Silvio Gesell - The NATURAL ECONOMIC ORDER
To me it seems preferable to make the work of reform thorough at the outset, and to add to the reform of the note-issue, just described, a change in the form of money which would dissolve the material connection between medium of exchange and medium of saying, a change which would cause the disappearance of all private stores of money, which would break the lids of all savings-boxes and force the locks of all money-chests-a change which, in war and peace, in good years and in bad, would keep exactly as much money in circulation as the market, without fluctuations in the general level of prices, could absorb. With Free-Money the traditional connection between the medium of saving and the medium of exchange is, in conformity with the results of our inquiry, irrevocably broken. Money becomes a pure medium of exchange, independent of the will of its possessor. Money becomes materialised demand.
14. CRITERION OF THE QUALITY OF MONEY The partisans of the gold standard ascribe the great absolute and relative economic development of the last decades to the gold standard. These millions of factory-chimneys belching forth smoke are the modern equivalents of sacrificial altars, and they express the nation's thankfulness for the gold standard There is certainly nothing surprising in the assertion that the monetary standard can cause, or make possible, an economic revival. For money makes the exchange of wares possible, and without exchange of wares there can be no work, no profit, no traffic, no marriage. When the exchange of wares is interrupted, factories shut down. The assertion, we repeat, contains nothing at first sight surprising. On the contrary, manufacturers, shipbuilders and other employers. when asked whether they could produce more wares with their present machinery and staffs, are unanimously of opinion that production is limited only by the sale of their wares. And money makes sales possible - or makes them impossible. That this eulogy of the gold standard should contain a tacit assumption that its predecessor, the bimetallic standard, hindered economic development also causes no surprise. For money, if it can bring progress, can also, evidently, hinder progress. More important results can be ascribed to money than economic prosperity or the reverse during a few decades. (* Gesell: "Gold and Peace ?" (spoken at Berne, 1916). (See page 117).) After the adoption of the gold standard by Germany, German landowners complained of the fall of prices and of their difficulties in finding money to meet the interest on their mortgages. The German import-duties were devised for their protection, and without this protection many farms would have come under the hammer. But with prices falling, who would have bought these farms? Large estates would have been formed, just as under the Roman Empire, and the downfall of Rome has been ascribed to its latifundia. The assertion of the advocates of the gold standard contains, therefore, nothing remarkable, but it requires proof. For German economic development could have had other causes; the school, the many technical inventions which made work fruitful, German wives who provide a numerous and healthy stock of workers, and so forth. There is, in short, no lack of competitors eager to snatch the laurels from the gold standard. Proofs, then, are needed. We must find some criterion for the quality of money. We must determine whether the gold standard has so facilitated exchange that the expansion of economic can be ascribed to this cause alone. If the gold standard has facilitated the exchange of products the result must be increased safety, speed or cheapness of exchange, and this increased safety, speed or cheapness of exchange must cause a corresponding decrease in the number of those engaged in commerce. This is too obvious to require further explanation, if we improve the roads that serve for the transport of merchandise, the efficiency of carters increases, and if the amount of merchandise to be carted remains the same, the number of carters must diminish. Since the introduction of steam, sea traffic has increased a hundredfold, yet the number of sailors has diminished.
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