Res Publica

2008-11-29T17:28:00.030Z

''The privilege of creating and issuing money is not only the supreme prerogative of Government, but also the government's greatest creative opportunity."

Abraham Lincoln

WHY do governments choose to borrow money from private bankers - bankers who create this money out of nothing - as interest bearing debt?

How can it be that those that create all the real wealth in this world are in debt to those that merely create then lend the tokens that represent that wealth?

Could it be in the words of Marshall McLuhan

"Only the small secrets need to be protected. The big ones are kept secret by public incredulity".

The truth is that 95% of money is debt created out of nothing by private banks at interest. Government then legitimises this money. By law it's exchangeable for the nation's bank notes & coins - only 5% of all money.

The debt money is created out of nothing by private banks and as the interest on the principle is not existing in the societal “money pool” more debt has to be created to enable the potential for repayment.

Mathematically this is expressed as an exponential curve.

“The greatest short coming of the human race is our inability to understand the exponential function”

A.A. Bartlett, physicist.

A money system based on privately created money as debt has a fixed default to crash. It is absolutely incompatible with the possibility of a just, creatively intelligent and equitable system for human development.

Put simply, the role of money should be to link underused resources with unmet needs. The goal to be an equitable, sustainable society where we leave this planet in better shape than when we arrived. This is a simple and straight forward money management task.

The path to economic & political independence from the global banking system

Sound Money - the People's Currency - Wise souls over the ages have devised various systems to facilitate this equitable and sustainable economic framework. The following proposals (para phrased) are advocated by monetary reformers from around the world. These ideas have been spectacularly successful when adopted. [More ]

i) A National Treasury creates non-cash or bank-account money out of nothing, as private banks do now, providing as much as is needed to increase money supply to balance the production of goods & services in the economy. This money would be used by government as debt-free public revenue for sustainable, socially beneficial development. Government would put this money into circulation by spending it, like other revenue, to create common wealth.

ii) A National Treasury provides interest-free loans (administered by the banking system) available for public capital projects; environmental capital projects; micro-credit; small farms & businesses; student loans; and provided wider ownership is thereby furthered, for private capital investment.

iii) Banks as money brokers. No other new bank-account money denominated in the national currency should be allowed; to lend money commercial banks will be required to borrow already existing money from elsewhere, thus becoming brokers, linking potential lenders to potential borrowers - as many people wrongly assume happens now.

iv) Restrictions on international capital movements, applying taxes on national financial transactions, an international Tobin tax [1] and site-value levy as set out by Henry George [2]

Wealth, mostly as the economic value of land and corporate holdings, intellectual property rights etc. is created by society as a whole and should be shared by all.

The maths of usury and of privately created money as debt, result in wealth being systematically concentrated in fewer and fewer hands. [UN figures]

The mechanism for the systematic accretion of wealth to the wealthy should not be held in the unrepresentative hands of a tiny minority of the planet’s people. People must be the masters of money or be the slave to those that control the global money system.

A national treasury dedicated to stimulating sustainable, society enriching infrastructure and overall wealth creation facilities can be built on the existing banking network. A sane, equitable, money system accords social justice to the majority and limits the power of the wealthy. It would mean "another world is possible" ..... as asserted by the G8 Protestors.

Nurturing the honest co-operation of human kind is an ever present challenge. [More]

VIDEO: A good introduction to the global monetary system, usurped by private interests from the nations, can be viewed on Google Video. See [Money as Debt]
BOOK LIST: [Money reform]

NOTES

[1] A Tobin tax is the suggested tax on all trade of currency across borders. Named after the economist James Tobin, the tax is intended to put a penalty on short-term speculation in currencies. The original tax rate he proposed was 1%.
http://en.wikipedia.org/wiki/Tobin_tax

[2] Henry George (1839-1897), was the last of the great Classical economists. His first book, Progress and Poverty (1879), was the best-selling book to that date, save only the Bible. George wrote several other popular but substantial books, and also had an international reputation as a lecturer, speaking throughout the English-speaking world, from Australia to England. He greatly influenced philosophers and politicians from Leo Tolstoy and G. B. Shaw to Clarence Darrow, Sun Yat Sen and Winston Churchill, among many others.

Like Tom Paine, George drew a sharp distinction between land and capital. Capital, he said, was a subset of wealth, i.e. that part of wealth which is devoted to economic activity; to production, transportation, sales, or services provided for profit. Like labour, capital represents human effort and deserves fair recompense. Land, however, is another matter.

It is produced by no person, and whoever uses it prevents others from doing so. Moreover, most of the economic value of land is created by society as a whole, not by the "owner".

Population growth creates demand for land and for resources, and population, together with public roads, pipelines, and utilities cause the value of land to rise even if the owner does nothing with it.

Since the economic value of raw land and its natural resources results entirely from social action, that value should be shared by all and not accrue to any single "owner".

George said that this result could easily be accomplished by taxing away all or most of the "economic rent" -- i.e. the rent that raw land or its resources would bring on the open market.

George added that society should collect the rent not only from land and natural resources, but also that accruing from special privileges such as patents and licenses like taxi licenses, radio and TV licenses, satellite orbits etc. which enable a few to profit from monopolies. Everything beyond a fair return to the inventor or license holder should accrue to society as a whole.

[3] The above are guidelines not set in stone. A free society geared to creating an enriching sustainability social evolution of our human species must experiment with both money systems based on the above and methods of controlling greed and corrupt self interest.

[4] Full quote of Abraham Lincoln:

“The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles… the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity"

[5] The Federal Reserve Bank of America [which is not federal, and has no reserves] actually posted this pdf on the Chicago FED's web site. Modern Money Mechanics is the story of money from the horses mouth. There is nothing in the UK that spells out the official charter for banks to make money out of nothing. This pdf file if no longer available from the FED. They say "it is out of print".
http://ia301505.us.archive.org/2/items/ModernMoneyMechanics/MMM.pdf

[6] What should money represent?

Dr Peter Bowman, tutor at School of Economic Science, and member of the Council of Management of Henry George Foundation reflects on Karl Polanyi's 1943 book "Great Transformations" which explores what happened to sow the seeds of self-destruction in our present monetary system. Polanyi's thesis is that it was a deception.

It was the pretence that the primary elements of the economy, namely land, labour and credit, are commodities that can be traded in the market in the same way that actual commodities can. He pointed out that these primary elements of the economy are patently not commodities in that they are not man-made goods. [Read more]

[7] The poster of this information, Anorak Notes, thanks participants of the [Global Table]
for opening wider the door to the enriching vista of a "people's currency".

The Money Key

2008-06-23T22:28:00.008+01:00

This is an index to essays, reports, book reviews and news about money and land reform. Below the index are headlines with intros to main issues.

Philosophy of Money What is Money?/

Smoke & Mirrors Economics - a religious saga?/

History How can paper money increase the wealth of a nation?/ How a bankrupt Germany solved its infrastructure problems/

21.04.2010 [Money]
Renaissance of Res publica
Dr Peter Bowman, tutor at School of Economic Science, and member of the Council of Management of Henry George Foundation reflects on Karl Polanyi's 1943 book "Great Transformations" which explores what happened to sow the seeds of self-destruction in our present monetary system. Polanyi's thesis is that it was a deception.

It was the pretence that the primary elements of the economy, namely land, labour and credit, are commodities that can be traded in the market in the same way that actual commodities can. He pointed out that these primary elements of the economy are patently not commodities in that they are not man-made goods. [Read more]

Money Quotes

2008-06-23T19:03:00.000+01:00

"The entire taxing and monetary systems are hereby

placed under the U.C.C. (Uniform Commercial Code)."

-- The Federal Tax Lien Act of 1966

"The few who understand the system, will either be so

interested from it's profits or so dependant on it's

favors, that there will be no opposition from that

class."

-- Rothschild Brothers of London, 1863

"Give me control of a nation's money and I care not

who makes it's laws."

-- Mayer Amschel Bauer Rothschild

"Most Americans have no real understanding of the

operation of the international money lenders. The

accounts of the Federal Reserve System have never been

audited. It operates outside the control of Congress

and manipulates the credit of the United States."

-- Sen. Barry Goldwater (Rep. AR)

"Whoever controls the volume of money in any country

is absolute master of all industry and commerce."

-- James A. Garfield, President of the United States

"Banks lend by creating credit. They create the means

of payment out of nothing."

-- Ralph M. Hawtrey, Secretary of the British Treasury

"To expose a 15 Trillion dollar ripoff of the American

people by the stockholders of the 1000 largest

corporations over the last 100 years will be a tall

order of business."

-- Buckminster Fuller

"Every Congressman, every Senator knows precisely what

causes inflation...but can't, [won't] support the

drastic reforms to stop it [repeal of the Federal

Reserve Act] because it could cost him his job."

-- Robert A. Heinlein, Expanded Universe

"It is well that the people of the nation do not

understand our banking and monetary system, for

if they did, I believe there would be a revolution

before tomorrow morning."

-- Henry Ford

"The regional Federal Reserve banks are not government

agencies... but are independent, privately owned and

locally controlled corporations."

-- Lewis vs. United States, 680 F. 2d 1239 9th Circuit

1982

"We have, in this country, one of the most corrupt

institutions the world has ever known. I refer to the

Federal Reserve Board. This evil institution has

impoverished the people of the United States and has

practically bankrupted our government. It has done

this through the corrupt practices of the moneyed

vultures who control it."

-- Congressman Louis T. McFadden in 1932 (Rep. Pa)

"The Federal Reserve banks are one of the most corrupt

institutions the world has ever seen. There is not a

man within the sound of my voice who does not know

that this nation is run by the International bankers."

-- Congressman Louis T. McFadden (Rep. Pa)

"Some people think the Federal Reserve Banks are the

United States government's institutions. They are not

government institutions. They are private credit

monopolies which prey upon the people of the United

States for the benefit of themselves and their foreign

swindlers."

-- Congressional Record 12595-12603 -- Louis T.

McFadden, Chairman of the Committee on Banking and

Currency (12 years) June 10, 1932

"[Every circulating FRN] represents a one dollar debt

to the Federal Reserve system."

-- Money Facts, House Banking and Currency Committee

"...the increase in the assets of the Federal Reserve

banks from 143 million dollars in 1913 to 45 billion

dollars in 1949 went directly to the private

stockholders of the [federal reserve] banks."

-- Eustace Mullins

"As soon as Mr. Roosevelt took office, the Federal

Reserve began to buy government securities at the rate

of ten million dollars a week for 10 weeks, and

created one hundred million dollars in new [checkbook]

currency, which alleviated the critical famine of

money and credit, and the factories started hiring

people again."

-- Eustace Mullins

"Should government refrain from regulation (taxation),

the worthlessness of the money becomes apparent and

the fraud can no longer be concealed."

-- John Maynard Keynes, "Consequences of Peace."

"By this means government may secretly and unobserved,

confiscate the wealth of the people, and not one man

in a million will detect the theft."

-- John Maynard Keynes (the father of 'Keynesian

Economics' which our nation now endures) in his book

"THE ECONOMIC CONSEQUENCES OF THE PEACE" (1920)

"These 12 corporations together cover the whole

country and monopolize and use for private gain every

dollar of the public currency..."

-- Mr. Crozier of Cincinnati, before Senate Banking

and Currency Committee - 1913

"A great industrial nation is controlled by it's

system of credit. Our system of credit is concentrated

in the hands of a few men. We have come to be one of

the worst ruled, one of the most completely controlled

and dominated governments in the world -- no longer a

government of free opinion, no longer a government by

conviction and vote of the majority, but a government

by the opinion and duress of small groups of dominant

men."

-- President Woodrow Wilson

"We are completely dependant on the commercial banks.

Someone has to borrow every dollar we have in

circulation, cash or credit. If the banks create ample

synthetic money we are prosperous; if not, we starve.

We are absolutely without a permanent money system....

It is the most important subject intelligent persons

can investigate and reflect upon. It is so important

that our present civilization may collapse unless it

becomes widely understood and the defects remedied

very soon."

--Robert H. Hamphill, Atlanta Federal Reserve Bank

"The Federal Reserve Banks are not federal

instrumentalities..."

-- Lewis vs. United States, 9th Circuit 1992

"The Federal Reserve banks, while not part of the

government..."

-- United States budget for 1991 and 1992 part 7, page

"The Federal Reserve bank buys government bonds

without one penny..."

-- Congressman Wright Patman, Congressional Record,

Sept 30, 1941

"The Federal Reserve system pays the U.S. Treasury

020.60 per thousand notes -- a little over 2 cents

each -- without regard to the face value of the note.

Federal Reserve Notes, incidently, are the only type

of currency now produced for circulation. They are

printed exclusively by the Treasury's Bureau of

Engraving and Printing, and the $20.60 per thousand

price reflects the Bureau's full cost of production.

Federal Reserve Notes are printed in 01, 02, 05, 10,

20, 50, and 100 dollar denominations only; notes of

500, 1000, 5000, and 10,000 denominations were last

printed in 1945."

