By E. C. Riegel, 1944.
The solution of one is the solution of the other. It lies in the
understanding and exercising of his inherent money power
through a non-political money system.
Because man has not mastered the problem of achieving prosperity, he has turned to government for its solution. Thus he has
complicated his problem, for government offers no solution to
the problem of prosperity, while its intervention in this primary
problem brings the additional problem of how to govern government. When government undertakes to solve man's problem
for him it undertakes the mastery of society and it cannot be both
master and servant. Thus it has failed in both spheres. By intertwining the prosperity problem with the political problem man
has snarled the threads and no solution of either is possible
When man has mastered money he shall have mastered not
only his economic problem of prosperity but also his political
problem, for he will see that money has no place in state functions, and, the money power being entirely in his own hands, he
will easily master the state and clearly define its services. Thus
money must be seen as the means of mastery of all economic and
political problems. Until we have mastered money we shall not
master any of our problems. Not money, but a false money
system, is the root of all evil.
We shall find that money power is inherent in all of us; and
that this power can not be exerted for us. We must either exert
it or become suppliants to some authority that issues money, and
which, when it issues, can do so only in its own behalf. Since we
have looked to government to exert the money power, either
directly or indirectly by the legalizing of the banking function,
we have innocently fashioned our own subjection from which
nothing but the correcting of this error ran extricate us.
It is useless to fret over our self-imposed oppressions or to
quarrel with our government over ills that have resulted from our
having placed upon government the impossible task of issuing
money in our behalf. Public officials are just as ignorant of the
real cause of economic and political miscarriages as we. However
earnestly they may strive to exert the money power in the public
interest, they are doomed to failure because the laws of money
make it impossible.
The first cardinal truth of money is that no one, whether individual or government, can issue money without buying something. By inviting government to become a money issuer, we invite it to become our customer. Then we quarrel with it if it
tries to buy something that we deem within the province of
The second cardinal truth of money is that money must be
backed with something, and the act of backing can only be the
act of selling. Since we object to government buying and selling
anything useful, but nevertheless insist that it issue money, we
force it into boondoggling or public works that do not conflict
with our private enterprise. Thus we compel government to issue
unbacked money by making it impossible for it to sell anything
in exchange for the money it issues. As this process of issuing
unbacked money continues, each unit grows weaker and thus the
dosage must be increased. Hedged about, as government is, by our
objections to its invading private enterprise and yet keeping it
under the pressure to issue money, it is ultimately forced to the
most consummate public works spending program, which is war.
Obviously, the economy must have money supply; and, since
we are too ignorant to understand that not only the power but
the duty to issue money resides in ourselves, pressure falls upon
government to issue it. To issue money, government must buy
something. We divide on what it should buy and from this
division arises our favor for fascistic or agrarian or proletarian
programs of expenditure. While we do not realize it, nevertheless, our partisanship is merely a preference as to the channel
through which the government is to pervert the economy, for
perversion it must be, since expenditures by government lead
either to government ownership or inflation. Each channel of
expenditure has its proponents and opponents and the one that
has the broadest appeal and the least opposition is armament
building - which in turn broadens into war. Thus Mars is continuously beckoning to the politician as the easiest way out of a
difficult political problem. We bring all our ills upon ourselves,
including the affliction of war, through our ignorance of the
laws of money which no government can alter or suspend.
We must first of all assume responsibility for the solution of
our primary problem of prospering ourselves. To do this we
must master money. Having done this, we shall find that vicarious
money issuing power is a pure illusion and that we can and must
exert the money power by and for ourselves. This step accomplished, we shall find that we are no longer petitioners of government but that government is completely dependent upon us. Ipso
facto we solve all political problems and end war.
