isii 
 
 
 
 
 
 
 
 
 
THE 
 
 FINANCIAL 
 
 Problem 
 
 ITS RELATION TO 
 
 LABOR REFORM AND PROSPERITY. 
 
 THE PFflNCIPLES OE MONETARY SCIENCE. 
 
 DEMONSTRATING THE 
 
 j^bolitior) of li)t<^st to b<^ dr^auoidabl^. 
 
 AlFREE IB. "RIVESTRTJP, 
 
 BECKKTAHY OF THE 
 
 MUTUAL BANK F> R. O F> A G A N L> A 
 
 I 
 
 Honorary Member of the Sociedad Las Closes Produrtoras. 
 
 AUTHOR OF "CITIZEN’S MONEY. 
 
 PUBLISHED BY THE 
 
 MUTUAL BANK PROPAGANDA, 
 
 Headquarters, 343 Michigan Ave.. 
 
 (Take Elevator.) 
 
 CHICAGO, ILL. 
 
 1891. 
 
McLACHLAN & SCHLESINGER, 
 
 AKTISTS JL.2X1D PHOTOGEAPHERS 
 
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 FINEST WORK IN THE CITY AT LOWEST PRICES. 
 
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 CHICAGO. 
 
THE 
 
 ’inancial Problem 
 
 ITS RELATION TO 
 
 LABOR REFORM AND PROSPERITY, 
 
 THE PRINCIPLES OE MONETARY SCIENCE, 
 
 DEMONSTRATING THE 
 
 ^bolitioo of li)t(^5t to bi? ilQauoidabli?. 
 
 BY 
 
 Alfred "Westestte 3 , 
 
 8ECKETARY OP THE 
 
 MUTUAL BANK PROPAGANDA. 
 
 Honorary Member of the Sociedad Las Clases Produrloras. 
 
 AUTHOR OF “CITIZEN’S MONEY.” 
 
 PUBLISHED BY THE 
 
 MUTUAL BANK PROPAGANDA, 
 
 Headquarters, 343 Michigan Ave., 
 
 (Take Elevator.) 
 
 CHICAGO, ILL. 
 
 1891. 
 
 DONOHUE & HENNEDERRy7pRINTERS AND CINDERS, CHICAGO. 
 
PREFACE TO THIRD EDITION. 
 
 Many years ago while lecturing and canvassing in the inter¬ 
 ests of Labor Reform, and regarding financial reform as indis¬ 
 pensably the initiative step towards any real progress in that 
 direction, the author advocated the establishment of Mutual 
 Banks of issue in order to abolish interest; and the utilization of 
 other products of labor besides gold and silver as a basis for 
 the issue of paper money, in order to obtain a surplus of capital, 
 instead of a surplus of labor, as we have at present. But conflict¬ 
 ing financial creeds revealed the necessity for scientific formula 
 upon which to base the true or correct system, and as diligent 
 search for it failed to discover any successful effort, while despair¬ 
 ing of accomplishing so important a task, the writer nevertheless 
 made the attempt. How well he has succeeded is for others to judge. 
 In 1879, the Murray Hill Publishing Company issued a pamphlet 
 entitled, “The Abolition of Interest, a Simple Problem,” embod¬ 
 ying in a condensed form what progress had been made up to 
 that time. In the second edition, the title was changed. The 
 present is a third edition. It is sincerely hoped that it may, at 
 least, contribute in some measure to the solution of the great 
 questions that are herein discussed, and thus solve the problem of 
 co-operation, which must ultimately take the place of all govern¬ 
 ment.* 
 
 I have refrained from quoting writers on this subject as 
 entirely beyond the purpose of this essay. As an independent 
 writer, I have not sought authority for truth, but truth for 
 authority. Wherein I differ from previous writers may be of 
 interest to others, it is of little consequence to me. My aim has 
 been to discover the cause of our failure to realize what was so 
 confidently hoped for in the establishment of this republic—the 
 end of tyranny. 
 
 The Author. 
 
 ♦Government means coercion. In co-operation there is no compulsion—what “ gov¬ 
 ernment” there is is self-imposed. 
 
 2 
 
PREFACE TO FIRST EDITION. 
 
 To state, that interest * for money loaned on good security is 
 irrational, and that its abolition is not dependent upon philan¬ 
 thropic motive, but upon business principle, and therefore 
 unavoidable, is to either startle the ‘‘civilized” world or else to 
 evoke ridicule. To state that savings banks are economic 
 absurdities, and that history gives no greater evidence of man’s 
 folly than in their establishment, is to become not only the 
 laughing-stock of superficial thinkers, but to be regarded as non. 
 compos mentis by “ learned ” writers on political economy. Of 
 course we do not court, neither do we fear these results. They 
 do not constitute arguments. They are the result of a firm 
 belief in accepted views of the nature and office of money, and of 
 the laws of value. It remains to be seen how long error upon 
 this subject will remain unassailed, while mankind is making 
 rapid progress in other directions. 
 
 To those who will further extend to us the courtesy of their 
 attention, we would say : The proof that interest upon money 
 loaned on good security is irrational, is the fact that good security 
 is wealth, and that what the borrower obtains is mereh r some¬ 
 thing which enables him to avail himself of the use of his wealth 
 as capital, without cutting it up into small pieces, as is done with 
 the wealth consisting of the metals used as money, but which in 
 his case is impossible. The banker lends his credit, and the bor¬ 
 rower PLEDGES HIS WEALTH ; THE BANKER BEING FAR MORE SECURE 
 THAN THE HOLDER OF THE BANKER’S PAPER. The banker TAKES PAY 
 
 for the use of capital, although he furnishes none ; for the capi¬ 
 tal (wealth) is furnished by the borrower. The banker, therefore, 
 renders no more service to the borrower than he would if, both 
 using in every way the same kind of spectacles, the borrower 
 should hand his to the banker, while he borrowed the banker’s 
 for his own use. 
 
 But it is not our intention to enlarge here upon the subject 
 
 * Speculative interest, or that which exceeds cost, is here referred to. 
 
4 PREFACE TO FIRST EDITION. 
 
 of our essay. What we propose is not new; it has long been 
 known to a few, who, when we hear the unsound doctrines of 
 those who want an.exclusive government money, and the fallacies 
 of “ specie basis, : ” k wonder how long we shall have to wait before 
 we get a hearing. We can only say in conclusion, that the incom¬ 
 patibility of present money systems, with the requirements of 
 modern progress, is a guarantee of their speedy overthrow, by the 
 establishment of a Money System in which speculative interests 
 will have no'part. The Author. 
 
INTRODUCTION. 
 
 We are sometimes told that we can not change human 
 nature. We are not trying to change human nature. It is their 
 mistake, not ours, in attributing the evils of society to manifest¬ 
 ations of human nature, and therefore unavoidable. The evils 
 we complain of are the consequences of invaded rights. Protect 
 those rights from invasion, and the evils will disappear. 
 
