall be made of or issued a'gainst gold· or silver; these metals immediately take on an artificial, government-created value, because of the. new use which arbitrary power enables them to monopolize, and· all other commodities, which are at the sam~ time· forbidden to he.· put to this use, correspondingly lose value. How absurd, then, in view of these indisputable facts, 'to assert that. gov ernment can affect values only in ratio of its consumption!

And yet Mr. Fisher makes this assertion the starting ...pointof alectureto the editoro£the Herald o/Anarchy delivered in 148 IN D I V I D U ALL I B E R T Y that dogmatic, know-it-all style which only those are justified in assuming who can sustain their statements by facts and logic. Mr. Fisherreplied, in a letter to Liberty, so Mr. Tucker continued: THE central position taken by Mr. Fi~her at the start that government cannot affect the value of gold or any other com modity except by the slight additional·demand which it cre ates as a consumer he has been forced to abandon at the first onslaught. If government were to allow the opening of thea;;res on Sunday, it would not thereby become a consumer of theatres itself (at least not in the economic sense; for, in the United States, at any rate, our governors always go to the theatre as ((dead-heads"), and yet Mr. Fisher admits that in such a case the value of theatres would immediately rise very greatly. This admission is an abandonment of the po sition taken at first so confidently, and no other considera tion can make it anything else. The fact that competition would soon arise to reduce the value does not alter the fact that for a time this action of government would materially raise it, which Mr. Fisher originally declared an impossibility. But even if such a plea had any pertinence, it could be promptly destroyed by a slight extension of the hypothesis. Suppose government, in addition to allowing the theatres now existing to open on Sunday, were to prohibit the establishment of any additional theatres. Then the value would not only go up, but stay up. It is hardly necessary to argue the matter further; Mr. Fisher undoubtedly sees that he is wrong. The facts are too palpable and numerous. Why, since my com ment of a month ago on Mr~ Fisher's position, it has tran spired that the cost of making twist drills in the United States has been increased five hundred and twenty per cent.

by the McKinley bill. Government cannot affect value, in deed! In the paragraph to which Mr. Fisher's letter is a rejoinder I said that ((when government decrees that all money shall be made of or issued against gold or silver, these metals im mediately take on an artificial, government-created value, beIN D IV I D U ALL I BER T Y 149 cause of the new use which arbitrary power enables them to monopolize." Mr. Fisher .meets this by. attempting ··to belittle the restrictions placed upon the issue .of paper money, as •• if all vitally. necessary liberty. to compete. with the gold-bugs were even now aUowed. Let me ask my opponent one ques tion. Does the law of England allow citizens to form a bank for the .issue of, paper money against· any property that they may see fit to accept as security; said bank perhaps owning no spec~ewhatever; the paper Inoney not redeem.able~n spec~ee:x: cept. at the option of the bank;, the customers of the bank mutually pledging themselves to~ccept the bank's paper in lieu' of gold or silver. coin of the same face value; .the paper being redeemable only at the maturity of the mortgage notes, and then simply by a return of said notes. and a release of the mortgagedproperty,-is such an institution, I ask, allowed by the law of England? If it is, then I have only to say that the working people of England are very great fools not to take advantage of this inestimable liberty, that the editor of the Herald of Anarchy and his comrades have indeed nothirtg to complain of in the matter of finance, and that they had bet ter .turn their attention at once to the organization of such banks as that which I have just described. But I am con vinced·that Mr. Fisher win ·have to answer that these banks are"illegal in England; and in that case I tell him again that the'present value of gold is a monopoly value sustained·.by the exclusive .• monetary privilege given it by government. It may be true, as Mr. Fisher says, that just as· much gold would be used if it did not possess this monopoly. But that has nothing to do ·with the question. Take the illustration that I have already used in this discussion when I said: ulf govern ment were to decree that all plates shall be made of tin, would not the value of tin rise and the value of china fall?" Now, if the supply of tin were limited, and if hearly an the tin were. used in making plates, and if tin Had no other use·0£ great significance, it is quite conceivable that, if the decree prohibiting the use of 'china in making' plates should bewith 7 drawn, the same amount of tin might. continue to be used for the same purpose as before, and yet the value. of tin would fall tremendously in consequence of. the admitted competition of china. And ·similarly, if all property were· to··be .admitted to competition with gold in the matter of representation.in :150 INDIVIDUAL LIBERTY the currency, it is possible that the same amount of gold would still be used as money, but its value would decrease no tably,-would fall, that is to say, from its abnormal, artificial~ government-created value, to its normal, natural, open market value.

