Lewis H. Blair on free currency

The right of the individual to do as he pleases with his own is an axiom with us. Trespass alone limits this right, and provided one does not trespass, one may by competition or otherwise ruin one’s neighbor. But notwithstanding our axiom, and notwithstanding we place little restriction upon this right, there is one thing individual may not, must not, do. One may freely fashion one’s gold and silver into ring, watch, spoon, &c., and pass or sell at alleged weight and fineness, but one may not, must not, without crime, fashion into coin and pass or sell at alleged weight or fineness; and one may also freely issue and sell time promises to pay, but one may not., must not, without crime, issue and circulate demand promises to pay.

Slightest thought should show the injustice and absurdity, and therefore injury of such prohibition; but as some cannot think, and many will not think, these perceive neither the injury, injustice nor absurdity, and as the few who do think qualify their perceptions With so many imaginary and impossible fears they might as well not think. Hence, all unite in preventing individual doing as he pleases with his own, respecting coining money and issuing circulating promises to pay. All fear to permit right and leave consequences to righteous nature, lest nature stultify herself and bring evil out of good.

To prevent right is to commit wrong. Now, what is government that it can righteously prevent one doing as one pleases with one’s bullion and putting one’s property into such shapes as one pleases? Government is not, as generally supposed, a mysterious, omnipotent creature whose simple fiat makes right and wrong, but is merely an aggregate or collective individual. Aggregation of individuals into government does not impart to the aggregate a different nature from its component units, nor rights different in kind, however in degree, from said units—no more than aggregation of seeds of wheat until they fill an elevator changes the nature of the grain. Government differs from the individual only as the grains from the mass—that is, in degree not in nature. How, as righteous individual cannot arbitrarily prevent individual doing as he pleases with his own, so neither can the aggregate individual or government righteously prevent its individual units. Or, if the aggregate can righteously control its individual units respecting coining money and issuing circulating promises to pay, and should do so, so can and so should it in every respect; unless, indeed, government is not an aggregate individual, or that mere aggregation confers rights or a nature unpossessed by its component units.

But the aggregate individual or government forbids the exercise of individual right in these respects on the ground of trespass, assuming that worthless money would then “flood the country,” that people, not knowing good from bad money, would refuse to accept it; that business would be stopped and ruin follow, or that if accepted, that all, but especially the ignorant poor, would be daily swindled—every man being either swindler or swindled, and finally all swindlers. Why such direful results should follow, the exercise of a simple right can only be explained on the ground that people are either imbecile or dishonest. Let us examine the objection.

It is undeniable that checks, which are entirely of individual coinage (coinage being simply putting into convenient shape for circulation) are money; that checks do vastly more monetary work than all governmentally-coined specie and notes and corporation-coined notes, and that checks are vastly more essential to progress and welfare than specie and notes. Money in its conventional sense of specie and notes might be obliterated, and commerce would hardly miss them; because commerce is mainly conducted by individually coined and issued money—namely, checks. Indeed, in August, 1393, conventional money—viz., specie and notes practically disappeared, yet business, judged by bank clearings, vas not greatly curtailed, and the curtailment arose from distrust and not from insufficiency of checks. Melt every government coin and strike never another, burn every governmentally-controlled note and print never another, and leave money to individual initiation and control, and then, but only then, will cease the interminable dissensions about money because public convenience will then see that money will always be proportioned to the needs of business.

Now if the poor and ignorant have not been swindled by this individually coined and issued money—namely, checks—if the public has received it freely to its advantage, and if without this individually-created money progress would have been impossible and decay inevitable, why should untold—why, indeed, should any injury result from extending individually-coined and issued check-money to individual coining his own bullion, and to individual putting his own property into a circulating shape. Conversely as unrestricted issue of checks has enormously increased human welfare, why should not farther extension to unrestricted coinage of one’s bullion and unrestricted putting one’s property into circulating shape still further increase human welfare? It would, but unfortunately we forbid. But prevention having lamentably failed, because monetary solution is confessedly as remote as ever, liberty cannot be worse. Let us, therefore, try liberty, and as liberty has assured success in all other business, we may rely upon it assuring success in coinage and currency. Let us look further.

