2. HOW THE STATE PUTS FREE-MONEY IN CIRCULATION

The money reform deprives the Banks of Issue of the privilege of issuing banknotes. Their place is taken by the National Currency Office which is entrusted with the task of satisfying the daily demand for money.

The National Currency Office does not carry on banking business of any kind. It does not buy or sell bills of exchange, it does not classify business firms as first, second and third rate. It entertains no connections with private persons. The National Currency Office issues money when the country needs it, and withdraws money when money is in excess. That is all.

To put Free-Money in circulation all public treasuries are instructed to exchange, when requested to do so, the old national metal money or paper money for Free-Money; one dollar (franc, or shilling) of Free-Money being given for one dollar (franc, or shilling) of the old money.

Anyone not consenting to this exchange may keep his gold. No one will compel him to exchange it; there will be no legal pressure; no force will be employed. The public is merely warned that after the lapse of a certain term (1, 2 or 3 months) the metal money will be only metal, and no longer money. If by that time anyone still possesses metal money he is free to sell it for Free Money to a dealer in precious metals, but he must bargain about the price. The only form of money recognised by the State will be Free-Money. Gold, for the State, will be a mere commodity like wood, copper, silver, straw, paper or fish-oil. And just as today taxes cannot be paid in wood, silver or straw, so gold will not be available for the purpose of paying taxes after expiration of the term for exchange.

The State knows that there is no room for any but State money, and that consequently no special efforts are needed to give this money currency. For the indispensability of money and the necessity for State control of money automatically lead to that result. So if anyone decides to set up a private mint and to strike coins of any particular weight and fineness, the State can tranquilly look on. Coins, for the State, have ceased to exist and so, therefore, have forgers of coins. The State simply deprives all coins, including those formerly struck by itself, of its guarantee of weight and fineness, the minting machinery being sold to the highest bidder. That is all the State does to prevent gold from circulating - but it suffices.

So if anyone opposes Free-Money to the point of rejecting it as payment for his goods, nobody will interfere. Let him continue to demand gold for his products. But he will have to weigh this gold and test its purity, coin by coin, with touchstone and acids. He will, moreover, have to ascertain whether anybody will buy the gold from him, and at what price, and he must be prepared for certain surprises. If on second thoughts he finds this procedure troublesome and expensive, he is still free to seek salvation within the pale of Free-Money. He will then only be following the example of the former enemies of the gold standard, the German landowners who at first fiercely opposed the new gold money but very soon accepted it.

What is the State to do with the gold received in exchange for Free-Money ? The State will melt it down and have it manufactured into chains, bracelets and watch-cases to present to all the brides of the nation on their wedding day. What more reasonable use could be found for such a mass of treasure ?

For the State does not need gold, and by selling the gold received for Free-Money to the highest bidders it would depress its price and embarrass other nations, as happened when Germany so thoughtlessly sold its demonetised silver. If on that occasion Germany had used the silver thalers to manufacture wedding presents, or to erect in front of every pawn-shop and loan-bank life-sized statues to the champions of the gold standard - it would have been better for economic life at home and abroad, and even for the State finances. For the few millions which the State realised from the sale of silver, a mere drop in the ocean considered from the point of view of German economic life as a whole, were largely instrumental in depressing the price of silver, and the difficulties of the German landowners, caused by the low price of grain, were partly due to these silver sales. (*Laveleye: La Monnaie et le Bimétallisme.) If Germany had adopted the above proposal and manufactured the thalers into silver wedding presents, it would have recovered the loss tenfold out of the increased taxpaying capacity of its subjects.