-- Donald J. Winn, Assistant to the Board of Governors

of the Federal Reserve system

"Neither paper currency nor deposits have value as

commodities, intrinsically, a 'dollar' bill is just

a piece of paper. Deposits are merely book entries."

-- Modern Money Mechanics Workbook, Federal Reserve

Bank of Chicago, 1975

"This [Federal Reserve Act] establishes the most

gigantic trust on earth. When the President [Wilson}

signs this bill, the invisible government of the

monetary power will be legalized.... the worst

legislative crime of the ages is perpetrated by this

banking and currency bill."

-- Charles A. Lindbergh, Sr., 1913

"From now on, depressions will be scientifically

created."

-- Congressman Charles A. Lindbergh Sr., 1913

"The financial system has been turned over to the

Federal Reserve Board. That Board asministers the

finance system by authority of a purely profiteering

group. The system is Private, conducted for the sole

purpose of obtaining the greatest possible profits

from the use of other people's money."

-- Charles A. Lindbergh Sr., 1923

"The [Federal Reserve Act] as it stands seems to me to

open the way to a vast inflation of the currency... I

do not like to think that any law can be passed that

will make it possible to submerge the gold standard in

a flood of irredeemable paper currency."

-- Henry Cabot Lodge Sr., 1913

"When you or I write a check there must be sufficient

funds in out account to cover the check, but when the

Federal Reserve writes a check there is no bank

deposit on which that check is drawn. When the Federal

Reserve writes a check, it is creating money."

-- Putting it simply, Boston Federal Reserve Bank

"There is a distinction between a 'debt discharged'

and a debt 'paid'. When discharged, the debt still

exists though divested of it's charter as a legal

obligation during the operation of the discharge,

something of the original vitality of the debt

continues to exist, which may be transferred, even

though the transferee takes it subject to it's

disability incident to the discharge."

-- Stanek vs. White, 172 Minn.390, 215 N.W. 784

"I have never seen more Senators express discontent

with their jobs.... I think the major cause is that,

deep down in our hearts, we have been accomplices in

doing something terrible and unforgiveable to our

wonderful country. Deep down in our heart, we know

that we have given our children a legacy of

bankruptcy. We have defrauded our country to get

ourselves elected."

-- John Danforth (R-Mo)

"Capital must protect itself in every way...Debts must

be collected and loans and mortgages foreclosed as

soon as possible. When through a process of law the

common people have lost their homes, they will be more

tractable and more easily governed by the strong arm

of the law applied by the central power of leading

financiers. People without homes will not quarrel with

their leaders. This is well known among our principal

men now engaged in forming an imperialism of

capitalism to govern the world. By dividing the people

we can get them to expend their energies in fighting

over questions of no importance to us except as

teachers of the common herd."

-- Taken from the Civil Servants' Year Book, "The

Organizer" January 1934

Founding Father's Quotes on Banking (Maybe some

repeats from "Founding Father's Quotes" / Information

tends to converge)

"I believe that banking institutions are more

dangerous to our liberties than standing armies.

Already they have raised up a monied aristocracy that

has set the government at defiance. The issuing power

(of money) should be taken away from the banks and

restored to the people to whom it properly belongs."

-- Thomas Jefferson

"If Congress has the right [it doesn't] to issue paper

money [currency], it was given to them to be used

by...[the government] and not to be delegated to

individuals or corporations."

-- President Andrew Jackson, Vetoed Bank Bill of 1836

"History records that the money changers have used

every form of abuse, intrigue, deceit, and violent

means possible to maintain their control over

governments by controlling money and it's issuance."

-- James Madison

Confronting Reality

2000-10-26T17:46:00.008+01:00

Seven billion people rising - finite planet

exhausting resources, poisoned air, earth,

water & minds

Existing leadership has failed comprehensively to ensure our security, our well being or confident hope for the future.

What are the most important factors for our troubled species to embrace going forward ?

Being human: Knowledge of the gamut of individual and group behaviour patterns of our species is in the public domain. We understand many of our vulnerabilities and weaknesses as well as the creative innovative brilliance residing in the human population. It has been our ability to cooperate, not compete, that essentially developed our species. We are an adaptable and malleable tribal animal.

When knowledge & resources are concentrated in the hands of a few closely knit, highly motivated, greedy cabals the majority of the people will be enslaved to their interests.

Those that benefit from the resulting social mechanism rarely wish to understand that mechanism especially if it appears to grant them privilege and power over their fellow man.

In an enlightening society there will still be seats of privilege and power occupied by brilliant Alpha types. In creating a better world we must acknowledge both the benefits and the dangers of achievers and ensure they are kept in check

There are effective technical and human skills that can detect outright dishonesty, a predominant characteristic of human development, manipulation & domination. Transparency & accountability in all areas of public interest is both possible and paramount. No privilege without accountability.

Population: We understand human breeding behaviour and have the knowledge to stabilise population, through education, enabling gender equality, contraception and by developing sustainable infrastructure guaranteeing security in essentials.

Technology: We have mastered the power of technology. Providing essentials such as energy, food and shelter with modern conveniences is within the grasp of our global population.

What needs our most urgent attention going forward?

Economics - a religious saga?

2000-03-14T21:26:00.003Z

[Home]

The G20's Continuing Free Market Disease - a Religious Saga?

What do you get when a religion masquerades as a science?

You get what's know today as "Economics!"

* Why do we identify it as a religion? Because it is a belief system based on faith,

* Where enshrinement of those beliefs is independent of evidence, pro or con;

* Where its bad effects are regularly dismissed as "anecdotal;"

* Where it's high priests, the economists, such as Ludwig Von Mises, assert that their theories (beliefs) cannot be dis proven by mere facts (!);

*And where they actually get away with those statements that are so destructive to sound thinking methodology.

A recent example is the official 18 point statement released by the G20 group of countries after their emergency meeting last Weekend (Nov. 15th and 16th). Lawmakers and citizens should regard it as an insult to the intelligence of all thinking and working Americans.

Most of its' 16 points refer to actions that common sense and decency would have required them to have already been performing, especially over the past lawless decade. So it all reads much like closing the gates after the thundering herd has run off. The first reaction to it is therefore "yeah sure," followed by a big yawn. But its worse than that. Particularly points # 2 and # 12, quoted below from the

official G-20 Statement on Financial Markets and the World Economy:

"2. Over the past months our countries have taken urgent and exceptional measures to support the global economy and stabilize financial markets. These efforts must continue. At the same time, we must lay the foundation for reform to help to ensure that a global crisis, such as this one, does not happen again. Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction."

This is horrible. They are saying that one of the main causes that facilitated the problem – the notion of so called free market ideology – must still reign unchallenged. This while the only reason anything is still standing in their ridiculous financial world is because of our government.

And they do it again in point # 12:

"12. We recognize that these reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems. These principles are essential to economic growth and prosperity and have lifted millions out of poverty, and have significantly raised the global standard of living. Recognizing the necessity to improve financial sector regulation, we must avoid over-regulation that would hamper economic growth and exacerbate the contraction of capital flows, including to developing countries."

There's that old destroyer again – "Free market principles." Its their heavy artillery in the class warfare those who these people represent are committed to. You see how desperate they are to bolster this ideology. But Greenspan has effectively destroyed it (Thanks Alan!). See or request my recently sent essay on Greenspan's Admission of Methodological Error.

Well a week later the Asia Pacific Economic Co-operation group meeting in Lima Peru, issued a two page statement, that continued to promote this failed market religion. It included these two pledges, which continue to ignore and evaluate the negative effects of the theory, in order to support the religious belief in the market as God:

"We reiterate our firm belief that free market principles, and open trade and investment

regimes, will continue to drive global growth, employment and poverty reduction."

and:

"We reaffirm our commitment to the Bogor Goals of free and open trade and investment in the Asia-Pacific as a key organizing principle and driving force for APEC."

But reading their statement, the only proposed actions that make sense are those promising greatly increased regulation, rules and governmental oversight. In other words, with curtailing the religious free market experiment. That is hopeful.

Friends, its interesting that many of the free market people, being libertarian oriented, would probably qualify as agnostics or atheists, when it comes to the mainline religions. Yet their great need to kneel and worship the market God, demonstrates a powerful, if misplaced psychological need for a religious experience. They even conjure up "holy ghosts," and call them invisible hands!

The first step in eradicating a sociopaths destructive behavior is to recognize the problem. Sad to say, the G20 and the APEC have not yet done that. Lets hope President Obama receives better advice and Counseling!

As Congressman Dennis Kucinich said in his election victory speech:

"We have to look at the role of the Federal Reserve...That isn't a Democratic or Republican issue.Its an issue that relates to whether were going to control our own government. The Banks took over the government with the bailout. We borrowed money from the banks to give to the banks so they could offload their toxic debt or hoard the money or use the money to buy other banks! Our country is in jeopardy because of this and the only way out is to take a new look at the way we create money in our society...we have to not only prime the pump of the economy the way Roosevelt did but we also have to look at the structures in our society that are causing this acceleration of wealth upwards."

See the inspiring 3 minute conclusion at http://www.youtube.com/watch?v=x2Xez11JfVM

Sincerely ... Stephen Zarlenga AMI.

http://www.monetary.org

Money Reform - Positive Examples

2000-03-14T19:53:00.006Z

Germany Reconstructs

http://respublicauk.blogspot.com/2000/03/germany-reconstructs.html

Of course this helped pave the way to WW11. But Germany would not have succeeded if it had not been for the enormous support of American corporations, Wall Street, International Bankers & BIS.

Lincoln and the Greenback

http://respublicauk.blogspot.com/2000/03/lincoln-greenback.html

Slavery, Lincoln & Greenbacks

http://respublicauk.blogspot.com/2000/03/slavery-lincoln-greenbacks.html

Lincoln's drive for a national treasury

http://respublicauk.blogspot.com/2000/03/lincolns-drive-for-national-treasury.html

Long and interesting article about the Greenback and Lincoln's struggle against European bankers.

How can paper money increase the wealth of a nation?

http://respublicauk.blogspot.com/2009/01/how-can-paper-money-increase-wealth-of.html

N American colonial financial structures are reviewed, quotes from David Hume, Benjamin Franklin, & Adam Smith & more plus the 1815 Guernsey Experiment.

Lincoln & the Greenback

2000-03-14T19:39:00.001Z

zzz

Please find links at foot of page to articles about the Greenback.

Page is "in the making" - Brief intro to the Greenbacks success:

Abraham Lincoln succeeded in creating government money to spend debt and interest free. America, using the Greenbacks, enjoyed significant prosperity under a system where government money was not interest bearing enslavement by bankers. The history of the success of the Greenback is not well published, as with the continental before it. Unfortunately the stimulation for the Greenback was both the strangulation grip of private banking and war. A better world is possible though if enough citizens understand the constructive power of a sound, sane, accountably money system in the peoples hands.

What follows are some clips and links to stimulate further interest in the Greenback & UK money reform in particular.

According to a London Times editorial in 1865, alarmed at the success of Lincoln's greenbacks, "[America] will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world...That country must be destroyed or it will destroy every monarchy on the globe."[1]

[1] This quote is attributed to Lord George J. Goschen, Director of the Bank of England and later, Chancellor of the Exchequer.

Under Creative Commons License: Attribution

Some key US political figures that promoted money reform above their own self interest. Check out how many were subject of assassination or attempted murder.

Andrew Jackson
Abraham Lincoln
Ben Franklin
Barry Goldwater
Louis T, McFadden
Charles Lindbergh
James Garfield
John F Kennedy

Slavery, Lincoln & Greenbacks

http://respublicauk.blogspot.com/2000/03/slavery-lincoln-greenbacks.html

Lincoln's drive for a national treasury

http://respublicauk.blogspot.com/2000/03/lincolns-drive-for-national-treasury.html

Long and interesting article about the Greenback and Lincoln's struggle against European bankers.

Lincoln's drive for a national treasury

2000-03-14T19:21:00.002Z

This is presented as a view of history not absolute truth. The reader needs to do their own research to give authority to what they alone believe to be "most likely" accurate. Anorak Notes

Rochelle Ascher submitted the following speech to the annual conference of the International Caucus of Labor Committees and the Schiller Institute in Vienna, Virginia on Sept. 5. Her speech was delivered on her behalf by her husband John. Ascher, the first associate of Lyndon LaRouche to be convicted in the Virginia ``get LaRouche'' political trials, began serving her 10-year sentence on June 15. She is appealing her frameup to the U.S. Supreme Court.

Printed in the American Almanac, September, 1992

There has not been in American history, until Lyndon LaRouche, a man such as Abraham Lincoln. When we look at the situation in the world today, and that in the U.S., the situation Lincoln found himself in was equally, if not more, devastating. Surrounded by traitors on all sides, with a totally bankrupt economy, he acted as no one expected him to act. The economic mobilization carried out during those four years, under conditions of brutal war in which more Americans died than in World Wars I and II combined, is unparalleled in U.S. and, possibly, world history.

When Lincoln was elected, he received no electoral votes in 15 states and no popular votes in 10. While he received 1.8 million votes, his three opponents together received 2.8 million. In the four months before his inauguration, five states seceded from the Union--the rest of the Confederacy shortly thereafter. By the time he took office, civil war was only weeks away.

