NATURAL MONEY THE PEACEFUL SOLUTION BY JOHN RAYMOND CUMMINGS NEW YORK THE BANKERS PUBLISHING CO. 1912 To the millions who are earnestly seeking a way out of social difficulties; mho Tcnorv that something is radically wrong in our institutions but know also that these institu- tions hold the most precious heritages of the race; who are as determined to conserve the good as to eliminate the bad; who are striving, to inaugurate universal brotherhood; who are more inspired by what is to be than embittered by what is, this volume is hopefully dedicated. THE AUTHOR. Copyright 1912, by the Bankers Publishing Co., New York CONTENTS PAGE PREFACE 5 CHAPTER I NATURAL LAWS ARE GOD'S LAWS Old Analogy of Money to Blood Circulation Extended 9 CHAPTER II NATURAL MONEY How It Comes Into Existence. . . 17 CHAPTER III THE QUESTION OF REGULATION Must Be Auto- matic ; Only by the Demands of Trade, and Free Even from Official Influences 24 CHAPTER IV ECONOMIC EMANCIPATION Showing that Money Should Be an Expression of the Labor "Set Free" from Previous Requirements; an Expres- sion of the Degree of Economic Emancipation. . . 35 CHAPTER v JUSTICE AND MORALITY OF THE SYSTEM 42 CHAPTER VI QUALITIES OF A PERFECT MONEY 49 CHAPTER VII COST OF COIN MONEY 51 CHAPTER VIII DISASTROUS EFFECTS OF FLUCTUATION IN THE VALUE OF GOLD The English Panic of 1847 Relief Found in Ten Minutes When Law was Suspended 63 CHAPTER IX CONSTANCY OF VALUE Its Effects on Business, Wages and Labor Troubles 73 CHAPTER X INCONVERTIBLE CURRENCY Showing that the Real (Though Not Legal) Money in Coin Systems is Mostly Inconvertible and Subject to Sinister Influences 84 20030 9 CHAPTER XI REDEMPTION Not a Government Obligation Good Money Does Not Need to Be Reinforced by Government Guaranty 96 CHAPTER XII LEGAL TENDER 110 CHAPTER XIII THE STREAM OF CURRENCY Causes of Natural Money's Issue 115 CHAPTER XIV VOLUME Estimates as to the Quantity of Natural Money that Will Remain Outstanding, Being Absorbed as an Agency of Saving 124 CHAPTER xv APPORTIONING TAXES Nature's Automatic Toll Gate 144 CHAPTER XVI NATURAL MONEY NOT THE LABOR CHECK SYSTEM.. 153 CHAPTER XVII BUYING THE LAND Purchase of Land and Public Utilities at Fair Price to Be Accomplished With- out Injustice or Debt 156 CHAPTER XVIII ABOUT GROUND RENT 163 CHAPTER XIX INTRODUCING SYSTEM IN UNITED STATES 168 CHAPTER XX A RESERVOIR OF LABOR Showing How System Saves Present Enormous Waste and Provides Labor for Extra Private Demand 176 CHAPTER XXI THE RIGHT OF GOVERNMENT , 181 CHAPTER XXII BANKING 190 CHAPTER XXIII SUPPOSE Common Sense Method of Dealing with the Situation in Time of Distress 197 CHAPTER XXIV "HE THAT HATH EARS TO HEAR, LET HIM HEAR" An Allegory of Capital, Labor, Monopoly and Interest 203 PREFACE TN the following pages I undertake to prove A these propositions: That there is a natural money. That its adoption will make panics impossible. That after a term of years natural money will bring our banking system to such condition that every bank will be able to pay all its obligations instantly. Banks will then be the accountants, custodians and clearing houses for all the people. That in the course of time (probably within fifty years) natural money will put all business on a cash basis. That in a like period the interest rate for property loans will fall to one or two per cent, and probably will disappear from money loans. That natural money will enable the govern-- ment to take over all the land and all the pri- vately owned public utilities on terms very lib- eral to present owners, without issuing a bond and without hardship or injustice. That it will enable the government to build during the same period a million miles of high- way at a cost of $10,000 the mile. To irrigate and drain a large proportion of the area needing irrigation and drainage. To develop tens of millions of horse power 6 PREFACE from water and distribute it throughout the country. To develop internal water-ways on a scale hitherto unattempted and undreamed of. That it will raise wages and end strikes and lockouts. That it will establish natural wages and se- cure absolute equity as between employers and employes. That it will pay off the government debt and make future debt impossible. That it will end our present industrial war- fare and bring all now discordant classes into harmonious cooperation, inaugurating an era of progress and prosperity such as the world has not even conceived of. I am aware that these statements must be astounding to those who regard periodic disaster as in the "natural course of events"; who have accepted the well worn formula, "you can't change human nature," not only as a refutation of faith but as a denial of hope. They are astounding, but not more so than was Galileo's statement that the earth revolves on its axis. Not more astounding than the statement, had it been made a century or two ago, that plagues would cease to decimate the race before the end of the nineteenth century. PREFACE 7 Not even more astounding than the statement Philip Armour may have made to his associates forty years ago: "We will make a hundred mil- lion dollars from the hair, hoofs, horns, bones and intestinal contents of slaughtered animals." We think we are doing a great work to build a Panama Canal in ten or fifteen years. We are. It is great to build it, how long soever it may take, but We are wasting a Panama Canal every three months. First of all I beg the reader to free himself from the idea that the money