Just another notes / quotes post.
Josiah Warren operated a very popular and successful 'Time Store' between 1827 and 1830, with other stores set up elsewhere later. As he describes in the Plan for the Cincinnati Labour for Labour Store:
All Labour is valued by the Time employed in it. Much might be said to show that, as Time is above all things most Valuable, that Time is the real and natural standard of value. But we will not now undertake to prove, that which upon reflection no one will undertake to deny. We will rather proceed to, give the arrangements which have been made to carry this principle into effect.
PRESENT ARRANGEMENT OF THE MAGAZINE.
Here upon this single and simple principle, any exchanges of articles and personal services are made, so that he who employs five or ten hours of his time, in the service of another, receives five or ten hours labour of the other in return. The estimates of the time cost, of articles having been obtained from those whose business it is to produce them, are always exposed to view, so that it may be readily ascertained, at what rate any article will be given and received. He who deposits an article which by our estimate costs ten hours labour, receives any other articles, which, together with the labour of the keeper in receiving and delivering them, costs ten hours, or if the person making the deposit does not wish at that time, to draw out any article, he receives a Labour Note for the amount; with this note he will draw out articles, or obtain the labour of the keeper, whenever he may wish to do so.
Some snippets from Ezra Heywood's essay 'Hard Cash' in Old and New, which proposes 'free' money with an unlimited commodity basis. Living in an era of derivative markets, we might imagine unregulated finance as a space where exchange value and use value drift apart, where their relationships become more complex and multiple and opaque. Heywood had the opposite instinct: if unregulated, those two things would converge. The problem was government, acting in the interest of usurers, artificially preventing the full range and variety of really valuable stuff from being used to issue money ...
On money as a unit of account:
You are actually much better acquainted with the mental dollar, than you are with the material dollar. If a merchant reviews his business, for a single year he will find that he uses the mental conception a million times where he employs its concrete expression once.
(16)
Heywood comparing the production of money (and its regulation) to the production of shoes:
Enterprise and self-reliance, liberty to create values and unrestricted exchanges are the conditions of success in "other trades." Government does not say to a set of men "You shall make the shoes and all restrictions upon your monopoly, through competiton, are forbidden by sufficient penalties." Nor does it say to the people, "In order that you may be protected against fraud we have appointed these men to shoe you at their own-price; and efforts of other parties to contract with you, on more favorable terms, are hereby pronounced penal offences." [...] industry prospers in proportion as men are left to manage their own affairs.
(20)
For Heywood, all government regulation is bound up with usury. Zingers:
Labor-reform asks only that the recognized principles of property and trade which are the life of business, may be applied to money. If we want "protection" we will contract for it. Abhorring favoritism we think that one privilege only should be guaranteed to usurers equally with other classes -- the beneficent privilege of earning their own living. Rich people have been subjects of charity long enough. Money covers a multitute of sins in which too many take stock.
(20)
A production theory of value underlies his conviction that money is not inherently usurious (against the suggestion that it will not circulate unless it steals value). What does it mean for enterprise to be unrestricted? Could we imagine it differently to how Heywood does, yet guided by that idea that it is whatever set of circumstances that would allow a production theory of value to become more-or-less true?
If enterprise is unrestricted the price of money, as of other commodities, must ultimately be regulated by the cost of production. Usury like chattel bondage is upheld by local statute law; and, as the best way to protect slaves was to destroy mastership, so now we need only to repeal all laws which restrict the natural right of people to provide their own medium of exchange. The usurer is a legal thief whose occupation will be gone when his victims cease to furnish courts and constables to enforce his unrighteous claims.
(21)
Heywood on money as credit-debt:
But there is another species of property, in much greater demand, more easily portable and, if it can be obtained, always chosen in preference to coin -- negotiable debt,-- which is already the medium of exchange in 95 per cent. of the world's business. [...] If the means of payment were restricted to specie, interested parties could monopolize it, hoard it, send it broad and deprive us of currency, thus compelling working people to pay them tribute. The specie-basis scheme is an effort to lock the laboring classes of all nations into one chain-gang, and hold them perpetually obedient to the merciless scourge of usury. But, fortunately, the laws of trade rebel against these narrow-minded extortionists; for, since whatever is salable discharges debt, all property can be drawn upon as means of payment. (18)
On the failures of wildcat banks, which fall short of entirely unregulated free money:
The genuineness of debts is assured only by the soundness of debtors, by unquestionable evidence of their ability and willingness to pay. Those who create more value than they consume are the most reliable debtors; for if one begs, or steals, or subsists on what comes of friendship or kinship he is a negative factor. The legerdemain of government currencies, the high sounding platitudes of financiers who preach the specie basis delusion create no value, and therefore lack the essential element of reliableness. It was this effort to substitute political jugglery, and speculative deception, for useful industry, which afflicted our people with what were called "wild-cat banks". In 1838 the legislature of the State of New York passed "An act to authorize the business of banking" which provided 1st., that it should be free under the provisions of a general statue; 2nd., that nine-tenths of a bank's capital ( consisting of approved bonds and stocks ) should be deposited with the State Superintendent of Banks to remain in pledge for the redemption of its notes; 3rd, that these notes should bear upon their face the nature and amount of stock pledged, together with the usual signatures. These plausable provisions ( which were proposed in 1821 by John McVickar Professor in Columbia College ) furnished important suggestions to Sir Robert Peel which were incorporated into the English Bank Act of 1844, and formed the basis of the present National Banking Law of the United States.