I have in my possession, a copy of a copy of an essay by E. C. Riegel, one of many that I gleaned from the files of Spencer MacCallum who had the foresight to rescue Riegel’s literary legacy from oblivion, and the good sense to make his insightful works on money and freedom generally available. The article titled, The Right Is Still To Come, is transcribed below. It bears no date, but I would guess that it was probably written sometime between 1945 and Riegel’s death in 1953.
In the very first paragraph, Riegel sets forth the essential target of his argument, saying, “The professed socialists and the professed anti-socialists are united as monetary socialists in the common superstition that money springs from the State.” I long ago took Riegel’s argument to heart and have taken up the cause of dispelling that superstition, most notably in Chapter 8, The Separation of Money and State, in my book, The End of Money and the Future of Civilization.
I personally try to avoid using imprecise terminology and political clichés that are emotionally charged and tend to get in the way of rational thinking. Riegel, on the other hand, can be forgiven for some slight indulgence in political rhetoric that seems to us perhaps judgmental and outdated. Keep in mind that he lived in tumultuous times that were scarred by two world wars, the great depression, and the rise of totalitarian governments bearing the various labels of fascist, communist, or socialist (any critique of Capitalism in the west at that time was overwhelmed and suppressed in a number of ways). These are the terms that defined people’s loyalties, as nations contested violently with one another to decide how people should be governed. The reader should not be put off by Riegel’s framing his arguments in terms of left, right, socialist, capitalist, and collectivist. His writings clearly show that he was, after all, a champion of peace, freedom, and social justice.
The emphasis of particular sections in the following essay has been added by me to highlight major points.–t.h.g.
THE RIGHT IS STILL TO COME by E.C. Riegel
On the left stands the socialist, back of him stand a hundred capitalists. All society is composed of conscious and unconscious socialists. The professed socialists and the professed anti-socialists are united as monetary socialists in the common superstition that money springs from the State. The birth of the Right awaits disillusionment from this all-confounding fallacy.
There are advocates of many different money reforms but none renounces the basic error of the socialization of the money system. To none of the believers in free enterprise does it seem incongruous to leave the State in complete control of the medium whereby free enterprise must articulate. The right to freely contract and the sanctity of contract is seen as cardinal to free enterprise. Yet, to leave to the State the power to alter contracts by altering the meaning of the money unit in terms of which all contracts are expressed, does not seem to professed capitalists contradictory. Thus the State exercises its most vicious interventionism by making itself a party to all contracts, an unbidden and perverting party.
Some would limit, by various devices, the amount of “money” the State should issue. Others would limit the amount of “credit money” that business men should issue. Still others would abolish the later entirely, counting only government issues as genuine money. None would abolish so-called money issues by government, leaving the money issuing power to the only true issuers, the private enterprisers.
With monetary socialization accepted, the choice is confined to different methods of perversion. There is no monetary Right and since free money is basic to a free economy, there is no philosophy of the Right. To merely complain against the drift toward socialism does not make one a true anti-socialist. To propose or support political money reforms does not make one’s surrender to socialization any less abject, nor betrayal of free enterprise less vicious.
The trend toward socialism was set when business men accepted the cry, better called superstition, that money issuance and control are functions of political government—the political money system. That fallacy, until exploded, makes the progressive socialization of the entire economy inevitable. The pace of this perversion is not determined by the amount of resistance offered by the alleged opponents of socialism, but by the degree that the State indulges its perversive power by emissions of false money into the blood stream of business.
The pace of this perversion is quickening all over the world; a huge flood of water-money threatens to inundate all. Can we preclude disaster by bringing those who call themselves anti-socialists over from the Left to the yet unoccupied Right? Can we induce businessmen to think and act in terms of the economic means rather than the political means? Can we build an economic statesmanship? In short, can we sell capitalism to capitalists? If we can we will save private enterprise and the social order. If not, the deluge.
