Silvio Gesell - The NATURAL ECONOMIC ORDER
population to make extraordinary savings. And the supply of these savings would soon overtake the extraordinary demand for loan-money. One can therefore conclude that the demand for loan-money for the improvement of the means of production must itself produce a supply of loan-money much more than sufficient to cover this demand. Thus from whatever side we consider the problem of covering the demand for loan-money so completely that interest would disappear; whether we approach the problem from the side of demand or the side of supply, we find that there are no natural obstacles to such covering. Except for the traditional form of money, the road is free for loan-money without interest, as well as for houses and means of production without interest. The elimination of interest is the natural result of the natural order of things when undisturbed by artificial interference. Everything in the nature of men as in the nature of economic life urges the continual increase of so-called real capital - an increase which continues even after the complete disappearance of interest. The sole disturber of the peace in this natural order we have shown to be the traditional medium of exchange. The unique and characteristic advantages of this medium of exchange permit the arbitrary postponement of demand, without direct loss to its possessor; whereas supply, on account of the physical characteristics of the wares, punishes delay with losses of all kinds. In defence of their economic welfare both the individual and the community have been and are at enmity with interest; and they would long ago have eliminated interest if their power had not been trammelled by money. We have now studied this new theory of interest from so many sides that we can finally put and answer a question which should logically have been asked at the beginning of our inquiry, but which we have purposely postponed till now, since knowledge and insight which can only be assumed to exist at the end of our inquiry are necessary for its complete understanding. We said that money is capital because it can interrupt the exchange of commodities. From this the deduction can be made that if, by the proposed change of form, we deprive money of the power of interrupting exchange, money as a pure medium of exchange is no longer capital, that is, money can no longer exact basic interest. Against this deduction no objection can be raised; it is correct. But if it is further deduced that, since money can exact no interest from commodities, we may count upon interest-free loans from the day that Free-Money is introduced - this deduction is not correct. As medium of exchange, in direct relation to commodities, that is in commerce. Free-Money will not be capital, just as commodities are not capital when exchanged for one another. With Free-Money, commodities will be exchanged free of interest. But when Free-Money is introduced it will meet with the market conditions created by its predecessor, gold, for the purpose of exacting interest upon loans; and as long as these conditions continue to exist, that is, as long as demand and supply permit the exaction of interest in the loan-market (in all its branches), interest will have to be paid also upon loans contracted in Free-Money. Free-Money will find before it world-wide poverty, the result of which is interest. This poverty must disappear, and it will not disappear in the course of a few days. Work is here the remedy. Until this poverty is removed, the instruments of production and commodities will continue to yield interest in all forms of loan-transactions (not, however, in exchange-transactions). But Free-Money does not make interest the condition of its services, it will allow our economic system, as the result of work uninterrupted by crises, to put on fat; and it is this fat which is to eliminate, and doubtless will and must eliminate, interest. Interest feeds upon the sweat and blood of the people, but it has no liking for fat or, in other words, economic prosperity. For interest, fat is poison. It is quite certain that the disproportion between the demand and supply of real capital, which is the cause of interest, will continue to exist for some considerable time after the introduction of the moneyreform, and that it will only gradually disappear. The effects, accumulated through thousands of years, of the traditional form of money, namely the scarcity of real capital, cannot disappear as the result of twenty-four hours' working of the lithographic press. The scarcity of houses, ships and factories cannot be eliminated by gaily-printed slips of paper, in spite of the belief to the contrary held by the papermoney lunatics of all times. Free-Money will permit the building of houses, factories and ships in unlimited quantities; it will permit the mass of the population to work as much as it pleases, to sweat and curse the pauperism that gold has left behind. But Free-Money will not itself provide a single stone for the missing cities. The lithographic presses upon which Free-Money is printed cannot themselves 190