INDIVIDUAL COINAGE

Assuming imbecility and dishonesty as usually done, but ordinary common sense, no more embarrassment nor damage should result from individual coinage than from individual checks. We know neither the weight nor fineness of governmental coinage, but we accept it from general appearance, and seldom are even the poor and ignorant deceived; and so would it be with individual coinage, and inexpensive scale and gauge would easily allay doubt. Really, however, governmental coinage, except our silver coinage, is private coinage, because the bullion is owned by and coined for the individual, and the government that made it repudiates it if clipped, sweated, worn by use, or defaced by simple device or even letter, and individual to avoid loss must be watchful, but he need be no more watchful regarding individual coinage. Whatever teaches watchfulness is beneficial. But watchfulness, like all habits, would become automatic, and would be practiced without effort. Fools pass on and are punished because not watchful, while the wise pass over the same route and are rewarded because watchful. Insomuch as individual coinage promotes watchfulness will it be beneficial.

“But individual coinage would bewilder and betray by its variety.” By no means; because, though every one could and might coin of different weight, fineness, shape and device, yet it is improbable that coins differing much from present coinage would be struck. Public taste and convenience which has determined dollars for us, sovereigns for Englishmen, francs for Frenchmen, &c., and a circular shape for all, would settle that. As stated, we would judge individual coinage as we now judge governmental coinage, by appearance, but scale and gauge would assure certainty, because if scale registered correct weight and gauge correct size, there could be no deception. Owing to great expense of a mint, there would probably be few or no individual coins, but bullion-holders would carry their bullion to corporate mints just as holders of ore send their ores to corporate smelters for refining.

But why not let coinage remain under governmental control? Because governmental control is trespass against the individual; because government should no more supply coinage than food, clothing, vehicles, or even wives; because government has no more right to forbid its component units to put bullion into coin than wheat into flour or cotton into cloth, &c., &c., and because when government punishes the individual for so doing it becomes as real a malefactor as highwayman who holds up train.

Individual coinage would promote public and private morality, because circulating by virtue of intrinsic value and not by virtue of force, it would destroy “legal tender,” always possible and sometimes actual robbery. Legal tender is a perpetual menace to honesty and a perpetual temptation to dishonesty, and individual coinage, removing both menace and temptation, would, as stated, promote morality. Legal tender is substantially a device whereby creditor may exact more or debtor pay less than is equitable. The strength of silver legislation has been legal tender. Free coinage was demanded because legal tender would permit payment in an inferior medium, and free coinage was resisted to compel payment in a superior medium. But for legal tender, the Bland bill, the Sherman bill, and silver agitation and legislation, the cause of untold injury, would never have been. The monetary problem will remain unsettled so long as legal bender stands in the way. Legal tender should be may, not must. That is, government may prescribe what, in the absence of stipulation, shall be legal tender. For example, government might enact that “bankable funds” should, in default of stipulation, be legal tender.

Individual coinage would always assure specie “commensurate with the needs of business,” because then both silver and gold would circulate freely, side by side, at market value. With compulsory legal ratio they cannot circulate freely, and thus the world loses the services, partially at least, of the metal that chances to be dearest. Except with us, the world is now deprived of the use of silver, but we use silver at great peril, because its legal tender value is so much greater than its bullion value that creditors are constantly exposed to spoliation from inability to maintain the legal ratio. The fear of this inability principally caused the unparalleled financial and commercial disaster of 1893. Specie would then fluctuate in value with its parent bullion, like flour with its parent wheat, but no more inconvenience would arise from one than from the other. In spite of legal tender, however, specie does and must in the long run fluctuate with bullion. Prices would then be in gold’ silver or currency, or indifferently in all or either, just as, before resumption, prices were in gold or currency. Standard coins would likely bear present names and general appearance, and would always mean a definite weight and fineness, and any variation above or below standard would be settled by custom, like cotton contracts are, namely, a contract for a stipulated quality may be satisfied by grades above or below contract by paying or receiving a specified difference. Custom would solve all difficulties arising from individual coinage.