* Prof. McVickar claimed that his methods to secure liberty and safety in banking were “not untried novelties, but already established by the experience of other trades.” It was undoubtedly one ofthe best schemes for state banking ever devised, for monopoly never took a fairer form. But that it made money free and reliable in the sense in which those words apply to “other trades” is not true. It did not honestly demand free banking, (that is liberty for individuals or associations to exercise their natural right to manufacture and issue currency on their own responsibility and at their own cost ) but, leaving all of the old statutes which prohibit free competition in the production of money in full force, it undertook to provide new conditions under which people were to be “permitted” to do what they have a natural right to do ! Precisely in this way did not the Pope permit Protestants to be free under conditions prescribed by his infallible self ? Was not George III, willing the Colonies should be governed as he thought best ? What slave is not free within the circle described by his driver’s lash ? The Act did indeed provide freedom for usurers, but subjection and extortion for their victims, the producers. Under the fair seeming pretense of protecting the people from fraud it robbed them of their natural right to protect themselves, at once arming the banks with power to enforce usury, and leaving them abundant opportunities to escape from the just obligations to redeem their notes. Simon Cameron, U.S. Senator from Pennsylvania can tell how fortunes were “made” by “wild-cat banking;” for he is reported to be one of many “friends of the people” who acquired large wealth through the stately imposition. Under the legal forms prescribed it was very easy to start a bank, issue bills and send them far away, West or South; because apparently “secured by the state” people would take them in exchange for property, thus enabling the bankers to get possession of real value when they had no intention of redeeming their false promises to pay. Defenders of the national bank monopoly now bring it as an objection, to the old state-banks, that their bills came back for redemption with inconvenient frequency, and in embarrassing quantities ! A banking system whose notes are rarely returned for payment, the issuers of which, while drawing semi-annual interest on their bonds, also receive interest constantly on their notes in circulation, thus getting a double rate of usury without ever being called upon to redeem their promises to pay, is especially “perfect” ! Who would not undertake to “protect” the people on these lucrative terms ! The epithet “wild-cat” was invented by usurers to scare their profit yielding victims into consenting to be “protected;” but the feline animal in their employ is noted for ferocity as well as irresponsibleness, and people are beginning to learn that systematic extortion, in comparison with which the instincts of savage beasts are merciful, is a kind of “protection” a little too expensive to be much longer desirable. Liberty may be perilous to victims of traditional subjection, but the “wild-cat” warnings of our usurious masters will be worth heeding when we have some evidence that their solicitude is disinterested.
(19-20)
Heywood on fiat money:
The scheme [of Edward Kellogg / endorsed by the National Labor Union], as now before the public, is at once a denial of liberty and of equity; for while it proposes to make usury perpetual, through political monopoly and dictation, it sees no better basis of financial values than the treacherous quicksands of "national faith."
Next, some snippets from William Greene's Mutual Banking (1850).
From the intro:
The object of the mutualist bank is to advance money on sound personal guarantee on their future earning or production, even without the mortgage of property at the rate of one percent interest per annum. This amount of interest covers the whole expenditure of the establishment and leaves something to be carried forward to reserve funds. Besides, loans on low interest would give impetus to honest industry and it will also help to increase employment by creating efficient demand. It is very difficult in these days to borrow money from banks on high interest for honest and enterprising concerns; even on pawning the securities or estates and so what to talk of owners of small workshops and craftsmen, who have very little of fluid capital and hardly sufficient capital to pledge securities.
Capital:
Money is disengaged capital, and disengaged capital is money.
Labour, capital, money, happiness (and a bit more implicitly, justice):
The community is happy and prosperous when all professions of men easily exchange with each other the products of their labor; that is, the community is happy and prosperous when money circulates freely, and each man is able with facility to transform his product into disengaged capital, for with disengaged capital, or money, men may command such of the products of labor as they desire, to the extent, at least, of the purchasing power of their money.
Liquidity, demand, something similar to what was later called the [double] coincidence of wants:
The community is unhappy, unprosperous, miserable, when money is scarce, when exchanges are effected with difficulty. For notice, that, in the present state of the world, there is never real over-production to any appreciable extent; for, whenever the baker has too much bread, there are always laborers who could produce that of which the baker has too little, and who are themselves in want of bread. It is when the tailor and baker cannot exchange, that there is want and over-production on both sides.
Types of money:
But all money is not the same money. There is one money of gold, another of silver, another of brass, another of leather, and another of paper: and there is a difference in the glory of these different kinds of money. There is one money that is a commodity, having its exchangeable value determined by the law of supply and demand, which money may be called (though somewhat barbarously) merchandise-money; as for instance, gold, silver, brass, bank-bills, etc.; there is another money, which is not a commodity, whose exchangeable value is altogether independent of the law of supply and demand, and which may be called mutual money.
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