 A mother’s love for her child, or the individual’s desire to 
 surround himself with the comforts of life, and his unremitting 
 efforts to accomplish it, are manifestations of human nature. 
 But it is also human nature to protest against, and forcibly pre¬ 
 vent robbery. If you live in a small country village and your 
 house is invaded and your property carried away without your 
 consent, you resist the invader (unless it is government levying a 
 tax on you); if superior force is used, you call for help and citi¬ 
 zens come and rescue your property. If others rights are in¬ 
 vaded in like manner, you hold a meeting to adopt measures for 
 self-protection ; each one volunteering his share of the labor, or 
 cost of such protection. This is co-operation, not government. 
 
 The banking institutions of large cities, in order to facilitate 
 the transaction of business that they may have with each other 
 during the day, establish an office at a central point called a 
 Clearing House, where a representative of each bank meet at a 
 fixed hour of the day. This is mutualism or co-operation. 
 
 But when government interferes with production or 
 exchange of products under any pretext, and, notwithstanding 
 the open protest of many citizens, levies taxes on each one, and 
 compels some to bear arms against their wish, to carry out and 
 enforce such interference; this is not co-operation, it is coercion, 
 
 it is not SELF-IMPOSED GOVERNMENT, it is GOVERNMENT BY FORCE, 
 
 it is tyranny, it is invasion of the rights of the individual. 
 
 Why we demand that all restrictions, which interfere with 
 
 5 
 
6 
 
 INTRODUCTION. 
 
 free banking* and free exchange of service or products shall be 
 removed, is because the prime factor in human happiness is exist- 
 ence, and the prime factor in existence is to supply your own 
 wants. If, in your effort to do this, you are restricted, you can 
 not attain happiness. Hence, the removal of all restrictions on 
 production, or the free exchange of service or products, is indis¬ 
 pensable to human happiness, whether that restriction be in the 
 form of a tax on the products, in the methods of furnishing the 
 medium of exchange or in the amount furnished. To deny this 
 is to deny the right to associate or co-operate for mutual good ! 
 
 Mature thinkers on these subjects know that to co-operate or 
 associate to lessen the burdens of life, we must have freedom to 
 act. Majority governments are no more infallible than autocratic 
 governments. It is patient, unceasing experiment alone that can 
 teach us better ways. Hence, we must persistently work for, 
 and patiently await the triumph of reason. 
 
 ♦It is often stated by persons who ought to know better, that free banking pre¬ 
 vailed previous and up to the late war. It is unfortunate, but true, that in nearly every 
 case the evils we endure are attributed to other than the right cause. Wild-cat banking 
 then, as now, results from restriction, not liberty. Banking has ever been under the 
 supervision of the State. When the paper money of a bank depreciated or a bank failed 
 previous to federal control it was called “ wild-cat ” banking; when a bank fails now in 
 
 spite of federal supervision it is called-what? What is it but wild-cat banking? 
 
 That the loss to depositors by failures of National Banks has exceeded a million dollars ^ 
 year for the last four years proves that federal control is not a remedy. 
 
THE RELATION OF FINANCE TO LABOR REFORM 
 AND PERPETUAL PROSPERITY. 
 
 All through the countless diversity of human effort; indus¬ 
 trial and agricultural processes and methods; systems of trans- 
 i portation and travel, education and the treatment of the sick— 
 f all are subject to the modifications which our better knowledge 
 ; and experience dictate; finance alone resists the spirit of prog- 
 [ ress, and time-honored custom holds its sway, though millions 
 • perish under its relentless grasp. 
 
 In canvassing this vastly important subject, its history, past 
 i and present experience, the logic of events, the pressing needs 
 [ of civilization and the demands of justice, I find no explanation 
 f to existing usage, save chronic error; and the various remedies 
 | proposed but reveal the chaotic condition in which the question 
 presents itself to the public mind. 
 
 In the absence of a correct solution there can be no success¬ 
 ful effort to reform; but when that solution comes, effort will be 
 | successful and reform will be speedy and effectual. 
 
 There can be no question as to the honesty of purpose on 
 ; the part of a sufficient number to defend what is right and just, 
 and when an appeal is made that can establish itself on these 
 grounds, the front lines will be covered and the best talent will 
 1 be available. 
 
 The great need of to-day is reform, not “ social ” or “ polit¬ 
 ical,” but a reform that shall change the whole structure of 
 human society—a reform that shall abolish poverty and initiate 
 an era of prosperity, in which morality can be possible, for no 
 society can be moral while a majority of its members are suffer¬ 
 ing all the discomforts and most of the horrors of poverty. 
 
 In the light of the knowledge we possess of sanitary meas¬ 
 ures and hygienic living, what becomes of our boasted civiliza¬ 
 tion? Why preach and print so much about the rules of health, 
 the necessity of ventilation, drainage and cleanliness, while the 
 great majority of mankind are doomed in their poverty to be 
 
FINANCIAL PROBLEM. 
 
 filthy, breathe disease in the polluted air of cesspools and suffo¬ 
 cate in houses they pay rent for, but can not reform. Do we 
 abhor filth, ignorance and injustice? Then let us abolish poverty 
 
 _put an end to financial systems that cause it as famine causes 
 
 death. To confess our inability to do this, is unworthy of a pro¬ 
 gressive age. To leave to posterity an inheritance so shameful, 
 and seek refuge from responsibility behind a supposed ignorance 
 of its cause, is unworthy of those who labor under the banner of 
 reform, inconsistent with the spirit of their teachings, and defeats 
 the objects they wish to accomplish. 
 
 To say that most men and women must forever toil in a con¬ 
 dition less favorable than that of the common brute! That 
 nature, with the magnitude of its inexhaustible supply, its count¬ 
 less and untold resources and the prodigality of its productions, 
 has left man, the highest and grandest of all its achievements, to 
 be the victim of his own necessities! That it has imposed on 
 him the conditions under which he shall live, and has failed to 
 provide the means of fulfilling those conditions! That it has 
 said to all, eat, or ye shall surely die; yet not have provided for 
 all! That it inflicts the penalty of death for violating its health 
 laws, yet rendered compliance with those laws impossible! 
 
 Yet it is not in appeals to humanity, nor in legal enactments 
 that we must look for relief. It is not upon the valor or fury of 
 an armed mob—legal or otherwise—that we must stake the 
 issue; so great a reform can not rest upon so fickle a base, but 
 upon the fact that all reforms spring from an intelligent sense of 
 wrong, or greater economy in proposed methods. 
 
 If we would reform labor, we must reform capital. We must 
 institute a most searching investigation into the subject of finance 
 —that main branch of economic science which has ever been used 
 by crafty and greedy men to acquire wealth and power at the 
 expense of useful people, and we must popularize correct notions 
 in order that we may eliminate the vicious features that these men 
 make use of, and by which they accomplish their ends. 
 
 That there is a profound sense of wrong in regard to the 
 present banking system, will hardly be denied. That there is 
 greater economy and justice in the one we propose, it is my 
 purpose to demonstrate. 
 
FINANCIAL PROBLEM. 
 
 I hold it to be the duty of those who have arrived at any 
 [ definite conclusions on matters of public econpmy, to make known 
 r the result of their research, and it is with a view of fulfilling this 
 duty that this work is published. 
 
