Table of contents:
Introductory remarks about the peace plan
productions and pointers to other publishers
1) Beckerath's Concept of a
Limited and Justified Compulsory Insurance
2) The following are some of
the objections Ulrich von Beckerath has raised himself against today's
compulsory Insurance schemes:
a) Compulsory insurance while inflation is
almost guaranteed through certain laws.
b) Compulsory insurance under present-day
Trustee Acts, insufficient funding and capital market control
c) Compulsory insurance whi1st the money monopoly
persists ?
d) Compulsory membership in a monopoly insurance
company?
e) Compulsory membership mitigated by self-government
and decentralization
f) Compulsory insurance and employers contributions
SOME NOTES ON THE TWO TYPES OF GOLD STANDARD WHICH
ARE POSSIBLE AND HONEST : THE 100 GOLD COVERED CURRENCY AND THE GOLD-CLEARING
OR GOLD-FOR-ACCOUNT STANDARD
(Standards? Does the golden sun not just 'stand'
but meander, swerve and for all we know help a hell of a lot besides? How
can we talk about an honest standard if the digging, destilling and shifting
of the stuff is not all hunky dory happiness for most of those involved?
Piet)
1 ) Popular Attitude Towards Money
2 ) Some Remarks on the Monetary Theory
of the Austrian School of Economics
3 ) Is a 100% Gold Cover Necessary
and Justified
start
of peace plan 11 supplement part 2
4 ) Current Gold production adn
the total gold supply
5 ) Some Notes on the Total Gold Supply
6 ) An Estimate of Gold Coin Denominations
which Might Be Required
7 ) Clearing end the Requirement of
a 100% Gold Cover
8 ) Some Suggestions for a Rightful
Currency Reform
9 ) Further Remarks on Price Adaption
to an FxclusiYe Currency
10 ) Unequal Distribution of Gold Currency
Liquidity.
11 ) Gold Production and Inflation
12 ) Rigidity of an Exclusive Metallic Currency
13 ) What is the Meaning of a "Gold Price"
Provided thatGold is no longer Outlaeed as a Standard of Value?
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appearances which happens to concern all sorts of currency issues.
COMMENT ON Bth's SUGGESTION OF
A LIMITED COMPULSION IN PUBLIC INSURANCE
____
267 page numbers are kept
in for later corrections and this is the last out of a threesome to which
an index was appended
Dear reader please do not
expect "our" kind of philosophical purity of libertarian thought in Bth's
writings. If you cannot for instance agree with him on the limited compulsion
which he suggests in the sphere of insurance do not let this disagreement
stand in the way of your appreciation of the radically libertarian solutions
he offers to major problems of present-day life like unemployment, deflation,
depression, inflation, economie development, the social question in general
and basic constitutional reforms, problems which are interrelated with
almost all other human problems. Although seemingly he deals only with
the technique of monetary freedom his reform would in reality tering about
a new economic, social and political order based on individual liberty
and peace and harmony as the naturel condition between exterritorial and
autonomous communities of volunteers.
I foresee your objection against compulsory insurance but find it really
somewhat absurd to accuse a man who advocates individual secession from
the State - because he advocates simultaneously a degree of compulsion
in the sphere of insurance. In reality there is no contradiction as we
will see later on. Let us pay him the respect he obviously deserves for
his other studies and at least try to understand the case he makes out
for a limited compulsion in insurance In his own objections against compulsory
insurance he largely agrees with you and me (Compare 273-276.)
1,) v. Beckerath's
Concept of a Limited and Justified Compulsory Insurance
Ulrich von Beckerath called
a natural or human right, one not yet codified by the U.N. or in any other
well known code -the riqht of the individual within its obligation to provids
for his own livelihood himself, even in case of inability to work- to provide
for this personal security without government assistance and intervention
through private organizations or suitable private contracts the individual
is furthermore obliged to make somehow unmistakably known in what way he
has taken care of his future subsistence."
In point 36 of the human
rights draft contained in plan 110 this right and duty has been expressed
as follows: "Every rational individual has the right and duty to provide
against the risks of normal life, e g. by taking out an insurance with
an insurance company of its choice.