INDIVIDUAL ISSUE OF MONEY.

By individual is meant person or corporation. Individual issue of circulating notes in no wise essentially differs from individual issue of circulating checks, because, though generally checks circulate only between issuer, receiver and bank, they often change hands many times before cancellation, and in Great Britain “crossed” * checks circulate as freely as bank notes. No injury arises from individual circulating checks, but, contrarily, great benefit; and so would it be with individual circulating notes. The objection that people would be bewildered and defrauded by the multiplicity of such notes is groundless, because not being legal tender, nobody need accept then, and, few would unless they knew maker or payer was responsible. Ordinary prudence and discrimination would amply protect. As a fact, there would be little individual issue, because corporate issue would be preferred. With little or no demand, not even good men, much less rogues, would be able to damage or defraud a trusting public. No one need be defrauded unless he wished to be, because individual issue would ordinarily be strictly local, and every locality would know its rogues and reckless men too well to accept their circulating promises, or if they did, they would deserve to lose.

The fear of “wild cat” banking is chimerical. No analogy exists between now and fifty years ago when people were defrauded by “yellow dog” notes, &c., though by no means to the extent charged and supposed. Then in the greater part of the country specie was almost unknown, and what we had was mostly slick Spanish quarters, ninepences and fourpences, and even these were scarce; so the people had to use risky currency. But now gold is to be had for the asking and silver goes a-begging, and therefore no necessity exists for accepting any note. Say “No” and specie is at once forthcoming. If people wish to be defrauded they will find now many to accommodate them, but it would be no worse under individual than under governmental issue. No law can protect such people, either then or now.

Individual issue would prevent currency famines with their inseparable disasters. Thus could person or corporation have issued notes last summer, they could, as circulation was withdrawn, have supplied the vacuum, and they would have done so, because every locality would have paid handsomely for the issues of its banks or wealthy citizens; but because this natural right was forbidden, currency disappeared, most banks were virtually under protest, and general bankruptcy was averted only by forbearance of creditors. Indeed, currency would not have been withdrawn if known that it could have been replaced by individual issue.

While bank issues would generally be preferred, there are many times, places and occasions when individual issues would be useful. For example: For six months each year there is almost complete dearth of money throughout the South, and all business is thereby curtailed and much business stopped. Now, every town has some bank, banker or individual whose issues at such period would readily circulate in its neighborhood, and all or many localities doing the same, there would then be a satisfactory local circulation supplying local needs as effectually as greenbacks or specie. If no demand, there would, of course, be no issue, but if a demand, it would, of course, injure to prevent the demand being supplied. Such issues being strictly local, the people would not likely lose by fraud or recklessness, because they would know who were reliable or reckless, and would therefore be forearmed. The South now pays Northern bankers heavily for money to move its cotton, &c. These local issues would lessen, if not altogether stop, this heavy expense. In the autumn, when greenbacks and specie sought the cotton, these issues would be retired or not, according to public convenience. As acceptance of individual issues would he optional, they could circulate only as found useful. To prevent their issue is therefore a public injury. To prevent all but governmentally-controlled corporations to convert cotton into yarns or cloth or wheat, into flour, and then arbitrarily to restrict production and make it a grave crime for individual or unofficial corporation simply to have in possession spindle or loom or burr, would be justly considered not only an injury, but a crime. But Government commits a similar injury and crime when it arbitrarily regulates banks and restricts their issues and makes individual possession of die or plate, and much more their use, a crime. To prevent right is to commit wrong, and to prevent the useful is to produce injury. When, therefore, Government prevents individual right to coin money and issue notes it becomes a trespasser, an evil-doer, and when it prevents individual from doing these useful things (if not a public convenience it could not be done) it injures the public. Nature resents and punishes interference, and to prevent exercise of individual right of coining and issuing notes is interference with nature.

* A crossed check is similar to our checks marked “Payable only through Clearing-House.” The holder cannot draw the money. It must be deposited.