 It is now sixteen years since my attention was first called to 
 this subject. During the period that has intervened I have 
 1 devoted much time to its study, and, I hope, succeeded in forrau- 
 I lating the correct principles of monetary science, and thus refute 
 prevailing erroneous and unsound doctrines maintained by money¬ 
 lenders and their associates who profit by existing institutions 
 and systems. This will aid us to understand the true nature of 
 exchange; or, in other words, what constitutes equity in the 
 ’ exchange of service or products; for in this inheres the whole 
 secret of the labor problem, that since you can not take some- 
 \ thing from nothing, and, since all things are produced by labor,* 
 what capital gains, labor loses. By what methods and how to 
 remedy it, is the purpose of this essay to explain. 
 
 I shall commence by calling the reader’s attention to a pre¬ 
 liminary argument in reference to the specie basis system of 
 banking. 
 
 In order that we may be understood, we wish it to be borne 
 in mind, that whenever we speak of interest, it is always in con¬ 
 nection with money borrowed on good security; a business trans¬ 
 action in which no risk is supposed to be incurred, and not in con¬ 
 nection with transactions that partake more or less of the nature 
 of a favor, and in which more or less risk is incurred. The one 
 we will call real credit; the other, personal credit. With the latter 
 we have nothing at all to do. 
 
 We will now suppose two individuals equally wealthy; the 
 wealth of one to consist of the metals, gold and silver, and that 
 of the other, of buildings or any other product of labor. 
 
 What, we ask, are the facilities afforded by this financial 
 system for the obtaining of real credit on the part of these two 
 individuals ? If they possess an equal amount of wealth are they 
 not equally wealthy ? Do they not stand on an equal financial 
 footing, and are they not equally entitled to real credit t 
 
 In the specie basis system of banking, as in others, this right 
 
 ■ See definition of wealth, page 17 
 
10 
 
 FINANCIAL PROBLEM. 
 
 to real credit is utterly ignored ; first, by government coining and 
 “fixing” the value of gold or silver, or both, or, in other words 
 making the coin legal tender; second, by government giving the 
 owners of this coin the exclusive privilege* to issue paper 
 money, not only to the extent of this “fixed ” value of their coin 
 but to the extent of three times as much. What right, we ask* 
 has government to “fix” the value of any product of labor 5 
 or make it legal tender, authorize the issue of paper money to 
 the extent of three times the amount of this legal tender coin and 
 prohibit the issue of paper money by the owners of any other 
 products? If government has the right to “ fix ” the value of one 
 product, then it has the right to “fix” the value of all products 
 
 No, it is a fundamental error in economic science to admit 
 the right of the State to “fix” the value of any product inas¬ 
 much as it exempts it from the effects of supply and demand to 
 which all other products are subject; and is, therefore, a privilege 
 which infringes on the rights of owners of all other products. 
 
 But it is a far graver error for the State to suppose it has 
 the right to restrict the issue of paper money, for this is attacking 
 the rights of owners of property to a much greater extent. If 
 one can not use property to the best advantage, he is restricted 
 in its use. One of the uses of property is to obtain real credit 
 as is done by the owner of coin when they issue paper money to 
 the extent of three, and even ten times the amount of their coin, 
 only, that in this case they get from three to ten times the 
 amount of credit they are entitled to, and thus draw interest on 
 what they owe. If owners of other products may not issue 
 paper money to obtain real credit, they must borrow from those 
 who do issue. Now, inasmuch as this involves the payment of 
 interest largely in excess of what it costs to print and issue paper 
 money, he pays for something he does not get; and as the public 
 who take all the risk, and should therefore be furnished ample 
 security, derive none from banks which pledge only one-third or 
 one-tenth the amount in coin, which, by the way, they retain in 
 their own possession while they requirb of borrowers a perfect 
 security m the form of a mortgage or pledge of some product 
 which far exc eeds ,n value the amount of paper money loaned 
 
 government'isa^USURPER^hen^t attempt a'. 6 supprefiaion of the rl »bts of the rest, and 
 
FINANCIAL PROBLEM. 
 
 11 
 
 I thereon, the issue should be made directly on the property of the 
 borrower; he would then get his real credit at cost, the same as 
 the owners of coin do; and the pledge should be made to the 
 public ; it would then be relieved of the risk it takes. 
 
 To prohibit this, under whatever pretext, is to restrict the citi¬ 
 zen in his right to the use of his property. To restrict the issue of 
 t paper money to any one or two products, even though it be 
 increased many times more than the amount of such product, 
 [ is to reduce the amount of paper money to the caprice or interests 
 I of those who own and control such product, besides compelling the 
 public to take the risk of bad faith, bad management, or both, and 
 allowing such owners more real credit than they are entitled to ; 
 and as paper money is the instrument with which exchanges of 
 \ the products of labor are effected, both real credit and exchanges 
 [ of these products are controlled by those who issue the paper 
 [ money. 
 
 Have I not demonstrated successfully that such a system of 
 > banking is unjust, in that it gives an exclusive privilege to the 
 banker? And have I not equally demonstrated that such a sys- 
 tern of banking is unsafe, in that it furnishes no security to the 
 ; holder of the paper money issued by such banks? 
 
 I will now show that such a system of banking is too costly. 
 If we ascertain from time to time the total wealth existing in 
 anv country, it is easy to determine the actual annual rate of 
 increase, by dividing the intervening time into years, and ascer- 
 I tain the percentage corresponding to one year, by a little cal- 
 i culation. Thus the United States census, for 1860, gives the 
 ; assessed valuation of the 
 
 Total real and personal wealth as $12,084,560,005 
 
 The same for 1870, - 14,187,986,732 
 
 The same for 1880, - 16,902,993,543 
 
 The rate of increase per annum, for the ten years ending 1870, 
 is less than 2£ per cent. The rate of increase per annum, for 
 the ten years ending 1880, is less than three per cent. We pre¬ 
 sume that the average rate of interest in this country is not less 
 than 7 or 8 per cent.; if it is seven, it is nearly three times as 
 much as the average increase of wealth. 
 
 Now, if the average increase of wealth, per annum, in the 
 
12 
 
 FINANCIAL PROBLEM. 
 
 United States is 2£ per cent., and the average rate of interest is 
 7 per cent., where does the per cent, come from, which money* 
 lenders demand for the use of their money, in excess of the said 
 average? And since, not only money-lenders, but all capitalists, 
 demand a similar rate for the use of their capital, our dilemma 
 increases. By what process of arithmetic can the situation be 
 explained? If all capitalists and money-lenders were to demand 
 and receive but 2£ per cent., all those who have no capital, but 
 who earn their living by their labor, could not accumulate, and 
 at the end of each year would find that all that they had appro¬ 
 priated would be what they had consumed. But the fact is that 
 most capitalists and money-lenders do receive a much higher rate, 
 and some large fortunes have accumulated so rapidly, that the 
 percentage of increase can only be expressed by hundreds. Can 
 it be explained by supposing that so large an amount of capital 
 is idle, or receives no interest, ana that another large amount 
 receives so small an interest as to account for the difference 
 between the average increase of wealth, and all the varying rates 
 of interest to capitalists and money-lenders from that which 
 exceeds the average increase of wealth, to that represented by 
 the most rapid accumulation ? May we not venture to introduce 
 here, also, the item of failures as legitimately connected with this 
 phenomenon? 
 