question is diffi- cult. It is not if we start right, but it is impossible of solution if we have not the foun- dation truth, just as the science of astronomy was impossible until we learned that the earth revolves and the sun is the center. The science of money hitherto has been like the Ptolemaic system of the universe in its makeshift complica- tions. The true science is simple; easy to under- stand and easy to apply. JOHN RAYMOND CUMMINGS. I NATURAL LAWS ARE GOD'S LAWS "T\ISCOVERY of and conformity to the nat- "^ ural law is all of wisdom, and the begin- ning of wisdom is faith that Nature's laws (God's laws) are all-sufficient; that no relation or condition can emerge for which there is not a natural law, a natural mode of procedure. It were impious to say that God put a hu- manity into an evolutional school of life in which it would meet unsolvable conditions. There are innumerable phenomena we shall probably not be able to solve for ages, perhaps not in this life, but to assume that our everyday life in this school should conform to rules of conduct im- possible for us to discover while we still need them, is to impute imperfection if not malevo- lence to the Ruler of the universe. In the evolution of a humanity, if government is desirable it will emerge naturally. If it in- volve expense, as we all know it does, there is a natural source of revenue for the purpose as certainly as mother's milk is food for the babe, as was shown more than thirty years ago by the elder George. If society requires to use money, there is a natural money. By discovering a natural method of taxation 10 NATURAL MONEY Henry George breathed life into a science that had borne little but Dead Sea fruit. He showed the system that should prevail, but his method of inaugurating it impressed many persons as not free from inequity and serious hardships. For years I have advocated his method, with some modifications to ease the hardships, not knowing of any way to avoid them altogether. I have discovered such method, a method so simple and easy it seems evident the natural law foresaw our gravest errors and beneficently provided an exit from situations that would otherwise seem almost hopeless. Only as we discover the natural, the perfect, mode of procedure do we advance in the school of life; and as we do this, more and more we shall find romance, even poetry, in the sciences we have considered dry and dull. If it be not divorced from human life, the science of politi- cal economy will be found of transcendent in- terest, for humanity has written its autobiog- raphy in its material progress, and a thrilling story it is. AN OLD ANALOGY EXTENDED Money has been aptly called the blood of the economic body. The analogy is even more far reaching and forcefully significant than has been shown, for with the money systems in use the analogy is largely to pathological conditions. THE PEACEFUL SOLUTION 11 In the human body we have the condition of anemia or deficiency of blood, and when this condition obtains the vitality of the patient dwindles until it ends in collapse and death if it is not corrected. On the other hand, hyper- emia, too much blood, is not an infrequent con- dition, and then we have dizziness, vertigo and even apoplexy. The blood is the life, but for health there must be the normal supply; neither too little, lest inanition and collapse supervene, nor too much, lest a delicate blood vessel burst, a clot form on the brain and the whole organ- ism be thrown out of balance and wrecked. Is there anything like these in the economic body? Is not a money stringency, when the agency of exchange cannot be had for the nor- mal activities of the business world, the anemic condition of the economic body? And do we not, at such time, perforce do just what the anemic patient does, relapse into a state of in- anition, of half -life, waiting for nature to bring vigor and activity again? And is not the too great supply of money, the inflation of credits, a condition of hyperemia ; too much blood in the economic body? And is not the wild specula- tion we then have the vertigo of the economic body, and as sure to end in apoplexy and disaster? In the condition of hemorrhage sometimes the heart of the patient collapses for want of sum 1 - 12 NATURAL MONEY cient blood to work on, and when such result threatens, the physician opens the circulation and pumps into it a saline solution. It is not blood; it does not nourish the patient, but it fur- nishes material for the heart to work on, thus preventing collapse and gaining time for nature to right things. Even this resort of modern science in coping with bodily disorder has its parallel in the eco- nomic body, for when general distrust has demonetized a large part of the credit, which is the real though not legal money, thus reducing the economic blood to a low ebb, the Doctors of Finance are called in and a saline solution in the form of clearing-house certificates is in- jected into the veins of commerce. It was a great discovery of modern medicine that nature can be induced to go on operating that marvelous mechanism, the human heart, winking that she is hoodwinked into accepting mere liquid quantity for blood; and the dis- covery that we can do the like when our eco- nomic blood is at ebb, is also great, but it is a makeshift. Among men are those known to physicians as "bleeders," whose blood lacks the coagulating quality. As a result of this defect, the slightest wound or a nasal