Government must be governed by a principle that defines the
separate spheres of business and politics. When we take the
money power out of politics, and allocate it to its natural sphere
in private enterprise, we establish a proper coordination between
the profit and non-profit motives of society. Without this allocation the two spheres are in constant conflict, breeding all manner
of pressure groups and isms that seek to reconcile the irreconcilable. Money is an instrumentality of the profit motive and must
be issued and backed only by private enterprisers. Economic and
political perversities are inescapable while government is admitted to money power. Since all national governments have,
up to the present, been money issuing powers we may justly
attribute all the economic and political ills of mankind to this
single error. This is a sweeping claim - but it is made deliberately
and in full consciousness of its broad implications. We have not
yet learned how to constitute government, nor do we comprehend
the full meaning of private enterprise and its power to bring
Empowered, as governments are today, to control the money
system, they are a constant menace to the peace and prosperity
of mankind. Mad men, selfish men, ambitious men, fanatics and
crackpots may at any time seize the reins of government and drive
the state like a juggernaut over the people. When government
is invested with money power it rises above the citizen and under
the profession of protecting him may actually constitute the
greatest threat to his well-being and safety. The power which
control of the money system gives to government to interfere in
and direct and even take the life of the individual should not
exist on this earth. No man or group of men is warranted in holding this terrible power over fellow men.
Democratic government to date has been a pure illusion. All
that has been accomplished by voting or revolting is a change
in the personnel of government. The perversive money power
remains to serve the evil designs of the dishonest politician and
to frustrate the plans of the virtuous. Money power means budget
power and it is folly to imagine that the citizen can control government unless he can control its budget.
Political democracy is a system of tolerance; not one of active
support. The citizen is engaged with the duties and problems of
his private affairs and if government does not especially annoy
him he takes it for granted. It is only when it burdens or bothers
him that he is stirred to action. As a citizen he functions negatively, i.e., he doesn't trouble to give approval; he registers only
disapproval. Since this is the citizen's natural attitude toward
government, he must be put in position not only to protest a
completed act but also to veto a proposed one. He must have
both voting and vetoing power. Therefore government must be
so placed that it can have no existence independent of the
citizen, and must ask for every penny it proposes to spend. This
monetary control by the citizen over the state is the only form of
democracy that is effective. Until we have attained it, we merely
beguile ourselves with our elective processes.
We must have a broader voting process than the mere marking of a ballot annually or quadrennially. We must vote money - and, to vote it freely and effectively, we must control this all-powerful ballot, without government interference. Thus we will
have elections every day and every hour, controlling both business and government by the simple process of granting or withholding patronage. Until we have monetary democracy we have
only the shell of democracy without the substance.
As long as we cling to the superstition that we must look to
government for money supply, instead of requiring it to look
to us, just so long must we remain the subjects of government
and it is vain to follow this or that policy or party or ism in the
hope of salvation. We can control government and our own destiny only through our money power and until we exert that
power it is useless for us to debate the pros and cons of political
THE FIRST STEP
The first step toward complete economic and political freedom
through the ultimate abolishment of the political money system
is the establishing of the private non-political money system to
demonstrate its feasibility.
The new concept of money is that, to be sound and stable, and
adequate, it must spring solely from the same source from which
all wealth springs, namely - the people, and that, to effectively
coordinate with our mass production system, the people must
issue the money necessary, to buy their production.
The program is for state-wise action by the people in their
respective states, to set up Valun Exchanges. (The word "valun"
is compounded from VALue and UNit and pronounced vallen.)
The Valun Exchanges will clear checks for their members and
with each other nationally and internationally - making one
money system, unifying trade regardless of political divisions,
and obviating foreign exchange.
The proposed new money unit is called valun and is to be
issued in checks, bills and coins. The valun is to be made par
with the 1939 dollar, but entirely disassociated from it and every
other political unit. Thus it offers escape from the coming
The projected plan for a private money system, designed both
to perfect private enterprise and preclude political perversions,
rests on this basic proposition:
Money can be issued only in the act of buying, and can be
backed only in the act of selling. Any buyer who is also a seller
is qualified to be a money issuer. Government, because it is not
and should not be a seller, is not qualified to be a money issuer.
This cardinal statement brings the money function clearly
within and makes it a part of private enterprise, and takes it out
of the political sphere. Thus private enterprise becomes truly
private, and money is transformed from being a tool of politics
and finance to a utility for mass distribution of mass production
of goods and services.
By democratic control of the proposed Valun Exchange, each
person and business would have the power to create money
equivalent to his or its power to produce, and there would be no
aristocracy to hold this power exclusively or disproportionately.
In brief, the capitalist system would be a popularized and equitable system, because everyone would be a capitalist, and would
command the sphere of his own activities. The composite of such
command would be a popular mandate for prosperity and peace
and economic union of all peoples.
What we have had to date is a politico-capitalism - an unnatural alliance between politics and business, corrupting to both.
