My posting of the 1870 Mutual Banking has already brought forth interesting fruit. Adrian Kuzminski, who is interested in Edward Kellogg, sent the following via email. For now, I simply want to clarify what I know of the Greene-Kellogg relationship.
It is clear that Greene read Kellogg, whom he cites several times in his essays entitled MUTUAL BANKING, apparently first published in 1849. Kellogg, who died in 1858, began publishing his views in 1841. Greene’s first essay in MUTUAL BANKING, “The Usury Laws,” seem to be largely a gloss on Kellogg. He not only quotes Kellogg’s assessment of the concentration of wealth in Boston, but also uses examples, even turns of phrase, found in Kellogg.
For those who don’t know the texts, and their publishing history, I’ve recently reviewed the intricacies. My pdf edition of Equality includes footnotes with indications of where Greene has made uncredited borrowings from Kellogg’s Labor and Other Capital. I intend to do full collations of the texts as soon as I finish scanning the latter work. (For the record, there are also uncredited borrowings from Pierre Leroux’s De l’humanité in that volume, and from William Beck’s Money and Banking in the 1850 Mutual Banking.) Greene certainly read Labor and Other Capital, and may in fact have been aware of Kellogg’s earlier work. In 1843, Kellogg sent Orestes Brownson a copy of his Usury, the Evil and the Remedy. At time, Brownson was becoming more distant from Greene and other radicals, writing for the The United States Magazine, and Democratic Review the articles that would lead to his break with both reformers and Protestants, but the break had not yet been made, and Brownson maintained fondness for Greene, to whom he had been a mentor, even afterwards. It is also possible that Greene was aware of the debates surrounding Kellogg’s work in Hunt’s Merchants’ Magazine and Commercial Review in 1848. (Initially, Kellogg appears under his “Godek Gardwell” pseudonym. See Kellogg’s publishing history. Usury, the Evil and the Remedy is an awkward, oversized publication that poses some scanning problems, but will eventually appear in the Libertarian Labyrinth. Kellogg’s earliest publication, Remarks Upon Usury and its Effects: A National Bank a Remedy (1841), is already available online.)
Kellogg’s fullest views were published only in 1861 in a postumous edition put together by his daughter and entitled A NEW MONETARY SYSTEM, but his earlier work was summarized in 1849 as LABOR AND OTHER CAPITAL. I see no discrepencies here, only a consistent evolution.
A New Monetary System is available online, and I have discussed it a bit in an earlier post.
Greene, I think it’s fair to say, agrees with Kellogg’s assessment of the burden of usury and its fundamental role in concentrating wealth. But he gives a different account of the origin of usury and the nature of currency;and though he offers a somewhat similar remedy in his notion of mutual banking, important differences remain.
Let me explore these issues in turn.
As far as currency goes, Greene focuses on its role as a medium of exchange. Kellogg, by contrast, focuses on the nature of currency, or money, as a debt. But there need be no conflict between these views, as Kellogg makes plain.
In the essay on “Money,” Greene quotes Kellogg to the effect that the value of money “depends upon its power of being loaned for an income.” Greene tells us that Kellogg is “mistaken” in this, and that its value can and should lie wholly in its use as a medium of exchange.
Greene misunderstands Kellogg here. For this is precisely Kellogg’s point: The lower the rate of interest, the less value money will have. At zero or nominal interest, money has no intrinsic value, being useful only as a counter and measure for purposes of exchange, exactly as Greene desires. Anyone reading either of Kellogg’s books will see this clearly, which leads me to suspect that Greene did not read Kellogg with a clear eye, but a prejudiced one. More on this below.
I think there is much in both Greene and Kellogg that is far from clear. For his part, Greene is frequently unfaithful to his sources, taking or taking seriously only what seems to advance his own project. I’ll have to look back at Kellogg, but there still seems to be more than just a difference of perspective here.
It is the whole burden of Kellogg’s work to show that it is the power of interest or debt or usury which gives money per se its value, which is precisely the reason to eliminate interest on money. Kellogg wants the same thing Greene does, and it’s a pity Greene’s misreading of Kellogg makes it seem otherwise. It may have had something to do with the relative obscurity into which Kellogg subsequently fell.
It strikes me that Kellogg probably had more actual influence than Greene did, as Chester McArthur Destler has shown in his American Radicalism, 1865-1901, Essays and Documents (1946). Greene’s objections to Kellogg certainly had little influence on the promotion of Kellogg’s work in The Word. Mary Kellogg Putnam had connections to the individualist anarchists and Kellogg’s work even gets a few fairly friendly mentions in Liberty. And I can’t think of a single posthumous review of Greene to match treatments like William Butts’ 35-page review in The North American Review for January 1873.
It’s worth pointing out that money remains intrinsically debt even without interest, insofar as money outstanding is the claim society allows itself to make against goods and services on the market which must be replaced to continue the process. (Frederick Soddy is good on this.)
