The Washington times., 1935-03-28


the government, and there is no
limit to save in the use or de-
many for it. Thus no standard
Of value Is required.
3. Thus money is considered
as being really nothing but
credit. 1t is argued that debtors,
by borrowing, create credit. All
that is needed is confidence"
4. But it is held that, since
"public credit" is the general
basis for confidence and credit,
money really belongs to the SOW.
ereign. (AS John Law put it,
money is the life blood of the
nation. and must belong to NO
individual organ of the body
pOlitic.)
S. So a central bank" is pro-
posed, to be based on the "gen-
eral assets Of the sovereign or
government. Through it, the
sovereign will got into debt, and
thus "create" credit which will
be money.
Always these notions come to
grief-and recovery then begins.
What are the errors? Well, the
truth is as follows:
/. Money is wanted only for
what it will buy, and its i'm
portance is therefore secondary.
2. In order to serve as medium
of exchange, money must be able
to measure the values of the goods
exchanged, and to store values. To
do these things, it must have a
definite and stable value of its
own, based upon some material
thing which is generally desired
and limited in supply.
3. The lender has as much to
do with credit as the borrower.
Credit is no good unless (a) it is
based upon a business transaction
which involves the productive use
of labor and capital, and (b) is
payable in some standard money.
Otherwise. there can be no lasting
confidence" (The creditors con.
fidence is what counts.D
4. Public credit is public debt.
It is the debt of every citizen.
Such credit" is no better than
the taxes minus the public ex.
penses, and an insolvent sovereign
has no good credit.
The larger the debt, the more
credit money" is required! Thus,
the more credit money" q State
makes, the more it needs.
5. A great central banking
system, controlled by the govern
ment, is merely means of Great
ing public debt. The sovereign
pledges the general assets" to the
bank, and the bank issues notes"
But whose assets are these "gen-
eral assets? If they belong to us
individual citizens, and are our
homes, our savings. and our in
comes, what right has the
sovereign to pledge them at it's
bank?
Outside of a little public prop
erty," there is no such thing as
general assets" s"-unleSs we go in
for communism.
Always when these monetary
socialists" are criticised, they
make the same replies:
If you ask what is to limit
the issue Of paper notes, they
say, "The sovereign will surely
not impair his credit by over
isSue-if he be wise." docs
that satisfy you?)
Asked about the amount of fiat
money" needed, they say,
Enough for the needs Of the people
Cor the sovereignD" But always
it develops that as prices rise and
the debt grows, more money" is
needed-and then more and more.
The more notes you issue, the
more you need. So initiation comes.
Asked about confidence" lin
view of an unbalanced budget,
they always fall back on COM
pulsiOn. They say that the
sovereign or government has
the great advantage Of being
able to force its citizens to take
paper money" John Law
said this. Mariner s. Eccles now
says it,
Is compuISiOn a basis for con-
fidence?