Capitalism cannot realize its purpose of prospering the people
and thus pacifying the world, and the state cannot become a
true and impartial public servant until the political money system, the tie that binds them, is severed and the private enterprise money system is instituted.
EVILS OF THE PRESENT SYSTEM
The present money system has three basic evils:
a) It permits money to be issued privately, only by a limited
number of persons and corporations who have bank credit, and
makes such credit subject to fee. Thus it establishes credit as a
privilege rather than a right, and makes it an object of profit
rather than a utility to further the production and distribution
of wealth. It denies to producers generally the right to issue
money, thus making it impossible to expand buying power to
potential producing power. This results in defeating the mass
b) It permits the government to issue unbacked money. The
only way the government could back its money issues would be
to go into the production of goods and services; and this would
compete with private business. Thus the problem offers the two
horns of a dilemma, both of which lead to socialization. If it
backs its money issues with goods and services (and there is no
other way it can be backed), it executes a frontal attack on private enterprise. If it issues money without backing it (as it is
doing), it executes a flank attack on private business through
inflation - since to issue money without creating equivalent
values is to inflate.
c) It permits ambitious or designing or fanatical men who are
in control of government to light the fires of war, threatening
the lives and fortunes of untold millions. This terrible power
lies solely in the political money system since armaments spring
from money and money springs from government fiat, whereas
it should spring only from the fiat of the people who would thus
hold the veto power.
SOCIALIZATION THROUGH SPENDING
Government spending in all nations throughout the world is
leading directly, through government ownership, to socialization
and the destruction of private enterprise. It is not a triumph of
socialistic ideology; it is simply a condition forced by the political money system. Our own government has become a "buyocracy"
that operates a bureaucracy employing (December 31,
1943) 3,162,199 civil employees. These Federal employees, residing and operating in our states, outnumber the employees of
each state government from three to six times. Our state governments, because they have not the money issuing power, are being
subordinated to one centralized government and home rule is
being impaired. Besides the 11 millions in the military and the
3 million civil employees of the Government, there are about
30 millions employed in producing for the government, making
a total of about 44 million persons working directly or indirectly
for the Government, leaving only about 30 millions in private
enterprise and local government service.
The "buyocracy" at Washington is literally buying its way
into control of our very lives. Yet there is nothing back of the
money it so freely issues except what the people put back of it
with their labors. The Government, popularly believed to be the
backer of money, is in fact the only one that does not back
money. Except for postal service, there is practically nothing
purchasable from the Government with the money it issues. Even
gold and silver cannot be bought from the Government, and
therefore these commodities are not back of its money. Private
enterprise supplies practically all the backing that exists for our
money. Since private enterprise is the sole backer of money,
simple logic dictates that it should be the sole issuer.
When government issues money and offers nothing in exchange therefore, the issue is the same as counterfeit money, with
this difference: counterfeit money can be detected and extracted
from the money supply, while unbacked legal tender merely
blends with all other money, making each unit weaker.
The Federal Government, through its "buyocracy," now holds
mortgages on two million farms (1/3 of the farms of the nation)
to the extent of $3 billions. It owns 2,500 war plants at a cost
of $16 billions and comprising 1/4 of the nation's entire industrial plants. The H.O.L.C. and F.H.A. and F.P.H.A. own 719,329
city dwellings at a cost of $2,198,542,204 of which $1,883,543,602
is temporary war housing. Mortgages held on urban homes
amount to $1,360,154,742. It is constantly acquiring new lands
and properties. The following is from the Congressional Record,
November 18, 1943, page 9767:
"This total of 363,600,533 acres owned or to be acquired by the
Federal Government is equal in size to the combined area of
Maine, New Hampshire, Vermont, Rhode Island, Massachusetts,
Connecticut, Pennsylvania, New York, New Jersey, Delaware, Maryland, West Virginia, North Carolina, Virginia, South Carolina,
Georgia, Florida, Ohio, Alabama, Kentucky and Indiana. It represents 20% of the area of the United States.
"From July 1, 1940 to January 30, 1943, land acquisitions totaling
14,884,244 acres have been acquired or are in the process of condemnation or purchase. This represents a total of 23,256 square
miles, a land area nearly equalling West Virginia."
