Tucker compares the human idolatry of gold to religious worship, looking forward to the day when every man pulls his own metals from the sea.

Instead of a Book, By a Man Too Busy to Write One

(published in Liberty on May 16, 1891)

Instead of a Book, By a Man Too Busy to Write One

Part Three: Money and Interest

Ten Questions Briefly Answered.

Liberty is asked by the Mutual Bank Propaganda of Chicago to answer the following questions, and takes pleasure in complying with the request.

“1. Does the prohibitory tax of ten per cent. imposed by Congress on any issue of paper money other than is issued by the U. S. Treasury limit the volume of money? If not, why not?”


“2. Whence did the State originally derive the ‘right’ to dictate what the people should use as money?”

From its power.

“3. If an association or community voluntarily agree to use a certain money of their own device to facilitate the exchange of products and avoid high rates of interest, has the State the right to prohibit such voluntary association for mutual advantage?”

Only the right of might.

“4. Do not restrictions as to what shall be used as money interfere with personal liberty?”


“5. Has the question of free trade in banking—i.e., the absence of all interference on the part of the State with making and supplying money—ever been a matter of public discussion?”


“6. What effect does the volume of money have upon the rate of interest?”

I suppose the intention is to ask what effect changes in the volume of money have on the rate of interest. Not necessarily any; but any arbitrary limitation of the volume of money that tends to keep it below the demand also tends to raise the rate of interest.

“7. Can the business of banking and the supply of money be said to be under the operation of supply and demand where the State prohibits or restricts its issue, or dictates what shall be used as money?”

Inasmuch as they often are said to be so, they evidently can be said to be so, but whoever says them to be so lies.

“8. Is there such a thing as a ‘measure’ or ‘standard’ of value? If so, how is it constituted, and what is its function?”

There is such a thing as a measure or standard of value whenever we use anything as such. It is constituted such either by force or by agreement. Its function is implied in its name—measure of value. Without the selection, deliberate or accidental, conscious or unconscious, of something as a standard of value, money is not only impossible, but unthinkable.

“9. What becomes of the standard or measure of value during suspensions of specie payment?”

Nothing. It remains what it was before. Certain parties have refused to pay their debts; that’s all.

“10. Are you in favor of free trade in banking, including the issue of paper money? If not, why not?


A Necessity or a Delusion – Which?

(published in Liberty on June 27, 1891)

To the Editor of Liberty:

It is not only a delusion, but a misuse of language to talk about a “standard of value.” Give us a standard of pain and pleasure, and you may convince us that there can be a “standard of value.” I am well aware of the difficulty of discussing this question, even with so precise an editor as Mr. Tucker; but since he has called into question the views presented in my pamphlet, I feel called upon to lay before the readers of Liberty some additional arguments to show the correctness of what Mr. Tucker has honored by calling “the Westrup view.”

Let us consider for a moment the practical workings of a Mutual Bank, as near as we can foretell them.

The incentive to organize a Mutual Bank is the opportunity of borrowing money at a very low rate of interest and no additional expense. This desideratum is not confined to a few individuals, but is well‐​nigh universal. It follows, therefore, that the starting of a bank will draw to it a large number of people, embracing producers and dealers in almost, perhaps all, commodities. One of the conditions in obtaining the notes (paper money) of the Mutual Bank is that they will be taken in lieu of current money without variation in the price of the commodities by those who borrow them. This condition is just, and will be readily acquiesced in without a murmur. At the very outset of the Mutual Bank, then, we have at least dealers in most of the ordinary commodities who will accept its money in place of current money. This certainty of its redemption in commodities at their market‐​price in current money guarantees its circulation.

Strictly speaking, the Mutual Bank does not issue the money; it simply furnishes it and is the custodian of the collateral pledged to insure its return. It is the borrowers who both issue and redeem.

The transaction between the bank and the borrower is of no interest to the public previous to the issue of any of the money by the borrower. Neither is it concerned with the transaction between the borrower and the bank after the former has redeemed all the money he borrowed.