Comment : It may only
be forced to take out an insurance just sufficient to guarantee a minimum
standerd of living in case of illness, accident, invalidity, and old age,
so that it may never become a burden to others,claiming support based on
its right to life. Membership in an exterritorial and autonomous community
of volunteers guaranteeing its members such a protection on the basis of
an assumed human riqht to receive the minimum material requirements for
existence from society, either free of charge or as a loan, is a sufficient
insurance."
In other words his concept of compulsory insurance implies that alt those
whose income or property precludes a self-insurance against the usual private
emergencies & needs arising out of sickness, accidents, invalidity,
old age and catastrophesshould be forced, if necessary, to provide for
their minimum requirements in such cases themselves. Each would remain
free to take out an insurance with a company of his choice or one he sets
up in association with others. The principle justifying this kind of intervention
in his eyes is that to force a man to do what as a rational being he would
do himself does not do him (his
personality as a rational being wrong, even then, rational beings
would only interfere if the mistake made is not just a trivial affair I
wish someone would undertake the trouble and thoroughly explain the applicability
of this principle and its limits. I hola that it would, for instance, well
justify the forceful prevention of most suicides)
The compulsion to take care
of one's own requirements, the immediate ones and the future private emergencies
and nceds which according to general life experience one must expect, would
lead to a situation where nobody who tends to be improvident and would
voluntarily neither save sufficiently nor insure himself - could any longer
be a burden for the general public. He would instead, by means of the insurance
system, be 270supported
by his own efforts only, even in times shen he is unable to support himself
through his current work.
In this way Bth wanted to
replace the present welfare State system - which compels everybody to provide
for the welfare of everybody else and does not allow anybody to take care
of himself without restricting such efforts - not only by the right of
everybody to take care of himself (either
by individual saving or reserve funds or by some mutual aid agreement with
others according to his own choice) but by
the enforced obligation of everybody thus to take care of himself and his
dependents for common and calculable future needs and emergencies. Thus
in his future misfortunes and inabilities he would, as a rule, not have
to appeal to the charitable feelings of others, would not become a ward
or a responsibility of others. Social security would then be a "right"
but a self-earned, a purchased, a contractual right against the insurance
company of one's choice. A rational being (one
which at least knows and respects the natural or human rights of others)
foresees the risk of personal emergencies and disabilities and would, as
a rational and responsible being provide for such emergencies at least
at the subsistence standard. Thus the above indicated compulsion is not
directed against their natural inclinations 'does' not reduce their choice.
It is instead directed against the irresponsible and improvident ones who
are now allowed to prey on the responsible ones - anonymosly, by means
of taxation, that is with the help of government compulsion - or by their
appeal to our charitable sentiments (sentiments
developed as a survival trait of the species before insurance was invanted).
To be economically independent
not only from a Welfare State but also from private charity is a desirable
aim for many whose charitable feelings or reliqious beliefs including a
religious duty to be charitable - are not strongly developed. We are in
this respect in a period of transition which tends to break down even family
communism and charitable relationships between parents and children. Many
do already regard the dependency on the charity even of close relatives
and the'obligation to be charitable at least to such people- as a burden,
not as a pleasant duty.
Few of those individualists
who are only too ready to exclaim: Let them starve if they did not provide
for themselves in time! would actually have the stomach to let a starving
man die before their door. Their wording does already indicate this. They
do not definitely state: I would let him starve. Furthermore, they would
not find it pleasant either to fight looters during a huntger riot.
I do still think that Bth
has a strong case here in favour of a limited compulsion which rrould force
the improvident and irresponsible to support themselves. If Beckerath's
suggestion had been realized in time we would not have to carry the present
Welfare State burden and most people would by now have learned that they
cannot have something for rothing, that they have to pay a price for the
social security they desire, All who now without your consent, live at
your expense, could then be self-supporting, One might therefore consider
this compulsion as a defensive and protective measure of those who love
liberty and consider their property as inviable.
From I. Kant' s remark,
quoted on p. 215, one might only conclude that all parties must at least
submit to predetermined arbitration should a collision of rights and interests
occur. Does such a collision occur when some persons do not insure themselves
against personal misfortune and age, aqainst fire, theft, floods etc.?