Painful as it may be to change habits of thought, (if indeed, prevailing money ideas can be called the product of thought) the triumph of free enterprise over socialism and tyranny can be accomplished only by the renunciation of the fallacy of political money power and the assertion of exclusive power of private enterprise to control and issue money. When we realize that the political money system has operated almost from the beginning of money, it may be seen what a break with tradition this proposal involves.
The long existence of the political money system does not, however, imply continuity of operation or vindication. There have been countless instances of the breakdown of national money units through excessive dilution of the money stream by the State. All money circulations have been a mixture of genuine money issued by private enterprisers and spurious issues by the State. Following these breakdowns the State set up new money units and repudiated the old. During the transition from the old to the new, exchange has been kept alive by resort to other national units that were still relatively stable.
What makes the present inflationary crisis unprecedented is the universality of the decline of political money units and that the U.S. dollar, the strongest unit, is being subjected to blood transfusion to sustain other units. Thus the superstructure of the entire political money system is being bolstered by timbers taken from the foundation with the ultimate result that the whole structure will collapse together. It is therefore imperative that we change superstitious money ideas for rational ones before it is too late to avoid worldwide chaos.
Why no State Can Issue Money
To understand money is to understand why it cannot spring from any government, national, state or city.
The purpose of money is to obviate the necessity for contemporary delivery of value by both parties to an exchange transaction and thus greatly expand exchange.
By means of money its issuer is enabled to purchase values from any supplier, who, in turn, is enabled to do likewise, the money ultimately reaching a supplier who has need of the issuer’s values and thus the reciprocating trader is found and exchange is completed and the money retired. Account is balanced by passage of value both ways, the medium, money, having no value.
Money can be issued only by a buyer who later, as seller, redeems his issue. He must, to stay in business, bid for money with value because that is his only way of gaining income. He must price his values competitively or he can make no sale. Thus, by his circumstance of being a private enterpriser he is ideally suited to issue and redeem money.
Contrast the State’s situation. It is not a trader; it does not sell. It needs not bid for money; it merely requisitions it by taxation. Since it has no way of redeeming money by open competitive bidding, it cannot issue it and its professed money issues are inescapably spurious.
The power and need to issue money is inherent in private enterprisers and thus it operates under natural checks and balances, while to the State it is entirely unnecessary and unnatural and no amount of fixing can supply the requisites that it lacks, nor is there the slightest reason for undertaking such artificiality. The State would never have gotten into its present unnatural position of its own necessities, for, it always had its taxing power, before the advent of money, to levy in kind and under money exchange to levy on money. It was forced into its anomalous position by the ignorance of businessmen who, not understanding money resorted to the superstitious belief that it needed the State’s imprimatur.
In spite of all the abortiveness of the political money experience professed friends of private enterprise and self-styled anti-socialists continue their efforts to perpetuate it by added gadgets. None has contributed in the slightest degree toward liberating private enterprise from it. Private enterprisers do not even know that, as bank borrower they are money issuers. They think that their participation in the money system is a secondary one and that even this depends upon a grant from the State. The truth is that every money unit ever issued has come from private enterprisers and that no money has ever or ever can be issued by any state. The only thing that makes it possible for the delusive political money system to operate at all is that the true money issued by businessmen serves as a host for the parasite issues of government to feed upon. No government could build a money circulation of itself anymore than a farmer can produce watered milk from the pump alone. In this metaphor government is the pump and private business is the cow.
How the political Money System Sabotages Private Enterprise
Every businessman knows that stock splits involve an increase in the number of shares without an increase in capital. What he does not understand is that so-called money issues by government are but money splits involving merely an increase in the number of units without an increase in the money supply. The analogy ends there. In stock splits the corporation does not rob the stock holder. In the process of money splits the government issues them by taking goods and services out of the market, thus robbing the economy, thereby depreciating the power of each money unit. This is called inflation and inflation is in turn defined, naively, as “too much money chasing too few goods”, whereas it is but the same amount of real money mixed with spurious money with the economy robbed in the sum of the spurious money.
With the so-called capitalist world deluded into thinking that what government issues is money, the process of sabotaging the economy has open sesame. It enables the State to practice paternalism and paternalism is the mother of socialism.
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Beyond Money 