hemorrhage may prove fatal. Is there any analogy to this in our "blood of commerce"? Is it not true that our fluid credit, THE PEACEFUL SOLUTION 13 which constitutes about 85% of the real medium of exchange, is of such character that even a trivial accident is liable to induce a hemorrhage from the effects of which the economic body will require years to recover? Have we for- gotten 1873, 1893 and 1907? And even if the saline solution, the recent discovery, does miti- gate the evil, shall we rest content with mitiga- tion and let the patient still remain a "bleeder" ? Shall we not rather cure the defect and make this economic "bleeder's" blood coagulate and stop the flow when bleeding begins? How shall it be done? The rapid and con- tinued running out or disappearance of the credit volume is the bleeding, and in this eco- nomic pathological case we find a condition not paralleled so far as I know in the human "bleeder," for in the economic body, not only does this uncoagulable blood run away, but that small portion of economic blood, the real money, becomes stagnant and circulates sluggishly or not at all, a large part of it being congested in the vaults of hoarders. This is the analogy of present money systems to the blood circulation, logically extended. Heretofore it has been stated only in general terms, and with no suspicion of the whole truth. Happily the analogy of Natural Money to the blood is a more pleasing picture; not a likeness to conditions of disease, but of health and vigor. 14 NATURAL MONEY In the body the blood goes from the heart to the lungs to be oxygenized and purified, and in its circuit, to all tissues of the body to carry food to every cell and gather up the broken down and now poisonous material, passing through the excretory organs, where the refuse is eliminated, and back again to the heart and lungs. This circulation is so rapid that the whole volume of the blood passes through the heart in about forty-eight seconds, yet men's hearts beat and this rushing torrent of life flowed on for thousands or millions of years before man discovered that his blood circulated. Is there any wonder he failed to solve the prob- lem of the circulation of the economic body? The marvelous metabolism of life is still a mys- tery; we know only the mechanics of it. It is as if our municipal water and sewer systems were united into one closed system and gave back to us, pure, sweet and wholesome, every drop of water not actually consumed. In the nurture of the economic body it is as if there were two streams, one running from the thousands of springs of production to the mil- lions of points of consumption, and a returning stream from the millions of points of consump- tion to the tiiousands of points of production. They are supplemental and constitute a closed system in the economic body. The goods in the stream of supply are the arterial blood, the THE PEACEFUL SOLUTION 15 returning stream of credit, the venous blood. But in this economic circulatory system we behold another miracle. I said it is as if there were two streams, but the fact is there is only one network of streams, and the careful observer will not fail to note that these vessels of value, the dollars, the carriers of utility from the springs of production to the points of con- sumption (the social cellular units), all travel in the opposite direction from that of their cargoes. It is as if they were negative ships, and for positive effect reversed their direction, or moved their cargoes by a force like magnetic attraction, the two objects moving together till they meet in exchange and then remaining static until acted upon by another "moving to ex- change." As in the human body the flow of blood to any given part is induced by the demands of its activity, so in the economic body; and as in the human body this activity may go to the point of injury or even destruction, so in the economic body, as we have all observed. And in the body we observe the wisdom and foresight of Mother Nature, who is a provident dame and well worthy our confidence and emu- lation. She is no spendthrift, living from hand to mouth, nor does she allow her children to be, in the most vital matters. By all sorts of de- vices, almost as if by way of the fourth dimen- 16 NATURAL MONEY sion, she packs away in the bodily recesses of warm storage, by her mysterious atomic mason- ry, here, there and everywhere, a reserve for any unusual demand of joy or grief, and finally for old age. And she is not only provident but esthetic, and uses this reserve to effect that beauty of outline we all so much admire that sometimes, having squandered the reserve, or being unrecon- ciled to approaching age, we audaciously at- tempt to counterfeit it. But even nature has found situations in which beauty has been put aside for utility. The camel, the ship of the desert, is altogether homely. He is an architec- tural monstrosity, and his sky-line is an offense to the eye, but that supra-spinal hump is his savings bank; a blood pudding nature put in his haversack when she bade him cross the sandy plain. Is there anything like this in our social body? Can we save without waste, in economic blood? Not under our present systems of money. We can save without waste only in credit, and not in money, the best credit. Natural Money will cure this defect and con- nect every provident individual with the pulsat- ing economic heart, as it were by an umbilical cord that shall endure to the