Socialized Money-Chapter I

Here's Chapter 1 from the book, Socialized Money. This chapter goes into further detail of what is meant by a socialized monetary system. I get the impression from the author that he believes that all wealth in the nation belongs to the nation and the people, as a collective. The author's position can be found in the first line of the chapter: "...civilization is made up of... people and wealth; and that wealth... is the physical extension of each human life." He goes on to say that "wealth is fundamentally social in character-a thing to be exchanged". Hence, how can any one person claim to own wealth when it is part of society. It would be like claiming another human as your personal property. Humans make up society, wealth makes up society, therefore, no one person can claim either as property. Do I agree with his position that wealth cannot be claimed as private property? Absolutely not! Wealth, in any form, can be either public or private property. It is every man's unalienable right to possess property.

On a side note, it is interesting to look at the 12 steps he lays out to achieve his dream of socialized money. How many of those can we point to as having been implemented in one form or another?

CHAPTER I

Means by Which This Socialized Monetary
System Would Regenerate Economic
Life Within the Nation

IT MAY SERVE to clarify the viewpoint in these days of economic fog, even of mirage upon the social horizon, to emphasize the fact that civilization is made up of just two grand elements-people and wealth; and that wealth, in the measure possessed, is the physical extension of each human life.

One cannot go far into the partnership between people and wealth without discovering that wealth is fundamentally social in character-a thing to be exchanged by one person for something available for exchange by another. In short, wealth is anything which has exchangeable value. It is the exchangeability of wealth, in fact, which determines its social character.

On the other hand, one cannot go far into the matter of exchange without finding that the medium by which wealth now is exchanged is non-social in character, unstable, adverse to the public interest, and overworked at moneymaking. The failure of a medium to facilitate the exchange of wealth denotes its non-social character.

People—the bright or dull, the rich or poor, the strong or weak, the better or worse, the wise or foolish—all are grouped in social unity and classified under the name Society. Wealth, however, even though a unity of all exchangeable values, classifiable as naturally as the different groups of society, is still economically a thousand and one things having independent existence in the minds of the people as well as in the policies of government.

The misconception which has obscured the unity of all economic wealth has likewise led to much governmental blundering. Particularly is this true not only of money but of the taxation travesty by which wealth is ignored as a unity of values and taxed, upon a sliding and hit-or-miss scale, as real estate, improvements thereon, personal property, selected commodities, incomes, etc., with probably one-third of the nation's total wealth having no place on the tax rolls.

But, it may be asked, what has the fact that all wealth is a unity, in an economic sense, to do with the monetary system of the nation? Even more, how can taxation have any bearing upon the subject of a medium of exchange? We shall see.

Ever since society has had need for a medium of exchange there has been in the minds of thinking people the idea that eventually, by the coordination of natural economic elements latent in society, there would be devised an ideal monetary system.

Such a concept presupposes (1) a socialized system based upon the unity of all wealth within a nation (not, however, in any way violating the right of private property); (2) a compensating and reciprocal relationship between the revenue derivable from such wealth and the medium of exchange, and (3) the employment of the means resulting from this relationship to maintain stability of the price level within the nation.

THIS MONETARY SYSTEM is founded, therefore, upon the theory that in a nation circumstanced as is the United States, with its wide political unity and superior natural advantages, the monetary system can and should be so established and maintained that the medium of exchange, the federal revenue, and the wealth of the people shall bear one to another a reciprocity of relationship. But, in addition to this broad purpose, the medium of exchange, as the substance of the monetary system, must also become the instrumentality by which the national price level—the barometer of economic normalcy—is to be stabilized.

Four socio-economic benefits attainable by no other means result from the gearing together of these factors. Principles responsible therefor, it hardly needs be pointed out, are diametrically different from those employed in the systems using gold, silver, fiat, bank currency, or a combination of any or all of them. For instance:

* * * 1. The money of this system will have the character of unconditional wealth. It will not be incumbered with promises to pay, and it will not rest upon hope of redemption,

* * * 2. Exceeding almost the possibility of belief, this socialized monetary system has power to free the federal government from subjection to funded indebtedness.

In the past the federal government has been the incubator in which was hatched, in season and out, that socially-impoverishing brood of parasites known as government bonds. Never again will it be necessary for the United States to float federal bonds, once it employs the fiscal devices of this socialized system.