Discussing theories is far less important than efforts to put in practice such momentous reforms as the application of the mutual feature to the supply of the medium of exchange. If Comrade Tucker really desires the establishment of Mutual Banks, it seems to me he would naturally discuss the practicability of such institutions. Let him point out wherein the above forecast is unsound. Let him show the necessity for a “standard of value” and suggest how to introduce one: perhaps I may become converted. I shall most surely acknowledge my error if I am convinced, but I have no time or inclination to discuss any abstract theory about a “standard of value.” The one question that seems to me of importance is the practicability of the Mutual Bank. If it is not practicable, why is it not so? If it is, why waste time and space in discussing whether the first or the second or any other commodity exchanged becomes the “measure or standard of value”; especially as “the whole trouble disappears with the abolition of the basis privilege.”

Alfred B. Westrup

Mr. Westrup’s article sustains in the clearest manner my contention that money is impossible without a standard of value. Starting out to show that such a standard is a delusion, he does not succeed in writing four sentences descriptive of his proposed bank before he adopts that “delusion.” He tells us that “one of the conditions in obtaining the notes (paper money) of the Mutual Bank is that they will be taken in lieu of current money. What does this mean? Why, simply that the patrons of the bank agree to take its notes as the equivale”nt of gold coin of the same face value. In other words, they agree to adopt gold as a standard of value. They will part with as much property in return for the notes as they would part with in return for gold. And if there were no such standard, the notes would not pass at all, because nobody would have any idea of the amount of property that he ought to exchange for them. The naïveté with which Mr. Westrup gives away his case shows triumphantly the peurility of his raillery at the idea of a standard of value.

Indeed, Comrade Westrup, I ask nothing better than to discuss the practicability of mutual banks. All the work that I have been doing for liberty these nineteen years has been directed steadily to the establishment of the conditions that alone will make them practicable. I have no occasion to show the necessity for a standard of value. Such necessity is already recognized by the people whom we are trying to convince of the truth of mutual banking. It is for you, who deny this necessity, to give your reasons. And in the very moment in which you undertake to tell us why you deny it, you admit it without knowing it. It would never have occurred to me to discuss the abstract theory of a standard of value. I regard it as too well settled. But when you, one of the most conspicuous and faithful apostles of mutual banking, begin to bring the theory into discredit and ridicule by basing your arguments in its favor on a childish attack against one of the simplest of financial truths, I am as much bound to repudiate your heresy as an engineer would be to disavow the calculations of a man who should begin an attempt to solve a difficult problem in engineering by denying the multiplication table.

I fully recognize Mr. Westrup’s faithful work for freedom in finance and the ability with which he often defends it. In fact, it is my appreciation of him that has prevented me from criticising his error earlier. I did not wish to throw any obstacle in the path or in any way dampen the enthusiasm of this ardent propagandist. But when I see that admirable paper, Egoism, of San Francisco, putting forward those writings of Mr. Westrup which contain the objectionable heresy; and when I see that other admirable paper, The Herald of Anarchy, of London, led by his or similar ideas to advocate the issue of paper bearing on its face the natural prices of all commodities (!); and when I see Individualists holding Anarchism responsible for these absurdities and on the strength of them making effective attacks upon a financial theory which, when properly defended, is invulnerable,—it seems high time to declare that the free and mutual banking advocated by Proudhon, Greene, and Spooner never contemplated for a moment the desirability or the possibility of dispensing with a standard of value. If others think that a standard of value is a delusion, let them say so by all means; but let them not say so in the name of financial theories and projects which the original advocates of mutual banking gave to the world.

Anarchy’s New Ally.

(published in Liberty on June 18, 1892)

Natural science and technical skill, which have revolutionized so many things, may yet revolutionize political economy, and in a way little dreamed of. It has long been known that the water of the ocean contains gold and silver. The percentage of these metals, however, is so very small that at first thought it hardly seems worth noticing. And as a matter of fact little notice has been taken of it, but principally for the reason that the extraction of the metals by any advantageous method has been deemed an impossibility. Now comes the Fairy Electricity, whose wand has already achieved so many wonders, and promises us a new miracle, which, though possibly less strange in itself than some others, will be more far‐​reaching in its results than all the telegraphs and telephones and railways imaginable. She proposes, by stretching long series of iron plates across channels and through various parts of the seas and ocean and running an electric current through them, to precipitate the gold and silver from the water upon these plates. It is estimated that one‐​half of one horse power is all that is needed for the purpose, and that it will consequently be possible to get gold in this way at a cost equal to but one per cent. of its present value.