The U.S. was bankrupt. For 30 years it had been the victim of British economic measures. Jackson's dismantling of the Bank of the United States, followed by Polk's Independent Treasury Act of 1846, and the free trade treason of Presidents Van Buren, Tyler, Polk, Pierce, and Buchanan, had placed the U.S. totally under the control of the Baring and Rothschild-allied New York banks of Astor and Gallatin. In 1857, the U.S. went totally bust; the banks collapsed, factories closed, business came to a standstill. Hunger and unemployment were widespread. The Treasury was empty. Congress had not been paid.

The Buchanan administration, as Anton Chaitkin has amply documented, was indistinguishable from the Supreme Council of the Scottish Rite. These freemasonic traitors had been working actively for months to disarm Northern federal arsenals while equipping the Southern rebel states. Citizens demonstrated throughout Northern cities, as tons of military hardware were stolen and shipped south for an attack on the U.S., with the connivance of the vice president and at least three cabinet members.

Lincoln's Gethsemane

The most telling description of the situation the country faced following Lincoln's election appears in an interchange between Lincoln himself, and one of his closest friends, Judge Gillespie, in the days before the inauguration:

"...Gillespie,'' said he, ``I would willingly take out of my life a period in years equal to the two months which intervene between now and my inauguration to take the oath of office now.'' ``Why?'' I asked. ``Because every hour adds to the difficulties I am called upon to meet, and the present administration does nothing to check the tendency toward dissolution. I, who have been called to meet this awful responsibility, am compelled to remain here, doing nothing to avert it or lessen its force when it comes to me.''
I said that the condition of which he spoke was such as had never risen before, and that it might lead to the amendment of such an obvious defect in the federal Constitution.
``It is not of myself I complain,'' he said, with more bitterness than I have ever heard him speak, before, or after. ``But every day adds to the difficulty of the situation, and makes the outlook more gloomy. Secession is being fostered rather than repressed, and if the [secession] doctrine meets with a general acceptance in the border states, it will be a great blow to the government.''
Our talk then turned upon the possibility of avoiding a war. ``It is only possible,'' said Mr. Lincoln, ``upon the consent of this government to the erection of a foreign slave government out of the present slave states....
``I see the duty revolving upon me. I have read, upon my knees, the story of Gethsemane, where the Son of God prayed in vain that the cup of bitterness might pass from him. I am in the Garden of Gethsemane now, and my cup of bitterness is full and overflowing....''
I then told him that as Christ's prayer was not answered and His crucifixion had redeemed the great part of the world from paganism to Christianity, so the sacrifice demanded of him might be a great beneficence. Little did I then think how prophetic were my words to be, or what a great sacrifice he was called upon to make.

President Lincoln received news from Fort Sumter that it was threatened the very morning after his inauguration. For the next 1,503 days, he mobilized as if drinking from that cup of Gethsemane every single day.

With Lincoln invoking the full powers of the presidency, the Civil War created the emergency conditions for Lincoln and his Whig advisers to carry out the most sweeping reorganization of the economy along American System principles since the founding of this country three-quarters of a century earlier.

Today, as we look around the world, particularly at the situation in eastern Europe, Lincoln's lesson to us--the reinstitution of the American System under emergency conditions--must be understood.

The breathtaking economic development program which Lincoln designed not only saved the nation and won the war, but remained in effect long enough after his assassination for the U.S. to become the world's greatest industrial power and to remain so for years to come.

Lincoln's policies as President were a result of a 30-year fight by him for the reinstitution of the American System against British free trade. Without going through the history, suffice it here to say that he did not arrive at this out of the blue--as a young man he was a student and devout admirer of [Henry] Clay and Mathew Carey. In his first election day speech, at the age of 21, he announced his commitment to the American System: ``My politics are short and sweet, like the old woman's dance. I am in favor of a national bank. I am in favor of the internal improvements system and a high tariff.''

He led the fight for internal improvements for eight years in the Illinois state legislature and for a national bank and protective tariff as the national spokesman for the Whig Party during every presidential campaign and his own single term in Congress. But he was not in a position to implement these policies until under the emergency conditions of a wartime mobilization, when he was able to force them through.

Lincoln's history as an American System economist is virtually blacked out of the history books. The other problem is that no historians understand what Carey and Lincoln and we understand--that slavery and free trade belong to a single evil system--which had to be defeated.

Formed in response to Kansas-Nebraska, the Republican Party was anti-slavery, but many of its leaders were rabid free-traders. Carey and Lincoln knew that it was an absolute necessity to win the platform fight at the 1860 convention to not only attack slavery, but to include a total commitment to Hamiltonian American System economics. Carey and Lincoln spent four years organizing for such a policy. Much of this agitation was initiated by the Home Protective Union of Pennsylvania, of which Carey was president. The four years of organizing paid off: Of the 17 planks adopted, 8 dealt with slavery, the rest with the political economy of the American System, including reestablishing the Bank of the United States, railroads, internal improvements, and restoration of a protective tariff.

Fighting the British-backed New York banks

So, what was it that Lincoln did that forced the British to murder him?

When Lincoln took office, Congress was out of session. The only available means Lincoln had to finance the war effort was to go to the Associated Banks of New York, run by British agents Gallatin and Astor. The government depended upon these banks for specie, and the government budget was financed through the sale of bonds to these banks. America was then mortgaged to Britain, as the U.S. debt was sold overseas to the Rothschild and Baring banking houses.

But, Carey and his circles organized an alternative, whose spirit was set forth by Lincoln in his famous Dec. 3, 1861 ``Annual Address to Congress.'' The significance of this address cannot be overstated, as the British were well aware.

Lincoln's emergency economic measures included:

a nationally regulated private banking system, which would issue cheap credit to build industry;
the sale of long-term, low-interest bonds (5:20s) to the general public and to the nationally chartered banks;
the increase of tariffs until industry was running at full tilt;
government construction of railroads into the middle South, promoting industrialization over the Southern plantation system--what Carey called ``a peace-winning program'' to industrialize the South.

The national banks were intended to serve a useful purpose by being both investors in the future wealth of the U.S. through the purchase of 20-year bonds at 5% (the 5:20s) and through the issuance of long-term, low-interest loans to manufacturers, as well as by acting as a medium for the circulation of currency. Instead of selling the U.S. debt to the British, the citizens would buy the debt. The policy was identical to Hamilton's: The debt would be the basis for credit for industrial development.

James Gallatin, the New York Associated Banks, and their friends in the British government went nuts. On Dec. 28, 1861, they suspended specie payment to the government. They suspended payment of gold owed to their depositors, and stopped transferring to the government the gold which they had pledged for the purchase of government bonds. The banks of other cities immediately followed suit. They came to Washington to present their alternative to Lincoln: high-interest bonds to be sold to the European banking syndicates; deposit of U.S. government gold in private banks for the investment use of the bankers; and a tax on basic industry to finance the war.

Lincoln showed the bankers the door, something which could be usefully repeated all over the world today.

While Lincoln fought the Eastern bankers, the Treasury issued several hundreds of millions of new greenbacks. Jay Cooke was employed to become sole agent for the 5:20 bonds. Carey's associates Colwell and Elder prepared the propaganda to sell the bonds, and were appointed to posts in the Treasury Department. Cooke sold over $1.3 billion worth of bonds to the citizens of the U.S. between 1862 and 1865.

The original bill authorizing the sale of the 5:20 bonds contained no provision for paying the interest on the bonds in gold. If the bill as prepared by Thaddeus Stevens's House Ways and Means Committee had passed the Congress, it would have had the effect of severing the domestic economy of the U.S. from the British early in Lincoln's administration.

The British pound sterling at the time was the world reserve currency. But, before the bill was passed, August Belmont and James Gallatin worked out a compromise with Congress which allowed the bonds to be purchased with greenbacks, but the interest to be paid in specie.

This compromise was the first step in pegging the value of the U.S. national currency, the greenback, to gold, and allowed August Belmont and other New York merchants engaged in the export-import trade to speculate in gold through the Associated Banks and thus create fluctuations in the greenback as measured by the British gold standard.

Lincoln had to bring the national banks under his control, out of the condition of anarchy and treason. Lincoln succeeded, through the enactment of two bills, the National Currency Act of February 1863, and the National Banking Act of June 1864.

Since the time of Andrew Jackson's removal of government deposits from the Bank of the United States, there was no national bank and no national currency, which, in effect, meant no national sovereignty. Each bank issued its own notes. In January of 1862, there were 1,496 banks in the U.S., 7,000 legitimate notes and 5,500 counterfeit notes. The specie payment on these notes was now suspended.

Banks had no one in the federal government to answer to--only state banking inspectors, who were frequently bribed. The banks had little or no capitalization or reserves, and operated often solely on the connections of the bank's chairman. Banks promoting the most outrageous schemes and responsible to no one were the order of the day. The large private banking houses, like the House of Morgan, used large credit lines from Europe to add to the chaos.

Lincoln attacked the British dominated banks through the following steps:

First of all--strict federal supervision of bank chartering, eliminating chaotic state banking practices. State chartered banks fell from 1,466 to 297, while federal banks increased to over 1,600.
Secondly--regulations were imposed covering minimum capitalization, reserve requirements, the definition of bad debts, reports on financial condition and identity of ownership and other elements of safety to depositors. Every bank director had to be an American citizen, and three-quarters of a bank's directors had to be residents of the state in which the bank did business. Interest rates were limited by state usury laws, with the maximum allowable rate set at 7%.
The third step concerned the control of currency. There were to be two kinds of legal money: greenbacks and bank-issued notes. Government-authorized bank-issued notes were strictly regulated. Banks were required to deposit bonds with the Treasury to qualify as a circulator of notes, and strict specie and money reserves were also required.

During the war, $450 million in greenbacks were issued. It is doubtful the war could have been won without the issuance of the greenbacks. By creating $450 million worth of greenbacks, Lincoln increased, by increasing government credit, government spending by 300%! The revolutionary nature of the greenbacks, of putting a nation in charge of its own currency, cannot be overstated. The Venetian system of finance was based upon limiting payment to gold, and controlling the gold supply, as was the Venetian-inspired British system.

Revolutionary improvements

The other key elements of the American System, beyond the national banking system, which Lincoln implemented were the system of protective tariffs and internal improvements.

Protectionism: Congress passed the Morill Tariff in early 1861, the highest protective tariff to date, then through the middle of 1864, new tariff bills, pushing rates even higher, were introduced and passed. By the end of the war, the average rate on goods subject to duty stood at 47%, compared with 18.8% at the start of the war.
Infrastructure and internal improvements: In 1862, the U.S. Congress chartered and pledged grants of land and subsidies to finance the construction of the first transcontinental railroad.

After Lincoln's assassination, Congress continued to finance massive railroad construction. The effect of this on the nation's future was astounding. In the second half of the 19th century, the railroads, along with the steel industry, were the ``science drivers'' of the American economy. The technology of railroad production involved pneumatic brakes, blasting through and grading tracks on inclines through mountains, the making of durable bridges to ford rivers, and the abundant use of different grades of iron and steel. The connection of the country by rail increased traveling speed two to three times, allowing rapid development of the West. Railroad mileage went from 45,000 miles in 1865 to 167,000 in 1890. By 1900, the U.S. had over 193,000 miles, more than all of Europe combined. The number of patents issued rose from 883 in 1850 to over 14,000 in 1876.

Additionally, Lincoln proposed and saw implemented measures for a national and international network of telegraphic communications, the development of the Land Grant College system, establishing the state college system for instruction in agronomy and the mechanical arts, the creation of the National Academy of Sciences, ``to investigate, examine, experiment and to report upon any subject of science or art,'' and the U.S. Coast Survey, which quickly became the largest employer of physical scientists in the U.S., with the largest budget ever allowed a scientific bureau connected with the government.

Lincoln also organized a new Bureau of Navigation in 1862, which totally revolutionized the U.S. Navy. He also, saw to the creation of the Department of Agriculture, whose purpose, as Lincoln stated in his famous 1859, Wisconsin State Agricultural Society speech was, ``to make two blades of grass grow where one grew before.'' As a result, Lincoln revolutionized American agriculture. Through Lincoln's policies, wheat and corn production tripled in the three decades following the Civil War.

With such measures, and the passage of the Homestead Act opening up vast areas of the American West for settlement, and his Immigration Act, recruiting waves of new immigrants, Lincoln guaranteed development for decades to come.

Standardization and mass production were introduced for production of war matériel, starting with uniforms and coats. This was the first time clothing had ever been produced outside of cottage industries. Steel production, which essentially did not exist in the United States before Lincoln, grew by leaps and bounds. The Bureau of Labor reported in 1886 that in the previous 20 years, productivity had increased 40-80% in agricultural implements, footwear, in machines and machinery, and other areas.

The U.S. population almost tripled between 1860 and 1902: from 31 million to 92 million. Immigrants flocked to and were welcomed into the United States. Finally, the U.S. shifted from a rural to an urban society. Philadelphia became the leading industrial city in the U.S., and possibly in the world. Chicago was transformed from a small town into a major urban center in a few years.