This land ownership (within the states and exclusive of the
territories) held by the Federal Government, ranges from a
minimum of .02% of the area of Connecticut, to as much as
76.3% of the state of Nevada. Lands and buildings held by the
Federal Government become tax free, thus diminishing the tax
income of the state in which it is located.
In his recent book, "Bureaucracy Runs Amuck," Lawrence
"Where shall we turn today to find the acknowledged area of free
enterprise? Not in agriculture, surrounded completely by quotas,
parities and soil-conservation allotments; not in housing, banking,
amusements, insurance, electric power, medicine, labor or shipping.
Through all its agencies, the federal government now is engaged
directly in forty-six different lines of business activity. And through
loans and liens, it has a proprietary interest in 77 additional economic pursuits.
"Adolph A. Berle, Assistant Secretary of State, and one of the
original brain-trust elders of 1932, thus presented the official logic
of our march to socialism in his testimony before the Temporary
National Economic Committee on May 22, 1939:
"...If, therefore, wealth is to be created by creation of government debts, the scope of government enterprise must be largely
increased. Briefly, the government will have to enter into direct
financing of activities now supposed to be private; and a continuance of that direct financing must be, inevitably, that the government will control and own these activities. Put differently, if the
government undertakes to create wealth by using its own credit at
the rate of $4 billion or so a year, and if its work is well done,
the government will be acquiring direct productive mechanisms at
the rate of $4 billion worth a year, or thereabouts. Over a period
of years, the government will gradually come to own most of the
productive plants in the United States."
Continuing, Mr. Sullivan says: "When Mr. Berle uttered this
sweeping prophesy, the federal investment in U.S. industry,
transport and finance stood at about $12 billion. At the end of
the fiscal year 1943 this investment stood at $37 billion."
It may serve the purposes of partisan politics for the "outs"
to blame conditions upon the "ins." But the causes that are developing the federal government into a "buyocracy" are much
deeper than administration policy. The political money system
that began before the United States was born, and was given
approval by the framers of the constitution, is merely beating
the fruit of the parent seed and will not be altered by a change
in administration. Crediting the present and all past administrations and all future ones with the most patriotic efforts within
the political money system, it must nevertheless operate adversely
to both government and people; and this statement applies not
only to our government but to all governments. What is happening in America is happening all over the world. The political
money system is forcing socialization everywhere and the only
escape of private enterprise lies through the private money system which also offers the state its only security against ultimate
public revolt. The dilemma previously outlined confronts statesmanship everywhere.
Approximately 60% of everything produced by the people
today is being bought by the government. Therefore our current
production is 60% socialized. To be sure, this is a war condition
from which we hope to escape, but before we can escape, we
must pass through the serious trial of inflation, during which
our present money system may break down completely. But, no
matter how much the dollar may depreciate through the process
of government spending and lack of backing, the title to the
property acquired thereby will remain with the government.
So let us get this clear: The issue between private enterprise
and collectivism is not a matter of choice as long as the political
money system prevails. If the government holds the money issuing power, it will either buy out the people and control them
or ruin their enterprise system through inflation. If the people
exert the money issuing power, they will buy the services of the
government and control it.
The source and flow of money determine the social, economic
and political outcome. The state being a single unit, its money
issuing power develops autocratic control of the people, but
money issuing power in the hands of the people develops - since
the people are many - a democratic control of the state.
Therefore sovereignty of the people and democracy can be
assured only if the people exercise their money power; and dictatorship in some form or other can be realized only by the government's exercise of the money power.
Consciously, or unconsciously, we align ourselves with either
private enterprise and democracy, or with collectivism, as we
take our stand in favor of either the private money system or the
political money system.
If we would oppose collectivism we can do so effectively only
by opposing the political money system. If we would uphold
private enterprise and democracy we must do so by supporting
the private money system.
In the play of propaganda there are many false passes. Let us
keep our eye on the determining factor and not be diverted by
dissembling phrases and ideological opiates.
As the inflationary crisis approaches, it is fortunate that we
have the private money concept that this book presents. We can
begin at once with a plan of reconstruction that will reverse the
trend toward socialization and forever preclude future disturbances and the economic perversions that are inherent in the
political money system. We can build a money mechanism that
will coordinate with our mass production mechanism and thus
give free rein to our productive capacity. We can assure ourselves that every unit of money is backed by value, and can thus
prevent inflation and maintain a stable price level. We can not
only abolish unemployment, but we can assure every worker the
full enjoyment of his production. We can abolish booms and
slumps and maintain constant production. We can end Government deficits and the insidious socialization that follows from it.