end. n NATURAL MONEY is a generic expression of credit; of perfectly and permanently fluid credit; the agency by which exchanges are effected and the benefits of economic cooperation realized. By the division of labor production is enor- mously increased, for the reason that a man can produce many times as much of a single article as he can of several articles, partly because the simpler movements required become habitual and almost automatic. Not only can he produce a much larger total in a given time, but there is a great saving also in the fact that he requires fewer tools than for a varied production. It is probably within the truth to say that the total production under division of labor as we have it is from five to ten times what it would be under the methods prevailing five hundred years ago, though even then there was considerable diversity of employ- ment. But with division of labor must come ex- change of products in order that each person may have a large variety of tilings to use, and when two persons meet for the purpose of ex- change it must be a haggling contest or there 17 18 NATURAL MONEY must be some basis upon which to determine how much each must give of what he has for what he wants. Such method is not only so wasteful of time that it well-nigh or quite neutralizes the gain by division of labor, but it is also productive of mutual irritation. In addition to the difficulty of making ex- changes by barter, there is also the great diffi- culty of bringing together two persons whose possessions and desires are both complement al. John may have a coat which he wishes to ex- change for a hat, a supply of groceries and a pair of shoes. It will probably take him as long to find a customer who has what he wants and wants what he has, as it took him to make the coat. These difficulties are rather imaginary than real, for in a very early stage of society they will be largely overcome. Analyzed, the diffi- culty may be expressed as a lack of something that everybody wants all the time; which does not rapidly waste or deteriorate, and which is divisible without loss, so that it may be given in exchange for a trivial or an important thing. Articles for decoration of the person have been used for the purpose, but for more con- venient illustration, even at the risk of historic inaccuracy, let us assume a primitive society, in which wheat constitutes a large part of the THE PEACEFUL SOLUTION 19 food and in which there is considerable division of labor. In such a society it would not be long before wheat became the medium of exchange if nothing better were found. As everybody would want it all the time, and as it is minutely divisible without loss, and does not rapidly waste, it could be used for the purchase of a horse or a darning needle with equal conven- ience. Yet it would not be wholly convenient, for a housewife who went to the grocery for a pound of coffee, some sugar and spices would need a two-bushel bag for a purse, and a cart to carry her money, though she could take her purchases home under her arm. However, this difficulty would soon be overcome, for the general store man (the forerunner of the department store keeper) would find that his cash drawer must be larger than his store. He would therefore build a warehouse and issue receipts in conven- ient denominations for use at his store. Then the community would have a very good money, with their great staple as its basis. But among many such communities some merchant would sooner or later give out wheat from his warehouse without canceling the equiv- alent receipts, by mistake or perhaps fraudu- lently. Then the communities, if they were wise, would take over the business of issuing money on wheat. They might decide to estab- 20 NATURAL MONEY lish mills for grinding the wheat into flour, and might even issue wheat certificates on corn, rye, barley and oats, received at the market price and sold at the market price. If the communities did this they would have a better money than any great nation of the world has or ever had. It would not collapse periodically, and its value would not go in the opposite direction from all other values at times, but it would not be a perfect money, as we shall see. Instead of considering the defects of present systems of money and seeking to devise a cure for them, I shall describe what I consider the natural money, sure that when it is understood no one will find any difficulty in comprehending all the phenomena growing out of the use of artificial and imperfect systems. For our purpose we will assume an isolated community of a thousand men and their fam- ilies; not primitive men, but sturdy men who have lived in civilization and are accustomed to the habits and conditions to be found half a cen- tury ago in the middle states. The Mormons at Salt Lake were splendidly situated for the development of a perfect money system, but the dominance of their religion would probably have prevented it even if it otherwise might have resulted. We will assume that our colonists brought THE PEACEFUL SOLUTION 21 with them a limited amount of gold and silver, and that they have no thought of inventing or adopting any other than the coin system with which they have been familiar, but they do in- tend to build a substantial community, and desire to have an orderly and efficient govern- ment, with the largest measure of public benefits and of personal freedom. Let us assume that they arrive in a body in the early