In the minds of all peoples fighting this war, there is a reserve resolve, once the external enemy is defeated, to deal with internal problems. Therefore, revolutions will follow the declaration of "peace." We too, must have a revolution. Let us have it with our minds rather than with our muscles. Thus we may sec, for other nations, a pattern that will not only save blood but also valuable time in attaining release from existing and menacing evils. Such an universal pattern is possible, because there is a common cause of human tribulations, and a mental attitude that is alike in all peoples. The common cause of distress is the inability of people to monetize their own labor and thus work out their own economic and political freedom. The common mental attitude that deludes them is the belief in "Santa Claus."

The Government invariably presents the image of Santa Claus. In spite of the frustrations of political paternalism, political prestige is now at its zenith. The people of all nations have come to believe that Government is an agency for economic betterment. Individualism and private enterprise are in the shadows cast by the towering state. The teachings of scholars and old-time statesmen have been forgotten. While there are still some who say, "yes, but," the "yes" gets broader and the "but" grows narrower. The time was when those who believed in the political means of salvation, would say: "there oughta be a law." Now they say: "there oughta be an appropriation."

When Government was largely a matter of prohibitory statutes, men like Thomas Paine met concurrence in the thought that "government is a necessary evil;" but now that we have government by appropriation - and it essays to take care of us from the cradle to the grave - men tend to believe that government is a necessary blessing. What has brought about this transformation? Briefly, the increasing need of money, and therefore the increasing dependence upon Government which monopolizes the money power.

As the process of specialization of labor and resultant greater productivity of wealth progresses, the need for exchange increases - with resultant demand for greater money supply and its more equitable distribution. A tradition having fixed in men's minds the error that the state is the fountain of money, the political money system is put under increasing pressure to meet the demands put upon it. This pressure first manifested itself against the banking wing of the political money system. As has been shown in the foregoing studies, banks provide business with the power to create only substitute money, and this expands the total money supply until the accumulated deficiency - arising from the unliquidated interest charge, and from the unbalance between substitute dollars and government dollars - precipitates a reaction and depression ensues - and money supply is depleted through bankruptcy of banks and borrowers.

This process of alternate floods and droughts of bank money, called "business cycles," operated in every nation; but had greater ebbs and flows in the United States - where it reached its climax in 1929. After waiting for four years for the cycle to renew itself, there arose a public demand that the government intervene to supply the money needed for revival. This pattern of ultimate breakdown of the private substitute money mechanism is common to all countries - with the result that the Government intervenes and becomes the main source (if not the only source, as in Russia), of money supply. The banking valvular method, of pumping in and pumping out, is now being superceded by the government constant flow method - which has but one cycle, by the exhausting of one unit through inflation and the creating of another.

In assuming the responsibility of supplying the economy with money, the government is put to it to find ways and means of channeling circulation. Various public works projects are conceived, and various subsidy and social benefit schemes are worked out, in an effort to facilitate exchange and balance money supply with goods supply. This end is pursued, not only by expanding money supply, but also by reducing goods supply. The latter becomes necessary because a single fountain cannot supply the necessary circulation, unless the Government goes into the production and distribution of goods - as in Russia. Until we become further conditioned to the socialization of private enterprise, the Government does not dare to go into the production of wealth; therefore it can go only into the destruction of wealth - to relieve the unbalance between goods supply and money supply.

The killing of animals and plowing under of crops, and the paying for this destruction, is done with the aim of prosperity through scarcity; but that it is a prosperity of prostration is seen when it evolves into its ultimate destructive force by means of war. Militarism is the flower of the weed called "economy of scarcity." There are too many men, just as there is too much material - they must be "scarcified" by occupying their energies, and possibly consuming their lives, in the destructive endeavors of war - or in the idle time-serving of peace-time standing armies.