Mr. Fisher then came back with another contribution to Liberty-in fact, several of them-in which he at tacked the editor a1;1d also Mr. Alfred B. Westrup, whose «Citizens' Money" and ((The Financial Problem" he had just read. Mr. Tucker's reply, therefore, is a defense of his own position and of that of Mr. Westrup as well, and the controversy develops into a discussion of free trade in banking, of currency and government, and of the equal ization of wage and product: I KNOW of no friend of liberty who regards it as a panacea for every ill, or claims that it will make fools successful, or believes that it will make all men equal, rich, and perfectly happy. The Anarchists, it is true, believe that under liberty the laborer's wages will buy back his product, and that this will make men more nearly equal, will insure the industrious and the prudent against poverty, and will add to human hap piness. But between the fictitious claims which Mr. Fisher scouts and the real claims which the Anarchists assert it is easy to see the vast difference.

I do not understand how ccthe unvarying failure of unsound currency enactments" makes the interference of government with finance seem less pernicious. In fact, it drives me to precisely the opposite conclusion. In the phrase, ((concomit ant dwindling of monetary law into a mere specification of truisms," Mr. Fisher repeats his attempt, of which I com plained in the last issue of Liberty, to belittle the restrictions placed upon the issue of paper money. When he has answered the question which I have asked him regarding the English banking laws, we can discuss the matter more intelligently. Meanwhile it is futile to try to make a monopoly seem less than a monopoly by resorting to such a circumlocution as «(system of licensing individuals to carryon certain kinds of INDIVIDUAL LIBERTY lSI trades/'ot to, claim' that" the' m.onopoly of a tool not" only common' but indispensable to all trades is not more, injurious than themonopoly,'of a tool used by only one trade'or a £~W trades.

It 1$ true that if the mass of capitalc~mpetingtorinvest ment were incl::eased, the rate of interest would fall. -Butit is not truethats~arcity of capitalis.the.onlytactor that ~eel1s up-the'rrate of interest? If, I ·were ,.' free "to >~se my capital directly as .a, basis of credit orcurrency,therelie£:froln the necessity,.of borrowing ,.' additional .,capital,,from, others would .decrease,the.borrowing., d~m.and,· and. therefore the rate of in terest. And if, as the Allarchists claim,t~isfreedom to use capital, as a; basis ,of credit· shouldgi~e,an immense impe~us to business, ,and .cQnsequently. cause an itnmense demand, for labor, ,atldc~nseq\lendy' increa,se•productive power, and •con seq~entlyal.lgmentthe a1l1ount of capital, here another ,force wOtlldhe exercised"to.lower ,the rate of i llterest and cause it togra~uaUyvanish. Free trade in, banking does not mean only, unlimited liberty to create debt; '. itmeansal~o'vast1y increased "ability •. to ' 111,eetdebt: ,and, .•,so: acc0tnpanied"the libertYito create ", debt is one of ,the greate~t,' blessings~ ••' ,'It ,.'i5 not, erroneous to label evidence. of debt as money. As ,Col.

Wm. ,',E.••Greene wdl said: UThat is ,money which "does.t~F work of the tool money." When evidence of debtcircul~tes asa "medium .ofexchange, to all intents and ,purposes it is mo~ey••."But, this isofsm~U consequence. The Anarchists do not 'insist on theword,((money." ' Suppose we call such evi" dence ofde1?ecurrencyi(and.surely it is cutrency) ,whatthe,n? How does,thisc~ange of name "affect,the conclusions of th~ ((curl'ency-faadists"! "Not in the least, as tar as I can see'. By the way,it isnotbecomi llg inamanwhohas,not simply one bee in his bonnet~., but a whole swarm of them; to ta:lk flippantly of the. ((fads"· of men whose lives afford unques tionable evidence of their earn.estness. Mr. Fisher seems to think it'· ilih~rentlyitl1possible' to 'use one?sproperty and at the. same timepledgeit.Butwhat,els~ happens when a rnall~after mortgagil\lghis house,co lltinues toJi~e in it? This is "anact\lalevery-dar.occurrence, .ancl mutual banking only see~s, to 111ake it pQ~sible'oneasier terms, __th~ terms that will prevail under competition ., instead .o~ the >te,rms•,that,.do prevail. under ,monopoly. " The man who 152 INDIVIDUAL LIBERTY c~lIs this reality an ignis fatuus must be either impudent or ignorant.