As far as usury is concerned, according to Greene, in his essay “The Currency,” it is a function of specie currency: “. . . the objection to the use of precious mentals as currency is, that, as soon as they are adopted by society as a legal tender, there is superadded to their natural value this new, artificial and unnatural value. . . . usury depends for its existence upon this superadded. social, unnatural value, which is given artifically to the material of the circulating medium.”
Greene’s presumption seems to be that since precious metals are commodities which can be controlled by a few persons, their sanction as legal tender or as money exclusively, gives those persons control over the money supply and therewith the power to charge interest, or usury.
Kellogg has a broader view, which Greene seems to miss. It may well be that control of precious metals helps encourage usury, but this can happen only if usury is already permitted by law. Usury, as we see painfully today, thrives as never before not under any precious metal regime, as Greene expects us to believe, but under fiat money.
Kellogg recognizes that state power can either prohibit or enable usury. He shows with great clarity the economic benefits to society as a whole which would follow the legal abolition of usury. It may be that Greene, more or less committed to Proudhonian anarchist principles, is anxious not to admit any role for state power, even if that power be democratically accountable in the best sense. So he has to find a cause and remedy for usury somewhere outside state power, and he chooses precious metals. Here seems to be an instance of political dogmatism distorting the analysis of money. I can explain Greene’s misreading of Kellogg only by reference to his philosophical commitment to anarchism.
If Greene is misreading Kellogg, part of the problem is undoubtedly that Kellogg’s work needed some of the clarification which it received posthumously. I’ll confess that some things which seem crystal clear to Kuzminski are going to require another look on my part. The emphasis on the “superadded” power of specie as currency is, in part, a borrowing from William Beck. (Microform reproductions of Beck’s book are very imperfect, and it is taking some time to get a good electronic text edition together, but the microfilm, such as it is, is fairly widely available through interlibrary loan and worth a look.) It is also certainly the case that Greene’s engagement with Kellogg was conditioned by prior commitments to a mutualism derived in large part from Leroux and Proudhon.
It goes even further. In the effort to avoid state power, Greene comes up with private mutual banking, the centerpiece of his response to usury. Kellogg’s solution to usury, by contrast, is to create by national law a decentralized public banking system which issues notes to all borrowers with good collateral at zero or nominal interest, those notes then circulating as a new currency (his ‘new monetary system’).
Greene’s mutual banking system looks suspiciously like an adaptation of Kellogg’s system to Proudhonian anarchist ends. The central insight of a currency based an a system of local public credit offered at zero or nominal interest is taken straight from Kellogg (without, incidentally, giving Kellogg any credit). But instead of a locally run but nationally regulated system, Greene offers us a series of private or mutual banks, which issue precisely the same kind of non-interest credit to their members as in Kellogg’s system.
It’s important to remember just how active the debates on “usury” were in the period following the Panic of 1837. Greene would have been pushed in the direction of the abolition of interest proper by a variety of influences, both secular and religious. As for the origins of the mutual bank idea, Proudhon’s Bank of the People is probably the most significant influence, and the one which continued to influence mutualists and individualist anarchists. (Through texts such as Henry Cohen’s Proudhon’s Solution of the Social Problem.) And the precedents for nearly all the contenders are the land banks of the 17th and 18th centuries. Greene did indeed steal a bit from Kellogg, but the issue of nominal interest looks like the practical goal of many of the mutual banks.
After presenting a summary of Proudhon’s Mutual Bank, Greene mildly raises some objections, mostly concerning how Mutual Banks might be regulated against various abuses. He might also have asked, but does not, what is to prevent mutual banks, once they have achieved control of the currency, in the absence of any state control, from raising interest rates and reintroducing usury?
This seems to involve some misunderstanding of the nature of the mutual bank. What motive would members of the mutual banks have for raising interest rates on themselves? Greene takes pains to make it clear that the nominal user fee associated with the monetization of mortgaged goods in not, properly speaking, interest, and that there is no separation of interests in the mutual bank between the “lenders” and “borrowers,” as they are the same group. The commitment to anarchist (more properly and less anarchronistically mutualist) principles is not just a prejudice here. Greene attempts to avoid the issue of representation, by which a real or apparent separation of interests might arise within a state banking system, and to establish the mutual banks as voluntary counter-institutions.
Kellogg, by contrast, envisions a system of non-interest public credit and currencyestablished by law and administered locally. It is a public or state run operation, accountable to a presumably democratically responsible government. Usury would be prohibited by law.
Greene’s sections on “The Usury Laws” deals with the problems of such legal prohibition. I’ve also posted a William Cullen Bryant essay on the same topic. It was precisely the efficacy of such prohibitions that was the subject of so much debate in the period when Greene and Kellogg were both active. More than just a commitment to mutualism is at stake in Greene’s position.
I want to thank Adrian for his comments, and hope we can pursue some of these questions in more depth.