We are now in the most colossal manifestation of the philosophy of the economy of scarcity - with both the money-producing arm and the men and material destroying arm, endeavoring to vindicate that philosophy; and there are not wanting minds that see in it tremendous postwar prosperity. To them, scarcity of goods and plentitude of money means prosperity. They do not realize that the power of money diminishes as its backing in goods diminishes; and that therefore we are impoverished regardless of how we have pyramided dollars.

With the peace, the problem will mount. To demobilize the military, and spew them on the labor market, will violate the principle of the economy of scarcity. To employ them on public works, or on "made work," will increase the dollars in circulation (of which there are already too many) without increasing consumer goods, of which there is now too little. But the Government cannot revert from its role as Santa Claus; and it will continue to put dollar candy bars in stockings, even though it bring digestive convulsions of inflation. If the people persist in their belief that the Government can be and is Santa Claus it may destroy civilization itself. Once the mental attitude of dependence becomes fixed in a people's mores, cultural advancement becomes impossible and decadence inevitable. Dependence is defeatism, leading to degradation. Crush individual initiative and nothing remains worth saving.

The illusion that there is a governmental Santa Claus, exists in the minds of all peoples; and its influence is to sap them of their substance and rob them of their initiative. As we have learned from the Valun Studies, money can be issued only by the process of buying, and the issuer of money commands the sphere of its influence. Therefore, the Government Santa Claus-process is one of buying our the people's estate, and accomplishes by economic operation what otherwise would have to be accomplished by military confiscation, as was done in Russia. Let us examine how it has, and is, operating in our country.


When the states created the national government, it was designed by the Constitution to be a federation of sovereign states, and not a merger. The Federal Government was granted, by the states, certain sovereign powers, such as the power to regulate inter-state and international commerce; make war and peace; and, "coin money and regulate the value thereof." The states of Maryland and Virginia ceded to it the District of Columbia, wherein - as well as in the territories and waters bordering the nation - it was granted exclusive jurisdiction. All else was reserved to the states. It was not dreamed that in the simple words - "coin money and regulate the value thereof" - lay the seed from which would grow the vine that would spread federal sovereignty, checking the sovereignty of the states, and alienating their citizens. Yet today, we have almost forgotten that we are, first of all, citizens of our respective states and that the only exclusive citizens that the federal Government has, are the voteless residents of the District of Columbia, home of our Santa Claus.

Since the federal Government functions by appropriation, a power that cannot be employed by our states - due to their lack of money power - we have transferred our affections to the great provider. The result was briefly outlined in the Introductory. For further data read "Bureaucracy Runs Amuck" by Lawrence Sullivan.

Beset as we are, with swarms of Government agents and all manner of bureaucratic regulations, we should recognize that it is political proprietorship that is creeping over us; the Government is buying us out. Bureaucracy is but the administrative machinery of a "buyocracy" which has come upon us through the unlimited money issuing power of the Government. Unless we overcome the Santa Claus complex and declare our independence of the political money power, we must become a dispossessed people; and even the mantel piece on which we hang our stocking, will be owned by Santa Claus.

"The history of Liberty is a history of the limitation of governmental power, not the increase of it. When we resist, therefore, the concentration of power, we are resisting the process of death, because concentration of power always precedes the destruction of human liberties." - Woodrow Wilson.
But how can we resist this "process of death"? Resistance to governmental encroachments can be offered only by asserting sovereignty, and when we fail to exert our money power we yield our sovereignty. How can we desist that which we require, namely money, if we accept the Government as our main source of money supply? "Nobody shoots Santa Claus," but there is no need to shoot him. We need only quit writing notes to him and begin writing them to ourselves through our money issuing power. It is the only way out for the people, and the only way out for the Government, which is the victim of a perversive power, thrust upon it and accepted in ignorance of the laws of money.


In Wilson's day we still depended for our money supply mostly upon the banks - a private institution. It was aristocratic, and was conducted for private banker profit and not for the benefit of the economy. But, there were then among us, at least a privileged group of citizens who were permitted to assert their money power, and thus kept the power from being exerted by Government. The banking system in every country is now socialized, and has no independent existence, nor would we recommend returning to that false system of privileged power, even if we could.