If we would accomplish all these things and thus perfect out
private enterprise system and save it from imminent inflation
and ultimate communization; if we would preserve the sovereignty of our states and our federal system of government, we
must adopt a private money system designed as a utility, responsive to the needs of mass distribution. This is a challenge and a
bid for private enterprise to vindicate its philosophy and perfect
its operation and thus assure its triumph in its issue with collectivism.
FREEDOM AT LAST
We are really going to be free at last, because we are going to
discover that the power of liberation is within us. We need only
to comprehend our inherent money power.
Freedom means freedom to manage one's self and freedom
from management by others. Obviously then, the political management philosophy, so prevalent today, cannot bring, but rather
denies, freedom. It is racing to its doom; we are in the midst of
a great revolution.
A new dignity is coming to us. From the wreckage that is
being wrought about us, we shall emerge as commanders of our
private lives rather than guinea pigs for political quackery. Every
social problem, every national problem, every world problem is
but the composite of the problems of individuals arising from
the evil of external management and from interference with self-management. The individual has been thwarted in his pursuit of
happiness; and the sum of these individual frustrations produces
social convulsions. We have delegated, or been robbed of, too
much power; we have exerted too little. We must have a democracy
of private dictatorships.
Though our beginnings and our endings be inscrutable, we
know that we exist in accordance with a natural plan. Is it not
then the basest profanity to rest our aspirations upon man-made
laws rather than those of nature? Could anything be more irreverent and vulgar than to entertain political promises which offer
to provide for us from the cradle to the grave? Could we live
and move and have our being if nature were planless? Why then
are we beguiled by political planning? How can we, by entertaining the paternalistic planning of the would-be father-state, be
so depraved as to imply an absence or failure of nature's plan?
We are meeting a well merited rebuke in the failure of political
planning that is falling upon us, a failure from which we shall
be turned to introspection and respect for natural laws and the
dignity of the individual.
This new-found dignity of the individual will renounce external support and assert the inherent power of self. It will
reduce the state to the status of a servant and denounce its pretenses of being a patron and guide. So much power will be self-asserted by the individual that there will be little left for the
state to exert. Such sovereignty of the individual will follow
from the simple discovery that the money power is inherent in
man and perversive when exerted by the state.
This truth we shall know and this truth shall set us free. This
freedom, once won, will be the guarantor of all freedoms; the
end of all tyrannies of every character. Parchment freedoms,
political proclamations, charters and constitutions are hollow
verbiage without money freedom - and with it, they are mere
Assailing us from all sides, come propaganda, pretense,
hypocrisy, incompetence and futility as the result of the malexertion of the money power by the state. We can, we must, we
shall become masters of our inherent money power and thus
assure tranquility, prosperity and happiness to ourselves and our
Turn if you will from the war's carnage; from statesmen's
sterility - from contemplation of the ominous aftermath - and
visualize a community of men and women within the community
of one of our American states, laying the foundation of a new
Because a group of common folk in one spot of the earth shall
have declared the principle that money power is inherent in man,
and that money power is sovereignty, democracy shall rise from
the blood-soaked earth to triumph over war and economic
Among the casualties of the war will be the national political
money units of the world, killed or maimed by inflation. Born
will be the new principle of private money for private enterprise; non-political, non-isolationist, non-manipulative and
In one of our forty-eight states reside the pioneers of this
new order - wherein the will of the common man to work
and win in prosperity and peace shall not be defeated; wherein
man will govern government and will reflect through it his
impulses of honesty, amity, frugality and tolerance rather than
be subject to its perversive power.
In one of the forty-eight states of this Union the leadership
of the new America will give hope to a distracted world that
humanity shall not be frustrated, and that the dictator, political,
economic and financial, shall pass from the earth, leaving
universal prosperity and perpetual peace.
This book is but a rough draft of the charter of freedom,
prosperity and peace that will be projected by the men and
women who effectuate its principles in action, in democratic
dynamic action, with flesh and blood and mental resolve rather
than with paper and ink.
[Contents] - [Next section: I. MONEY MYSTERY]
Federal Reserve Note.
Backed by nothing.
| Gold & Silver Never Lie.