Free trade traitors counterattack

But the British-allied Northern bankers and their congressional spokesmen forced several compromises, while the British government itself organized every possible opposition.

Frantic over the American System financial policy, the British began a massive organizing drive in the U.S. in support of free trade. John Stuart Mill and Chancellor of the Exchequer William Gladstone controlled the Cobden Clubs--Britain's worldwide agitators for free trade. These were heavily deployed into the free trade wing of the Republican Party and abolitionist movement.

There was speculation on Wall Street to depreciate the greenbacks, by Belmont and other New York merchants engaged in export-import trade.

The second compromise forced on Lincoln was his appointment of British agent and rabid free-trader Hugh McCullough as first Comptroller of the Currency, which he had to do to get enough votes to pass the National Banking Act. Lincoln appointed McCullough in March of 1865, one month before the war's end.

Lincoln and Carey were quite aware of the problem created by such compromises. Several steps were taken. First, at Lincoln's request, Thaddeus Stevens authored a bill to outlaw all sale of gold in the New York Gold Room.

Just three days before Lincoln's death, McCullough initiated an attack on Lincoln with an open letter to Carey in the Chicago Tribune, in which he called for a reduction of the protective tariff, an immediate return to specie (elimination of the greenback), and contraction of the currency. The article was accompanied by the following excerpt from the London Times:

``He [McCullough] is what few Americans are; a sound political economist. He has studied the philosophy and theory as well as the practice. To read his letters and treatises anyone who did not know that he was American might imagine that he was an Englishman or a Scotsman, who had never embraced the delusion so prevalent on this side of the Atlantic, that as the resources of America are not half developed it is competent to American statesmen to run riot in world experiment and set as defiance the dearly bought experience of older communities. McCullough is, as far as his published opinions testify, a worthy successor of Adam Smith, Mill, Ricardo....''

Lincoln responded with a brutal attack on McCullough--and was killed three days later. In fact, just before his assassination, Lincoln and Carey were making major moves to wipe out some of the most pernicious British-controlled New York banks. They had already severely restricted their speculative real estate loans by law.

In fact, on the day he was assassinated, Lincoln was considering the problem of how to combat speculation by bringing the national currency (the greenbacks) up to par value without contracting the supply. He was planning to break with the British gold standard altogether. At Lincoln's request, Carey wrote a series of open letters to Speaker of the House Schuyler Colfax that were titled, ``How to Defeat England without Fighting Her.'' Carey argued against the heteronomy with which U.S. economic policy was carried out. Carey said that Lincoln had been forced to put his signature to bills that he did not consider in the national interest.

Carey called for the creation of a national economic policy planning body under the control of the Executive branch, which Lincoln did set up shortly before his death, called the Commission on Revenue.

The corrupt Johnson administration

Lincoln's assassination constituted a virtual coup d'état. The British had succeeded in wiping out with a single bullet the hope of the world.

Lincoln's successor, Andrew Johnson, in his inaugural address, signaled a total reversal of Lincoln's economic policy. He called Lincoln's tariff ``a clearly recognized outrage.'' He concluded his inaugural with the statement: ``Free trade with all the markets of the world is the true theory of government.''

Almost the entire Johnson cabinet were outright British agents or corrupted by British ideology. In late 1865, McCullough officially announced his intention of reversing the American System and all that Lincoln fought for. His policy was to rapidly contract the national currency (the greenback) and return the nation immediately to specie payments and direct taxation of productive wealth (looting) to pay off the national debt. Within the context of a policy which called for destroying the nation's industrial base to pay off foreign debts, any positive program for reconstruction of the South was impossible.

The congressmen and senators allied with Carey launched a counterattack in defense of Lincoln's program--that action, even if rear guard at times, was responsible for the continued growth of American industry and the scientific development of the last three decades of the 19th century, which turned this nation into the most technologically advanced nation in the world.

Abraham Lincoln and Lyndon LaRouche

In conclusion, Abraham Lincoln, like Lyndon LaRouche today, demanded that leadership required for taking responsibility directly upon our shoulders.

In his Second Annual Address to Congress in 1862, he said:

Fellow citizens, we cannot escape history. We of this Congress, and this administration, will be remembered in spite of ourselves. No personal significance, or insignificance, can spare one or another of us. The fiery trial through which we pass, will light us down, in honor or dishonor, to the last generation. We say we are for the Union. The world will not forget that we say this. We know how to save the Union. The world knows we know how to save it. We even here--hold the power and bear the responsibility. In giving freedom to the slave, we assure freedom to the free--honorable alike in what we give and what we preserve. We shall nobly save, or meanly lose, the last, best hope of earth. Other means may succeed--this could not fail. The way is plain, peaceful, generous and just--a way which, if followed, the world will forever applaud and God must forever bless.
If we do this we shall not only have saved the Union, but we shall have so saved it, as to make, and to keep it forever worthy of the saving. We shall have so saved it, that the succeeding millions of free happy people the world over shall rise up and call us blessed, to the latest generations.

The fact that Lyndon LaRouche sits in a federal prison, while the fate of 6 billion souls depends on his freedom and the implementation of his economic policy, defines the task at hand.

Slavery, Lincoln & Greenbacks

2000-03-14T18:35:00.001Z

Dr. R.E. Search in Lincoln: Money Martyred (Omni Publications, PO Box 900566, Palmdale, CA 93590)

An alternative view of the Civil War history.

Abraham Lincoln was "the man who first proved that government could issue its own paper money, legally, honorably, and rightfully, and make it full legal tender for all debts, both public and private..." The Greenback was successful in it's intended purpose but Lincoln failed to get approval to extend the system.

Was Lincoln "a dangerous man from the [bankers] point of view? Could they have continued their knavery, trickery, bribery, and destructive work... if Lincoln had lived?"

"The struggle that was to rid the country of human slavery of the black race, however, was also to fasten upon the whole nation an economic or money slavery, which has endured to the present time..."

Abraham Lincoln and his Treasury Secretary, Salmon P. Chase (Chase Bank later named after him) went to the New York bankers "and applied for loans to the Government to carry on the [Civil] war; the bankers replying, 'Well, war is a hazardous business, but we can let you have it [the loans] at from 24 percent to 36 percent.'" (Dr. R.E. Search)

Appleton Cyclopedia (1861), page 296, states: "The money kings wanted 24 percent to 36 percent interest for loans to our government to conduct the Civil War." (qtd. in Search's book)

President Lincoln and Secretary Chase were outraged at the usurious interest, and refused the offer.

Lincoln wrote to an old friend, Colonel Dick Taylor in Chicago, and asked for advice. His friend told him to "get Congress to pass a bill authorizing the printing of full legal tender treasury notes or greenbacks." (qtd. in Search's book)

60 million dollars of full legal tender greenbacks were issued. "All were taken at par and never appreciably fell below par at any time..." (Dr. R.E. Search)

Lincoln referred to these greenbacks as "the greatest blessing the people of this Republic [have] ever had." (qtd. in Search's book)

But as soon as Lincoln began issuing the greenbacks, "the bankers and money changers saw that unless they could stop that sort of thing they were 'sunk' as far as ever being able to issue money again themselves." (Dr. R.E. Search)

The banksters "had been able to fool and hoodwink England, and keep her in bondage for 168 years, and they wanted very much to continue, and to add the balance of the world to their conquest; making the people everywhere economic serfs, working for them." (ibid.)

From the London Times:

If this mischievous financial policy [greenbacks]... should become endurated down to a fixture, then that government will furnish its own money without cost. It will pay off its debts and be without debts. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe. [qtd. in Search's book]

The Bank of England/Rothschilds (do not be deceived by name, "Bank of England"; Bank of England was/is a private bank) issued, and distributed to American banksters, the following document, quoted in part below:

The Hazard Circular
Slavery is likely to be abolished by the war power, and chattel slavery abolished. This, I and my European friends are in favor of, for slavery is but the owning of labor, and carries with it the care of labor, while the European plan, led on by England, is that capital shall control labor by controlling wages.
The great debt that capitalists will see to it is made out of the [Civil] war must be used to control the value of money. To accomplish this, the Government bonds must be used as a banking basis.
We are now waiting for the Secretary of the Treasury of the United States to make this recommendation. It will not do to allow greenbacks, as they are called, to circulate as money any length of time, as we cannot control that, but we can control the bonds and through them the bank issues. [qtd. in Dr. Search's book]

Slavery is but the owning of labor, and carries with it the care of labor.

A "new, improved system" of slavery was being born. Gustavus Myers (a "leftist") corroborates this in his book, History of the Great American Fortunes: "...chattel slavery could not compete in efficiency with white labor... more money could be made from the white laborer, for whom no responsibility of shelter, clothing, food and attendance had to be assumed than from the Negro slave, whose sickness, disability or death entailed direct financial loss."

"The perfect slave thinks he's free." That was the "new, improved system" for exploiting labor. (Currently, a further refinement is the use of temporary labor.)

James Robertson BOOK LIST

2000-03-14T16:27:00.000Z

James Robertson established the New Economics Foundations to promote money reform - taking the creation of the nations money supply into the government's hands. This is a book list reproduced from his site [http://www.jamesrobertson.com/books.htm] as I fear it may become "unobtainable" as his main site has become in recent weeks. 01.01.2011

Books

Please click on the following links to go to the description of an individual book. Alternatively, please scroll down the page to see descriptions of all the books.

Hard copies of some of these books are still available. Click here for details.

History of Money (free download)

Monetary Reform - Making it Happen (free download)

Creating New Money: A Monetary Reform for the Information Age (free download)

The New Economics of Sustainable Development: A Briefing for Policy Makers (free download)

Transforming Economic Life: A Millennial Challenge

Beyond the Dependency Culture: People, Power and Responsibility(free download)

Sharing Our Common Heritage: Resource Taxes and Green Dividends(free download)

Future Wealth: A New Economics for the 21st Century (free download)

Future Work: Jobs, Employment and Leisure after the Industrial Age(free download and copies for sale)

The Sane Alternative (free download and copies for sale)

Power, Money and Sex: Towards a New Social Balance

Profit or People? The New Social Role of Money (copies for sale)

Reform of British Central Government (copies for sale)

The History of Money: From Its Origins to Our Time - the English text of "Une Histoire de l'Argent: des origines à nos jours", Paris 2007.

This 12,000 word "Junior Histoire" from Autrement is about how money began, how it has evolved to the present day, what it has enabled humans to achieve, why so many people in the world today suffer from the way it works, how it may develop further, and how young people today might want it to develop.

Click here to download a pdf version of the English text.

Monetary Reform - Making it Happen, 2004 (with John Bunzl). International Simultaneous Policy Organisation, paperback, 80 pp. ISPO "Making it Happen" Briefing Series No 1.

The text of this book can be downloaded free - click here.

"A brilliant treatment of a question which has never been so urgent" - George Monbiot.

More comments can be found here. For details about ordering printed copies, click here.

Creating New Money: A Monetary Reform for the Information Age, 2000 (with Joseph Huber). New Economics Foundation, paperback, 97 pages, £7.95.

"We look forward to monetary reform moving to the centre stage of public and policy debate" - Ed Mayo, then Director of NEF.

Click here to order a hard copy of the book. A pdf version of the book can downloaded free by clicking here.

The book was launched in the first Alternative Mansion House Speech - on Financial and Monetary Policies for an Enabling State - on 15th June 2000. For the text of the speech, click here.

The New Economics of Sustainable Development: A Briefing for Policy Makers, 1999, written for the European Commission's Cellule de Prospective (Forward Studies Unit), and published in paperback, by Kogan Page, London, Editions Apogée, Paris (asChanger d'Économie: ou la Nouvelle Économie du Developpement Durable), and The Office for Official Publications of the European Communities, Luxembourg.

For further background, click here.

To download the 2005 text, click here.

There are two omissions from the 1999 printed version of (1) information about relevant organisations which is now outdated, and (2) my biographical details available elsewhere on this website. In addition, the page numbering differs from the 1999 printed version.

Transforming Economic Life: A Millennial Challenge, 1998, Schumacher Briefing No 1, 77pp.

Written for the Schumacher Society (UK) and published by Green Books, £5.

Copies are available from www.greenbooks.co.uk.

Beyond The Dependency Culture: People, Power and Responsibility, Adamantine Press, 234pp. Foreword by Ronald Higgins.

Sixteen papers and lectures dating from 1977 to 1996 on the need for a new path of progress based on co-operative self-reliance and not on the further growth of dependency. Topics include; a conserving society, work, health, welfare, money, politics, energy (including nuclear power), a post-modern worldview, and a post-marxist strategy for change.

Out of print. No hardcopies available. The Contents can be found here. The book can be downloaded for free in three sections.

Section 1 - Foreword, Acknowledgments, Introduction and Chapters 1-4

Section 2 - Chapters 5-10

Section 3 - Chapters 11-16 and the Epilogue

Sharing Our Common Heritage: Resource Taxes and Green Dividends, 1998. Proceedings of an International Conference, held on 14th May 1998 by the Oxford Centre for the Environment, Ethics and Society, 74pp.