But where does the revolution in political economy come in? some one may ask. Does the connection seem remote to you, my thoughtless friend? Then think a bit and listen. Every ton of sea‐​water contains half a grain of gold and a grain and a half of silver. Has that an insignificant sound? If so, let us appeal to mathematics. We shall find that, at the rate of half a grain of gold and a grain and a half of silver to each ton of sea‐​water, the entire seas and oceans of the world (I take the figure from a scientific journal) contain 21,595 billion tons of gold and 64,785 billion tons of silver. As good fish in the sea as ever were caught? I should say so, and much better! Why, this means, to speak at a venture, that there is several billion times as much gold in the water as has been extracted from the land up to date. Now, if this gold can be taken from the water, as is claimed, at the rate of a dollar’s worth for a cent, soon it will be scarcely worth its weight in good rag‐​paper. The much defamed “rag baby” will be a very aristocratic personage beside it. In that case what will become of “the metal appointed by God in his goodness to serve as the currency of the world”? Would it be possible to more thoroughly revolutionize political economy than by dethroning gold? And could gold be more effectually dethroned than by reducing its value to insignificance? Its monetary privilege would disappear instantly and of necessity, and the era of free money would dawn, with all the tremendous blessings, physical, mental, and moral, that must follow in its wake. As Proudhon well says: “The demonetization of gold, the last idol of the Absolute, will be the greatest act of the revolution of the future.”

All hail then, Electricity! On with your magnificent work! Lend a hand, you believers in dynamite; we offer you a better saviour! This good fairy is carrying on a “propaganda by deed” that discounts all your Ravachols. Success to her! May she force gold, the last bulwark of Archism, to become, through offering itself for sacrifice on the altar of Liberty, the greatest of Anarchists, the final emancipator of the race!

Money, said Adam Smith, in one of those flashes of his intellectual genius which have so illuminated man’s economic path, money is a “wagon‐​way through the air.” If Electricity shall make of this wagon‐​way a railway, it will be the most signal, the most useful of her exploits.

Economic Superstition.

(published in Liberty on August 13, 1892)

Apropos of my editorial of a few weeks ago, forecasting the probable increase in the supply of gold through its extraction from the ocean and the consequences thereof, Comrade Koopman writes me: “If this is so, every craft that sails the ocean blue will carry an electrical centre‐​board to rake in the gold as it sails along. I am afraid, though, that the governments will betake themselves to platinum (I believe Russia tried it once) or some other figment, and so postpone their day of reckoning. But what a shaking‐​up a gold deluge will give them if it come! I hope we may be there to see.” If the present adherence to gold were anything but a religion, there would be some ground for Comrade Koopman’s fears. But, so far as the people is concerned, it is only a religion. To uproot the idea that gold is divinely appointed to serve as the money of the world is to destroy the godhead. In vain, after that, will the priests of plutocracy propose a change of deities. The people will say to them: “If you lied when you told us that gold was God, you are lying now when you place platinum on the celestial throne. No more idolatry for us! Henceforth all property shall stand on equality before the Bank. In demonetizing gold we monetize all wealth.” The Anarchists are fighting the old, old battle,—the battle of reason against superstition. In the earlier phases of this battle, science, after a time, re‐​enforced the philosophers and gave the finishing stroke in the demolition of the theological god. Perhaps it is reserved for science to similarly re‐​enforce the Anarchists in their task of smashing the last of the idols. Of this, however, I am not as hopeful as I was. A fact has lately come to light that fills me with misgiving. No sooner is it proposed to begin the extraction of gold and silver from the ocean by the new and cheap method than a man pops up in England to say that he patented this method a year or two ago. If his patent is valid (and I see nothing to the contrary), this man is virtual owner of the entire 21 billion tons of gold and 64 billion tons of silver which the ocean contains. All finance must kneel to him as Pope. “Nearest, my God, to Thee,” will be his hymn henceforth, or rather till some luckier individual shall discover a still cheaper way of securing the ocean’s treasures and thereby become Pope in his stead. This one perfectly logical and appalling possibility ought to be sufficient in itself to sweep away as so much cobweb all the sophistry that has ever been devised in support of property in ideas. Gold, after all, is not the last of the idols; in mental property it has a twin. And my remaining hope is that science, with its new discovery, may do double duty as an iconoclast, and destroy them both at one fell stroke.