* * * 3. The inherent nature of the non-social monetary system now in use causes it always to run counter to the interests of the people in so-called hard times. In fact, when economic conditions are such that the people most need a "lift," the monetary system as a social helper is even worse off than the people. Now, for the first time, this socialized monetary system makes it possible for the government to initiate naturally, and consequently without harmful after effect, the movement from depression to normalcy.

* * * 4. In the establishment and operation of this socialized system there are accomplished three paradoxical results: (1) The nation saves itself the cost of government equivalent to the total volume of the medium of exchange in use coincident with a stabilized price levels (2) incurs no direct liability for the issue thus created, and (3) the medium of exchange itself results as a by-product.

The system is bound together and made workable in the stabilization of the price level through additional provisions, as follows:

1. An exclusively national medium of exchange.

2. Only one kind of major money, with the silver half-dollar the largest subsidiary coinage.

3. Demonetization of both gold and silver.

4. Issue and control of the medium of exchange to be solely in the government.

5. Complete divorcement of the monetary system from bank participation, and conversion of the Federal Reserve into an administrative branch of the federal treasury.

6. Restriction of credit inflation by banks.

7. The eleven different kinds of circulating medium in the United States to be retired and replaced with stabilized wealth certificates, the major money of this system.

8. Bond maturities and interest payments thereon to be payable in stabilized wealth certificates maintained in the United States at 100 cents on the dollar.

9. The dollar would rest temporarily on the prevailing unit of value. Eventually it would be standardized at 100 units of average commodity value, determined by index numbers supplied by the federal statistical department.

10. Governmental exchange guaranties applicable to exports and imports would be negotiated with other nations in the interest of international commerce.

11. The government would maintain a "treasure chest" of precious metals mined in the United States, so as to conserve this form of wealth to the nation.

12. The integrity of the system would be safeguarded by legislation as found necessary (a) more fully to socialize the wealth of the nation under capitalistic auspices, and (b) to eliminate investment practices destructive of stability of the price level.

LET US NOW COME to the point which gives to this medium the unquestionable character of social wealth for public and private uses. First, this medium comes into existence in payment of the cost of government. It may be issued in amount fully to meet the needs of a stable medium of exchange, with its cost to society merely contingent. Thereafter it would be expanded or contracted according to the direction and measure of control necessary to stabilize the national price level. This medium, therefore, may be described as possessing the character of stabilized wealth certificates. As previously stated, these certificates are first issued and enter into circulation in payment of the cost of government—or, in payment of services performed for or wealth conveyed to the government.

Without losing sight of the bona fide mediumship in exchange of these stabilized wealth certificates, it may help to convey a clearer understanding of the manner in which they are issued and paid out for cost of government if they be compared with warrants issued by states, counties and cities subject to future redemption. The distinction should be borne in mind, however, that a warrant, being the obligation of a political subdivision and the responsibility of local government, is legal wealth only in that it is convertible at a later date into monetary wealth. In the case of stabilized wealth certificates issued as legal tender by the sovereign right of the federal government, on the contrary, both their nature and conditions make them actually certified wealth-in fact, a part of the entire wealth of the nation, because they have at one and the same time paid the cost of government and left in the pockets of the people wealth which otherwise would have been taken through taxation to pay such cost.

The warrant was brought into comparison with the stabilized wealth certificate to illustrate the point that the medium in which public obligations are discharged is wealth. It was the purpose also to show that while the warrant is conditioned as to future payment, the stabilized wealth certificate has been prepaid by society assuming the obligation of its stabilization—or, the maintenance of its purchasing power at 100 per cent in terms of average commodity value.

As previously stated, a wealth certificate is not redeemable; it has already been paid for. This is true because collection of revenue by means of taxation, which would have been collectible to pay the cost of government cancelled when the certificate was issued, has been deferred, payable when and as needed to effect stabilization of the price level.

Assumption of the cost of stabilization, it will be seen, is the consideration which the government accepts and the people guarantee in exchange for deferment of taxation—or, postponing payment for a thing until it is due.

Stabilization in this manner—which, in fact, is the only manner in which it can be effected by means naturally available—calls for this new use of the principle of deferred taxation. Deferred taxation as here employed leaves in the pockets of the people money which government, by availing itself of a fiscal resource heretofore unused by society, has no need to spend.

Stabilization in the economic sense, therefore, it must be conceded, is not attainable as an establishment, or as something once ordered and delivered always available and operative. Stability comes only in the course of maintenance.

The subject of stabilization, and particularly the method of stabilization under this plan, will be discussed more in detail in a subsequent chapter.