His first problem is:
HOW TO PROSPER.
His second problem is:
HOW TO GOVERN GOVERNMENT.
The solution of one is the solution of the other. It lies in the understanding and exercising of his inherent money power through a non-political money system.
Because man has not mastered the problem of achieving prosperity, he has turned to government for its solution. Thus he has complicated his problem, for government offers no solution to the problem of prosperity, while its intervention in this primary problem brings the additional problem of how to govern government. When government undertakes to solve man's problem for him it undertakes the mastery of society and it cannot be both master and servant. Thus it has failed in both spheres. By intertwining the prosperity problem with the political problem man has snarled the threads and no solution of either is possible without separation.
When man has mastered money he shall have mastered not only his economic problem of prosperity but also his political problem, for he will see that money has no place in state functions, and, the money power being entirely in his own hands, he will easily master the state and clearly define its services. Thus money must be seen as the means of mastery of all economic and political problems. Until we have mastered money we shall not master any of our problems. Not money, but a false money system, is the root of all evil.
We shall find that money power is inherent in all of us; and that this power can not be exerted for us. We must either exert it or become suppliants to some authority that issues money, and which, when it issues, can do so only in its own behalf. Since we have looked to government to exert the money power, either directly or indirectly by the legalizing of the banking function, we have innocently fashioned our own subjection from which nothing but the correcting of this error ran extricate us.
It is useless to fret over our self-imposed oppressions or to quarrel with our government over ills that have resulted from our having placed upon government the impossible task of issuing money in our behalf. Public officials are just as ignorant of the real cause of economic and political miscarriages as we. However earnestly they may strive to exert the money power in the public interest, they are doomed to failure because the laws of money make it impossible.
The first cardinal truth of money is that no one, whether individual or government, can issue money without buying something. By inviting government to become a money issuer, we invite it to become our customer. Then we quarrel with it if it tries to buy something that we deem within the province of private enterprise.
The second cardinal truth of money is that money must be backed with something, and the act of backing can only be the act of selling. Since we object to government buying and selling anything useful, but nevertheless insist that it issue money, we force it into boondoggling or public works that do not conflict with our private enterprise. Thus we compel government to issue unbacked money by making it impossible for it to sell anything in exchange for the money it issues. As this process of issuing unbacked money continues, each unit grows weaker and thus the dosage must be increased. Hedged about, as government is, by our objections to its invading private enterprise and yet keeping it under the pressure to issue money, it is ultimately forced to the most consummate public works spending program, which is war.
Obviously, the economy must have money supply; and, since we are too ignorant to understand that not only the power but the duty to issue money resides in ourselves, pressure falls upon government to issue it. To issue money, government must buy something. We divide on what it should buy and from this division arises our favor for fascistic or agrarian or proletarian programs of expenditure. While we do not realize it, nevertheless, our partisanship is merely a preference as to the channel through which the government is to pervert the economy, for perversion it must be, since expenditures by government lead either to government ownership or inflation. Each channel of expenditure has its proponents and opponents and the one that has the broadest appeal and the least opposition is armament building - which in turn broadens into war. Thus Mars is continuously beckoning to the politician as the easiest way out of a difficult political problem. We bring all our ills upon ourselves, including the affliction of war, through our ignorance of the laws of money which no government can alter or suspend.
We must first of all assume responsibility for the solution of our primary problem of prospering ourselves. To do this we must master money. Having done this, we shall find that vicarious money issuing power is a pure illusion and that we can and must exert the money power by and for ourselves. This step accomplished, we shall find that we are no longer petitioners of government but that government is completely dependent upon us. Ipso facto we solve all political problems and end war.
Government must be governed by a principle that defines the separate spheres of business and politics. When we take the money power out of politics, and allocate it to its natural sphere in private enterprise, we establish a proper coordination between the profit and non-profit motives of society. Without this allocation the two spheres are in constant conflict, breeding all manner of pressure groups and isms that seek to reconcile the irreconcilable. Money is an instrumentality of the profit motive and must be issued and backed only by private enterprisers. Economic and political perversities are inescapable while government is admitted to money power. Since all national governments have, up to the present, been money issuing powers we may justly attribute all the economic and political ills of mankind to this single error. This is a sweeping claim - but it is made deliberately and in full consciousness of its broad implications. We have not yet learned how to constitute government, nor do we comprehend the full meaning of private enterprise and its power to bring universal prosperity.
