|
A Chinese Tale
Once
upon a time money in China
consisted of silver coinage issued by the Imperial Treasury. Since time
immemorial, the main source of imperial revenue has been seigniorage,
due to the limit the emperor placed on the number of silver coins in
circulation. Consequently the Imperial Treasury could buy two pounds of
silver from the people in exchange for coins containing only one pound, then
turn around and mint it into twice as many silver coins. The difference was
simply expropriated by the emperor. As a result of this cruel exploitation,
people of the Celestial Empire fell into the
direst poverty. Money was exceedingly scarce. Parents were selling their
children into slavery, and they killed their baby daughters when no takers
were found.
The chief mandarin, Kwang,
threw himself at the feet of the emperor, pleading thus: "Son of
Heavens, have pity. People are suffering. Money is scarce."
The emperor made an edict providing for free
coinage. From then on, people could take all the silver to the Treasury and
get the same weight in silver coins in exchange. Seigniorage
was abolished. There was a great relief all over the Celestial
Empire. A tremendous resurgence of agriculture and industry took
hold. The humblest of coolies could pick and choose between jobs. People were
becoming so prosperous that husbands started to embellish their wives with
choice silver jewelry. Hardly twelve moons had
passed when Kwang threw himself at the feet of the
emperor once more and pleaded thus: "Sire, money is still scarce. The
people want you to issue paper money in order to augment the circulation of
silver coins."
The emperor, who was a wise man, answered: "Kwang, you are talking like a fool. You ask me to restore
poverty that I abolished in this country twelve
moons ago. I have given people the right to put their silver where their
mouth is. If money is still scarce, they have only themselves to blame. Let
them bring their jewelry to the Treasury, and we
shall give them silver coins, pound for pound. If they really think that
money is scarce, they have to prove it not by words, but by deeds. Remember, Kwang, it is not the abundance of money that makes people
prosperous, but the unencumbered fruits of their own effort. By the same
token, it is not the scarcity of money that impoverishes them, but
exploitation that you now try to advocate."
And Kwang went off,
tearing his beard, as he lamented: "0 Wo! 0
Fu! 0 Pe! 0 Li! And all
the two-letter named gods of Cathay! Take
pity on our people! For there has come to us an emperor of the Austrian
School, who believes that people can lift themselves out of their misery
by their own bootstraps! The emperor is deluded by the idea that wealth is
created by the coolies! He no longer believes that the source of all wealth
lies in the power to regulate the money supply."
Beat scarcity
There will always be
people who complain that money is scarce. Today, there is no answer to these
complaints. In a true sense of the word, everything of value is scarce. The
only way to abolish the scarcity of the dollar is to make it lose all its
remaining value. And there is a real danger that this is exactly what we are
doing.
Money and
money-substitutes have never been so abundant as
they are today in the United
States. Yet, if we are to believe the
officers of Continental Illinois, and the directors of the savings banks in Ohio and Maryland,
money is excruciatingly scarce in this country.
The only way to stop the
vicious agitation against the scarcity of money is to put the power of issue
where it belongs, namely into the hands of the people. This means free
coinage of gold. When this is done, every citizen who believes that there is
too little money in circulation can do something about it. He can take his
old jewelry or his newly mined gold to the U.S.
Mint, and convert it into the gold coins of the realm. After this fundamental
right - guaranteed by the Constitution but abolished in 1933 - has been
restored to the people, all cries about the scarcity of money can be exposed
as frivolous gibberish.
Latter-day
slaves
The principle of free
coinage also exposes the cruel exploitation to which the people of the United States
have been subjected by the mandarins in the Treasury and on the Federal
Reserve Board. The Constitution abolished bondage embodied by seigniorage in this country, but the bureaucrats have reimposed a more cruel seigniorage through the back door.
The rate of exploitation
in the Celestial Empire of old was 2:1, as
silver in the hand of the emperor was worth twice as much purchasing power as
the same silver in the hands of the people. Today the rate of extortion in
the United States
is 35:1. As reported in The New York Times
on July 21,1985, Michael Brown, a spokesman for the
United States Mint in Washington,
D.C.. explained
that the Susan B. Anthony dollar, introduced in 1979, costs 3 cents each to
make, allowing the government to pocket a profit of 97 cents. Thus resources
in the hands of the Treasury can create 33 times more purchasing power than
the same resources in the hands of the people. The extra purchasing power is
not created out of thin air: it is simply extorted from the people.
Mr. Brown used these
figures to support his argument against melting down half a billion Anthony
dollars which nobody seems to want. If the coins were melted down for the
metal, the government would have to take a loss. "And we don't want to
add half a billion dollars to the deficit," Mr. Brown was quoted as
saying.
The rate of exploitation
in the United States
would be much higher if the calculation was based on the cost of printing
bonds, which the Treasury can turn into cash at the Federal Reserve banks.
Moloch of Managed
Money
Irredeemable currency
could be made to work in a free country only if every citizen were given the
right to print and to dispose of his bonds on the same terms as the Treasury.
But this would make the bonds and ultimately the dollar lose their remaining
value. Therefore the regime of irredeemable currency can never be made to
work, nor can it be made compatible with freedom.
The usurpation of the
Constitutional right of the people to free coinage, and the reimposition of bondage embodied by the seigniorage, makes free citizens into slaves of the
government. Moreover, the unemployed are like the innocent female infants in China,
earmarked to be sacrificed on the altar of the Moloch
of Managed Money.
Antal E. Fekete
September, 2005
| 