spring, and that for the time being they decide that all work shall be communal. They must have enough houses for protection before the coming winter and must grow food and provender, so they decide that those who are handy with the broad-ax, saw and hammer shall assist the few artisans in the building of houses, while the other men, with the assistance of some of the women and the youths, shall grow the crops. But it is understood that when there are houses for all the work is to be individualistic, except for such work as is of a public character. When they have reached the point of individ- ual work they hold a meeting and decide that each man of voting age shall render thirty days' public service yearly or pay the equivalent into the public treasury, and shall be subject to call for from one to thirty days additional. Even without any difference in the efficiency of individuals this would have resulted in sub- stitute work in the public service because it 22 NATURAL MONEY would enable individuals to dispose their time more conveniently; with difference in efficiency, this substitute work was all the more certain to prevail because it enabled the more efficient to apply their labor in the most productive way open and hire less productive substitutes. Thus the pay current for substitutes established a minimum common labor wage. In the beginning a man who desired a sub- stitute made arrangements with him and noti- fied the overseer of public works, giving the name of his substitute. The overseer gave the receipts accordingly to the workman, who deliv- ered them to his employer and received his pay; but after a time, probably to save work in mak- ing the receipts, they used printed blanks re- quiring only the filling in of the worker's name and the overseer's stamped signature. These each worker delivered to his employers. Still later even this was found to be unneces- sary, for it involved personal engagements to perform the service and subsequent settlements of each worker with his employers. Perhaps by the accident of some workman's failure to settle with his employers at the usual time; pos- sibly by the natural and necessary development of the situation, the workmen came to be quite indifferent and careless as to settlements and used the receipts with the grocer, the butcher, the merchant, in fact everywhere they had dealings. THE PEACEFUL SOLUTION 23 But most of the receipts were for a week's work, only a few of them being for a less amount, so, after a time, on the suggestion of a committee of the workmen, the receipts, or cer- tificates, as they were commonly called, were given in various denominations, from the fourth part of a day to one, two, two-and-a-half and five-day certificates, and were printed on their best paper and as ornamentally as their facili- ties allowed. Very soon after this was done the certificates constituted the larger part of the circulating medium and the people realized that unwittingly they had invented a new money. Gradually, as the volume of the certificates increased, the gold disappeared from circulation and silver was used only as fractional currency. Coin did not disappear by "emigration" nor by hoarding, but by finding its way into the public treasury and remaining there because the people pre- ferred the certificates. Let it be noted that these certificates were not "promises to pay," nor were they money in any legal sense ; not legal tender, yet they performed all the functions of money. Probably no one of the colonists ever so much as thought of pro- viding by ordinance that anything should be a legal tender. Ill THE QUESTION OF REGULATION winter evening at a public meeting for the consideration of certain public improve- ments, one of which was of considerable magni- tude, some doubt was expressed as to whether the community could afford it. The work in question involved the purchase from abroad of about fifteen thousand dollars' worth of appli- ances, and after considerable discussion the man who acted as public accountant, recorder, treas- urer, etc., said he had a suggestion to make, and proceeded about as follows: "There is something more than $10,000 of coin in the vault, some of which has been there over a year. Gold and silver keep dribbling in as people pay their taxes, and coin never goes out except that occasionally I am called upon for fractional silver, nickels and pennies, and of course I use some in the payment of small bills. For a time we paid some of the workmen in coin, but they preferred the certificates, so we abandoned coin payments. I have noticed that many persons, in paying taxes, pay all or part in coin and retain certificates. It is probable there is still considerable coin in the possession of individuals who would gladly exchange it for 24 THE PEACEFUL SOLUTION 25 certificates if the opportunity offered. I sug- gest, therefore, that authority be given for mak- ing the exchange, and that all the coin except the fractional silver, nickels and pennies be used to purchase the machinery and appliances needed from abroad for our improvements." Hitherto nobody had evinced any concern about the value of the certificates. They had passed current on the same basis as coin (a full day certificate as $2.00) and nobody thought of any other basis; but now that the suggestion was made to send the coin away and depend wholly on the certificates it was a very different thing, and the discussion showed not only a deep interest but widely