There are several reasons why organization of Valun Exchanges should be state-wise.

It is natural for us to think, both economically and politically, in terms of state areas. The state is our primary political unit. Our state constitutions are written on a pattern of supremacy; with towns, cities, counties and other local units receiving their grants of power from them, rather than direct from the citizen. The sovereign power of the citizen rises to the state government; and from there it is delegated upward to the federal government, and downward to subdivisions. We are, first of all, citizens of our respective states; and this implies citizenship also in local and national governments.

The thirteen original states were nations that agreed to enter a league of nations, called the United States, in which the citizens of each would participate in the election of the lower house of Congress; and the state legislatures would elect the members of the Senate. To remove the greatest element of disturbance between nations, the states agreed to set up no trade or immigration barriers at their borders. To effect solidarity, they agreed to delegate to the federal government the right to declare war and make treaties with other nations. To promote internal trade and unity, they agreed to abstain from making anything but the money unit of the federal government, legal tender in their realms. The intent, however was to remain sovereign powers; the Federation was not a merger.

When, by the revolution, the thirteen colonies became independent states, each had its own money unit; and thus exchange between the states was foreign exchange, requiring translation of one unit into another. The advantage in abolishing this multiplicity of monies was obvious, but the implications involved in surrendering the money issuing power to the federal government was not comprehended. The gain to all in uniformity of money unit was visualized; the loss in sovereignty thereby suffered, was not;

We now realize that the money power of the private citizen is in fact his sovereignty; and that in yielding it he yields his sovereignty. Thus the transferring of the money power from the states to the federal government was the transferring of the citizens' sovereignty to the national government, and the reducing of the state to the status of a subordinate.

The political money system implies that the citizen will abate his natural money issuing power, and make the criterion of his exchanges and the regulation of the money system entirely dependent upon the government that he recognizes as the money power. By making the federal government the sole money issuing power, the individual states transferred the fealty of their citizens to the national government, because they became thereby dependent upon its money power. The citizen having thus had his fealty transferred to the national government, it was taken from the state governments - and the latter are now dismayed by the increase of federal power and the commensurate subordination of state power.

What has actually transpired is a reversal of the intent of the federal plan whereby the national government was to be dependent upon the states for grants of power. The national government, through its money power, is now supreme and in reality holds the state governments, in subjection to it. Federal fiscal policy now determines the bounds of state sovereignty.

It took many years to reveal this structural weakness, because, in the earlier days of the federation, the economy depended more upon the private issuance of money through the banking system, and thus federal fiscal power was dormant. The policy of the federal government up to 1932 was to leave to the banks the function of supplying money. During the Jackson administration, with the abolishment of the United States Bank, government participation in money supply reached its lowest point - with the government confining itself to the mere minting of gold and silver coins at a seigniorage charge to any one who brought the metal to the mint.


These were the days of wild-cat banking by state authorized banks - when the paper circulation was almost wholly private bank notes issued by irresponsible banks that relied on the old goldsmiths' law of averages, and issued far more promises to deliver gold or silver than their resources would permit. As we have previously pointed out, money will and must manifest itself in bad form if it cannot emerge in good form; and this alternate method has by no means been adverse to the development of industry. The wild-cat banking era was a very prosperous era as has been every era of money expansion. To be sure, they have all been followed by reaction when the falsity of the basis of issue was discovered, but the net result has been beneficial. Man must have easy exchange if he is to progress; and even if he must be deceived into it it is nevertheless better for him. Nothing is so adverse to man's progress as lack of exchange; and the most faithful money system, if inadequate, is worse than a faithless one that induces exchange.

President Jackson's idea of confining the government's participation in the money system to the mere certifying of fineness and weight of gold and silver coins was the original concept of government function when political money began, and from that modest participation to the almost exclusive money issuing function of the present day government, is a very wide swing of the pendulum. Experience has shown that both the conservative and the extravagant policies are evil; and that median policies merely partake more of one evil than the other.

Had the Jackson policy, of letting the economy depend upon private money, been accompanied by strict regulation and examination of banks, the result might have been worse because there is an inherent dishonesty in private money under the political money system. For a bank to issue credit payable in government dollars that are not available is just as dishonest as is the issuing of currency notes payable in gold coins that are not available. But the dishonesty cannot be eradicated; because to authorize banks to make loans payable in "bank dollars" is to give them the power to expand the money supply indefinitely, with no corrective action such as follows in the periodic deflation or depression phase of the business cycle as the result of loans in "dollars."

