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
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
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.
COMMUNISM FROM SANTA CLAUS
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.
DECLINE OF BANKERS' POWER
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
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
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.
CONGRESSMAN WRITE HOME
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
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
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
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.
THE COMING STORM
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
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.
Federal Reserve Note.
Backed by nothing.
| Gold & Silver Never Lie.