 Let us imagine a great balance sheet: 
 
 ON THE DEBIT SIDE WE WOULD 
 
 find: 
 
 Idle Capital, 
 
 Low Rates of Interest, 
 No Interest, 
 
 Partial Loss of Capital, 
 Total Loss of Capital, 
 Failures. 
 
 ON THE CREDIT SIDE WE WOULD 
 FIND .* 
 
 High Rates of Interest, 
 Rapid Accumulation, 
 Immense Fortunes. 
 
 In other words, if there were no failures, there could be no 
 rapid accumulation such as we see. For all capital that increased 
 at the rate of 5 per cent, there would have to be an equal amount 
 that did not increase at all; for all capital that increased at the 
 rate of 10 per cent, there would have to be three times that 
 amount that did not increase at all; for all capital that increased 
 
FINANCIAL PROBLEM. 
 
 13 
 
 at the rate of 20 per cent, there would have to be seven times 
 that amount that did not increase at all; for all capital that 
 increased at the rate of 50 per cent, there would have to be nine¬ 
 teen times as much that did not increase, and so on in that pro¬ 
 portion, otherwise the average would exceed per cent., which 
 is not the case. Think then of the failures that must occur when 
 you contemplate the vast accumulations of the Vanderbilts, the 
 Goulds, the MacKays, and all the other millionaires you have 
 created within the last twenty years. 
 
 Let me still further reinforce this idea by stating it in another 
 way. The present social system may be said to be strangling 
 itself to death. The annual interest charge exceeding the net 
 annual increase in labor products; or, in other words, labor pro¬ 
 duced more wealth during the year than is actuall} 7 consumed 
 and there remains a surplus, but this surplus is not sufficient to 
 meet the amount of interest demanded by the capitalists for the 
 use of their capital; hence, as I have already stated, failures are 
 inseparable from the system. 
 
 But what the ultimate result must be, can only be compre¬ 
 hended when you realize that not only is this interest being com¬ 
 pounded year after year by the old method of reinvesting the 
 interest, but it is greatly accelerated by the new method of divi¬ 
 dends on the water as well as on the stock, and by rents on fic¬ 
 titious land “ values,” etc., etc. 
 
 If such desolation—such annihilation of human effort, and 
 slaughter of human hopes, is the result, is it not a matter of self- 
 interest to all concerned to put an end to such barbarism ?—invent 
 a svstem that has common sense as well as justice, or cease to 
 associate our generation with these terms—blot them out from 
 the vocabulary, and substitute in their place “hypocrisy” and 
 “ fraud.” 
 
 Is further argument necessary? Need we go any deeper 
 into the subject to show that a rate of interest, even equal to the 
 average rate of increase of wealth, is incompatible with a just dis¬ 
 tribution of the same? For with such a rate of interest money¬ 
 lenders and capitalists will absorb all the increase, and labor, the 
 only producer of wealth, can not participate in the enjoyment of 
 its own offspring. 
 
14 
 
 FINANCIAL PROBLEM. 
 
 Therefore, as the specie-basis system of banking, as readopted 
 in this country, will not materially change the rate of interest, 
 much less reduce it below the average rate at which wealth 
 increases, we must decide that, in addition to its other defects, it is 
 out of all proportion to the economy required of institutions to 
 furnish real ared.it. 
 
 But we have still another reason for rejecting this system. 
 If, in the future, gold and silver cease to be mined from any cause, 
 or the supply greatly reduced, and such large quantities are con¬ 
 sumed in the arts and trades as to constantly diminish the amount, 
 what would become of the system based on these metals? We 
 may finally conclude to dispense with a “ measure of value,” or 
 a “ standard of value,” even if such a thing ever existed. But 
 can we have a system of money based upon silver and gold with¬ 
 out any such metals to base it on? Who will venture to affirm 
 that fifty years from now the amount of gold and silver coin in 
 existence will not be reduced to one-half or one fourth its present 
 volume, or that the world’s commerce will not be double what it 
 is now? And if both take place, will the advocates of specie- 
 basis still insist that we must adhere to their pet system ? 
 
 But, suppose, on the other hand, that by new discoveries of 
 vast quantities of the “precious” metals, and greater facilities 
 and economy in process of reduction, they become as abundant 
 as copper or lead, is their market or exchangeable value to be 
 kept up by legislation ? Or are we to have silver quarters as big as 
 saucers and gold dollars that weigh an ounce ? And if so, how 
 are we to manage the loss that such changes entail ? 
 
 Need we extend this argument to show that there is no 
 science in a system that may be deprived of its base, and there¬ 
 fore impracticable ? Can the impracticable be scientific? If the 
 term science can be applied to a money system, it should be because 
 it is in every way practicable, not only to-day, but for all time ; 
 that it furnishes a money that fulfills the office or functions 
 required of money perfectly; that it is reliable absolutely at all 
 times, portable and sub-divisable to the greatest extent, and 
 obtainable at the lowest possible cost. 
 
 We must decide, therefore, that instead of being in accord 
 with scientific principles, it is a scheme to enrich bankers and 
 their associates at the expense of the rest of mankind. 
 
FINANCIAL PROBLEM. 
 
 15 
 
 That it affords no security to the holders of its paper money. 
 
 That it is the worst of all monopolies, because it is the basis 
 of all monopolies. 
 
 That it limits the circulating medium to a fraction of what 
 is required to develop the resources of nature and transact busi¬ 
 ness for cash, instead of on the credit system at present unavoid¬ 
 able, by excluding as a basis for the issue of paper money, all 
 wealth except gold and silver. 
 
 That it absorbs all the increase of wealth through compound 
 high rates of interest, thus directly creating pauperism and indi¬ 
 rectly misery and crime. 
 
 That it corrupts and vitiates integrity and morality in all 
 transactions, and perverts industry and commerce into a species 
 of piracy. 
 
 We will now pay our respects to the National Banking sys¬ 
 tem, which is in vogue in this country. 
 
 This system is so well known that a description of it will be 
 unnecessary. It will be well, however, to refer to the cause that 
 produced the change in the banking system of the country, con¬ 
 verting the old State banks into National banks. 
 
 It is a well-known fact in political economy that you can 
 increase the market value of an article by creating a demand for 
 it and controlling the supply. How did the bankers create a 
 demand for United States bonds after they had purchased most 
 of them of government at a large discount? They established 
 the National Banks and made the bonds the basis for the issue of 
 paper money, and at the same time passed a law that any indi¬ 
 vidual, corporation or company that should issue notes, bills, 
 checks or anything that could circulate as money, should pay a 
 tax of 10 per cent, on such issue, except National Banks, hence, 
 the change. 
 
 So delusive has been the idea of safety under a republican 
 form of government, so forgetful the people that eternal vigi¬ 
 lance is the price of liberty, and so crafty and successful the 
 tyrant, whether in the garb of a republican or disguised as a 
 democrat, that we can no longer boast of this as the home of 
 liberty. If you have forgotten what constitutes democracy, 
 read the Declaration of Independence and refresh your memories 
 
16 
 
 FINANCIAL PROBLEM. 
 
 with those glorious sentiments. Call up the honored dead and 
 ask them if the institutions of to-day are what they had expected 1 
 or hoped to establish. Beaten on the battle-field, aristocracy has 
 appeared in a new form. It is not now taxation through the tax- 
 gatherer only, to support royalty; but it is taxation in all the ! 
 various forms, which monopolies are able to impose through their 
 control of the currency. 
 