Yet it must be said in fairness to it, that it built America and other countries. Many an industry that is with us today, owes its existence to it, and could never spring up under the present political money monopoly. But it is no more, and we cannot return to it; we must go forward.

In the passing of the private banking system - the last remains of the private money mechanism with which money began - it may be appropriate to point out that it was foredoomed to ultimate socialization when it first came under political control. The Government, by its sponsorship of money, established a double standard for money - political money and bank-substitute money. private, or bank-substitute money, could expand only in ratio to the existing supply of political money; and when it exceeded these bounds - as it was compelled to do to meet the demands of expanding commerce - it precipitated depression. These cycles of boom and depression came with increasing frequency and severity. After the last war the Government adopted a surplus budget policy - thus draining political money out of the economy, for the purpose of retiring bonds - thereby reducing the base upon which the bank-substitute money pyramid was being erected; and thus precipitated our worst private money collapse. This was the final blow at the private substitute money mechanism, but public disfavor toward the bank credit system was bound to bring about, sooner or later, a demand for Government money, which has no swings of the pendulum, because it has but one cycle through total inflation. There is nothing that can force it to balance its budget, and there is no safety device. Thus the public illusion lasts longer and the delusion is deeper and far more menacing than the short term cycle of the bank credit system.

The banking system, today, in every nation, is but an agency of government - a deceptive device for political finance. With the money system - which is the life blood of the economy - now socialized, it is inevitable that the entire economy will become socialized, unless we find the solution.

To do this, we must become fundamental in our thinking. We must comprehend the great liberating fact that the money power is in all of us; that it must not be perverted by political control, and that it must be democratically exerted to assure both economic and political democracy. Otherwise, the present process of subjection must continue. Every nation in the world is in the grip of the political money power; and, unless the citizens assert their private money power, all must go the way of Russia - where the Government ruthlessly asserts complete dominion, and imposes economic slavery in the name of ideology. We have in America already the beginnings of ideological opium in the thought that "the Government owes every man a living," and in the paternalism called "social gains." These signal "the process of death."

Ideological garments are cloaks for ugly facts. By violating the laws of money - for which the people are themselves to blame - Governments become the victims of a fallacy, whereunder they undertake to issue money on behalf of the people. No government can issue money except by acquiring something; and therefore, Government money creation - which is effected by deficit financing - inevitably develops Government proprietorship and private dispossession. As the fatalism of this process manifests itself, "ideological" justifications are invented to condition the minds of the people to the transformation; opiates for an otherwise painful operation. When in the evolution from the economy of scarcity - whereunder the government merely destroys wealth and slows up its production - the next step must be taken, by the operation of productive industries, and the distribution of their products, the shift will come to the people cloaked in a pretty "ideological" phrase to sloganize it. The natural order never has any "ideologies" because it needs no defense mechanisms.


Our forty eight state governments, from the Governors down, are in revolt against the encroachments of the federal Government and its ominous threat to state sovereignty, but their protests alone are vain. Rescue can come only by the private action of the citizen through the assertion of his money power. By such assertion the governing power will lie at the grass roots in each state and be commensurately reduced at Washington. If we do not do this the process of subjection of states and citizens will continue unto communization.

We have failed to realize that the federal Government's deficit power is its money power. By this process it has created over two hundred billions of deficit dollars, and continues at the rate of about five billions a month. With these deficit dollars it buys everything that is purchasable, and after the process has run its course through total inflation unto worthlessness of the dollar, it will own title to everything it has purchased and the people will have the paper receipts. The process may then be repeated by the creation of a new money unit. There is no such thing as Government bankruptcy, since its property cannot be levied upon, and there is no such thing as "Government debt," since everything it "owes" is but a promise to issue another promise, ad infinitum. The viciousness of political money power has never been comprehended by the people. We are being socialized by a process that is beyond our ken, and beyond the power of the Government to arrest without our aid, which can be given only by the assertion of our private money power.


