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,
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
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.
BAD BETTER THAN NONE
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.
MONEY POWER IS SOVEREIGNTY
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.
INCOME OF THE EXCHANGE
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
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.
NO ATTACK UPON POLITICAL MONEY
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
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
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.
[Contents] - [Next section: X. FROM STATE TO WORLD OPERATION]
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