 Suppose the working people had controlled legislation at 
 Washington, and suppose that instead of the bonded system with 1 
 its twin parasite the National Bank, they should have established ^ 
 a scheme something on this order: 
 
 By prohibiting any building material being used except 
 hand-made bricks. The bricks to be delivered as fast as made 
 to duly appointed government officials, who should pay for them 
 at a fixed high rate in paper money printed for that express pur¬ 
 pose, and all other money, including gold and silver be pro- : 
 hibited by a law similar to the one which now protects the 
 National Banks from competition. All duties on foreign goods 1 
 to be paid in bricks, which, of course, could not be obtained except 
 of government, and all bricks paid in this way to be used in 
 constructing government buildings and other public works. The 
 bricks received of makers to be disposed of to customers, and a 
 certain proportion of the money paid in this way to be canceled 
 and destroyed, unless it could be loaned on good security, at one 
 per cent, per annum. The government to receive said money at 
 par in all cases except duties on imports. 
 
 What would the gold bugs have said of such a project ? They 
 would have denounced it in unmeasured terms; pronounced it a 
 “ desecration of sacred rights and time-honored customs.” Their 
 patriotism for gold would have been aroused to such an extent, 
 that they would have called upon their foreign allies to come 
 over and help them “ put down such communism.” 
 
 And yet such a scheme would have contained more common 
 sense, and been far less disastrous to the inhabitants of this coun¬ 
 try than what we have had to endure. 
 
 Such are our reasonings a priori , unbiased by superstition, 
 prejudice or personal interests. We will now review the subject 
 from the scientific point of view. 
 
THE PRINCIPLES OF MONETARY SCIENCE. 
 
 The present essay is intended to show that there is a true 
 and correct monetary system ; that there is a Monetary Science; 
 that monetary science defines the office or object and use, as well 
 as the nature of money; and that our present, as well as all past 
 monetary systems are as unscientific, and the popular views of 
 money as incorrect as the notions entertained in regard to astron¬ 
 omy before the days of Copernicus. 
 
 As much of this comes of a misunderstanding of the defini¬ 
 tion of terms, in order to arrive at comprehensive views on this 
 subject, I shall commence by giving the definitions of such terms 
 as I shall make use of, and, in regard to the meaning of which, 
 there exists a confusion of ideas. 
 
 The terms whose definitions I give, as I understand them, 
 are as follows : 
 
 Wealth; Capital; Value; “Measure” or “ Standard ” of 
 Value; Monetary Unit; Money, Circulating Medium; Usury; 
 Cost; Barter. 
 
 WEALTH. 
 
 1. Wealth.— -There are two kinds of wealth, natural and 
 artificial. Natural wealth is that which is the spontaneous prod¬ 
 uct of nature, or in the production of which man has taken no 
 part. Artificial wealth is the product of man’s labor, or in the 
 production of which man has taken part. Wherever the term 
 wealth simply is used in this essay, it is intended in every case to 
 mean artificial wealth. 
 
 CAPITAL. 
 
 2. Capital. —Capital is wealth that is employed in produc¬ 
 tive enterprise. 
 
 value. 
 
 3. Value. —There are two kinds of value. There is what is 
 commonly called “ market value.” The market value of an article 
 is ordinarily determined by the exposure of that article for sale. 
 Owing, however, to our false financial system, the market value 
 
 17 
 
18 
 
 PRINCIPLES OF MONETARY SCIENCE. 
 
 of products often depends very largely upon the “money market,” 
 whereas, when we come to correct monetary principles, the “money 
 market ” will have nothing to do with it. The other kind of value 
 is constituted by the usefulness of an article. Thus the air we 
 breathe is so valuable that we can not live without it, yet its mar¬ 
 ket value is nothing. So with water (unless labor is bestowed 
 upon it), it has no market value, yet to one dying of thirst, it is 
 not easy to compute its value. Money, also, because it is not 
 issued by scientific method, has, and until it is, will continue to 
 have, two values. First, its exchangeable value ; second, its 
 value in procuring an income. It must be evident to any one of 
 sound mind, that the fact that one has borrowed money without 
 interest, will not affect its purchasing or exchangeable value; 
 hence this exchangeable value must depend on something else 
 than upon the amount of interest that money will bring, whereas 
 the other value is entirely dependent upon its ability to draw 
 interest. But when common sense enters the “ money market,” 
 and abolishes speculative interest, this value must disappear; 
 then the only value that money will have will be its purchas¬ 
 ing power or exchangeable value. 
 
 MEASURE OR STANDARD OF VALUE. 
 
 3. Measure or Standard of Value. —There is a fatal mis¬ 
 understanding in regard to this term, and almost all writers on the 
 subject of finance appear to have fallen into an error. There is no 
 such thing as a “ measure or standard of value.” Instead of saying, 
 “ gold ”or “ the gold dollar is the measure of value,” we should say, 
 
 THE DOLLAR IS THE MONETARY UNIT OR CONVENTIONAL MONETARY 
 
 denominant. The fact that we can not express the value of an 
 article, except by stating a quantity of some commodity, is proof 
 that there is no fixed or permanent measure of value, for the 
 (market) value of all commodities change with supply and demand, 
 and the object “ measured ” is as much the “ measurer ” as the com¬ 
 modity by which it is “ measured.”* Value not being a substance 
 nor occupying space, can not be reached by mathematics. The 
 absurdity of this popular view of the “ measure of value ” is graph¬ 
 ically illustrated in the Constitution of the United States in 
 “conferring the power” upon Congress to “ regulate the value of 
 
 * See page 88. 
 
PRINCIPLES OF MONETARY SCIENCE. 
 
 19 
 
 money,” for neither Congress nor any other legislative body have 
 any more power to regulate the value of money than they have to 
 regulate the velocity of the wind, or the degrees of solar heat. 
 So long as competition—supply and demand—regulate the mar¬ 
 ket value of labor and products, it, and not legislation, controls 
 the purchasing power of money. 
 
 MONETARY UNIT. 
 
 5. Monetary Unit.— I have already indicated the meaning 
 of this term, and for reasons already stated, believe thatthe terms 
 “measure of value” and “standard of value,” should not be 
 used, as they convey incorrect ideas of the functions of money, 
 as well as in regard to the laws of value. 
 
 MONEY. 
 
 6. Money.— Circulating Medium. These two terms have 
 about the same meaning. Money is a circulating medium, and a 
 circulating medium is money. 
 
 Money can not properly be called wealth, although it is 
 wealth to the extent of the market value of the material of which 
 it is composed, as is the case when it is made of gold, silver, etc., 
 but it is not wealth when it is made of paper, for the wealth con¬ 
 tained in a paper dollar, or a thousand paper dollars, is too 
 insignificant to be called wealth, or rather to warrant the state¬ 
 ment that such money is wealth. Hence to call money wealth, 
 is incorrect, for that would imply that all money is wealth, 
 whereas, as I have already shown, some kinds of money is not 
 wealth. Therefore, in defining money, I say, money is a repre¬ 
 sentative of wealth; or, to state it more fully, money is the circu¬ 
 lating medium ; its office is to facilitate the exchange of the 
 products of labor; its nature is a representative of wealth. 
 