To state that the officials of state governments are opposed to the expanding power of the federal Government, does not imply that federal officials are happy over it, or that it is the result of plot or evil design. It is possible that among the bureaucracy there may be some who are communist minded and who could say, "we planned it that way," but certainly there are none among our elected representatives. There is not a Senator or Representative at Washington who does not share the resentment of his state officials and the concern of thinking persons everywhere, over the serious situation that exists and the danger that menaces us. They suffer headaches and heartaches from the incessant appeals from constituents to do the impossible or ultimately harmful. At last, under the program for private action to assert the money power, a Congressman can write home to the folks and ask them to do something for themselves, and the release of the Government from its dilemma.

Until you assume your responsibility of monetizing your own labor, the Government will have an insuperable problem, no matter who its officials may be and its efforts to do for you what you must do for yourself will miscarry - and with increasing evil results. You may, in your perplexity, feel that the Government must be changed. But, it isn't the Government that needs to be changed; it's you. You must be fit not only for political self-government, but also for economic self-government. In fact, without the latter, the former is impossible. You cannot be a leaner on Government. You must stand on your own; Government must lean on you.

In asserting our money power, we will save political democracy by founding economic democracy; and will thus show the world a pattern of pacific revolution that all may emulate, and may gain thereby what could never be gained by violence, or by opera bouffe revolutions.


Economic democracy is 100% democracy; political democracy is merely the rule of the majority, leaving the minority forever tyrannized. However tragic it may be to thwart the minority - which always contains the seeds of progress, while the majority often represents decadence - political democracy can nevertheless operate in no other way.

Economic democracy, as asserted through the money power in all of us, involves no tyrannies or repressions. Each vote counts, and each voter wins the election. Elections are held in every market place, and in every town and city and farm, every hour of every day. When you exert your money power you cast the total vote in that exclusive sovereignty which is YOU. John Jones, next door, votes for the goods with the yellow label; you vote for the goods with the blue label. Neither has to yield to the other - both win. The manufacturer of the goods with the blue label may have the majority of the customers - but that doesn't interfere with the yellow label manufacturer serving the minority, no matter how tiny their number may be.

Because political democracy is unfair to minorities and economic democracy is fair to all, the sphere of the former must be minimized and the sphere of the latter maximized. This will be the logical consequence when we have asserted our individual money power and depend less upon the political means of attaining ends. Ultimately we will have complete separation of money and state - and will thus have achieved harmonious operation of the twin democracies.

Do you want to take part in this most fundamental of all revolutions to rescue both the people and the Government from a fatal error? If so, you must first of all have a one-man revolution within yourself by casting out doubts of your inherent money power and fear from any quarter. This accomplished, gang up with other like-minded revolutionaries on the intellectual plane. Start talking - not in whispers, for this is a revolution in a fish bowl with a loud speaker. It can't hurt anyone. We're not going to grab the Government; we're not even going to try to win an election. This is a cooperative and evolutionary revolution - the ins are in and the outs remain as before, unmolested in their way of life.

Begin radiating the new credo by parlor parleys of small groups. Use this book as a text book, reading and discussing the studies. Expand your number until you can meet at some restaurant or hotel where you may have the space for the price of a meal. If in a rural section, ask for the use of the county court house, or school house, or farmers' Grange headquarters. If there be other valun groups in your city or county, work out a federation or merger. Develop trade as well as social intercourse among yourselves. Keep the press and radio informed of your activities. Enlist the churches and fraternities and commercial organizations. Be methodical; be persistent.

Remember, you are agitating a revolution to end political revolutions; a revolution that once and forever will make private enterprise really free; and will give the state and federal Government a really secure and well defined place in the scheme of life - where men and women will be permitted to work out their individual destinies without political intrusions and economic limitations, and where the threat of wars will be ended.