I most cases and directly only the victims suffer, The others would be
indirectly influenced whenever and to the extent that "Catiline existences"
are created, strong appeals to their charitable sentiments are made, or
the concept of a "duty of 'the right to help the poor" becomes popular
and finds expression in laws, that "Catiline existences" are a threat to
the safety and property of others has been vividly demonstrated by the
riots in recent years which took place even in countries with the highest
standard of living. Whether the appeal to charity does constitute a threat
is a matter of doubt or is strongly denied by all those who have not yet
reed Ayn Rand's works, But please, do consider the present situation The
improvident, as voters and through their representatives in parliament
do act as predators on the productive and self-suppording part of the population,
quite legally and quite immorally. If this is not depredation, then what
is?
271 It
can hardly be denied that liberty lovers should mind their own business.
But it must also be recognized that when Statists interfere with such rightful
aspirations and mind not their own business teut that of others, then it
is the business of the Liberty lovers to "intervene" against the interventionists
and to force them to mind their business, in our case, to force them to
provide for their own social security themselves. If it is rightful to
defend oneself against an individual predator, a criminal, to restrain
him and to reform him into a responsible and self-supporting citizen then
it is also rightful to employ preventive and defensive force against Welfare
Statists.
Do I have to go on arguing this point? Under freedom to set up or join
exterritorial and autonomous communities of volunteers the Statists would
undertake the required compulsory measures themselves, would introduce,
through the elected shepherds compulsory social and other insurance for
all members of the herd. This one ought to be a really striking argument
against the objectors. Alas, how many of my readers are already able to
clearly visualize a society of this kind.
Let us therefore discuss further some of Beckerath's arguments on compulsory
insurance. He believes that a compulsory fire insurance would be justified
in the same way as a conpulsory membership in a juridical community (p
215) The comparison holds to a large extent - with regard to old type towns
r/heie wooden houses prevailed and the carelessness of a single uninsured
could causeafire that would go out of control and burn the town down. Then
at least compulsory fire prevention and protection measures seem justified
if they stay within certain limits. Perhaps one might under such conditions
consider not only this but also a compulsory insurance, comparable to that
of bank-cashiers,so that whoever started a fire might be successfully held
responsible by the burnt down neighbours The insurance Company selected
by the insured would then see to it; its own, the insured's 'the neighbours'
interest, that he takes a minimum of precautions against fire hazards If
this compulsory insurance would only cover the fire damage done to others
and not at all the damage suffered by the guilty party then the premium
required might be reasonably low. Apparently in practice, the guilty party
is only rarely held responsibe,, for instance e.g.of a careless smoker
being charged with having set off a large scale forest fire and sued at
least for part of the damage he caused. Should people always be charged
and sued in such cases? If so then they ought to be forced to acquire an
insurance cover which would enable them to fulfil such a responsibility.
Instead the present tendency seems to consider irrational acts or irrational
human beings as a natural hazard and one attempts only to provide an insurance
cover once such "natural catastrophes" have occurred. typical instance:
insurance against theft. An extension of the above indicated degree of
compulsory fire insurance could only be defended on the basis of the three
arguments discussed before: prevention of "Catiline existences", of the
need for charity, and prevention of income distribution schemes of governments.
Nowadays houses can be built almost fireproof, and most of them are, People
are at liberty to build only fire-proof houses in the vicinity of wooden
other ones. Thus only the careless or guilty ones need suffer directly
from a fire they start. Furthermore, those who have lost their homes and
many of their private possessions through fire are not necessarily reduced
to "Catiline existences" thereby. They may be forced to speed a higher
percentage of their income than before on accommodation (rent for a furnished
flat) and may have to make an extra savings effort to enable them to acauire
again certain property they appreciate. In a society with economic freedom,
including the economic freedom Beckerath demands which would make full
employment possible to the extent that those who have labour power for
safe desire it, no poverty need result from failure to insure property
against the fire hazard.
In his estimate of the need
for compulsory public insurance v. Beckerath seems to have assumed a statie
situation and to have forgotten the fundamental and dynamic changes implicit
in his system once it it applied, at least by a minority, and allowed to
spread:
272 Already
the insurance companies he proposed would alleviate the continuous currency
-shortage so typical for most Asian and other underdeveloped countries
(even, and more so, when they are empoverished
by the over-issue of forced and exclusive currency).