 I do not expect opposition to my first two propositions, viz.: 
 that money is the circulating medium, or that its office is to 
 facilitate the exchange of the products of labor; but to my third 
 proposition, viz.: that the definition of money which relates to its 
 nature is not wealth, but a representative of wealth, I antici 
 pate opposition from a certain quarter. For instance, an oppo¬ 
 nent might argue that money is wealth, and attempt to prove it 
 by the fact that the possessor of a million dollars, even in paper 
 
20 
 
 PRINCIPLES OF MONETARY SCIENCE. 
 
 money, is a wealthy individual. I do not deny this, yet it does 
 not conflict with my definition. He is a wealthy individu 1 
 because he possesses the representative of one million dollar » 
 worth of wealth, and can exchange it for wealth at any time 
 But to say that that individual is the possessor of wealth, would 
 not be correct, for he is the possessor of wealth only to the 
 extent of the market value of the paper stock contained in the 
 said paper money. We can not too strongly urge the importance 
 of recognizing this distinction; for, by so doing, we admit the 
 fact that we do not increase wealth by issuing paper money jet 
 by issuing paper money amply secured, we increase in the" same 
 proportion the available capital for the purpose of productive 
 enterprise, and at the same time, as will be seen by the plan for 
 Mutual Banks, destroy that which is the bane of all modern enter¬ 
 prise, usury! 
 
 usury. 
 
 7. Usury.— The term usury is applied to that sum which is 
 paid for the use of a larger sum. It is true, the word “interest” 
 is now more commonly used, but this is because the former is 
 somewhat odious, owing to the fact that modern legislation has 
 ** legalized ” usury up to a certain extent; hence, it is now cus¬ 
 tomary to regard usury beyond what is “allowed bylaw” as 
 immoral, and call it “usury,” while legal usury is politely called 
 " interest,” and regarded as acceptable morality. According- 
 to this philosophy, legislatures are the source of morality. 
 
 . ?• ,. CoST 7 The term cost is meant by ‘be present writer to 
 
 denote the net expense of production, exclusive of any profit. 
 
 .!'i BAETE r Th " term ‘ S siven t0 that transaction which is 
 an exchange of wealth for wealth, or one product of labor for 
 anothe, product of labor; such an a house L a farm, a watch 
 
 Snec^r 6: a Pa "'r ° GS f ° r a hat ' or aU «><*> for specie. 
 IS barter a Sp601es of wealth 5 ‘before, to purchase with specie 
 
 Having given definitions of the 
 
 terms in regard to the mean 
 
PRINCIPLES OF MONETARY SCIENCE. 
 
 21 
 
 ing of which I might be misunderstood, will now proceed with 
 our subject. My object being to prove that the money question 
 is a subject of science, and that there are principles by which we 
 can test the correctness of a money system, I will first state what 
 those principles are and then test the correctness of prevailing 
 systems by their application. 
 
 V 
 
ESSENTIAL QUALITIES OF A SCIENTIFIC MONE¬ 
 TARY SYSTEM. 
 
 PRINCIPLE NUMBER ONE. 
 
 Money being a representative of wealth, a money system 
 must provide a sufficient volume and facilities to enable all wealth 
 to be represented by money. 
 
 PRINCIPLE NUMBER TWO. 
 
 As interest for money loaned is not ‘‘compensation for the 
 use of capital,” the borrower possessing the capital (wealth), and 
 needing but the representative (except in cases where money is 
 loaned without security), a money system must provide for the 
 loaning of this representative at cost. 
 
 PRINCIPLE NUMBER THREE. 
 
 As the holder of a bank bill or government note is not there¬ 
 by the possessor of wealth, a money system must provide abso¬ 
 lute security against loss to the holder of paper money. 
 
 The three foregoing principles constitute, in my judgment 
 the basis of a correct money system, and any system that does 
 not fulfill their requirements, is defective, and fails to supply what 
 is wanted, as their application to the following svstems will 
 show. 
 
 “ SPECIE BASIS.” 
 
 The system most popular with bankers is commonly called 
 “ hard cash,” or ‘I specie basis.” That is to say, gold and silver 
 form (almost) the only circulating medium, except bank bills, 
 which are issued either by depositing an equal amount of coin as 
 security, or in case an additional amount of bills are issued, 
 this additional amount is otherwise “ secured ” bv mort¬ 
 gages, railroad and other stocks and bonds, individual notes, 
 etc., etc., etc. The amount in coin in all cases to be suffi¬ 
 cient to satisfy the claims of such bill-holders as might 
 (according to the law of chance, only understood by bankers ) pre- 
 22 
 
PRINCIPLES OF MONETARY SCIENCE. 23 
 
 sent them at any one time for redemption, or, in other words to 
 be exchanged for coin. 
 
 In the first place, the system does not fulfill the requirements 
 of principle No. 1, for all the gold and silver in the world is not 
 adequate to represent the balance of wealth, and would still 
 remain without a representative itself. For example, suppose the 
 demand for money to be such as to induce all owners of build¬ 
 ings to seek money by mortgaging the said property, it is evi¬ 
 dent the amount would not be sufficient. But, suppose’the circu¬ 
 lating medium to be increased by the issue of more bank bills, 
 securing the same by depositing the mortgages. Each additional 
 issue would render it more and more difficult for the bank to 
 “ redeem on demand, until finally it would be an impossibility to 
 meet even the ordinary demands upon the bank for coin. 
 
 In the second place, such money is not a representative of 
 wealth, but, to the extent of the metals used, it is wealth itself 
 and therefore can not fulfill the requirements of principle No. 2.’ 
 
 In the third place, the system does not fulfill the require-' 
 ments of principle No. 3. for, aside from the notorious fact.that 
 the history of such banks is a history of failures, these banks 
 promise to do what their managers know is an impossibility, for 
 the history of banking shows that no bank could ever redeem all 
 its notes on demand at any one time, having issued at least three 
 dollars in paper to every silver or gold dollar on deposit. Again, 
 such banks do not afford that security demanded by our principle 
 No. 3, from the fact that the only “ security ” is in the hands of the 
 bankers themselves. 
 
 It is evident from the foregoing that the specie-basis system 
 of money is unscientific. It does not possess any of the qualities 
 demanded by monetary science. 
 
 GREENBACKS. 
 
 We will now consider the paper money known as the “green¬ 
 back.” Greenbacks are notes issued by the United States gov¬ 
 ernment. They are promises to pay. When first issued the gov¬ 
 ernment made the duties on imports payable in gold only. This 
 action on the part of the issuer of the greenback very naturally 
 caused a premium to be demanded for gold. There being a 
 
24 
 
 PRINCIPLES OF MONETARY SCIENCE. 
 
 steady demand for it and the supply limited and controlled like 
 any other commodity, its price advanced, and the purchasing 
 power of the greenback correspondingly diminished. As soon 
 as the government made the greenback receivable for all dues 
 (including imports) its purchasing power became equal to that of 
 coin money. 
 