Always hold to this basic truth and resolve:

Money can be issued only by the act of buying, and can be backed only by the act of selling. I buy and I sell. Therefore, I have the right, the power, and the duty to be a money issuer.

Government should not sell. Therefore it has no way of backing money issues. As it continues to issue unbacked money it gradually destroys the money system and undermines private enterprise upon which our life depends. Government's only alternative to the issuance of unbacked money is to back it by going into the making and selling of goods. This means government monopoly and dictatorship over all of us. Government can give us sound fully backed money. The Russian dictatorship is, as yet, the only government in the world that backs its money issues. Every ruble is backed by goods in the hands of government and available to its subjects to the extent of their meager holdings. But competition is gone and this means that man is no longer catered to; he is but a unit of man power in the machine that grinds out the means of a miserable existence without liberty and individuality. We can have sound money and stability and full employment through communism and shall have it if that is all we demand. But we must have all this with liberty and competition and free enterprise. Therefore, we, ourselves, must make our money sound and our economy stable by taking over the money issuing function and ultimately denying it to government.

This purpose must not be effectuated by an attack upon the political money system. It would be foolish to attack an existing system without first establishing a better one; and, when this is done, there will be no need to attack the old - because it will die from attrition. As more people come into the private money system, less trade will be done under the political money system; and the victory will be won purely by the test of public service and public preference. So, you see, we need no legislation or political action of any kind. If the idea of a private money system is sound, it is up to us to demonstrate it by private action.

This does not imply, however, that we do not need our public officials - even though we ask no official action. We need their help because of their public prestige and their forum capacities. Their help can be enlisted because of their sincere interest in the public welfare, and also because their cooperation with public movements leads to greater political preferment for themselves. Therefore, the Governor and all the legislators, federal and state and municipal, the mayor and other public officials, should be kept informed of the movement and invited into it. The movement should have a unifying influence upon all the elements of our society; and this will be a great contribution to our common security in the disturbing days ahead.


There is now brewing a cosmic storm that threatens every nation. Every national monetary unit must pass through the trial of inflation; and few, if any, will survive it. The dollar, which has been the North Star for international monetary navigation, is being shaken from its position; and the world will be without a standard. International trade, such as survives, will resort to whole barter; and every nation will have to struggle against the possible breakdown of money exchange, even internally. Runaway inflation and the war's end will come simultaneously - and either may precipitate the other.

The world must face a grave disillusionment. Modern governments have played an awful trick on their peoples. They have made the people believe that government - even in war - need not be a tax burden to the constituency, but can reverse the process, and, by means of an unbalanced budget, can actually reward the people. It is but a new and deceptive method of taxation that will fall upon the people all of a sudden when they try to exchange their money for goods. The collapse will be equal to all the South Sea and Mississippi bubbles and speculative collapses of history, rolled into one.

When the crisis comes, there will be a race between men and money - both seeking employment. If the money reaches the market places before the men reach the work places, there may result such a drastic and threatening price rise that manufacturers may pause for the storm to abate - and thus production paralysis may ensue while prices skyrocket. Be prepared for these contingencies. A large number of people will not listen to our program for a stable monetary unit until, in panic, they seek a storm cellar. It is imperative that the thinking, the far-seeing elements of our society begin the program for the valun before the dollar becomes too wabbly; and that they be thus prepared for the sudden onrush that may come from an inflation stampeded populace.

Chaos is a favorable climate for an emotional revolution; but not for an intellectual revolution, such as we are agitating. Let us, therefore, be fore-handed, sure-footed and cool-headed. The world has great need for these stabilizing qualities of leadership, for conditions will grow ever more critical until we turn from the political or centralized concept of money to the private or diffused method of exerting money power. With technology developing ever higher forms of labor specialization, thereby increasing the need for facile exchange, society is, under the political money system, driven toward centralized government and subjection. The only escape from this lies in the ability of man to grasp the money power and thus save civilization from decadence. The issue is - money or your life.


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