Moreover, this issue of new and stable exchange media would most likely
not be the only one. I can hardly imagine a situation where only public
insurance companies would be permitted to make use of monetary freedom
or would realize it in a revolutionary way. The change brought about by
a sufficient supply of healthy exchange media and stable value measurement
would directly and indirectly immensely facilitate - among many other things-
the spread of private insurance. These two reforms could reach their optimum
effect naturally only if they are accompanied by all the other aspects
of a free market economy. Inflation would no longer make insurance unattractive,
deflation would no longer make it difficult or even impossible. Competition
would lead to the offer of the most attractive insurance cover scheme.
The decentralization Bth envisions would permit the setting up of cooperative
fire, health insurance etc. on a level attractive to people still living
in a village economy. To the extent that people would then at last be fully
employed, if they desired this - and could thus gradually accumulate some
savings to the extent that they would thus become removed from a'mere subsistence
economy, they would get interested in taking out insurance covers. Private
and voluntary insurance would be likely to spread still faster when cooperative
banks would ask that as an additional cover for themselves the deblor insure
himself and 'his property' They might, as Beckerath suggested take out
an insurance for him and recover the expense together with the loan money,
(That
loan conditions of banks can increase personal security has e g been demonstrated
in the early nineteenth century in the Southern States of the U.S).
Duelling had become fashionable again at least among certain' classes of
society and was eliminated by bankers stipulating that any loan would fall
due immediately of the debtor engaged in a duel, See
Charles Sealsfield (Karl Anton Post) "The Cabin Book", 1841'.
Automatic and regular deductions of insurance contributions from bank accounts
would make the collection of insurance contributions as simple and possibly
even cheaper than their collection together with taxes. This, again, assumes
that free banking is introduced generally and at the same time. It must
be admitted that European or American style commissions for insufance agents
would be out of question for some time. However, do we have to consider
this as an unsurmountable obstacle? I hold that localized insurance companies
applyina the principles of monetary freedom would not find it very difficult
to become locally sufficiently known and appreciated. Every single one
of their notes would act as an advertising leaflet. Particularly if the
local clergy physicians lawyers, shopkeepers and money lenders ( who by
then would be likely to have set up local issuing centres would cooperate,
in their own interest, no great difficulties will arise in:'building up
a large voluntary membership Perhaps considerable premium reductions for
those who join without having to be persuaded by an insurance salesman
and discounts when people join as a group, on their own initiative would
be possible advisable, and help spread voluntary insurance faster. The
group principle might be further applied by granting a no-claim or low
claim bonus to those smal groups which through preventive measures' and
mutual supervision would keep the total claims of group members at a low
level, last not least by reducing and almost eliminating fraud. If experience
is any guide cooperative insurance companies of the type suggested by Beckerath
would- be likely to succeed very fast e. g. in China, provided that there
are no local obstacles (no matter how well intentioned) and that genuine
co-operatives maybe set up and not only state-owned and State-regulated
enterprises, either explained or subsidized by the State, and wrongly named
"cooperative".
It can be foreseen that a number of irresponsible Statists and childlike
primitive people would remain uninsured if insurance is not compulsory
and if we tacitly assume the continued existence-of territorial uniform,
centralized and warlike States with a monopoly for passing laws and regutations,
However, in a genuinely free society, granting each individual a free choice
even regarding political, social and economic institutions and laws, all
people sho have not privately taken care of their future
273
would
be likely to be taken care of by Statist oriented exterritorial and autonomous
communities of volunteers, societies they would be likely to join or which
would remain as a remnant of the present States once the individual's right
to secede from the State is recognized. The
Statist communities could provide for their voluntary members all the compulsory
insurance and general Welfare State benefits they fancy -but at their own
expense only. Indeed as membership is voluntary,
these Welfare States could then have much in common with private insurance
companies. Only the kind and extent of coverage would be different and
less individualized. I do not believe that many adherents of the Statist
religion and welfare Communities, that the host of well-meaning "organizers"
would fail to succeed in signing them up.
The few remaining "Catiline
existences" could not be dangerous any more and could, as objects of charity,
help those whose charitabLe sentiments would otherwise become frustrated.