Contributions by Prof. David Marquand, Prof. Philippe van Parijs, Fred Harrison, Prof. Mason Gaffney, Alanna Hartzok, Dr.Tatiana Roskoshnaya, and James Robertson, who organised the conference and edited the proceedings. For further background, click here.

To download the text, click here.

Future Wealth: A New Economics for the 21st Century, 1990, Cassell, London, 179 pages.

This is one of my more important books. It provides a framework of understanding for the new economic order which the world clearly needs. An agenda for transition on the lines it put forward for the 1990s is now (December 2005) more obviously relevant than it was fifteen years ago.

Review comments at the time included the following.

"'A New Economics for the 21st Century' is an exact description of this very remarkable book" - The Good Book Guide, 1990.

"It could well be that Future Wealth will ultimately be required reading for economics students, alongside The Wealth of Nations and The General Theory of Employment, Interest and Money" - Francis Kinsman,Management Today, May 1990.

"With Future Wealth as our guide, we can describe the framework of the living economy... We can show how current initiatives can be enabled and encouraged, and we can show how that framework can be created out of our present, rather warped version." Perry Walker, New Economics, Summer 1990.

No hard copies are available. The list of Contents can be found here. The book can be downloaded for free in three sections (pdf format).

Section 1 - Contents, Introduction and Chapters 1-5

Section 2 - Chapters 6-10

Section 3 - Chapters 11-14, Appendix and Index

Future Work: Jobs, self-employment and leisure after the industrial age, 1985, Temple Smith/Gower, 220pp, paperback.

"The best book of its kind so far, packed with ideas and one cannot but be affected by its enthusiasm and verve" - Prof. Ray Pahl in the Times Literary Supplement, 14th March 1986.

This was one of the books I most enjoyed researching and writing. I tried, but failed, to persuade the publisher we should call it 'The Ownwork Revolution'. He thought that title would be too far out to appeal to a mainstream readership. However, if and when the book is republished, I shall insist on it!

Its theme is that a possible future for work, and the one we should seek to create, is its liberation. In the age of slavery and the age of employment, most people have had to work for people and organisations richer and more powerful than themselves. But in the age of ownwork it will be accepted as normal that most people will work independently for themselves and one another, and the institutions of society will enable them to do so instead of depending on employers for jobs.

The book is in four parts:
1. What Comes After the Employment Age?
2. Changing Perceptions of Work
3. The End of the Employment Empire
4. The Practicalities of the Transition

This book is out of print. A few copies are available from us - click herefor ordering details.

The list of Contents can be found here. The book can be downloaded for free in three sections (pdf format).

Section 1 - 2006 Preface, Contents page, Introduction and Part 1, including Chapters 1 to 4

Section 2 - Parts 2 and 3, including Chapters 5 to 10

Section 3 - Part 4, including Chapters 11 & 12, Conclusion, Appendices, Notes and References, and Indexes

The Sane Alternative, 1983, James Robertson, 156pp, paperback.

The text can now (February 2008) be downloaded for free, together with a new 2008 Preface - click here.Hard copies are also available - click here for ordering details.

This is the revised and expanded version of the original 1978 edition - probably my best known book. The gold medal awarded in 2003 by the Pio Manzu Research Centre is inscribed to "Creator of a Sane Alternative".

"The best and most persuasive handbook I know to the 'alternative society'" - Michael Shanks in The Director.

"An essential book.... compelling reading" - Tom Hancock in Town and Country Planning.

"The best futures books I've ever read.....People will read it, keep it and thank you for introducing them to it" - Prof. James E. Moore, University of Texas.

"This book is important. It seeks to get new ideas on the move" - Harford Thomas in The Guardian.

"The most practical book on futures that I know" - Prof. John Morris, Manchester Business School.

"Comprehensively considerate..... a very realistic future" - R. Buckminster Fuller.

"Indispensable. A rare combination of important new theory with practical guidance. An important map for the future of all industrial countries" - Hazel Henderson, author of Beyond Globalization and other books, from the Foreword to the US edition.

Power, Money and Sex: Towards a New Social Balance, 1976, Marion Boyars Publishers, 149pp, paperback.

"A most searching, radical, even revolutionary book" - Harford Thomas in the Guardian, 12th August 1976.

A few copies are still available at £5.95 from Central Books. To order a copy, click here, write James Robertson in the 'Quick Search' box on the webpage that comes up and then click on 'Go!'.

Profit or People? The New Social Role of Money, 1974, Marion Boyars Publishers, 95pp, paperback.

"A powerful cocktail of novel ideas which will leave the reader either exhilarated or queasy" - Christopher Johnson in the Financial Times, 20th February 1975.

This short book, in Marion Boyars' Ideas in Progress series, arose from my reflections after my few years working for the banks.

It has six Chapters as follows: Breakdown or Breakthrough; Socially Responsible Enterprise; Financially Responsible Government; Honest Money; Money Science and Money Metaphysics; and Whose Move?.

Its final paragraph begins as follows: "To transform the money system into a fair and efficient mechanism of collective choice, a value system of society... must be pioneered by those of us who can imagine what the new social role of money could be and how it may be achieved."

This book is out of print. A few copies are available - click here for ordering details.

Reform of British Central Government, 1971 (by J.H. Robertson), Chatto & Windus/Charles Knight, 226pp, hardback.

"His book is of first-rate importance" - Prof. Max Beloff in the Daily Telegraph, 22nd July 1972.

This, my first book, was the outcome of my experiences in Whitehall. It suggested that, in the words of Sir Robert Morant, one of the great administrative reformers of the early 20th century, the efforts of those attempting to modernise our system of government in the late 1960s and early 1970s were:

"as though a man had been seeking to build a substantial house by working spasmodically on odd portions of the structure on quite isolated plans, fashioning minute details of some upper parts, when he has not set up, nor indeed even planned out, the substructure which is their sole possible foundation and stay."

In this book I was trying to set out, systematically and holistically - to use words unfamiliar to me then - how I thought the functions of government might be better organised as an intelligent whole.

I had learned that our institutionalised society, fragmented and dominated by specialist professions and interest groups each with its own separate 'territory', finds it almost impossible to deal sensibly with any situation as a whole. To this day, 'joined-up government' remains an elusive goal.

This book is out of print. A few copies are available - ordering details can be found below.

Ordering Details

Future Work, The Sane Alternative, Profit or People? and Reform of British Central Government can only be ordered via me as they are no longer available through bookshops. All four can be ordered together at a reduced price or individually.

Book	Cost (incl. postage)
	UK	Europe & Outside Europe (Surface Mail)	Outside Europe (Airmail)
Future Work	£10.00	£11.00	£15.00
The Sane Alternative	£6.50	£7.00	£11.00
Profit or People?	£5.00	£5.50	£8.00
Reform of British Central Government	£7.00	£7.50	£12.00
Bundle of all four books	£25.00	£28.00	£40.00

Please email me for prices if you wish to purchase multiple copies.

To order, please send details of the book(s) you require together with a cheque (in pounds sterling only) made payable to James Robertson to:

James Robertson
The Old Bakehouse
Cholsey
Oxfordshire
OX10 9NU
United Kingdom

Please indicate if you would like a signed copy on your order letter.

Note: The rights to republish most of the out-of-print books listed above have reverted to me. At some future date they may be republished or further texts may be put on this website.

Book List - Money Reform

2000-03-14T16:10:00.009Z

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Below are a list of books by a variety of authors, including James Robertson, Stephen Zarlenga, Michael Rowbotham, Ellen Brown and many more.

These are seminal works that reveal the holy grain of a fraternal "peoples" currency as both catalyst and conduit of human creativity.

These esteemed money reformers reveal that an understanding and focused dedication to the enactment of a transparent & accountable citizen's money system, is the only strategy to resolve the multitude wrongs gripping our deeply troubled world.

Publicly created & issued money, dedicated to creating common wealth, is the only control system that people can use to set a course towards an equitable, sustainable and enriching social evolution of our species. See "The People's Currency"

BOOKS

Creating New Money (2000),

James Robertson and Joseph Huber promote money reform designed to move the money supply to being wholly publicly-created. It can be summarised in 4 parts:
1. Forbid private banks to create money.
2. An independent public body -- a branch of the Central Bank -- creates all the money debt-free, on a regular basis.
3. Government spends this money into society via its spending projects.
4. It is this money which private banks compete to attract into their savings accounts, in order to lend out to their customers.

The Robertson / Huber money reform proposals seeks the full social ownership of the power to create money.

Also by James Robertson

Beyond The Dependency Culture (Adamantine/Praeger, 1998)

The Transformation of Economic Life (Schumacher Briefing No 1, Green Books, 1998)

A New Economics of Sustainable Development, a "Briefing for Policymakers" written for the European Commission in 1997 (Kogan Page, 1999)

James Robertson has dedicated his life to money reform. He established the New Economics Foundations to promote money reform i.e. taking the creation of the nations money supply into the government's hands.

A enormously rich source for money reform books can be found on James Robertson's original web site. Many are downloadable FREE as pdf's

http://www.jamesrobertson.com/books.htm

If this page fails to open a copy is here:

.James-Robertson-books

The Lost Science of Money-

Stephen Zarlenga's massive true history of money

If you want an insight into money through the ages this is a "MUST READ"

Great Transformations 1943

Karl Polanyi. This book explores how the seeds were sown for the self-destruction of our present monetary system / society. Polanyi's thesis is that it was a deception. [Read more]

The Grip of Death (1998)
Michael Rowbotham's reform, promoted in his book, The Grip of Death (1998), is intended to move the money supply to being largely publicly-created.

Goodbye America (2000) Michael Rowbotham

Web of Debt-

Ellen Brown has one of the most easy-to-understand books on monetary reform.

Seven Steps to Justice [Paperback]

Rodney Shakespeare and Peter Challen

The Money Changers: Currency Reform from Aristotle to e-Cash
by David Boyle

We Hold These Truths-

When Richard C. Cook retired from the Treasury department.

The Center for Full Employment and Price Stability, a non-partisan, non-profit policy institute at the University of Missouri, has several books worth reading. One of the best is "Understanding Modern Money".

Modern Money Secrets-

Byron Dale
longtime reform advocate

The Modern Universal Paradigm: Binary Economics for All Who Seek Justice
Rodney Shakespeare

Money reform book reviews plus another short explanation of the private bankers money system.

Alistair McConnachie explains how our Debt-based Money System is the Driver of Unsustainable Growth, and What we can do to Stop it

http://www.sovereignty.org.uk/features/articles/manifesto07/mreform1.html

Germany Reconstructs

2000-03-14T15:35:00.002Z

For war not peace.

Imagine people taking responsibility to make their political representatives accountable & recallable.

Imagine people taking responsibility to ensure transparency and limited privilege for the managers of our society

Imagine people taking responsibility for the shape and texture of our society to build a brighter future.

This article is about the mechanics of money systems not the ends

THINKING OUTSIDE THE BOX:
HOW A BANKRUPT GERMANY SOLVED ITS
INFRASTRUCTURE PROBLEMS

Ellen Brown. Aug 9th 2007

When Hitler came to power, the country was completely, hopelessly broke. The Treaty of Versailles had imposed crushing reparations payments on the German people, who were expected to reimburse the costs of the war for all participants — costs totaling three times the value of all the property in the country.

Speculation in the German mark had caused it to plummet, precipitating one of the worst runaway inflations in modern times. At its peak, a wheelbarrow full of 100 billion-mark banknotes could not buy a loaf of bread. The national treasury was empty, and huge numbers of homes and farms had been lost to the banks and speculators.

People were living in hovels and starving. Nothing quite like it had ever happened before - the total destruction of the national currency, wiping out people's savings, their businesses, and the economy generally. Making matters worse, at the end of the decade global depression hit. Germany had no choice but to succumb to debt slavery to international lenders.

Or so it seemed. Hitler and the National Socialists, who came to power in 1933, thwarted the international banking cartel by issuing their own money. In this they took their cue from Abraham Lincoln, who funded the American Civil War with government-issued paper money called "Greenbacks."

Hitler began his national credit program by devising a plan of public works. Projects earmarked for funding included flood control, repair of public buildings and private residences, and construction of new buildings, roads, bridges, canals, and port facilities. The projected cost of the various programs was fixed at one billion units of the national currency. One billion non-inflationary bills of exchange, called Labor Treasury Certificates, were then issued against this cost. Millions of people were put to work on these projects, and the workers were paid with the Treasury Certificates. This government-issued money wasn't backed by gold, but it was backed by something of real value. It was essentially a receipt for labor and materials delivered to the government. Hitler said, "for every mark that was issued we required the equivalent of a mark's worth of work done or goods produced." The workers then spent the Certificates on other goods and services, creating more jobs for more people.