variant opinions. Some thought that every currency should have a coin basis, and the banker thought that the coin in the community had really served as a basis for the certificates, which passed as token money upon the tacit understanding of a return to coin at any time the certificates might prove un- satisfactory. He was very sure a crisis would come before long if the coin were sent away. He raised the question of limiting the issue of certificates, and soon it was evident that this was the crux of the whole question. How to limit them had never been considered, and now it was evident that this was the one point to be made sure of if it could be. The suggestion that this be left to the governing board seemed to meet 26 NATURAL MONEY with general approval, and would doubtless have carried if it had been put to a vote,* but a wheelwright who had not taken part in the dis- cussion before, showed conclusively by the Soc- ratic method that the board had not even an approximate idea of how much money per capita there should be. Then he confessed that he had no idea, and expressed his belief that all the people together knew no more about it than he did, and that no expert could be imported who could give them any light on the subject. It began to look as if the suggestion would have to be abandoned, but the speaker con- tinued: None of us knows, nor all of us to- gether, and we cannot figure it out. Even if we could, it would be dangerous, for an unwise board in the future might precipitate disaster. This possibility is a fatal defect because it is a perpetual menace, a sword of Damocles. Its effect is independent of its occurrence. Must our plan therefore be abandoned? No; for though we do not know to what total to limit them, and though no fixed total, nor even a fixed per capita, would serve, we do know how to limit them so that the total shall always be *There is a widespread superstition that if several men who "do not know" are organized into a board they will bring forth wis- dom. In many (if not most) cases it would be as well to appoint a committee of wooden Indians, for ignorance does not become wisdom by multiplication. THE PEACEFUL SOLUTION 27 right, for it will be self -regulating. It is a curious fact that we look upon the efforts of governments in times past to regulate prices and wages as a superstition in sociology; even look upon the direct attempt to regulate the value of money, in the same way; yet do not realize that attempt to regulate its volume is the same thing in disguise. Perhaps I should not call it superstition. Where the effort has been to legislate value into light-weight coins, it has properly been stigmatized as downright legisla- tive fraud, but when the same end is sought by indirection it is attributed rather to ignorance than to dishonesty, unless the result be obviously inequitable. My contention is that any exercise of official power to expand or contract the vol- ume of money is of a piece with light-weight issues, repudiation, and confiscation. Nobody knows nor can know by a process of reasoning, what is the value of a bushel of wheat, corn, oats, or anything else, but the market knows; the relation of supply and de- mand fixes prices in a free market, and it will do the same for our certificates if wq abandon all effort to regulate their quantity. _It is for us to inaugurate the system, set the machinery going, and then keep hands off. Men always invest their gods with unknow- able attributes, and it may be from this pro- pensity that money has been considered a thing 28 NATURAL MONEY of mystery. There is no mystery, but much mystification. Let us suppose that gold, like aluminum, were to be found everywhere, and that every- one had a right to extract it from the ground; that by ordinary work a man could extract in a day as much gold as is contained in two gold dollars; that the process required only a shovel and a pan and were such that no modification could be made. This would relieve men lacking employment, but wages would constantly fall, because gold is a long-lived substance even when actually in circulation, and becomes almost im- mortal when it lies in a vault and shifts the real work to a paper substitute. Thus every dollar that issues is a permanent addition to the stock, except as money is melted for use in the arts, and this cannot happen to any considerable ex- tent except as a result of decline in value. As the volume would be increasing the value would decline pro tanto, assuming other things the same, until a dollar would be reduced to a very low point measured in the things it would buy. What I particularly desire to illustrate is the incurable defect of precious metal moneys. The dollars come in, but will not get out to stay except as their value is permanently lowered. A perfect currency is not only elastic in the sense that it will expand to the fullest require- ments of trade, but it is as perfect in resiliency, THE PEACEFUL SOLUTION 29 for no matter to what extent it has been ex- panded by temporary demand, it will contract as demand abates. But all this change must be automatic, and not by the dictum of any man or any number of men; not even by the unanimous vote of all concerned. The only perfectly performed functions of the body are the involuntary or automatic ones, and I suspect the same is true in the social body. We could not all come together and by estimate set a proper price upon a single staple, even if we knew the exact quantity