The Jackson policy of private money was later implemented by strict regulation of the banks. This long effort to make a virtue out of a vice culminated in the Federal Reserve System, and reached its climax and denouement in 1929 showing that the wild-cat banking was no worse, with its irresponsible issue of currency notes, than is the modern banking method of issuing check writing power based on false promises to deliver government dollars.

In 1932 the exploded Jackson policy was abandoned; and then began the new government policy which is rapidly approaching its collapse. Under this policy, of unlimited money-issuing power, the government asserts over the community a financial dictatorship which subordinates not only the citizen but all the other divisions of government. All become suppliants to it and there is no thwarting of its power short of exhaustion through total inflation. It is a policy of buying acquiescence. As outlined in previous studies, local governments as well as citizens become suppliants to it and therefore subjects of it.


The states, to recapture their independence and sovereignty, must look to their citizens who, in turn, must assert their sovereignty by exercising their inherent money power. It was right that the states should have surrendered their money power; but they should have surrendered it to their citizens, and not to another government. At the time the federation was formed the nature of the money power was not understood; and it was not realized that it is the essence of sovereignty. But we know now that it is and if we wish to preserve the federation and also home rule, we must now deal intelligently with the money power.

While the states have surrendered their money power, their citizens have not. The citizens have merely failed to exercise their natural powers against which there is no prohibition in either state or federal constitutions. This is not a political issue - requiring legislation or repeal of legislation, or constitutional amendments, or any official action - but it is, nevertheless, a profound political movement; because, as the people assert their money power, their natural intimacy with their state and local governments asserts itself - since there is no other power that can step between. Today, the federal government stands between the citizen and local government, and thus alienates him.

If our states are to develop their individuality and counter the stereotyping influence of a monetary dictatorship, if local government and private enterprise are to work out their natural virtues, if democracy is to prevail in business and government, and if our federal republican system is to survive, we must meet our problems by dealing with their fundamental causes - the political money system.

To accomplish these broad and vital aims, the Governor or some other public official should take the leadership of this cause within his state. In the absence of this, leadership must be taken by private citizens. It offers an incomparable opportunity for public service.

While the money issuing power is inherent in every man, it can be realized only by a pact among many. Therefore, the individual is helpless, and organized action is necessary. The method of organizing a Valun Exchange should be no different from organizing any other cooperative movement. It requires only the concurrent action of a sizeable number of persons and corporations who share its aims - and this, of course, requires propaganda.

The first essential is the organizing of a "Money Plan Committee" to sponsor the propaganda. This committee should be composed of not less than 12 persons of as conspicuous standing as possible. The larger the number, the better. If possible each county or at least each congressional district should be represented.

It should locate in the largest metropolitan center in the state which should also be the location of he Valun Exchange when organized. Funds should be raised by contribution. The press, radio, mails and forums should be utilized to apprise the public of the plan to organize a state Exchange to carry on money exchange by the valun non-political, private enterprise money system.

After a reasonable amount of publicity has been had, "The Valun Exchange of the State of _________" should be incorporated as a non-profit membership corporation. It should provide the following officers: President, several vice Presidents, Secretary, and Treasurer and a Board of Directors of five or more, with the officers as ex-officio members of the Board. The officers and directors should be named by the Money Plan Committee, to hold office for the first six months after beginning of operations - after which the first members' meeting and election should be held. Nominal salaries should be paid to all officers and directors, pending a resolution to be presented at the first members' meeting setting salaries for the ensuing 12 months. The organization of the exchange should be in strict democratic form, with one vote for each member whether individual or corporation.


The Exchange should depend for its income and expenses upon a charge for check clearance. The fee for membership should be nominal and the same for individuals and corporations. The membership subscription should pledge the member to abide by the rules of the Exchange as adopted by the Board and the obligation to pay a charge for each check cleared as may be determined by the Board. All persons residing or transacting their business within the state would be eligible to full membership. Each county in the state should elect to the annual meeting of members a delegate who would be empowered to cast the entire vote of his county.

The membership drive should begin only after adequate advance publicity has been had and should not require more than 60 days to complete. Every chamber of commerce, as well as other organizations, should be enlisted in the drive; and quotas should be set for each county. It is essential to enroll the farmers as well as urbanites. The larger employers should be enlisted to enroll their employees.

The membership enrolment should state whether the applicant is employer or employee; and, if the latter, the name, business and location of the employer. If employer, the nature of the business and the number of employees should be stated.