Mr. Fisher, in his remark that Uno attempt· is made to show how displacing gold from currency would reduce the price as long as its cost and utility remain what they now are," is no less absurd than he would be if he were to say that no attempt is made to show how displacing flour as an ingredient of bread would reduce the price. of flour as ·long as its cost and utility remain what they now are. The· utility of .flour consists in the fact that it. is an ingredient of bread, and the main utility of,' gold consists in the fact that it is used as .currency . To .talk .of displacing these utilities and at the same time keeping them what they now are is a contra diction in terms, of which Mr. Fisher i,~ .guilty. But Mr. Westrup is guilty of no contradiction at all in claiming that money can be made very much more plentiful and yet main tain its value at the same time that he contends that the pres ent value of money is due to its monopoly or scarcity. For to quote Colonel Greene again: ~tAll money is not the same money. .There is one money of gold, another ,of. brass, another of leather, and·" another of paper; and there is a difference in the glory of these different kinds of money. There is one money that is a commodity, having its exchangeable value determined by the law of.supply and demand, which money may be. called (though somewhat barbarously) merchandise-money; as, for instance, gold, silver, brass, bank-bills, etc.: there is another money, which is not a., c0tnmodity, whose exchangeable value is. altogether .inde pendentof the law of supply anddema l1d, and which may be called mutual money. • . . If Qrdinary bank ..bills represented specie actually existing in the vaults of the bank, no mere is sue or withdrawal of them could affect a fall or rise in the value of money: for every issue of a dollar-bill would corre spond to the locking-up of a specie dollar in the banks' vaults; and every' cancelling of a dollar-bill would correspond to. the issue by the banks of a. specie dollar. . It is by the exercise of banking privileges-that is, by the issue .of ,bills purporting to be, but which are, not, convertible-that' the banks effect a depreciation inth,e price of the silver dollar. It,isthis fiction (by which legalv:alue is assimilated·, to, and becomes, to' all business intents and purposes,actual value ) that enables bankINDIVIDUAL LilB~RTY IS:;' notes to depreciatethe silver dQUar•.•••..•Substitute VERITYin~kf place..otfiC'tion, ·.,eitherby •• penznittingth~ ... baJ;).ksto .issue ••• p.Q more. paper>thantl,1ey haye§p~cieip.. their vaults,()r .l:>yeffect ing\an •• entiredivorce •.··.petweenhank-pap~r and "its •. pretended specieba~is, and .thepow?r ,0£ paper to depreciate .. specie. is atain ••end'i",so long ••• as. the fiction •is•• kept up,.·.the .silY~rdollar iSideprecia ted, and· tends ,toernigratef()f ••.the· .purppse.·.0£ tta'\7clling in .foreign' parts ; hut, the. rnom~nt. the •. fiction is c1estr0}ted,the '. po-wex-p±paperpyer .. 1netalceas~s ... , By .~ts '.;n. trinsic,nature ... spe.cie"is ·'.D.1e17chandi,~eLhaving, its value .•• de-· termined"as •••such,hy.supplyand ·d~lllanc1; hut on .•• the CoD.\'"