The right of individuals
to resign from a State without having to migrate and without losing any
human or natural right provides paradoxically for a non-compulsory method
to introduce compulsion, introduce it by individual consent of all concerned
- for all members of an exterritorial and autonomous community of volunteers
constitutinq another new State within the general human society, Likewise
it provides an opportunity for compulsory. private insurance for all the
members of a libertarian community, Furthermore, personal law communities,
parallel, or alternative or competing governments might be set up which
nould e g outlaw insurance altoqetter and impose instead a religious obligation
on their menbers to act charitably. Where does the Libertarian objection
come in there? Even if they should still feel the need to argue and advise
against such system they would have no reason or justification to resist
it. Thus, viewed in perspective and combined with the competition he proposes
between private end public companies and with the individual's right to
secede from e 9, a Welfare State, the element of compulsion in his insurance
plan becomes almost reduced to naught.
2, ) The following are some of the objections Ulrich von Beckerath has raised himself against today's compulsory Insurance schemes.
a) Compulsory insurance
while inflation is almost guaranteed through certain laws.
Compulsory insurance on
the basis of a legal tender paper currency is wrong. Any depreciation of
this currency would partly or completely destroy the security as aimed
at and paid for. Only insurance schemes applying the levy principle could
form an exception. But, to finance old age and invalidity pensions by levies
raised on members would destroy the self-responsibility principle and impose
an excessively large burden on the younger or still working members. The
rightful and sensible alternative is productive investments of the reserve
funds (accumulated insurance premiums) on a stable currency basis allowing
every member - according to the law of large numbersto be supported out
of the additional production due to his invested insurance premium dues.
To compel a person to take out an insurance while at the same time the
government systematically destroys accumulated insurance funds through
its monetary policy - is a particularly evil trait of monetary despotism
and Welfare Statism. The 'insured' are thereby compelled to pay a price
out of proportion to the service they will receive. In some instances the
purchasinq power of the insurance amount will be so reduced they will ineffect
have been forced to buy scrap paper for their old age security. Governments
usually cover up their embezzlement and force the new generation to foot
the old age pensioner bill out of their current earnings - which are much
lower than they would be if the insurance reserves would have been properly
invested at the highest interest rates obtainable on a free market. The
pensioners, at the expense of the new generation, are treated as if their
accumulated insurance funds had not been wasted by the governments monetary
policy. They thus become the accessories to the-huge fraud committed by
the Government against the new generation,
274
b) Compulsory insurance
under present-day Trustee Acts, insufficient funding and capital market
control
Largely from the above objection
follows the objection against compulsory insurance as long as today's Trustee
Acts are still valid end capital transfers and interest rates are controlled
end regulated by professional inflationists, exoropriators, and mismanagers
(known under various fancy titles). As long as government securities had
the least fluctuations on the stock exchange there seemed to be a case
for compulsion to invest insurance funds in these at first sight safest
and most unobjectionable securities 9ut already since several generations
government securities have become the least safe, the most insecure investments,
Nevertheless, in most countries insurance companies are still forced to
invest a considerable percentage of their reserves in government "securities".
(The insufficiency of parliaments as guarantors
of natural rights is well demonstrated by this glaring example)
But compulsory insurance, while this hypocritical malpractice persists,
is objectionable for still another reason. Not only do the "insured" not
get their money's worth back when they are forced to invest it by way of
their insurance company in unproductive or inefficient government projects
and are repaid only in inflated paper - but they themselves, as Taxpayers,
have to repay this compulsory government loan which the government owes
them in their nature as insured citizens from whom the government "borrowed".
In other words, they are compelled to pay their premium twice and to pay
in form of taxes the interest they nominally receive for their insurance
funds forcefully invested in various as a rule unprofitable government
projects. Moreover they may soon be forced to subsidize these projects.
Compulsory insurance is unjustifiable in this case. Furthermore, the government,
through imposing an interest ceiling prevents the optimal use of accumulated
insurance funds and indirectly increases the premium to be paid for one
and the same insurance cover. This also offends against the ideal of investing
insurance funds as productively as possible, for as high interest rates
as can be obtained on a free market a system which would allow people to
reduce their premiums to a minimum and permits e.g. old people to live
as pensioners from the added production due to their insurance funds, almost
in the same way as if they had obtained old age security through a private
savings plan The aim of those benevolent souls who passed the Trustee Acts
can easily be achieved by requiring a credit insurance for all insurance
investments. Prospective members would demand This additional safeguard
from insurance companies of their choice and other companies not providing
this protection would be driven out of business Ulrich
von Beckerath wrote an article on the subject in "Oesterreichische Revue"
of 12/9/1927, called "Kreditversicherung und Muendelsicherheit"Prof
Heinrich Rittershausen dedicated a whole book to the subject :
''Die
Reform der Muendelsicherheitsbestimmungen und der industrielle Analgekredit
- zugleich ein Beitrag zum Erwerbslosenproblem " (Gustav Fischer, Jena
1929, Compare page 23).
