A SANE VIEW OF THE GREAT PROBLEM WHAT PRINCIPLE SHOULD GOVERN THE ISSUE OF MONEY? By JAMES D. HOLDEN Author of “The Disturbing Factor in Human Affairs.” "There is yet a book to be written about Money. The man and the task will some day meet. Nothing is more certain than that the world still lacks a true knowledge of that tremendous factor in modern life called—MONEY. There’s something about it which none of the books tell. Its agency in human affairs is more far-reaching and omnipotent than the economists claim.”—THOS. E. WAT¬ SON. (1896.) “We have been using money for many dreary cen¬ turies. We have worked for it, begged for it, bargained for it, fought for it, married and murdered to get it, and still—WE KNOW NOTHING OF MONEY! We know as little about the actual inside workings of money as we do about the nature of electricity.”—BOS¬ TON AMERICAN. (1918.) Advocates of representative money differ in opinion as to the proper method of providing the amount re¬ quired to obviate the use of “bank-credit” in com¬ mercial dealings. They are divided into three groups: 1. Those who would have the government print a full legal-tender national currency, to be “paid” into circulation by public officials for service rendered the government and for supplies furnished. 2. Those who would have the government print the same kind of currency and “loan” it to borrowers on security at a slight interest charge through a sys¬ tem of “government banks.” 3. Those who would increase the currency by en¬ larging the money basis; i. e. by adding land values to the gold, the silver, and the bond values which constitute the nation’s present money basis, and against which it issues currency to the owner, on application, free from an interest charge. Of these three proposals, the first is the one gen¬ erally favored by active paper money advocates. It is endorsed by many despite the fact that, as “green- backism,” it has had its hearing before the intellec¬ tual world and been overwhelmingly rejected by the victims as well as by the beneficiaries of the existing system. It is not unreasonable to conclude that the well- nigh universal ignorance of money, to which the quotations at the beginning of this thesis testify, accounts for the continued adherence of many well- meaning men to the repudiated “greenback” theory of money. In solving this problem there is more to unlearn than to learn. For centuries we have been taught “finance” by honest but incompetent teachers. The problem has baffled the economists of the past. Beyond question, “the blind have led the blind,” here¬ tofore, in the field of financial economics. Economists are far more responsible for existing conditions than are the financial magnates of the world. The latter have merely profited by the operation of a pernicious statutory law; a statute which confines the volume of legal money to the precious metals; a statute which makes this indispensable tool of commerce so scarce and inaccessible to the many that a charge called “interest,” can be exacted for its use. The need for unity of action among financial writers in support of a specific measure embodying the true principle of currency issue, is the writer’s excuse for undertaking to point out why and wherein the “service certificate,” or “greenback,” method of providing an adequate circulating medium, and also the second of the foregoing proposals, are inde¬ fensible—because unscientific and impracticable. The conclusive reason why both these methods are indefensible is that neither is an automatic system. This fact alone is fatal to the pretensions of either. It will be readily observed that only a strictly auto¬ matic system of issue can be impartial or practical in its operation. This is true because discretionary power over the emission of money cannot with safety be lodged in public officials. It is a power that is certain to be abused by the average official—for the reason that it is discretionary. A system wherein the currency right of the citizen is clearly defined in the written law is the only safeguard against a flagrant abuse of this power. A second fatal objection to the proposed issue of service certificates as a means of increasing the cur- rency is that the proposal does not accord with the law governing the production of wealth by labor. While it is true that Congress has the power to ar¬ bitrarily issue service certificates and pay them into circulation as proposed, yet it cannot in justice to all make anything a money basis which, like “ser¬ vice," is of uncertain value. To monetize service is tantamount to monetizing the time of the public employee at a fixed wage—whether the wage is honestly and faithfully earned or not. No argument is necessary to show the impracticability of such a system. The crowning objection, however, to both these methods is that neither would eliminate the absurd social custom of paying “interest” for a circulating medium, which is the primary and sustaining cause of the evils of which we complain—THE UNSEEN CAUSE! In order to avoid the use of bank-credit as a circulating medium, and to transact business with cash, representative money, direct from the source of supply, must be made accessible, at all times, to all who are logically entitled to call it into existence. As to who are “logically entitled to call it into existence” depends upon what “money” IS—not what it is thought to be by those who “know nothing of money.” As we know it, money is MONETIZED WEALTH; nothing more—nothing less. No other kind of absolute money is known to mankind. Indi¬ vidual wealth is monetized by law, but in no other sense can it be said that “Money is the creation of law.” A nation, by an arbitrary act, may create and is- sue legal-tender currency without regard to property, but it can create scientific money—the money known to civilization—only in conjunction with the indi¬ vidual who offers his wealth for monetization i. e. for conversion into an available form. PROPERTY is, and ever has been, the money basis of the civilized world—property in some form. Gold, silver, furs, cattle, tobacco, bonds, etc., have served in the past. It is the logical, the practical, the only consistent and safe basis. The money known to civilization is not “monetized service.” It is the monetized product of service or labor; a tangible product, having a value in the market, for which reason society (to whom monetized wealth is indispensable) can well afford to monetize it at the pleasure of the owner, free from an interest charge, as it monetizes bullion and national bonds. Individual wealth is “monetized” by investing the wealth itself (or a currency representative thereof) with the legal-tender quality. This is the act which transforms property-value into “money.” Any stable wealth of the citizen may be monetized as advantage¬ ously as his gold, his silver, or his bonds. A whole¬ some change in the wording of the currency law will work this miracle—or what seems a “miracle” to the millions who “know nothing of money.” It is because “we know nothing of money,” that this momentous truth is not generally recognized. It is a fact that we convert bond values into a cir¬ culating medium as effectively by the certificate process as we convert bullion values by the coinage process. Why then may not land values be utilized as well as bond values? Why, intelligent reader, need there be a dearth of money so long as there is no dearth of stable wealth? Inasmuch as true or scientific money is monetized wealth for a monetized representative thereof), it follows that the original owners of money are those who offer suitable wealth for monetization, i. e., for conversion into an available form. It also follows that the government can be the legitimate owner of such money only as it acquires by taxation. Hence it has. and can have, no funds that it can consistently “loan” through a system of “government banks.” Logically therefore the power of the government to “create money” (genuine money) is limited to its power to monetize individual wealth. The evils of our financial system arise, not from the fact that the world’s money is based on property, but that the property basis is, and ever has been, un¬ wisely restricted by law; the statutory law which con¬ fines it to property in certain metals; a statute which electors and lawmakers, in their profound ignorance of money, and of the possibilities of sane financial legislation, unwittingly perpetuate. The “land currency” advocate is suggesting the simplest possible solution of the financial problem. It is conservative, practical and safe. It involves no new or untried financial principle. It is in no respect visionary or chimerical. It enlarges the money basis—providing more money by monetizing more stable wealth. Gold and silver were monetized by the coinage act in 1792. Government bonds, an entirely different form of wealth, were monetized by the national bank¬ ing act in 1804. Improved land, in town and country, may be monetized at any time by act of a Progressive Congress. The proposed measure will, in a simple and non-revolutionary manner, provide that SUF¬ FICIENT supply of legal money that is essential to general individual prosperity. It solves the great problem by substituting cash for the expensive bank-credit ingredient of our present circulation; accomplishing this much desired end by the single act of making IMPROVED LAND eligible to monetization by the certificate process, as bullion and certain bonds are now utilized. To perceive that stable wealth generally is the true and practical money basis, is to perceive a sensible and speedy way of extricating ourselves from our financial difficulties. Denver, Colorado.