tra~r,papermoney .. is,.hy it~··iAtrins~c ••..n.~t'Ure, . not .mercllan dise, but the •• means •.• wherebym.er<;ha119i,se.is .. ~xchallged, •and,. as•. such, 'ought always toQecom.mensurate. in,quality .with .. t~e amount •of •merchandis.e tQbe exchanged, be thataUl0'Up.t great ·orsmaU .••·.•.•. Mutzudmon;ey.. is .measurt?d.by·speC'ie, but.·is in nowa:Ylfssimilated,toit;,an;d .therefqre .it~issue C'anhqve noeffeC'twhatever .·tocause,arise .or}all. in the price of the preeious\metals." .. / «y", ..•.•.•....••.•,'.' ••.•...•" .'. , lJhis·· is"oneo£'. the .most •••'iml'pJ:"tant.truths .~n ·bllanRC,.·.··.rl1l;Q. perfectly .• aecQunts,£or .•.Mr.<;We,stfup.~~positi()l1.. ."Wllenk~ says that •money can. be made very •. much more .plentif ttl.an.4 yet maintain its value, he is .sp~akit1g0f m.u}ualmoney;yv-hen he says· that,;the ·.present,value· 0£ll19ney(jepends up()nmonqply orsfarcity,ne. isspeak.ingof111erC'hanilis~,money.

,.Ass~nsibl~mightone .say to .fvit;·.,Fisher, 'YehQ is. 1l.sta,flch oPJ?onento£-J:.• overnl11el1tpQstalservlce"that .•..'tlle~11l1l1tdla teo effeFtof .,the,.total ,ahste,n~ion ,.of.. govern11ilentfrotn.its iPfo,teST tio~()fthei,ublic .f179111.. the ,rogl.lery o£priva teiwail"'~~J:riers wOlild,be tl1~,~,agreatcrop.(}f£t~shs<;llel11e~"\Vol.lld .offer,tpem selvest()tll~e'~desirQUs,()£ intrl.lsting •. ~ny\oftheir •.• 1e~ters .••t(). oth!rs to car~y. A verylarge proportiono£ the~eschem;es.. possibly-the,inajQrity---'W()pldbe .••ulls0und.". .W"e~l, iwhat: <of it? > Are We pnthis acc()unttogive up :freedom? >No,says Mr.•;fisher .•. 'lflut" then, what is. the ~ot;ce of ,the •consideration,? ..•. ··Mr .•Westt¥p? s •money notonlYii ,~how\> ,tpat. A.,hasgiven ... B a .conditionalititletocertainwealtl!, bu~. guarantees tll~,~,tris, wealthha.s, b~ell preserveq. . That· is, it affords a guaran.tee so nearly perfect that it is. acceptable. If youta~t~1110rt gage,op.ahop~eandtheoWller insures it in your £avqr~~he guarantee.,ag4inst Jossby.:firejsnotp?;1;fec~, .sincethejA~\lt:154 INDIVIDU AL LIBER TY ance company may fail, but it is good enough for practical purposes. Similarly, if B,the bank, advances money to A against a mortgage on the latter's stock of· goods, it is within the bounds of possibility that A will sell the goods and disap pear forever, but he will thus run the risk of severe penalties; and these penalties, coupled with B's caution,make· a guar antee that practically serves. To be sure, Mr. Westrup's money does not assure the holder that the bank will· deliver the borrowed articles on demand, but it does assure him that he can get similar articles or their equivalents on demand from any customers of the bank that have them for sale, because all these customers are pledged to take the bank's notes; to say nothing of the fact that the bank, though not bound to redeem on demand, is bound to redeem as fast as the mort gage notes .mature.

The truisms which Mr. Fisher enunciates so solemnly do not establish the absence of any necessity for enabling all wealth to be represented by money. This necessity is shown by the fact that, when the monetary privilege is conferred upon one form of wealth exclusively, the people have to obtain this form of wealth at rates that sooner or later send them into bankruptcy. The value of gold would be reduced by mutual banking~ because it would thereby be stripped of that exclusive mone tary utility conferred .upon it by the State. The percentage of this reduction no one can tell in advance, anymore than he can tell how much whiskey would fall in price if there were unrestricted. competition in the sale of it. Neither gold nor any other commodity is bought by people who don't want to consume it or in some way cause others to consume it. Gold is in process of consumption when it is in use as currency.

Mutual banking might or might not cause gold to lose its pre-eminence as the most thoroughly constituted value. If it should do so, then some other commodity more constantly demanded and uniformly supplied would take the place of gold as a standard of value. It certainly is unscientific to impart a factitious monopoly value to a commodity in order to make its value steady. . Other. things being equal, the rate of interest is inversely proportional to the residual increment of wealth, for the reaINDIVIDUAL LIBERTY IS5 son that a low.ra1:e of interest (except-when offered to an already bankrupted people). ,makes business actiye,.·,causes. a 1l1ore;.universal.employment •. o£Jabor, and. thereby adds to pro ductive capacity. The residual increment is lessin the United I(in~dom, where interest is low, thanintb.e United Sta1:es~ where.,'interest· is. high, .hecauseother ;.things are not eQllal.