in stock and had all the statistics of past years to aid us, yet we do it without effort and unconsciously; do it perfectly. Natural law takes care of it, and all effort to regulate it would be labor lost, and would bring only confusion and disaster if we were so unwise as to attempt it. Every loaf of bread consumed, every cooky eaten by a little one, is a factor in the price of wheat. It is through the operation of her laws that nature admonishes us by ascending prices against im- providence; by descending prices intimates in- dulgence in her bounty. But how shall we arrange so to regulate the quantity of our money that its value shall re- main constant? Remember that the quantity must increase when the demand increases and decrease when the demand decreases. This is 30 NATURAL MONEY exactly the opposite of the behavior of coin moneys, and of all moneys heretofore in use. How shall it be accomplished? Easy enough. Easier to do than not to do. It is said that the first steam engines re- quired a person to move the valve back and forth to let the steam into the cylinders, a small boy usually performing this work. One of these boys discovered that he could attach the valve stem to the moving machinery and thus gain freedom from the monotonous task. From the ingenuity of this boy, step by step we have come to the automatic cut-off, a practically perfect device for maintaining constancy of speed, but the great heart of commerce, the pumping en- gine that circulates the blood through the eco- nomic body, still has a small boy actuating the most delicate and vital part of the mechanism, and the fluttering of the heart tells us how in- adequately he performs his work. We must attach the governor to the mechanism in such way that variations shall bring about their own correction. Hitherto we have been requiring from each male citizen of voting age thirty to sixty days of public service each year, for which receipts have been given. These receipts were not pay- ment for service but acknowledgments of ser- vice due and rendered. This little government does not pay for anything. It receives what is THE PEACEFUL SOLUTION 31 due it and gives receipts. These receipts pass current because, being impersonal, anyone who is prepared to surrender them to the amount of his services due is thereby discharged of his ob- ligation; shows that he has rendered the service personally or by proxy. By surrendering them he designates for credit to his own account that part of public service for which the certificates were issued; and the certificates go back to be canceled or to be reissued in acknowledgment of further service. But heretofore we have done only such pub- lic work as estimates called for without any reference to creating a circulating medium, and if this has given us the proper amount to use as money it is simply a happy accident. There is one way and only one way to de- termine how much public work should be done, and that is to provide public employment for all who cannot be more profitably engaged in pri- vate employment. Naturally you will ask how this can be done. It is very simple, as most great truths are. All the change we need to make in our present method is an ordinance authorizing and com- manding the board of public works to employ all unskilled laborers who apply, at two cer- tificates per day (as we have been giving), and as many skilled laborers as may be needed, at such compensation as is necessary to secure the number required. 32 NATURAL MONEY While I do not think it important, it may be well for technical reasons to provide in the or- dinance that the certificates shall be legal tender. The way in which this plan will work to ac- complish what we seek is this: If at any time, for any reason whatsoever, there are not enough certificates in circulation to meet the demands of trade, their value will rise slightly, or what is the same in effect, general values, prices, will fall, including the price of labor in private em- ployment. This will cause an increase in the number of public workers and a consequent ex- pansion of the currency. Instead of saying that prices would fall I think it better to say that trade would slacken, for it is not likely that prices would noticeably change nor that private wages in general would fall. Instead, it would probably be only a change from brisk to quiet, and laborers whose work in private employment is intermittent or irregular would find less call from private employers and as a result would spend more time in public work. If some men in private employment were laid off temporarily they would shift to public work until the de- ficiency of certificates was made good and busi- ness became brisk again. In a large community, one of many millions, my opinion is there would be no noticeable shift- ing from public to private work and back again, except of those laborers who habitually do so be- THE PEACEFUL SOLUTION 33 cause of the character of their private employ- ment. Indeed we may find that except for those intermittent workers there will be no shifting. I suspect the ultimate development will be that most young men will serve an apprenticeship in public work, and the currency volume will be adjusted by the slightly varying average time they remain. This apprenticeship work, if it all goes into the public service temporarily, should be a very accurate gauge or index of the cur- rency, for if we can imagine a perfectly even standard of business, that