Within two years, the unemployment problem had been solved and the country was back on its feet. It had a solid, stable currency, no debt, and no inflation, at a time when millions of people in the United States and other Western countries were still out of work and living on welfare. Germany even managed to restore foreign trade, although it was denied foreign credit and was faced with an economic boycott abroad. It did this by using a barter system: equipment and commodities were exchanged directly with other countries, circumventing the international banks. This system of direct exchange occurred without debt and without trade deficits. Germany's economic experiment, like Lincoln's, was short-lived; but it left some lasting monuments to its success, including the famous Autobahn, the world's first extensive superhighway.¹

Hjalmar Schacht, who was then head of the German central bank, is quoted in a bit of wit that sums up the German version of the "Greenback" miracle. An American banker had commented, "Dr. Schacht, you should come to America. We've lots of money and that's real banking." Schacht replied, "You should come to Berlin. We don't have money. That's real banking."²

Although Hitler has rightfully gone down in infamy in the history books, he was quite popular with the German people, at least for a time. Stephen Zarlenga suggests in The Lost Science of Money that this was because he temporarily rescued Germany from English economic theory — the theory that money must be borrowed against the gold reserves of a private banking cartel rather than issued outright by the government.³ According to Canadian researcher Dr. Henry Makow, this may have been a chief reason Hitler had to be stopped: he had sidestepped the international bankers and created his own money. Makow quotes from the 1938 interrogation of C. G. Rakovsky, one of the founders of Soviet Bolsevism and a Trotsky intimate, who was tried in show trials in the USSR under Stalin. According to Rakovsky, Hitler had actually been funded by the international bankers, through their agent Hjalmar Schacht, in order to control Stalin, who had usurped power from their agent Trotsky. But Hitler had become an even bigger threat than Stalin when he had taken the bold step of printing his own money. Rakovsky said:

[Hitler] took over for himself the privilege of manufacturing money and not only physical moneys, but also financial ones; he took over the untouched machinery of falsification and put it to work for the benefit of the state . . . . Are you capable of imagining what would have come . . . if it had infected a number of other states . . . . If you can, then imagine its counterrevolutionary functions.⁴

Economist Henry C K Liu writes of Germany's remarkable transformation:

The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began.⁵

In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented:

Germany issued debt-free and interest-free money from 1935 and on, accounting for its startling rise from the depression to a world power in 5 years. Germany financed its entire government and war operation from 1935 to 1945 without gold and without debt, and it took the whole Capitalist and Communist world to destroy the German power over Europe and bring Europe back under the heel of the Bankers. Such history of money does not even appear in the textbooks of public (government) schools today.

Another Look at the Weimar Hyperinflation

What does appear in modern textbooks is the disastrous runaway inflation suffered in 1923 by the Weimar Republic (the common name for the republic that governed Germany from 1919 to 1933). The radical devaluation of the German mark is cited as the textbook example of what can go wrong when governments are given the unfettered power to print money. That is what it is cited for; but in the complex world of economics, things are not always as they seem. The Weimar financial crisis began with the impossible reparations payments imposed at the Treaty of Versailles. Schacht, who was currency commissioner for the Republic, complained:

The Treaty of Versailles is a model of ingenious measures for the economic destruction of Germany. . . . [T]he Reich could not find any way of holding its head above the water other than by the inflationary expedient of printing bank notes.

That is what he said at first. But Zarlenga writes that Schacht proceeded in his 1967 book The Magic of Money "to let the cat out of the bag, writing in German, with some truly remarkable admissions that shatter the 'accepted wisdom' the financial community has promulgated on the German hyperinflation."⁶ Schacht revealed that it was the privately-owned Reichsbank, not the German government, that was pumping new currency into the economy.

Like the U.S. Federal Reserve, the Reichsbank was overseen by appointed government officials but was operated for private gain.What drove the wartime inflation into hyperinflation was speculation by foreign investors, who would sell the mark short, betting on its decreasing value.

In the manipulative device known as the short sale, speculators borrow something they don't own, sell it, then "cover" by buying it back at the lower price. Speculation in the German mark was made possible because the Reichsbank made massive amounts of currency available for borrowing, marks that were created with accounting entries on the bank's books and lent at a profitable interest. When the Reichsbank could not keep up with the voracious demand for marks, other private banks were allowed to create them out of nothing and lend them at interest as well.⁷

According to Schacht, then, not only did the government not cause the Weimar hyperinflation, but it was the government that got it under control. The Reichsbank was put under strict government regulation, and prompt corrective measures were taken to eliminate foreign speculation, by eliminating easy access to loans of bank-created money. Hitler then got the country back on its feet with his Treasury Certificates issued Greenback-style by the government.

Schacht actually disapproved of this government fiat money, and wound up getting fired as head of the Reichsbank when he refused to issue it (something that may have saved him at the Nuremberg trials). But he acknowledged in his later memoirs that allowing the government to issue the money it needed had not produced the price inflation predicted by classical economic theory. He surmised that this was because factories were sitting idle and people were unemployed. In this he agreed with John Maynard Keynes: when the resources were available to increase productivity, adding new money to the economy did not increase prices; it increased goods and services. Supply and demand increased together, leaving prices unaffected.

___________________

¹	Matt Koehl, "The Good Society?", www.rense.com (January 13, 2005); Stephen Zarlenga, The Lost Science of Money (Valatie, New York: American Monetary Institute, 2002), pages 590-600.

²	John Weitz, Hitler's Banker (Great Britain: Warner Books, 1999).

³	S. Zarlenga, op. cit.

⁴	Henry Makow, "Hitler Did Not Want War," www.savethemales.com (March 21, 2004).

⁵	Henry C. K. Liu, "Nazism and the German Economic Miracle," Asia Times (May 24, 2005).

⁶	Stephen Zarlenga, "Germany's 1923 Hyperinflation: A 'Private' Affair," Barnes Review (July-August 1999); David Kidd, "How Money Is Created in Australia," http://dkd.net/davekidd/politics/money.html (2001).

⁷	S. Zarlenga, "Germany's 1923 Hyperinflation," op. cit.

Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.

How can paper money increase the wealth of a nation?

2000-03-14T11:05:00.002Z

[Home] Project in progress:

The extract below is from an 1851 Retford Currency Society booklet with essays and reports of the success of government issued interest free money. The N American colonial financial structures are reviewed as is a issue on the island of Guernsey. The most complete facsimile of the Retford document (Flip book 2.4MB) is located at:
http://www.archive.org/details/tractsre00retfuoft

The contents lists:- 1. Currency, agriculture, and free trade. 1851. 4. How can paper money increase the wealth of a nation? 1849. 5. Second address to the farmers of England. [1851] 6. Market Bosworth Farmers' Association meeting, held October nd, 1850, at the Dixie Arms Inn. 1851

EXTRACT

London :
Simpkin, Marshall, and Co. stationers hall court ;
W. Skeffington, 192, Piccadilly ; J. Ollivier, 59, Pall Mall ;
and A. Metcalfe, Retford . 1849. HG 938 R45

How can paper money increase the wealth of a nation?

This is a question often asked. To many persons it appears impossible that bits of Paper, inscribed with certain characters, can promote the prosperity of a nation, or increase its wealth. This question shall not now be answered by explaining the true theory of money, but by an appeal to facts. Land and labour being admitted to be the primary sources of a nation’s wealth, let facts shew how Paper Money assists land and labour to create wealth.

Look, first, at the great fact of the prosperity and wealth of the United States of America. As a testimony to their growing prosperity, let us take a short extract from a speech of EDWARD BURKE, on American Taxation, delivered in the House of Commons so far back as the 14th. of April, 1774. Alluding to the Americans, he says :—

“Nothing in the history of mankind, is like their progress. For my part, I never cast an eye on their commerce, and their cultivated and commodious life, but they seem to me rather nations grown to perfection through a long series of fortunate events, and a train of successful industry accumulating wealth in many centuries, than the colonies of yesterday ; than a set of miserable outcasts, a few years ago, not so much sent as thrown on the bleak and barren shore of a desolate wilderness, three thousand miles from all civilized intercourse.”

Such is the recorded opinion of one who richly deserved the name of a “ statesman.”
And how was this miracle effected ? The celebrated DAVID HUME shall answer that question. Here is an extract from his correspondence with the Abbe Morellet :—

“ In our colony of Pennsylvania, the land itself, which is the chief commodity, is coined, and passes into circulation. A planter, immediately he purchases any land, can go to a public office and receive notes to the amount of half the value of his land, which notes he employs in all payments, and they circulate through the colony by convention.

To prevent the public being overwhelmed by this representative money, there are two means employed ; first, the notes issued to any one planter must not exceed a certain sum, whatever may be the value of the land ; secondly, every planter is obliged to pay back into the public office every year, one tenth of his notes.

The whole is of course annihilated in ten years, after which it is again allowed him to take out new notes, to half the value of his land.”

Now observe here how completely the Currency Question is a Farmers’ Question. Paper Currency, or “ representative money,” as David Hume here calls it, would enable the English Farmer to drain his land, to improve its cultivation, and to employ more labour, just as it enabled the American Planter to convert a barren wilderness into fruitful fields. The means adopted for issuing the Paper Currency, viz. through a public office of government, were suitable to a colony in its infant state. In such a state there would be no body of men of sufficient wealth and responsibility to act as Barkers.

In an old country, like our own, where capital has been accumulated, Bankers discharge the function, which the government of the American colonies assumed of issuing commercial money. A more useful body of men does not exist. No government machinery could provide agents so well adapted for furnishing the money of commerce as the wants of the people require it, as are the Bankers of this county. As men of education and probity, resident in every district, acquainted with the character, resources, and peculiar circumstances of each individual, Bankers—under just and liberal enactments for securing the stability of their houses—occupy an honourable and important position, and exercise a most beneficial influence, morally and politically, on the community. Their interests, rightly understood, and the interests of the agricultural and commercial bodies, are identical. In promoting the general prosperity of the country, they secure their own.*

But we proceed to adduce another authority as to the advantages resulting from a Paper Currency, viz. DR. BENJAMIN FRANKLIN. In 1764, before the Stamp Act was proposed in Parliament, (which was passed the next year, and repealed the year following) Dr. Franklin, writing in England in defence of the Paper Money of the Colonies, says :—

“ On the whole, no method has hitherto been framed to establish a medium of trade in lieu of money, equal in all its advantages to bills of credit, founded on sufficient taxes for discharging them, or land securities of double the value for repaying them at the end of the term, and in the mean time made a GENERAL LEGAL TENDER. The experience of now near half a century in the middle colonies, (New York, New Jersey, and Pennsylvania) has convinced them of it among themselves, by the great increase of their settlements, numbers, buildings, improvements, agriculture, shipping, and commerce. And the same experience has satisfied the British merchants who trade thither, that it has been greatly useful to them, and not in a single instance prejudicial.”

ADAM SMITH’S version of this system is worthy of observation :— “ It is convenient,” he says, “ for the Americans, who could always employ with profit, in the improvement of their lands, a greater stock than they can easily get, to save, as much as possible, the expense of so costly an instrument of commerce, as gold or silver ; and rather to employ that part of their surplus produce which would be necessary for purchasing those metals, in purchasing the instruments of trade, the materials of clothing, several parts of househould furniture, and the iron work necessary for building and extending their settlements and plantations ; in purchasing, not dead stock, but active and productive stock.”

Again he says, “ The redundancy of paper money necessarily banishes gold and silver from the domestic transactions of the colonies, for the same reason that it has banished those metals from the greater part of the domestic transactions in Scotland ; and in both countries, it is not the poverty, but the enterprising and projecting spirit of the people, their desire of employing all the stock which they can get as active and productive stock, which has occasioned this redundancy of paper money.”

He also says, “ In those branches of business which cannot be transacted without gold and silver money, it appears that they can always find the necessary quantity of those metals.”—Wealth of Nations, B.V.CH.III.

The “representative money” which could in the Colonies be converted, at pleasure, into land, labour, and produce of every kind, could, of course, as easily be converted, at the market price, into gold and silver.

Now a country prospering, as was the case with the American Colonies, is generally well satisfied with its form of government. In 1776, Dr. Franklin was examined before a Committee of the whole House of Commons ; he was asked, “What was the temper of America towards Great Britain before 1763 ?”

He answers, “ The best in the world. They submitted willingly to the government of the Crown, and paid in all their courts obedience to Acts of Parliament. Numerous as the people are in the several old provinces, they cost you nothing in forts, citadels, garrisons, or armies, to keep them in subjection. They were governed by this country at the expense only of a little pen, ink, and paper. They were led by a thread. They had not only a regard, but an affection for Great Britain, for its laws, its customs, and manners, and even a fondness for its fashions that greatly increased its commerce. Natives of Britain were always treated with particular regard ; to be an Old England man was, of itself, a character of some respect, and gave a kind of rank among us.”

In an evil hour, the British Government took away from America its “ representative money,” commanded that no more paper “bills of credit should be issued, that they should cease to be a legal tender,” and collected the taxes in hard silver. This was in 1773. Now mark the consequences. Ruin seized upon these once flourishing Colonies, the most severe distress was brought home to every interest and every family ; “ human nature,” as Dr. Johnson phrases it, “ rose and asserted its rights.” In 1775, the American Congress first met in Philadelphia. In 1776, America was declared an independent State.