But in either country t~is, incrementwoul~be greater than ~t now is if ,the rateofinterest'wer~ to> fall. 'I .' lfsoldbecatneasabundap.t,a~copper, Jegls1~tiort"if. it cho~~" ~ould maintain. its yaluepy '. decreeing•that .we •should" drink ~nly·. from ·gold g9ble1:s~ ..•...1£•• the •• value were. maintained, .. the tolume,()f money '. ';V0~lqhegreater on. a,.ccountof the<~bun panceo£gold. ThIS Increa.seof volume would lqwer, t~e ... rate Q£ interest. I.A; voluntary custom of sellingprefere;ntially for gold would ~ot;be. a monoply, but there is no such voluntary custom. ]Where cattle are used voluntarilyasel mecliumof exchange, ~hey;are not: ,a monopoly; butw1}ere theryis a law that 0.rtl....y. ~attleshall be so used, they~reamonopdly. .. i·.·.· It .is.·not.in.cumbent on .i\.n,a.rchists••• to .shQw.an atlalogy·.•. be ~W6¢n a law ·to. require the. e~,clusive.~onsutIlPtion,. of.. hand ~ade·bricks .. andanylaw.speci£ying.that ~heword.Donar in ~ Ipolld$pall imply a ••.. certain quantityofgQld. . But. they are Ihound and: ready, to show an analogy' bet.w:eenthe. nrst ..tlamed Ilaw~tldianylaws prohibiting or.ta~ng Jhe issue of notes, 'of Jwha,tever•d~scription, "int~nd:ed, for cirgtllationa$ currency.

IGovernments force people1:() consume gold, in. thesenseth~t Ithey give people n()alternativebu~< thato£ abangoning the use lofmoney. '. When governtIlent swaps off gold for othetcom 111l0diti~s, •it. thereby .consu1l1~s it .in .the economic .s~nse. The I,United•States government .Pllrchases its .gold' alldsilver.It lean hardly he ~aid,however,tllatitpurchases silver in an /open1ll.al;ket, because, being. obliged ,by .law to buy so ·1ll.any imillionseachmonth,it. tlterebycreates.· an artificial market. Again· Mr••.Fisher came'.·.back, ·.in his'· 'characteristic style,. to which" Mr. Tucker replied in the following manner: Mr. Fisher's article is nothing but a string of assertions,.

156 INDIVIDUAL LIBERTY most of which, as matters of fact, are untrue. The chief of these untruths is the· statement that in exchanging gold we do not consume it. What is consumption? It is the act of destroying by use or waste. One of the uses of gold---and under the existing financial system· its chief use-is to act as a medium of exchange, or else as the basis of such a medium. In performing this function it wears out; in other words, it is consumed. Being given a monopoly··of this ·use or function, it has an artificial value,-avalue which it would not have if other articles, normally capable of· this function, were not forbidden to compete with it. And these articles suffer from this restriction of competition in· very much the same way that a theatre forbidden to give Sunday performances suffers if its rival is allowed the privilege. Mr. Fisher may deny the analogy as stoutly ashechdoses;it is none the less established.

This analogy established, Mr. Fisher's position falls,-falls as surely as his other position has fallen: the position that gov ernment cannot affect values, which he at first laid down with as much contemptuous assurance as if no one could deny it without thereby proving himself a born fool. So there is no need to refute the rest of the assertions. I will simply enter a specific denial of some of them. It is untrue that gold is not withdrawn from the market to raise its price. It is untrue that the gold mines are kept open principally to sup ply the arts. It is untrue that, if· gold were twice as dear or twice as cheap, bankers would not lose or gain; the chief business of the banker is· not to buy· and. sell gold, but to lend it. And I believe it to be untrue-though ... here I do not speak of what I positively know-that English law permits the establishment of such banks as Proudhon, Greene, and Spooner proposed. :TvIr. Fisher certainly should know more about this than I, but I doubt his statement, first,because I have found hiITl in error so often; second" because nine out of ten Massachusetts lawyers will tell you with supreme con fidence that there is no law in Massachusetts prohibiting the use of notes and· checks as currency (yet there is one of many years' standing, frained in plain terms, and often have I astonished lawyers of learning and ability by showing it to them) ; and, third, because I am sure that, if such banks were legal in England, they would have been started long ago.