Empowered, as governments are today, to control the money system, they are a constant menace to the peace and prosperity of mankind. Mad men, selfish men, ambitious men, fanatics and crackpots may at any time seize the reins of government and drive the state like a juggernaut over the people. When government is invested with money power it rises above the citizen and under the profession of protecting him may actually constitute the greatest threat to his well-being and safety. The power which control of the money system gives to government to interfere in and direct and even take the life of the individual should not exist on this earth. No man or group of men is warranted in holding this terrible power over fellow men.
Democratic government to date has been a pure illusion. All that has been accomplished by voting or revolting is a change in the personnel of government. The perversive money power remains to serve the evil designs of the dishonest politician and to frustrate the plans of the virtuous. Money power means budget power and it is folly to imagine that the citizen can control government unless he can control its budget.
Political democracy is a system of tolerance; not one of active support. The citizen is engaged with the duties and problems of his private affairs and if government does not especially annoy him he takes it for granted. It is only when it burdens or bothers him that he is stirred to action. As a citizen he functions negatively, i.e., he doesn't trouble to give approval; he registers only disapproval. Since this is the citizen's natural attitude toward government, he must be put in position not only to protest a completed act but also to veto a proposed one. He must have both voting and vetoing power. Therefore government must be so placed that it can have no existence independent of the citizen, and must ask for every penny it proposes to spend. This monetary control by the citizen over the state is the only form of democracy that is effective. Until we have attained it, we merely beguile ourselves with our elective processes.
We must have a broader voting process than the mere marking of a ballot annually or quadrennially. We must vote money - and, to vote it freely and effectively, we must control this all-powerful ballot, without government interference. Thus we will have elections every day and every hour, controlling both business and government by the simple process of granting or withholding patronage. Until we have monetary democracy we have only the shell of democracy without the substance.
As long as we cling to the superstition that we must look to government for money supply, instead of requiring it to look to us, just so long must we remain the subjects of government and it is vain to follow this or that policy or party or ism in the hope of salvation. We can control government and our own destiny only through our money power and until we exert that power it is useless for us to debate the pros and cons of political programs.
THE FIRST STEP
The first step toward complete economic and political freedom through the ultimate abolishment of the political money system is the establishing of the private non-political money system to demonstrate its feasibility.
The new concept of money is that, to be sound and stable, and adequate, it must spring solely from the same source from which all wealth springs, namely - the people, and that, to effectively coordinate with our mass production system, the people must issue the money necessary, to buy their production.
The program is for state-wise action by the people in their respective states, to set up Valun Exchanges. (The word "valun" is compounded from VALue and UNit and pronounced vallen.) The Valun Exchanges will clear checks for their members and with each other nationally and internationally - making one money system, unifying trade regardless of political divisions, and obviating foreign exchange.
The proposed new money unit is called valun and is to be issued in checks, bills and coins. The valun is to be made par with the 1939 dollar, but entirely disassociated from it and every other political unit. Thus it offers escape from the coming inflation.
The projected plan for a private money system, designed both to perfect private enterprise and preclude political perversions, rests on this basic proposition:
Money can be issued only in the act of buying, and can be backed only in the act of selling. Any buyer who is also a seller is qualified to be a money issuer. Government, because it is not and should not be a seller, is not qualified to be a money issuer.
This cardinal statement brings the money function clearly within and makes it a part of private enterprise, and takes it out of the political sphere. Thus private enterprise becomes truly private, and money is transformed from being a tool of politics and finance to a utility for mass distribution of mass production of goods and services.
By democratic control of the proposed Valun Exchange, each person and business would have the power to create money equivalent to his or its power to produce, and there would be no aristocracy to hold this power exclusively or disproportionately. In brief, the capitalist system would be a popularized and equitable system, because everyone would be a capitalist, and would command the sphere of his own activities. The composite of such command would be a popular mandate for prosperity and peace and economic union of all peoples.