Take another fact as to what Paper Money has effected, on a smaller scale, and in more recent times.
Starting in1815 by 1829 there was £48 000 Island government money in circulation

“ The STATES OF GUERNSEY, having determined to build a Meat Market, voted £4,000. to defray the cost. The notes were guaranteed by the whole of the property of the island, said to be worth four millions. These notes did not bear any interest, nor were they convertible into the precious metals. They were tokens, not possessing any intrinsic value, but only that conventional or representative value which they received from the authority of the States by whom they were issued. They were the symbols of the real money of the island. They were worthless to any other community than Guernsey, and therefore there was no inducement to their exportation. Consequently they remained permanently in local circulation for local purposes. They were inscribed “Guernsey Meat Market Notes,” and numbered from 1 to 4000, each note representing £1. of account in the currency of the island. They were legal tender by universal assent.

With these notes the States paid the contractor, and with them he paid his work men, and all who supplied him with materials. They were freely taken by tradesmen for goods, by landlords for rent, by the authorities for taxes.

In due season the market was completed. The butchers’ Stalls, with some public rooms constructed over them, were let for an annual rent of £400. At the expiration of the first year of this tenancy, the States called in the first batch of notes, numbered from 1 to 400, and with the £400. of real money received for rent, redeemed the £400. of representative money, expressed by the “ Meat Market Notes.” At the end of ten years, all the notes were redeemed through the application of ten years’ rental ; and since that period, the Meat Market has returned a clear annual revenue to the STATES, and continues to afford accommodation, without having cost a farthing in taxes to any inhabitant.”**

Can it be doubted that—as this able writer infers—the system which enabled the States of Guernsey to build their Market, would, if the restrictions on the issue of Representative Money were removed, reclaim the bogs of Ireland ?

These facts prove that either on a small scale, as in the instance of the GUERNSEY STATES, or on a large one, as in the case of the AMERICAN COLONIES, the judicious application of representative money—PAPER CURRENCY—is attended with the most beneficial effects to the community.

The American Colonies grew great and prospered, not only with Paper Money, but in consequence of it. Their Paper Currency was withdrawn—distress, ruin, and revolt followed. Again, in recent times, an attempt was made to establish, to a great extent, a Metalic Currency. Commercial depression, stagnation of trade, and panic, were the results. “The Americans,” says an experienced Liverpool merchant, Alexander Henry Wylie, Esq. who was examined before the Committee of the House of Lords on the Commercial Distress of 1847, “have paid for their experience, and profited by it ; and so far as I have been able to compare different systems of Banking, and to look into the subject, I believe that in no part of the world whatever, is there a system of Banking more perfect than that now working under the General Banking Law of New York. It has now been in operation ten years, and it is found to answer securely and profitably : that is, profitably to the proprietary, and usefully to the public. The great peculiarity of the General Banking Law is, that it enables any party or parties desiring to form a Banking Association to do so, on complying with certain provisions of the Law, the principal of which is the deposit with the State Comptroller, of an amount of state stock equal to the amount the projected Banking Association intends to issue.”

Here is a return to the system of Paper Bills of Credit, under which the American Colonies originally flourished, and under which we may expect to see the United States rapidly advancing in prosperity. Great Britain has paid for her experience, but has not yet profited by it. The Americans will every day grow richer, and we shall grow poorer.

Again, MR. ALISON, the able and distinguished historian, gives this testimony to the power and superiority of Paper Money. “ When sixteen hundred thousand men were engaged in active warfare, on the two sides in Germany and Spain alone, where nothing could be purchased but by specie, it is not surprising that guineas went where they were so much needed and bore so high a price. In truth, such was the demand for the precious metals, owing to that cause, that at length all the currency of the world, attracted to Germany, as a common centre, could not supply it ; and by a decree on September 30th, 1813, from Peterswaldau in Germany, the allied sovereigns issued paper notes, guaranteed by Russia, Prussia, and England, which soon passed as cash from Kamskatkha to the Rhine, and produced the currency which brought the war to its successful issue. There was an instance of the manner in which a paper circulation, based on proper security, supports credit and supplies the want of specie at the decisive moment. Whereas, according to the present system, the paper would of necessity have been contracted, when the specie became scarce—credit would have been ruined at the critical period, and the vast armaments of the allies would have been dissolved for want of funds for their support.” England in 1815, and 1845. p. 76, 77.

And in a recent edition of the History of Europe, he gives this additional evidence of the important advantages which EXPERIENCE HAS DEMONSTRATED to result from a Paper Currency. “ To the suspension of cash payments by the Act of 1797, and the power in consequence vested in the Bank of England, of expanding its paper circulation, in proportion to the abstraction of the metallic currency and the wants of the country, and resting the national industry on a basis not liable to be taken away either by the mutations of commerce, or the necessities of the war, the salvation of the empire is beyond all question to be ascribed.
A similar crisis, and from a similar cause, occurred in 1810, but it led to no injurious results ; on the contrary, it was contemporary with the greatest exertions of the nation. The prodigious absorption of specie for the use of the French and Austrian armies during the campaign of 1809, joined to the immense cost of the campaign in Portugal, and the importation of one million five hundred thousand quarters of wheat, to supply the deficiences of a bad harvest in 1810, had occasioned so great a dearth of specie in Great Britain in the latter year, that gold and silver had almost disappeared from the circulation ; and a light guinea was worth twenty-five, and sometimes as much as twenty-seven shillings. But what then ? The Banks increased their issue in a similar proportion ; that of the Bank of England was raised to twenty-eight millions ; its discounts reached twenty millions in a single year. All other Banks did the same ; and, by this means, not only was the crisis surmounted without difficulty, but a hundred thousand combatants and forty ships of the line were assembled round Lisbon, which hurled back the French from the lines of Torres Vedras. A commercial and monetary crisis which, beyond all question under our present system, would have involved the nation and all the commercial interests in a general public and private bankruptcy, was not only surmounted without distress, but the property of the industrious classes was unimpared during its whole continuance ; and the nation commenced in the middle of it, those gigantic efforts which at length turned the tide against France, and brought the contest to a glorious termination. It is remarkable that this admirable system, which may be truly called the MOVING POWER OF THE NATION during the war, became towards its close, the object of the most determined hostility on the part both of the great capitalists and chief writers on political economy in the country. Here, however, as everywhere else, EXPERIENCE, THE GREAT TEST OF TRUTH, HAS DETERMINED THE QUESTION. The adoption of the opposite system of contracting the paper in proportion to the abstraction of the metallic currency, by the Acts of 1819 and 1844, (followed as it was necessarily by the monetary crises of 1825, 1839, and 1847) has demonstrated beyond a doubt that it was in the system of an expansive currency that Great Britain during the war found the sole means of its salvation.” Alison’s History of Europe, vol. xx. p. 79, 80.

And moreover, the fact that from 1797 to 1815, commerce, agriculture, and wealth advanced (in spite of all the evils of war) with a rapidity greater than they had previously done in centuries, proves still further the power of Paper Money, to increase the wealth of a nation.
In 1819 we took a step backwards. Peel had not the power of destroying the system of Paper Money. Had he been able to do so, and had he done it, the nation would have retrograded as speedily as it had advanced. But Peel’s Bill crippled the monetary system which Mr. Pitt had introduced. Peel went as far as he dared to restore an exclusively metallic money—the money of the early ages of barbarism. Nor shall we ever permanently prosper as a nation, till we return to a Representative Paper Money—the money of civilization and progress. Money which is capable of expanding with expanding wealth and increasing population. Money based upon the great truth that a nation’s wealth consists not only in the precious metals, which are drawn out of the mine ; but that there is wealth lying hid in the nerves and sinews of the labourer, the enterprise of the merchant, the skill of the artizan, the discoveries of science ; which, therefore, gives to every wealth-producing power of man, to land and to labour—no less than to gold and silver—its representative, as well as its real value.

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* Those Bankers who seem to think that their individual interests require that the advantages of Paper Money should be doled out under the most restrictive system that the country can bear, resemble the Dutchmen in Sumatra, who used to destroy half their crop of spices, in order to enhance the value of the remainder.
** Letters on Monetary Science—by Jonathan Duncan, Esq.

METCALFE, PRINTER, RETFORD.

What is money?

2000-03-14T09:27:00.003Z

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Dr. Peter Bowman

Tutor at the School of Economic Science, and member of the Council of Management of Henry George Foundation reflects on Karl Polanyi's 1943 book "Great Transformations"

Introduction

Although the calamitous events of Autumn 2008 did not in the end result in total collapse of the financial system, fifteen months later the sense still remains of an economy in crisis. Those events were symptomatic of a deeper malaise. It was certainly not the case that before that time all had been well. The appearance of growing prosperity over the previous decade proved to be largely a sham.

When the bubble broke the underlying instability of the present system was revealed. Even if the goal of a return to growth of GDP is achieved two deeper issues that rankle beneath the surface will not be driven away by simply reinstating ‘business as usual but with more regulation.’

The first is the growing gap between the rich and the poor that is present both between different countries and also within each country itself. It is this inequality rather than poverty that is now recognized (Wilkinson & Pickett 2009) to be the source of a whole range of gradually worsening social ills, particularly in the developed world. The second is the effect of growth-impelled economic activity on the environment. This is resulting in both the rapid depletion of natural resources and the excretion of growing quantities of pollutants that the world’s eco-system cannot cope with.

The crisis has produced for some a waking up to the reality of our present situation. In so doing it provides the opportunity to examine critically our whole economic system and review the depth of reform needed to deal effectively with these underlying issues as well as the inherent instability. Is it the case, as some have suggested, that the free market hypothesis is inherently flawed and that our system is rotten to the core? Behind the drive for growing material prosperity at any cost that our present market economy facilitates is an overtly materialist worldview. Could it be that this is a cultural crisis and that nothing short of a change of this fundamental stance can provide the change of direction that is needed?

After acknowledging the possibility this essay will leave that question to others and focus just on the economic realm. It will attempt to look holistically at the present situation to uncover its underlying shortcomings and what could be done to remedy them.

The most helpful tool in such an examination would be a model or framework that is capable of fulfilling three functions simultaneously:

(1) to provide a basis for analyzing the underlying faults in the present system that have led to the destructive crisis,

(2) to provide a basis for a better system, one that is fairer, more stable and sustainable and

(3) to provide a "roadmap" to take us from the former to the latter.

Karl Polanyi and The Great Transformation.

The thesis is that such an analysis of our present free market system was provided by the political economist Karl Polanyi, in his classic work: The Great Transformation written some 60 years ago (Polanyi 1944). Through his comprehensive analysis that combined social, economic and historic perspectives this author identified the critical weakness that would inevitably lead to the self-destruction of the free market system. When, contrary to his prediction, the world’s economy got back to its feet after the Second World War there seemed to be a good reason to ignore his analysis but sixty years on its prescience is again being recognized (Spratt et al. 2009).

In its essence Polanyi's argument is very simple. It cuts right to the heart of the present crisis. Polanyi did not criticize the market system in itself. He recognized that markets have been a social phenomenon throughout man’s history. What he gave original thought to was the natural limit of the market system, what should be included in it and what excluded.

The traditional function of a market is the exchange of commodities, a term which implies man-made goods. These range from extracted raw materials and agricultural produce through intermediate goods to complex finished products. According to Polanyi what happened to sow the seeds of self-destruction in our present free market system was a deception. It was the pretence that the primary elements of the economy, namely land, labour and credit, are commodities that can be traded in the market in the same way that actual commodities can. He pointed out that these primary elements of the economy are patently not commodities in that they are not man-made goods. Markets in labour, land (the distinguishing aspect of ‘property’ and ‘real estate’) and credit are artificial and will behave totally differently to markets in commodities.

These basic elements are of an entirely different category to man-made goods and the economic laws they follow are entirely different.

For Polanyi, the admission of this pretence that these factors would follow market theory was not only unreasonable but ultimately destructive. Here is the heart of the problem with the current free market system. This underlying pretence is the cause of its inherent instability and has given rise to the (often unrecognized) characteristic feature of its history which is a series of cycles of ‘boom and bust.’ It is in the markets in these primary elements that the difficulties of our present economic system lie. Note the main features of the last crisis: the self-destruction of the credit market, the stagnation of the closely connected property (i.e. land) market, shortly to be followed by a significant increase in unemployment. With the primary factors so de-stabilized the real market economy then suffers consequently as an innocent victim.

Since economists themselves have taken up the pretence the subject of economics as it is presently taught has rendered itself incapable of describing the real working of the economy and hence of explaining and predicting the recurring cycles of boom and bust that frustrate it (Bezemer 2009).

Why is it fundamentally wrong to have markets in these basic elements?

Consider land. In economics this term is used to include all natural resources. In other words, it denotes the part of the economy that is not man-made. It is, in the words of Alfred Marshal, the ‘free-gift of nature.’ It follows that because it is not man-made one of its fundamental economic characteristics is that its supply is inelastic, (‘they’re not making it anymore’ to quote Mark Twain). Therefore land does not respond to the law of supply and demand in the way manufactured goods do. Unlike motor cars or toothbrushes, when the demand for land increases the supply cannot be increased to match, it is perfectly inelastic and all that happens is the price goes up.

To be traded land must first be claimed. To many cultures of the world, such as the North American Indians, the notion that land can be owned and hence bought and sold was incomprehensible but it has become ingrained in Western thinking despite the reasoning of philosophers such as Locke.

