Individual Liberty by Benjamin Tucker & Benjamin Tucker

Author:Benjamin Tucker & Benjamin Tucker
Language: eng
Format: epub
Tags: economics, individualist, practice
Published: 1926-08-14T16:00:00+00:00

At the time when Colonel Greene wrote “Mutual Banking”, the banks of issue in vogue were the old State banks professing to redeem their notes in specie on demand. It was this system which he had to combat, and the entire assault of “Mutual Banking” is upon a demand-note currency. There being no other currency in the people’s mind, he had not to guard against other ideas. Consequently he declared the mutual bank-notes independence of hard money in language so absolute and unqualified as to give some color to the latter-day claim made by Henry Cohen that his plan excludes specie-redemption at any time and under all circumstances. If the passages which Mr. Cohen quotes in another column are to be construed with all the rigor that he seems to desire, they absolutely exclude the use of the specie dollar; but that Colonel Greene contemplated no such exclusion is undoubtedly shown by his declaration that no paper bill of less than five dollars should be issued, in which case disuse of the specie dollar would mean disuse of all dollars, for the specie dollar would be the only dollar in existence. The alternative, then, is to construe these passages liberally rather than literally, and in the light of the fact that an essential feature of the Mutual Banking plan is the provision of a collateral to serve for the redemption of notes not canceled in the ordinary fashion. Despite the keen intellectual quality shown in “Mutual Banking” as a whole, it contains here and there obviously inexact statements that will not bear analysis. There is, for instance, the declaration that the mutual bank is by its nature incapable of owing anything, clear absurdity if vigorously insisted upon instead of being interpreted by the context; for Colonel Greene elsewhere defines the issue of mutual money as an exchange of credits, an exchange inconceivable between two parties one of whom is by nature incapable of indebtedness. I might take up the cited passages seriatim, but it is needless, for my general answer covers the ground.

Possibly Mr. Cohen’s suggestion that the security for uncancelled notes would be converted by sale partly into bank-notes and partly into gold, the former to satisfy the bank’s claim and the latter to satisfy the borrower’s equity, meets my argument that the collateral would have to be converted into gold because of the rights of the borrower, — though I have some doubts as to the practicability of the plan, — but my argument that the collateral could not be converted into bank-notes unless these bank-notes had first shown a greater power of general circulation than they would be likely to acquire by a mere agreement of members to receive them in trade regardless of redeemability in specie remains untouched. To be sure, Mr. Cohen urges that the notes will float if enough members join to insure their immediate convertibility into all marketable products; but to assume that a membership of this size and variety can be obtained,

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