is, unvarying pros- perity, the demand for money should be in pro- portion to the number of producers, and the ap- prentices are the enlisting force in the industrial army. On the other hand, if there should ever be too many certificates in circulation their value would fall slightly, or business would become more brisk at prevailing prices and workers would be drawn from public to private employment (not many but a few) and cancellation by payment of taxes would bring about adjustment. Probably more certificates will issue each year than are canceled, for the community is growing and naturally will need more money and more public service. Indeed I suspect that every child, soon after its birth, if not before its birth, will be represented by an increase of the cur- rency, and every increment of social energy will be so expressed in its proper degree. 34 NATURAL MONEY As compared with getting money by digging the precious metals from the earth, even if they were everywhere at hand, this method is immeas- urably superior, for it will give us a better money and we shall have the public works be- sides. This will not mean that the public ser- vice and public utilities cost us nothing, but that our money, thq instrument of exchange, costs us nothing; not even the trivial cost of the certifi- cates, for they or some equivalent would have to issue even if they were not used as money. And as money is merely a short method of book- keeping, why should the counters cost anything? So they did it. ECONOMIC EMANCIPATION, \ltTE have seen from the foregoing that the ~ * money of the proposed system is self- regulating in quantity; that when its value rises the quantity is automatically increased, and when the value falls the quantity is automatic- ally decreased, which is as it should be; and if we can show that this kind of money is the nat- ural money we shall have established its s claim to adoption. Economically, human evolution consists in gradual self -emancipation from thq necessity to toil. This necessity is imposed by nature, and it is evident that complete emancipation is the work of ages, each generation winning a little more "free time." Let us get this fundamental truth firmly fixed in mind, for it is very im- portant. Every economic advance means that less toil is necessary to maintain our mode of life, or that we may live considerably better with the same amount of toil, or somewhat better with a little less toil. To reduce it to definite terms, assuming that we now toil eight hours a day, if improved methods enable us to produce as much in seven hours as we now produce in eight, we will work, say, seven and a half hours 35 36 NATURAL MONEY and live somewhat better. Even with the better living we shall then have half an hour more of "free time," but it will not be for use without accounting to Mother Nature. Economically it is "free time," but it has an evolutional aspect also, and in this sense is probational, and if it be devoted to indulgence instead of aspiration we shall find our gain has become a loss. He has made an ill exchange of masters who has won freedom from "necessity" to become the slave of passions and appetites or of vanity and vulgar display. Unhappily we have evidence all about us that some individuals are rapidly losing the freedom so slowly won. But as a whole, humanity is progressing, and we will consider the progress of a society in which the advance is not lost, wherefore Let us now suppose our colony to own every- thing in common except such things as must, for convenience, be owned individually. We will make a supposititious schedule of this col- ony's labor for a few years, and seq if we can get any helpful suggestion from it. We will assume that in the beginning all their work is necessary to make sure of subsistence and to con- duct the simplest form of government, and in- dicate their progress during a period of ten years by the percentage of labor set free from necessity to toil to maintain the first year standard. THE PEACEFUL SOLUTION 37 Labor necessary to main- Percentage of tain first-year standard. "free labor." 1st year 100% None 2nd year 90% 10% 3rd year 80% 20% 4th year.... 75% 25% 5th year 70% 30% 6th year 65% 35% 7th year 62% 38% 8th year 60% 40% 9th year 58% 42% 10th year.... 56% 44% Here we have an annually increasing amount of labor set free from absolute necessity, and its disposal will determine the progress of the col- ony. In the beginning a very large percentage of it will be devoted to a better material stand- ard of food, clothing, etc., but very soon a goodly percentage will go to permanejnt im- provements and to social and moral benefits. Let us take the annual percentages of "free labor" and make an imaginary apportionment of them to various lines of activity, not dividing them minutely but in broad classifications. This schedule (see page 38) indicates that in the second year six of the ten points gained went to a better subsistence, three to improve- ments of a more permanent character but for individual use, and only one to communal bene- fits, but the increase for food and clothing reaches its limit in a few years, and the sixth 38 NATURAL MONEY year from the first of "free labor," the amount devoted to personal and family betterments shows a decrease, while the communal benefits are steadily commanding a larger share, reach- ing twenty-four out of forty-four in the last year. 4 I O I t, .- fc I fc, I fc - * i d 1 *~ slip 5i^s HI** V 5 ** fi **