It is likewise wrong to
compel people to contribute to an insurance fund which can easily be shown
to be insufficient to cover the amount insured for. The apologists for
such an institution consists insure Taxpayers. Otherwise this type of "insurance"
can only be compared to forcing people to invest in a business which, as
cen be seen right at the beginning, is going to be bankrupt in a few months.
Whoever voluntarily joins such a social security fund or accepts this kind
of State guaranty without protesing is morally no better than a member
of a robber band. To conscript people into a robber band is naturally neither
morally nor otherwise defensible. Simple tables can show that the social
security taxes are often out of proportion to the benefits promised and
that they would, as a ruie,be recovered within a fev months after the insurance
falls due.This has been clearly pointed out in the case of the U.S. in
Robert
E. Slayton's article "Recovery of Social Security Taxes", Rampart Journal,
Winter 67 Box , Larkspur, Colorado 80118.
c) Compulsory insurance
whilst the money monopoly persists ?
Ulrich von Beckerath is
among the very few who recognized that compulsory insurance (275)
is
wrong not only when the insurance cover is in danger of being wiped out
by an inflation or reduced through interest ceiling or when it is confiscated
for welfare State and warfare State (...ah....well-
and warfare statism, ....sounds plausible poetic)
purposes or when others are compelled to pay a large share of the contributions,
but also as long as the insured would have trouble to acquire the necessary
exchange media to pay their premiums - because the money monopoly almost
guaranties a permanent money shortage. He shows clearly how this particular
objection to compulsory insurance cen be overcome.
d) Compulsory membership
in a monopoly insurance company?
likewise von Beckerath objects
against compulsion to insure oneself only sith one particular insurance
company. If public insurance would fulfil the expectations of its supporters
it would not need this compulsion. 90% of the population sould join voluntarily
because they should be offered a better and cheaper insurance cover. Furthermore,
only under competition can a public insurance company convincingly show
what its services are worth, and Beckerath advocates this kind of competition
- e.g. on pp 209 and 216 and suggests likewise a cooperation between private
and public insurance companies, e.g on p 250. Thus in still another way,
he would reduce compulsory insurance to a minimum. I predict that in the
long run the public insurance companies he suggests would be competed out
of existence. You might counter this by saying that Beckerath proposes
tax-exemption, that is privileged public insurance companies. However,
instead of attacking him for thus proposing what appears to be an obvious
privilege you should consider his proposals as a whole. Then you would
realize that he would like to see insurance companies to take the place
of States and that he is far from condoning the present penalizing taxation
of private enterprise but suffers voluntary taxation instead, that is repeal
also of compulsory taxation for private insurance companies. He opposes
such taxes as much as e.g. special taxes on note issuino banks, private
competing police forces voluntary fire-brigades or private schools (or
parents who at their expense send their children to private schools)
He opposes taxes in the insurance sphere particularly because they amount
to an attempt to tax "competinq governments" out of existence. No government
is authorized to tax private efforts which would tend to make government
"help" superfluous. At the time and place when he wrote he could not express
this clearly.
e) Compulsory membership
mitigated by self-government and (from
here on down more end's instead of and's; sorry, but there is a war on
right now) decentralization
The self-government he demands
( p. 210) for public insurance companies combined with the large extent
of decentralization he suagests (without it self-government would be no
more than a farce) would from still another angle, reduce compulsion to
a minimum and would- like competition - offer an easy way to do away with
compulsory public insurance altogether.
f) Compulsory insurance
and employers contributions
Like any sensible man with
economic insight Beckerath also objects against the deceptive (towards
the employees) end unjust (at
face value) system of charging the employers with part of the insurance
premium of the employees. Moreover by force of law, the employers are degraded
into tax collectors for the State) this method
deceives ignorant workers aho do not realize that these deductions are
calculated by all employers as part of the wages (without
this compulsion eages aould include these amounts)
end makes them believe that they could get a cheap insurance coverat the
expense of someone else, once they would have to pay the full amounts themselves
end directly they would soon come to realize how inefficient most large
scale public insurance companies are run and would begin to shop around
for a better cover, to get
their money's worth.