What we have had to date is a politico-capitalism - an unnatural alliance between politics and business, corrupting to both. Capitalism cannot realize its purpose of prospering the people and thus pacifying the world, and the state cannot become a true and impartial public servant until the political money system, the tie that binds them, is severed and the private enterprise money system is instituted.
EVILS OF THE PRESENT SYSTEM
The present money system has three basic evils:
a) It permits money to be issued privately, only by a limited number of persons and corporations who have bank credit, and makes such credit subject to fee. Thus it establishes credit as a privilege rather than a right, and makes it an object of profit rather than a utility to further the production and distribution of wealth. It denies to producers generally the right to issue money, thus making it impossible to expand buying power to potential producing power. This results in defeating the mass production system.
b) It permits the government to issue unbacked money. The only way the government could back its money issues would be to go into the production of goods and services; and this would compete with private business. Thus the problem offers the two horns of a dilemma, both of which lead to socialization. If it backs its money issues with goods and services (and there is no other way it can be backed), it executes a frontal attack on private enterprise. If it issues money without backing it (as it is doing), it executes a flank attack on private business through inflation - since to issue money without creating equivalent values is to inflate.
c) It permits ambitious or designing or fanatical men who are in control of government to light the fires of war, threatening the lives and fortunes of untold millions. This terrible power lies solely in the political money system since armaments spring from money and money springs from government fiat, whereas it should spring only from the fiat of the people who would thus hold the veto power.
SOCIALIZATION THROUGH SPENDING
Government spending in all nations throughout the world is leading directly, through government ownership, to socialization and the destruction of private enterprise. It is not a triumph of socialistic ideology; it is simply a condition forced by the political money system. Our own government has become a "buyocracy" that operates a bureaucracy employing (December 31, 1943) 3,162,199 civil employees. These Federal employees, residing and operating in our states, outnumber the employees of each state government from three to six times. Our state governments, because they have not the money issuing power, are being subordinated to one centralized government and home rule is being impaired. Besides the 11 millions in the military and the 3 million civil employees of the Government, there are about 30 millions employed in producing for the government, making a total of about 44 million persons working directly or indirectly for the Government, leaving only about 30 millions in private enterprise and local government service.
The "buyocracy" at Washington is literally buying its way into control of our very lives. Yet there is nothing back of the money it so freely issues except what the people put back of it with their labors. The Government, popularly believed to be the backer of money, is in fact the only one that does not back money. Except for postal service, there is practically nothing purchasable from the Government with the money it issues. Even gold and silver cannot be bought from the Government, and therefore these commodities are not back of its money. Private enterprise supplies practically all the backing that exists for our money. Since private enterprise is the sole backer of money, simple logic dictates that it should be the sole issuer.
When government issues money and offers nothing in exchange therefore, the issue is the same as counterfeit money, with this difference: counterfeit money can be detected and extracted from the money supply, while unbacked legal tender merely blends with all other money, making each unit weaker.
The Federal Government, through its "buyocracy," now holds mortgages on two million farms (1/3 of the farms of the nation) to the extent of $3 billions. It owns 2,500 war plants at a cost of $16 billions and comprising 1/4 of the nation's entire industrial plants. The H.O.L.C. and F.H.A. and F.P.H.A. own 719,329 city dwellings at a cost of $2,198,542,204 of which $1,883,543,602 is temporary war housing. Mortgages held on urban homes amount to $1,360,154,742. It is constantly acquiring new lands and properties. The following is from the Congressional Record, November 18, 1943, page 9767:
"This total of 363,600,533 acres owned or to be acquired by the Federal Government is equal in size to the combined area of Maine, New Hampshire, Vermont, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New York, New Jersey, Delaware, Maryland, West Virginia, North Carolina, Virginia, South Carolina, Georgia, Florida, Ohio, Alabama, Kentucky and Indiana. It represents 20% of the area of the United States.This land ownership (within the states and exclusive of the territories) held by the Federal Government, ranges from a minimum of .02% of the area of Connecticut, to as much as 76.3% of the state of Nevada. Lands and buildings held by the Federal Government become tax free, thus diminishing the tax income of the state in which it is located.