 The greenback adopted as the only circulating medium as 
 advocated by large numbers of people in the United States, does 
 not fulfill the requirements of principle No. 1, for government 
 issues of paper money—treasury certificates of service—at best 
 could but represent the wealth created in the service rendered 
 government, but could not represent wealth not so created. 
 
 It does not fulfill the requirements of principle No. 2, as 
 owners of'private wealth can notobtain it to represent their wealth 
 
 AT COST. 
 
 It does not fulfill the requirements of principle No. 3, because 
 holders of such paper “money” are not secured against loss, and 
 the arbitrary issue of such enormous quantities would cause its 
 depreciation. 
 
 With regard to the National Bank system, the reader will 
 find it treated exhaustively in a pamphlet by the author, entitled 
 Citizens’ Money. 
 
 Having demonstrated, through the Principles of Monetary 
 Science, the defects of prevailing banking systems and the utter 
 inability of such institutions to fulfill the pressing needs of our 
 progressive'civilization, we call attention to the following system 
 which does, and is destined to, supersede all others. 
 
PLAR FOR THE MUTUAL BARK. 
 
 Col. Wm. B. Greene, of Boston, about forty years ago pro¬ 
 posed the application of the mutual idea to banks of issue in 
 order to abolish interest and increase the circulating medium in 
 proportion to the demand for it. 
 
 The following is Col. Greene’s plan for a Mutual Bank, 
 with such alterations and additions as, in my humble judgment, 
 will explain it more fully, and add to its usefulness and safety as 
 a co-operative instrumentality: 
 
 1. The inhabitants, or any portion of the inhabitants, of 
 any town or city, may organize themselves into a Mutual Bank¬ 
 ing Company. 
 
 2. The officers of a Mutual Bank should be a board of 
 directors, an appraiser, a manager, a cashier, and a secretary. 
 
 3. Those who propose to become members should elect the 
 appraiser and the board of directors, who should hold their office 
 for one year. 
 
 4. The board of directors should first elect the manager, 
 cashier and secretary, from among their number. 
 
 5. The manager, cashier and secretary should hold office 
 until they resign, or are removed by the board of directors, who 
 should require each to give bonds. They should be subject to, 
 and not members of the board, nor participate in its meetings, 
 except when called upon to do so; and the same rule should 
 govern the appraiser. 
 
 6. The appraiser and members of the board may be 
 removed at a general meeting of the members of the bank, and 
 others elected to fill their places, of which due notice should be 
 given.* 
 
 7. Membership ceases when a member pays his notes to the 
 bank, and none but members should be directors. 
 
 8. The board of directors should employ a secretary of its 
 own, and a legal advisor, and fix the salary of the officers and 
 employees. 
 
 9. The manager should manage the affairs of the bank, 
 the cashier the usual duties, and the secretary should have charge 
 
 25 
 
26 
 
 PLAN FOR THE MUTUAL BANK. 
 
 of all documents, see that all mortgages were duly recorded 
 before notes are cashed by the bank, and keep an account of the 
 printing and issue of bills. 
 
 10. Any person may become a member of the Mutual Bank¬ 
 ing Company, of any particular town or city, by pledging UNIX- 
 CUMBERED IMPROVED REAL ESTATE, NEVER VACANT LANDS, 01* Other 
 first-class collateral situated in that town or city, or in its im¬ 
 mediate neighborhood, to the bank. 
 
 11. The Mutual Bank should print (or have printed) paper 
 money, with which to discount the mortgage notes of its mem¬ 
 bers. 
 
 12. Every member, at the time his note is cashed by the 
 bank, should bind himself and be bound in due legal form, to. 
 receive in payment of debts at par, and from all persons, the bills 
 issued and to be issued by the bank. 
 
 13. Notes falling due.may be renewed by the bank, subject 
 to the modification which a new valuation may require, so that 
 the note does not exceed two-thirds. 
 
 14. Any person may borrow the paper money of a Mutual 
 Bank on his own note running twelve months (without indorse¬ 
 ment), to an amount not to exceed two-thirds of the value of the 
 collateral pledged by him. 
 
 15. The charge which the Mutual Bank should make for the 
 loans, should be determined by, and if possible, not exceed the 
 expenses of the institution, pro rata.* 
 
 16. No money should be loaned by the bank except on the 
 above conditions. 
 
 17. Any member may have his property released from 
 pledge, and be himself released from all obligations to the Mutual 
 Bank, and to the holders of its bills as such, by paying his note or 
 notes to the said bank. 
 
 18. The Mutual Bank shall receive none other than its own 
 money, or that of similar institutions, except such coin money as 
 the board of directors may designate, and this should be dis¬ 
 counted one-half of one per cent. 
 
 ♦According to the report of the commissioners of savings banks of the State of 
 Massachusetts, the average annual expenses of those institutions is less than three-tenths 
 of one per cent, of the deposits, while their average dividends to depositors is over four 
 per cent, per annum. 
 
PLAN FOR THE MUTUAL BANK. 
 
 27 
 
 19. All Mutual Banks may enter into such arrangements 
 with each other, as shall enable them to receive each other’s bills. 
 
 20. The Mutual Bank should publish in one or more daily 
 papers each day, a statement of its loans the day previous, describ¬ 
 ing the property mortgaged, giving the owner’s name and its loca¬ 
 tion, with the appraiser’s value and the amount loaned on it. And 
 also a statement of the notes paid, and mortgages canceled during 
 the same period, which statements should be signed by the man¬ 
 ager, cashier and secretary. 
 
 21. The Mutual Bank should exchange at any time, any of 
 its own bills that are torn or worn for new ones without charge. 
 
 The foregoing plan for a bank of issue or bank to discount 
 mortgage notes or notes secured b} r adequate collateral security, 
 upon the idea of mutuality, and wherein the stockholder is dis¬ 
 pensed with and usury is abolished is suggested after mature 
 reflection ; but the author will gladly accept any improvement 
 that could be proved to be such. It is obvious, that all such 
 property should be covered by insurance, payable to the bank. 
 We would simply add that Mutual Insurance can only be possible 
 when usury is abolished; then none other can exist, and such will 
 afford the best protection that human institutions can furnish. 
 
 That this system of organizing credit is based upon our prin¬ 
 ciples, must be evident to any one candid enough to examine it. 
 The question remains then, are they principles? Or are they dog¬ 
 mas merely ? The answer we must leave to the future. 
 
 That this plan will furnish real credit independent of any 
 monied power, at cost, and thus materially help personal credit, 
 seems evident to^us. 
 
 The emancipation of borrowers-with-collateral, from a monied 
 power who now control the circulating medium, will render 
 financial crises impossible and perpetuate that prosperity which is 
 destined to abolish [ poverty, and with it all the evils it is the 
 cause of. 
 
28 
 
 FINANCIAL PROBLEM. 
 
 The Practicability of the Mutual Bank and the Utter Absurd¬ 
 ity of the Idea of a u Measure” or “ Standard ” of 
 Value Demonstrated by Simple Illustrations. 
 