In his view (Mazor, 2009), the basis of a claim to a property in anything lies in the work done (directly or indirectly, for example through trade) to produce it. There can be no such claim for land, since by definition; man does not make it. However the tendency to ignore this and claim land as private property is difficult to resist. Because it is such an essential pre-requisite to all human activity and has an inelastic supply it is one of the most valuable of assets.

In addition there is the fact that at this time on this planet, with its current human population, land of quality good enough to sustain a high level of human well-being is scarce. As such it enters the market place to become an irresistible object of speculation and because it is so fundamental, since everyone needs somewhere at least to live, the asset bubble has to follow and take precedence over the real needs of the economy.

The market in land can never come to equilibrium in the way that markets in manufactured goods do.

Credit is almost as fundamental to economic production as land. Its essential function is to provide a bridge to cross the time gap between the start of any economic activity and its point of completion when it can provide a return for the producer in the marketplace. The farmer has to sustain himself between the time he plants his crop and when he harvests it, the craftsman and builder must purchase their materials before they can even start their work. Even the shopkeeper must purchase his goods before he can sell them on to his customers.

For all these and other productive activities credit is absolutely essential.

In the hands of the banking system this primary function has become privatized and effectively monopolized. It has been distorted from an essential economic service into a method of making returns for its owners and a few select employees at the expense of the rest of society.

One effect of this distortion is that credit is directed not where it is actually needed but where it can gain the largest returns for its issuers. Even where it is for productive purposes these are usually of a large scale and of questionable overall social and environmental benefit: mechanized energy intensive large-scale agriculture, large-scale production of short-lived consumer goods driven by advertising rather than real need, large centralized energy schemes.

A high proportion of credit issued is not for production at all but for speculation on assets or even just to finance consumption. The removal of the separation between the credit-creation of conventional banking and the operation of investment banking has led to the use of bank credit in leveraged operations to greatly expand the power of financial institutions to engage in highly profitable what was recently described ‘socially useless activity.’ (Hosking 2009)

In the hands of the private banking cartel credit has been transformed from an essential economic service into the pretence of a commodity whose price is the rate of interest. The pretence overlooks the underlying economic truth that, like land, credit does not obey the law of supply and demand in the way that manufactured goods do. The ‘cost of production’ of credit is negligible and its supply is without any natural limit. Once the agreement with the customer has been made a bank ‘loan’ can be produced simply at the stroke of a pen or the pressing of numbers on a computer keyboard.

The market in credit can never come to equilibrium, it can never clear in that way that markets in goods do, and hence it always remains under the control of its producers, the banks (Werner 2005), until they overreach themselves.

The existence of a ‘labour market’ where human beings are themselves treated as little different from a commodity contributing one of the costs of the productive process is largely a result of the monopolies of privatized land and credit. Under conditions where the land and the other natural provisions of nature are no longer freely available but only accessible at the monopolist’s price and the basis of the extension of credit is to maximize the return to the issuer the relative bargaining power of employers and employees is so uneven that the latter have little choice but to accept what is offered.

In most modern economies it has become acceptable to maintain a significant proportion of the workforce unemployed. Having excess ‘supply’ helps to keep the cost of labour low. In developed countries the worst effects of this commodization of labour have been ameliorated through social provision by the state but taking humanity as a whole the effect of this has simply been to export the worst effects to less developed countries.

In the process known as globalization multi-national companies continually move their production to where lower wages can be paid and poor working conditions remain acceptable. This has generally depressed earnings of labour everywhere. In the developed countries, to maintain what they regard as an adequate standard of living workers have been pressed to supplement their inadequate earnings with debt using their homes as collateral.

The effects are worsened by the way most governments have chosen to use wages as the basis for taxation, diminishing yet further the proportion of the wealth that workers produce that they are able to retain for themselves.

These are the economic effects of the commoditization of labour. The human consequences go much deeper. The nature of work has fundamentally changed. For many it is no longer something that is fulfilling and satisfying in its own right, it becomes just a means to an end. People now work not for what they can contribute but for what they can get out of the system and attempt seek their satisfaction in other avenues.

What is the solution?

If Polanyi's analysis is correct, then, in addition to indicating the underlying causes of the present crisis it can also point to a remedy. This would be a move to an economy in which the market is limited only to commodities and the primary elements: land, labour and credit are excluded. For this to take place governments would need to enact their fundamental duty to protect these components from exploitation and thus enable them to fulfill their respective primary economic functions.

This does not require centralized state control. On the contrary, it offers the possibility of truly free market with economically free people having unexploited access to the land and credit that is needed for genuine prosperity. The route to achieve this would be to take the primary factors out of the market system. They need to be ‘de-commoditized’.

How can this be done?

First consider credit. To begin to stop thinking of credit as a commodity and start thinking of it as an essential economic provision requires a fundamental change in attitude. In the developing world this step was taken with the introduction of the micro-financing schemes starting with the Gramene Bank (Yunus 1999). The transformative effect on many thousands of poor people able to take advantage of the scheme has been to begin to lift them out of abject poverty.

In the developed world there is much public confusion and misunderstanding over the way the money and banking system work. As the proportion of money that exists in bank accounts rather than as cash has grown so also has the proportion of the money supply that is produced by the private banks rather than by the government.

On the basis that ‘every advance creates a deposit’ the proportion of the UK money supply that has been privately produced as bank credit has now risen to 97%. The nation’s money supply has become interest bearing bank credit. An essential government function and all the economic privilages that go with it has been gradually and unwittingly handed over to a privately owned cartel.

However, as was demonstrated by the bailouts, the ultimate responsibility for the money supply remains with the government so it is left to pick up the pieces and the taxpayers the bill when these private institutions, through their greed, and incompetence fail.

Credit is essential for economic activity. Where it is directed will prosper and where it is restricted cannot flourish. With the present private banking system and ‘commodity’ model of credit the basis of where it is directed is not how socially or even economically useful the recipient’s purpose is but rather what achieves maximum return at minimum risk for the issuer.

When credit is used for investment in ‘real’ economic activity such as manufacturing then the effect can be real economic growth.

When it is used for the purchase of assets such as real estate in the hope that they will increase in value then the long-term result must be inflation.

Similarly, if credit is issued for consumption, although this may have a short term stimulating effect in the long term it is not likely to produce a sustainable increase in economic activity.

The differing effects on the economy of these different uses of credit are highly significant but it is not in the interests of private banks to recognize them.

Even in this age of electronic money there is good reason to return the function of issuing money to the government and restrict the banks to what most people think they do now – not creating credit but putting their customer’s deposits to good use by investing it in productive enterprise.

With the adoption of the policy of quantitative easing the central banking has recently been openly creating new money but it could be put to much more productive use. Financing much needed infrastructure projects – particularly low carbon energy production - would have a much greater impact on the real economy than its present use of buying back debt.

Under the present conditions with the private banks showing great reluctance to extend credit for productive purpose whilst they rebuild their balance sheets there is a real need for an institution to take on the traditional function of banks and supply credit to the real economy, for the sake of the economy rather than its own gain.

Such is the fundamental importance and therefore high price of land that in our present commoditized arrangements well over two thirds of the credit issued by banks is for mortgages on domestic or commercial property. Redirection of credit away from speculative purchase of assets either directly or through leverage take-overs would be a first step of removing land from the market mechanism.

A further significant step could be achieved in a less direct way as a consequence of reform of the way Government collects its revenue. To appreciate how this could be achieved requires taking a fresh look at what the basis of the value of a plot of land is, particularly in an urban environment where the more valuable land is now found. One sees that it is not the land itself as a piece of earth which is where the value lies but rather with the access to public goods and services, markets, and an environment propitious for business or domestic occupation, that owning that site provides.

In the present system of privatized property all these benefits come free of charge to the owner once he has acquired the plot. The public aspects of these services do have to be paid for by someone. At present it happens indirectly through the system of taxation, mostly levied on labour as income tax but on various other taxes as well.

Perversely, as a community grows and the location is enhanced so the owner receives greater benefits but this enhancement is also reflected in the growing (land component of) property value and increased equity accrues to the private owners as well as the benefits of the location.

This was illustrated quite vividly with the extension of the Jubilee Line in South London in 2000 where an infrastructure development costing £3.5 billion and financed by taxation raised property prices in the locality by an estimated £13.5 billion (Riley 2001). It can also be seen in the way property prices around a good school command a premium.

On this analysis the value of all services and other benefits a particular site receives by virtue of its location can be equated with the rental value of the site (stressing strongly that for any building this is only the site component, not the full market rent for the premises). If the landowners had to actually pay the community back for these services the site-related component of their unearned rental income would be now matched by this expense (Burgess 1993).

The ramification would be that no unearned income would any longer accrue from merely having property in land. It would become particularly disadvantageous to hold land out of use in the hope of making speculative gain since the service expenses would still have to be met but without any corresponding income.

The only reason for having property in land would be to actively make the best use of any advantages a given location offered. The best sites, would be available at a premium, but with the payments now going to the suppliers of the services, i.e. the community as represented by either local or central government. For the enterprising, marginal sites would be available at very low cost.

Here is the second step of reform, the charging for public services by location using land rentals as a means of evaluating the overall value. The overall effect of this would be to de-commoditize land. It would no longer be worthwhile to treat it as a good that can be bought and sold. It would remain a valuable primary factor of production, which would have to be put to good use for it to be retained.

A similar system could be applied to natural resources. The extractor would be paid the costs of extraction including normal profits. (The value of this could be decided by auction as recently happened in Iraq). The resource rental, the difference between the extraction costs and the market value of the resource would then fall to the local community. This could provide a much-needed source of public revenue for many developing countries.

An additional advantage of using land and resource rents as a major source of Government revenue is that the burden of taxation could be taken away from labour and enterprise.

Setting the economy free

The combined effect of de-commoditized credit directed towards productive economic activity, de-commoditized land freed from speculative valuation and the burden of taxation removed from production would have a huge impact on the conditions for engaging in economic activity and hence on the ‘labour market’. With the possibility of self-employment and associated meaningful work so much more accessible there would be a shift in bargaining power from the employer to the employee. A viable alternative to ‘wage slavery’ would be much more realistic. The possibility could also arise of full employment.

More and more of the workforce could begin using their working life as a means of utilizing their innate talents rather than just earning enough to keep body and soul together.

From this follows the possibility of a general uplift in society. There would be the opportunity for a move away from cheap, low quality manufactured goods that the circumstances of the debt-based economy forced upon us, back towards the production of quality goods that actually provide the purchaser with some lasting satisfaction. This shift would also have positive effects for the environment. In the long term longer-lasting quality goods require fewer raw materials taken from nature and less pollution. The freeing up of the labour market would encourage a general increase in the quality of service offered including the rejuvenation of a maintenance industry. The incentive could be for quality rather than quantity.

For example the new labour and land tenure arrangements would make quality domestic food production much more viable. With credit sensibly directed there would be the possibility of bringing low carbon energy production into play.

In addition, and of the greatest importance, is the effect these changes have on our social welfare. The removal of the special privileges accruing to the effective monopolies on land and credit in combination with greater opportunities for productive employment would directly address the underlying causes of the inequalities in wealth and income we see in both developing and developed economies. This in turn would bring about a considerable reduction in the gap between the richest and poorest with the consequent wide-ranging social benefits that are now recognized to accrue to more equal societies.

Polanyi’s insight offers an analysis that is both simple and deep. The aim here has been to no more than sketch out how it could provide a basis for the transformation of the economy towards something that is more stable, more just and less damaging for the environment; one that continues to embrace the extraordinary technical achievements of the age whilst at the same time offering the opportunity for a much greater proportion of humanity to find fulfillment and satisfaction through their everyday work; one in which the rewards obtained for honest endeavour are preferred to those achieved through exploitation.

Bibliography

Bezemer, Dirk (2009) No-one Saw This Coming: Understanding Financial Crisis Through Accounting Models, Munich Personal PePEc Archive.

Burgess, Ronald (1993) Public Revenue without Taxation, Shepheard-Walwyn, London.

Hosking, Patrick (2009), quoting Lord Turner of Ecchinswell: FSA chairman says City is too big, Times, August 27.

Mazor, Joseph (2009) A Liberal Theory of Natural Resource Property Rights, PhD thesis for Harvard University.

Polanyi, Karl (1944) The Great Transformation: the political and economic origins of our times Beacon Press, Boston, Ma.

Riley, Don (2001) Taken for a Ride: Trains, Taxpayers and the Treasury, Centre for Political Studies, London.

Spratt, S., Simms, A., Neitzart, E. & Ryan-Collins, J. (2009) The Great Transition, New Economics Foundation, London.

Werner, Richard (2005) A New Paradigm in Economics, Palgrave.

Wilkinson, Richard & Pickett, Kate (2009) The Spirit Level: Why More Equal Societies Almost Always Do Better, Allen Lane.

Yunus, Muhammad with Jolis, Alan (1999) Banker to the Poor. The autobiography of Muhammad Yunus founder of the Grameen Bank, Aurum Press LW.