Each employer should agree to pay his employees in all valuns or all dollars, or part in each as each employee requests; but each employer should, for his own convenience, undertake to have his employees agree upon a uniform method of handling the payroll. Study No. 6 outlined how "Valun Currency Counters" will supply exchange of valuns for dollars, or vice versa, for persons finding themselves short on one and long on the other.


The Exchange should not begin to function until the three trades essential to life are well represented, namely; food, clothing and housing. A complete cycle should exist in each. By this is meant that the food and clothing industries must have ample retailers to accept valuns from employees and the retailers must in turn have wholesalers who accept from them, and manufacturers who accept from wholesalers, and farmers who accept from manufacturers and packers. Farmers must in turn have local stores or mail-order houses to trade with. Landlords must have suppliers who are members. If these three lines are well represented, the ordinary processes of exchange will cause the system to ramify and expand naturally.

A condition precedent to opening and operating the Exchange would be the determination and adoption of the valun unit. This was dealt with in the previous study.

While the valun will circulate mostly among members, it will not be confined to them - as there will develop naturally an outer rim of dealers who will accept them because they know that they can either pass them to some member of the Exchange, or sell them for dollars to "The Valun Currency Counters." These outer rim acceptors will sooner or later join the Exchange so that they may enjoy its facilities.

When the Exchange opens, each member will receive a check book and will be entitled to draw checks within his debit limit - in accordance with the rules of the Exchange as outlined in Study No. 7. For currency in bills and coins they will present checks to the Valun Currency Counter in their neighborhood.

Any person or corporation or institution outside the state would be entitled to part or credit (Class B) membership. The distinction between debit or full (Class A) membership and credit or part membership is in the power of the debit or full member to overdraw his account; while the credit, or part member, can draw checks only if he has a credit balance on his account. These two classes of members will hereafter be called class A and Class B. The reason for the class B is to permit membership anywhere outside of the state without the necessity of the Board passing upon the debit power to be extended to such members. As Exchanges are opened in the states of such members, they could transfer their account to the local Exchange and thus classify as a class A member.

As Exchanges open in other states they would be joined with existing Exchanges for clearing purposes under central control - as will be explained in Study 10.

Members could not, of course, switch their business completely from the dollar to the valun at the outset. Therefore they would be obliged to quote prices and buy and sell in terms of dollars with non-members, while utilizing the valun in all dealings with members.

Business with the Exchanges would be transacted entirely by mail - making it unnecessary for members to visit the Exchange or to have more than one Exchange in a state. Valun Currency Counters would be in trade neighborhoods - thus obviating branch Exchanges, and minimizing the overhead cost of the system. The Exchange could be located in a loft. The cost of operating the Exchange would be minimized, and thus the pro rata charge for check clearance would be small. There would also be a small charge for converting checks into currency, or vice versa, but these fees would go to the private dealers authorized to operate Valun Currency Counters.


The departure from the political money system does not contemplate any attack upon it, nor any interference with those who wish to continue to use it exclusively. The purpose is merely to demonstrate that a more stable and equitable unit can be established by private enterprise; through which its users will gain command over their economic and political affairs. If this can be demonstrated, accretion to the valun system, and attrition of the dollar, will automatically determine the issue. It is believed that ultimately political money will be abandoned everywhere because of lack of use. State, city, town, county and district governments, as well as the national government, would be entitled to membership in the state Exchanges; but, as explained in Study No. 10, they should be allowed only class B membership.

As the valun system develops within a state, the state government will retrieve the power and prestige it has now lost to the federal government; and the two would fulfill their respective functions with neither having control over the citizen. Both would have to win his support by service because the sole method of taxation of both would be on a cash basis. No financial finagling would be possible. This would give the state government a fair break, and destroy the bureaucracy that has harassed both it and private enterprise.

The Governors of our forty eight states are unanimous in their denunciation of federal bureaucracy and centralized government. There is in fact a Governors' rebellion against these conditions but the rebellion will be futile unless the attack is directed against the fundamental cause - the political money system. The states cannot maintain their sovereignty so long as the federal government controls the supreme governing power - the money power. There should be a common cause between state officials devoted to the preservation of home rule and business men devoted to the preserving of private enterprise. There must be political and economic statesmanship to bring the general protest against prevailing conditions to a successful consummation. The states rights movement, to accomplish its purpose, must aid the citizen in invoking the money power.

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