"From July 1, 1940 to January 30, 1943, land acquisitions totaling 14,884,244 acres have been acquired or are in the process of condemnation or purchase. This represents a total of 23,256 square miles, a land area nearly equalling West Virginia."
In his recent book, "Bureaucracy Runs Amuck," Lawrence Sullivan says:
"Where shall we turn today to find the acknowledged area of free enterprise? Not in agriculture, surrounded completely by quotas, parities and soil-conservation allotments; not in housing, banking, amusements, insurance, electric power, medicine, labor or shipping. Through all its agencies, the federal government now is engaged directly in forty-six different lines of business activity. And through loans and liens, it has a proprietary interest in 77 additional economic pursuits.Continuing, Mr. Sullivan says: "When Mr. Berle uttered this sweeping prophesy, the federal investment in U.S. industry, transport and finance stood at about $12 billion. At the end of the fiscal year 1943 this investment stood at $37 billion."
"Adolph A. Berle, Assistant Secretary of State, and one of the original brain-trust elders of 1932, thus presented the official logic of our march to socialism in his testimony before the Temporary National Economic Committee on May 22, 1939:
"...If, therefore, wealth is to be created by creation of government debts, the scope of government enterprise must be largely increased. Briefly, the government will have to enter into direct financing of activities now supposed to be private; and a continuance of that direct financing must be, inevitably, that the government will control and own these activities. Put differently, if the government undertakes to create wealth by using its own credit at the rate of $4 billion or so a year, and if its work is well done, the government will be acquiring direct productive mechanisms at the rate of $4 billion worth a year, or thereabouts. Over a period of years, the government will gradually come to own most of the productive plants in the United States."
It may serve the purposes of partisan politics for the "outs" to blame conditions upon the "ins." But the causes that are developing the federal government into a "buyocracy" are much deeper than administration policy. The political money system that began before the United States was born, and was given approval by the framers of the constitution, is merely beating the fruit of the parent seed and will not be altered by a change in administration. Crediting the present and all past administrations and all future ones with the most patriotic efforts within the political money system, it must nevertheless operate adversely to both government and people; and this statement applies not only to our government but to all governments. What is happening in America is happening all over the world. The political money system is forcing socialization everywhere and the only escape of private enterprise lies through the private money system which also offers the state its only security against ultimate public revolt. The dilemma previously outlined confronts statesmanship everywhere.
Approximately 60% of everything produced by the people today is being bought by the government. Therefore our current production is 60% socialized. To be sure, this is a war condition from which we hope to escape, but before we can escape, we must pass through the serious trial of inflation, during which our present money system may break down completely. But, no matter how much the dollar may depreciate through the process of government spending and lack of backing, the title to the property acquired thereby will remain with the government.
So let us get this clear: The issue between private enterprise and collectivism is not a matter of choice as long as the political money system prevails. If the government holds the money issuing power, it will either buy out the people and control them or ruin their enterprise system through inflation. If the people exert the money issuing power, they will buy the services of the government and control it.
The source and flow of money determine the social, economic and political outcome. The state being a single unit, its money issuing power develops autocratic control of the people, but money issuing power in the hands of the people develops - since the people are many - a democratic control of the state.
Therefore sovereignty of the people and democracy can be assured only if the people exercise their money power; and dictatorship in some form or other can be realized only by the government's exercise of the money power.
Consciously, or unconsciously, we align ourselves with either private enterprise and democracy, or with collectivism, as we take our stand in favor of either the private money system or the political money system.
If we would oppose collectivism we can do so effectively only by opposing the political money system. If we would uphold private enterprise and democracy we must do so by supporting the private money system.
In the play of propaganda there are many false passes. Let us keep our eye on the determining factor and not be diverted by dissembling phrases and ideological opiates.
As the inflationary crisis approaches, it is fortunate that we have the private money concept that this book presents. We can begin at once with a plan of reconstruction that will reverse the trend toward socialization and forever preclude future disturbances and the economic perversions that are inherent in the political money system. We can build a money mechanism that will coordinate with our mass production mechanism and thus give free rein to our productive capacity. We can assure ourselves that every unit of money is backed by value, and can thus prevent inflation and maintain a stable price level. We can not only abolish unemployment, but we can assure every worker the full enjoyment of his production. We can abolish booms and slumps and maintain constant production. We can end Government deficits and the insidious socialization that follows from it.