INDIV/ID.UAL LIBERTY 157 Another Jo~~ letter from Mr. /Fisherhere intervened andtheeditot of Liberty took up each point and care "'fully reJ>lied<to it:. ..A l~bQt;er'~ prodtict •is>suchportionof fhe/va1ue ()fthat which he delive+s~o~4e~ons,ti~er aSihisowll labor has con. tributed. .To ex:pect; the laborer's wagestohuythis value ba.ck isto/expe<;tno more than simple equity. If ~0rn.eoth~t" laborer hascolltributed •... to .• th<r total ,valuep£the •.•. delivered article. byrtnakillg atopl., which>has peen used in. its.•. map.ufa~ t:qte"by.theJaborer'who .delivers.it, .then.t;he. wages of. the, Ja horerwho makes .tpe, tool .••.~hould,.also.,.buyback·his product ordgeproportiQn .ofvalue,·and ·w()uld.doso under .. liberty. But his portion of .t;he value and therefore his wage "\V0\.Jld be me~sured by the·. wear and tear 'Which thetoQl hadsufferefi. in •this •.single •act •• of· .manufacture, .,and npt .. byany suppose~ hen,ent·conferred ·.hy·t4e.· use •. o£tlJe \tool Qver an4 •. above its wear and .tear ..,.. In., other •• warps, the ',. tOQl..maker'W01l1dsimply sell that portion •()f,the tool destroyed in the>act ofmanufac tureinsteadof lending. the' tool .and •.receiving. it again .,ac companied bya' value. which would more than restore it to itsorig~nalcondition~ .....••..Mr•.. Fisper's ••• intet;Br~tatio~ rests,. fur th~rmore, on. a mis.c()n,ceptionq£ th~ .ter~wages. '.' \Vllena far~ethire~ a day-lap()r~rforadoll;lrad~Yiap.-dhis board, th~ip()a1"dis;as tr141y a part of the'rages~s istlle (folIar; aJ;1d.

when 1 saythattlJe laborer' s~agesshoul~puyback his prod uet,Illlean •. that,•.the.total. a111-()ullt.whi~11 ...•hereceives .for his labor, whether in advance or syl;>sequently,and. whether .con'" sM111e4.before.•. oraftertlle .' perfopn~nc~,of ·'hislabor, should be equal in market <va1lJe to his totaL contribution ·tothe. prod uctupon .which heybest()yr$llis,labor •.••·1s·.this ·.exp~s~ing t.oo much? If SQ, 'rnight .laskt() '\Vholll.theexc~ss of product over wage' should equitably go? Everyman who postpones qonsl4tnP~iontakesarisk.••1£ he :keepscQ111111oditri.e.~ -Which he•. d~s;qot,wishto .•·•.constUne,·they may.perish·Qll •• his .• hallds... If .he:exchanges .... the1l1 for.gold~ .. !h.e goldr1l1Clydeclineill value.. If.heexchal1gesthe1l1 for govern men,t••,paperpr()~sing gold.on .demand, the.papermay. decline iJarvalt..e., And it. heexchange,sthelll.formutual.moJ;1,ey, .this 158 INDIVIDUAL LIBERTY transaction, like the others (though in. a smaller degree, we claim), has its element of risk. But, as .long as merchants seem to think that they run less risk by temporarily placing their valuables at the disposal of others than by retaining pos session of them, the advocates of mutual money will no more concern themselves about giving them recompense beyond the bare return of· their valuables unimpaired than the advocates of gold and government paper will concern themselves to insure the constancy of the one or the solvency of the other.