 Let us suppose a community where there is only one bank, 
 and that each individual in that community secures an account 
 current by depositing collateral to a greater or less extent with 
 the bank. Is it not clear that in such a system of payments, no 
 money would be needed, every individual would pay by check; 
 the accounts being adjusted by offsetting on the books of the 
 bank; the monetai'y unit we call ‘“dollar” answering the pur¬ 
 pose of a conventional denominator or denominant. "We will also 
 suppose that this bank is conducted on the mutual plan, and 
 therefore charges are made to cover cost only. Gold and silver 
 bullion, like any suitable commodity, could be used as collateral, 
 but no coin would be necessary and none would be used. It 
 would therefore seem to be sufficiently clear that a unit to act as 
 a measure or standard of value is but a fiction, a fetish. It is 
 admitted that the proposed bank, for various reasons, would be an 
 impracticable method of effecting exchanges, but the absence of a 
 coin-unit-measure-standard would not be one of them. Not every 
 one can have a bank account; the inconvenience of paying small 
 amounts by checks as well as the uncertainty, in many instances, 
 as to the acceptability of checks at the bank are insurmountable 
 difficulties, but one can hardly contemplate the foregoing and at 
 the same time conceive how the advocates of a coin basis to paper 
 money would defend their theory of its necessity. It is not diffi¬ 
 cult to comprehend the nature of the error here fallen into. 
 
 A monetary unit (a conventional denominator or denominant) 
 to facilitate the expressing of amounts in the realm of value, is, 
 apparently, so similar in its function to that of the units employed 
 in physics such as the inch, the pound, etc., especially as certain 
 coin is made legal-tender, that the notion has become well-nigh 
 universal that this monetary unit must be a definite quantity of 
 some commodity just as the inch is a definite and unvarying 
 length, or the pound is a definite and unvarying weight; but this 
 notion is utterly devoid of reason. 
 
 As there is nothing definite or permanent in value a unit of 
 value is a physical impossibility. 
 
FINANCIAL PROBLEM. 
 
 29 
 
 The monetary unit is as near a unit or measure of value as 
 the “ x” in an algebraic equation is a known quantity. You can 
 ascertain the exchangeable value of a gold dollar in any commod¬ 
 ity by inquiring the price of that commodity; so also you can 
 find the quantity “x” by ciphering out the equation. 
 
 The value of the gold dollar varies with every change in mar¬ 
 ket price, just as the quantity “ x” differs with every change in 
 the equation. 
 
 The gold dollar is a certain quantity of gold. It is not the 
 gold, however, but the value of the gold that is supposed to do 
 the measuring, and it is the value of the gold that is the uncer¬ 
 tain quantity. 
 
 How can an uncertain quantity be a unit or measure ? And 
 if it is not a measure, what is the object of a coin basis ? If it is 
 answered that it is not a measure, but a “ standard ” of value, 
 if by “standard ” is meant denominant, then the use of the term 
 “standard” is equivocal, and therefore sophistical or dishonest. 
 If it is claimed that it is more than a denominant, there is no 
 escaping the dilemma that confronts the paragram “ measure.” 
 
 When paper money is issued as proposed by the Mutual 
 Bank Propaganda, with ample security but not legal tender nor 
 redeemable in any special commodity, the monetary unit dollar 
 will simply be a denominant’. Its purchasing power will not be 
 affected by a rise or fall in the price of any commodity any more 
 than an order for a pound of butter commands more than a 
 pound atone time and less at another. The Mutual Bank paper 
 dollar will buy more butter at one time than another, but this 
 will take place in consequence of the operation of supply and 
 demand in regard to butter only; and so with regard to all other 
 commodities; the Mutual Bank paper money will have no more 
 effect on the price of commodities than the order for the butter 
 will affect the price of butter, whereas when the monetary unit 
 is a legal tender commodity dollar, variations in the price of any 
 commodity are affected, not only by supply and demand in that 
 particular commodity, but also “supply and demand ”in the arbi¬ 
 trarily limited legal-tender-commodity-dollar, which limit enables 
 a class to own and control it, the scarcity or abundance of which 
 (dependent upon combinations among this class) must affect the 
 
30 
 
 FINANCIAL PROBLEM. 
 
 price of all other commodities. Under any system, therefore 
 which recognizes any special commodity as a legal tender basis 
 for its paper money, especially as that commodity must neces¬ 
 sarily be one that is limited by nature^ fluctuations in prices 
 become complicated by compound causes, resulting from the lim¬ 
 itations to credit through this control of money. No such effect 
 can occur under the Mutual System, the volume of money 
 being unlimited except by the quantity of collateral offered and 
 the rate of interest being the same to all borrowers. Of 
 course it is not contemplated that this system shall remain 
 as it must necessarily start, each bank independent of all the 
 others, although any bank may remain so as long as it considers 
 it to its interest to do so—but as the Mutual Bank is not a spec¬ 
 ulative institution, but rather an institution to defeat speculation 
 the system can best subserve this end by the banks becoming a 
 general co-operative institution throughout the entire country 
 establishing headquarters and clearing-house at some central 
 point. The association of all the mutual banks thus guarantee¬ 
 ing each individual bank, their bills would circulate as free from 
 discount as do those of the National Banks. What objection 
 then could a mutual bank have to join the National organization 
 since its purpose is to carry out generally what each mutual bank 
 is established to accomplish locally, viz., the supply of an abun¬ 
 dance of reliable exchange media. 
 
 The capitalists form trusts and combinations and seek pro¬ 
 tection in law. Repeal the law and their protection ceases. It 
 is liberty, therefore, that affords protection to the people. Both 
 are prompted by selfish motives, but if liberty prevails no monop¬ 
 olies can be possible, while at the same time there is opportunity 
 to discover by experiment the best and most economical methods, 
 a result not attainable where systems are established by law. 
 
 If there are those who think they can refute any of the argu¬ 
 ments or ideas advanced, or conclusions arrived at in this work, 
 we shall be most glad to hear from them, either through the press 
 or by directly addressing the author. All such communications 
 or published articles will receive careful consideration and be 
 courteously answered. 
 
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 We are also manufacturers of fine OFFICL 
 FUUNITL'RK. 
 
 A. H. ANDREWS & CO., 215 Wabash Avenue, Chicago, III. 
 

 Ei ghteen Years' Experience as Operator and Manager 
 in some of the Most Noted Studios, 
 
 Instantaneous Process. §1 
 Cloudy Days no Objectio*4 
 
 The Studio of W, J. ROOT, 
 
 OPENED MARCH 30, 1891. 
 
 IN THE NEW KIMBALL HALL BUILDING, 243 TO 253 WABASH AVENUE , NEAR JACKSON STREET , 
 
 ^XAA/I c N T C A G O . Vinsi^- 
 
 I TAKE pleasure in announcing to my friends and the • 
 public that in the future I shall be found at the above 
 location, in my new Studio, which I have fitted up in the | 
 latest style, with the most modern improvements in sky- ■ 
 light and workrooms that have been made in photography- \ 
 With a staff of the best artists at commanck I will per¬ 
 sonally superintend and devote my attention to the pro¬ 
 duction of a high grade of photographs and portraits. Old 1 
 friends and new are cordially invited to visit the Studio 
 and inspect our work before placing their orders elsewhere. 3