If we would accomplish all these things and thus perfect out private enterprise system and save it from imminent inflation and ultimate communization; if we would preserve the sovereignty of our states and our federal system of government, we must adopt a private money system designed as a utility, responsive to the needs of mass distribution. This is a challenge and a bid for private enterprise to vindicate its philosophy and perfect its operation and thus assure its triumph in its issue with collectivism.
FREEDOM AT LAST
We are really going to be free at last, because we are going to discover that the power of liberation is within us. We need only to comprehend our inherent money power.
Freedom means freedom to manage one's self and freedom from management by others. Obviously then, the political management philosophy, so prevalent today, cannot bring, but rather denies, freedom. It is racing to its doom; we are in the midst of a great revolution.
A new dignity is coming to us. From the wreckage that is being wrought about us, we shall emerge as commanders of our private lives rather than guinea pigs for political quackery. Every social problem, every national problem, every world problem is but the composite of the problems of individuals arising from the evil of external management and from interference with self-management. The individual has been thwarted in his pursuit of happiness; and the sum of these individual frustrations produces social convulsions. We have delegated, or been robbed of, too much power; we have exerted too little. We must have a democracy of private dictatorships.
Though our beginnings and our endings be inscrutable, we know that we exist in accordance with a natural plan. Is it not then the basest profanity to rest our aspirations upon man-made laws rather than those of nature? Could anything be more irreverent and vulgar than to entertain political promises which offer to provide for us from the cradle to the grave? Could we live and move and have our being if nature were planless? Why then are we beguiled by political planning? How can we, by entertaining the paternalistic planning of the would-be father-state, be so depraved as to imply an absence or failure of nature's plan? We are meeting a well merited rebuke in the failure of political planning that is falling upon us, a failure from which we shall be turned to introspection and respect for natural laws and the dignity of the individual.
This new-found dignity of the individual will renounce external support and assert the inherent power of self. It will reduce the state to the status of a servant and denounce its pretenses of being a patron and guide. So much power will be self-asserted by the individual that there will be little left for the state to exert. Such sovereignty of the individual will follow from the simple discovery that the money power is inherent in man and perversive when exerted by the state.
This truth we shall know and this truth shall set us free. This freedom, once won, will be the guarantor of all freedoms; the end of all tyrannies of every character. Parchment freedoms, political proclamations, charters and constitutions are hollow verbiage without money freedom - and with it, they are mere surplusage.
Assailing us from all sides, come propaganda, pretense, hypocrisy, incompetence and futility as the result of the malexertion of the money power by the state. We can, we must, we shall become masters of our inherent money power and thus assure tranquility, prosperity and happiness to ourselves and our fellowmen.
Turn if you will from the war's carnage; from statesmen's sterility - from contemplation of the ominous aftermath - and visualize a community of men and women within the community of one of our American states, laying the foundation of a new world order.
Because a group of common folk in one spot of the earth shall have declared the principle that money power is inherent in man, and that money power is sovereignty, democracy shall rise from the blood-soaked earth to triumph over war and economic adversity.
Among the casualties of the war will be the national political money units of the world, killed or maimed by inflation. Born will be the new principle of private money for private enterprise; non-political, non-isolationist, non-manipulative and non-inflationary.
In one of our forty-eight states reside the pioneers of this new order - wherein the will of the common man to work and win in prosperity and peace shall not be defeated; wherein man will govern government and will reflect through it his impulses of honesty, amity, frugality and tolerance rather than be subject to its perversive power.
In one of the forty-eight states of this Union the leadership of the new America will give hope to a distracted world that humanity shall not be frustrated, and that the dictator, political, economic and financial, shall pass from the earth, leaving universal prosperity and perpetual peace.
This book is but a rough draft of the charter of freedom,
prosperity and peace that will be projected by the men and
women who effectuate its principles in action, in democratic
dynamic action, with flesh and blood and mental resolve rather
than with paper and ink.
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