As for the ttsomething out of nothing" fallacy, that is shared between God and the Shylocks, and, far from being enter tained by the friends of free banking, is their special abomina tion. CtCredit without remuneration!" shrieks Mr. Fisher in horror. But, if credit is reciprocal, why should there be remuneration? CtDebtwithout cost!" But, if debt is recipro cal, why should there be cost? tCDnlimited or very plentiful money without depreciation!" But if the contemplated ad dition to the volume of currency contemplates in turn a broadening of the basis of currency, why should there be. depreciation? Free and mutual banking means simply reci procity of credit, reciprocity of debt, and an extension of the currency basis. It is the especial claim of free banking that it will increase production. To make capital· fluent is to make business ac tive and to keep· labor steadily employed· at wages which will cause a tremendous effective demand for goods. If free bank ing, were only a picayunish attempt to distribute more equita bly the small amount of wealth· now produced, I would not waste a moment's energy on it.

I am interested in securing the' greatest possible liberty for banking so that I may profit by the greater competition that would then be carried on between those .born with a genius for finance. But what about Proudhon, Mr. Fisher? He was no amateur. He could value, not only a horse, but a rail road, the money kings utilized his business brains, his Manual for a Bourse Speculator served them as a guide, and, when he started his Banque du Peuple, it immediately assumed sucb proportions that Napoleon had to construct a crime for which to clap him into jail in order to save the Bank of France from this dangerous competitor. The suppression of Proudhon's bank was a coercion of the market. And in this country atINDIVIDUAL 'LIBEltTY 159 temptafteratternpt has" been made to introduce •credit money outside .,of goverllment ." and, national. bank ••,channels, ,•and.,the promptness of suppre~sion. 'has.always been, proportionaJ to •the success of •• the ". attempt.

I.te11 Mr. Fisher.,again that •it. is; a ',. crime. to issue, and cir culate as currency a note promising ,to deliver iron atacer taintiine. I know that it is a crime in this country, and I be lieve that the laws of England. contain restrictionsthatoc co1rtpli$hv1~tually., the s:nne result. There,is no contradiction ,between mypositio ll,••and •Greene's. Gr~ne. beld, as, I hold,.that the, existing m()nopoly imparts' an artificial value to"gold, and, that the abolition. of the monopoly wo~ld •take '.away this .•,artificial" value. '.·.But,he'also held, '.asI hol~, ,that"',after .' this reduction of '. value had. been effected, theyariations.,in .the volume o£.mutual.'money ,would 'b~,independent· of,· the price of •specie. Inotherwords,thisloeduc.., tion'of •• the'value of, gold' ,from" the artifi.cial~o',· thenoJ;maI pointwiH .,be effected by ,the,equalliberty' g~ven .,'.to other c~mmodities to serve ,as'·a basis.o£'currency;but,. this~iberty having been granted and having taken effect, the issue of mu"

tual moneyagainstithese. ,commodities, each.·note being:based on a, specific portion, of"them,".cannot affect ,the value ,of any of ••. thesecommodities,of. which gold is one. ," L leis .no answer to,the charge.of, monopoly to say ,', that any ,one can.huyand s.ellgoldcoin.Noonedeniesthat., The monopoly complained of is this,-thatonlyholdersof ,gold, (and;fihthiscountry, of government bonds ):can use tneirproperty ascurreQ.cy,or asa basisi of 'currency •.••.•'. Suchamonop()ly •has >eyen,moreef feet in enhancing ,the price of gold ,than would a monopoly that snouldallow, only certain persons to deal in .gold. The price of gold is determined. less by the . number of persons dealingin it than by the ratio of the total supply to the total demand. The mono,poly that the Anarchists complain of is mollopoly that increases"the demand ,for ,gold by giving it the currency function to' theexclusionofoth~rco111modities. If my whiskeyiHustration isn't satisfactory, I will change it. , If whiskey were the onlyalchoholic drink allowed to be used as a bey~rage, it would command a ,higher price than. it commands now. I should then tell Mr. Fisher that the. value bfwhiskey was artificial and that free rum wou.ld reduce it to its normal point. If he should then ask me what the normal point was, 160 INDIVIDUAL LIBERTY I should answer that I had no means of knowing. If he should respond that the fall. in whiskey resulting from free rum ((would be limited to such relinquishment of profit as would be forced upon the dealers by competition," I· should acquiesce with the remark that the distance. from London to Liverpool is equal to the distance from Liverpool to· London.