Lastly, one has to keep
in mind that in spite of the inclusion of a limited compulsolry insurance
in his economic freedom proposals his main preposal, monetary freedom,
276
does
not depend on it. On the contrary, he expressly mentions money issues based
on private contributions or cues (e g on p.222) and such issues are generaliv
discussed or implied when he discusses acceptance, clearing, creditor cover,
debt foundation duty to issue exchange media, readiness to accept etc.
If
he had written instead: "Private Insurance and Compensation Money" not
much in this book would have to be altered.The
monetary principles involved are the same: "every
possibility of applying the principles of the Milhaud system throws light
on all other possibilities of its application as well as on the principles
of the system itself'' - he wrote on p. 227,
SOME NOTES ON THE TWO TYPES
OF GOLD STANDARD WHICH ARE POSSIBLE AND HONEST : THE 100 % GOLD COVERED
GURRENCY AND THE GOLD-CLEARING OR GOLD-FOR-ACCOUNT STANDARD
Standards? Doesn't the golden
sun not just stand but meander swerve and for all we know help a hell of
a lot besides? How can we talk about an honest standard if the digging,
cleaning and 'trading' of the stuff is not all hunky dory happiness for
most of those involved?
1 ) Popular (misconceived)
Attitude Towards Money
Money is still such a mysterious
good for most people that they think only of finding winning, taking, or,
at best, earning it in free exchange. They hardly ever think of (literally)
m a k i n g it. Whenever this does happen, only forgery, infiation
or fraud enter their mind (immediately) as either disgusting or attractive
possibilities. They feel unable to produce sound money themselves but believe
that certain other people or certain institutions somehow possess this
mysterious capacity for "creating" money and that they ought to be restrained
in this "dangerous power". If exclusive and forced currency were the only
possible currency then they would even be right. This type of currency
has nowadays become so predominant that it has almost become a category
of thought. All other currency and standard of value possibilities are
either considered as non existent or ignored or as being defended only
by "money cranks''. Even the otherwise very advanced adherente of the Austrian
School of Economics are not quite free from this prejudice as they consider
a 100% gold cover to be necessary as a restraint on private money issues.
Amons the remnant of those who love freedom as much as they love peace (end who realize the close relationship between the two) it has almost become fashionable to consider the 100%_covered gold currency as ideal and to a large extent so it is - compared with the paper currencies issued and mismanaged by governments This attitude is strengthened by the weakness end wrongness of arpuments favouring central banking end discrediting the gold standerd ( the old classical or the 100% cover type) The other type,which beckerath advocates, is hardly discussed at all. (The argument that the gold standerd would not allow a government to pursue an independent monetary policy is typical. It is only comparable to complaints of thieves about solid locks and alert nightwatchmen.) In fact, the old type "classical" gold cover and ths various 'gold reserve currencies' are far from ideal and even the 100% gold cover and convertibility advocated by some has several major defects. Ulrich von Beckerath has treated these currency standard possibilities directly only with some side remarks and generally by criticizing the right of creditors to demand a particular and exclusive currency, He concentrates instead on advising on rightful, sound and practicable alternatives whenever and wherever a shortage of qold coins arises. Apart from this he only discussed gold as an account or clearing standerd of value, combined with a similar silver standerd in a parallel currency. A comprehensive end objective evaluation of the still current concepts of a gold standerd has apparently still to be Britten or at least still to be published.
2 ) Some Remarks on the
Monetary Theory of the Austrian School of Economics
I am looking forward to
a scholarly comparison between the monetary theory advocated by economists
of the Austrian School and the monetary freedom theory upheld by von Beckerath
and a few other economists. My own knowledge of the Austrian School is
very limited, being confined to the reading of a few magazine articles
and in the sphere of free banking there are many more books I would like
to read than I have read so far. Nevertheless, I have formed for myself
a preliminary judgment and it might inspire someone else' and be it only
through errors which have crept in, to undertake a thorough investigation
and comparison.
277
From what I have learnt
about it, the Austrian School of Economics does much good in upholding
the torch of liberty. For this reason I recommend its literature to everybody.
In the monetary sphere it effectively fights some prejudices whilst still
defending some others it stands for gold as the ideal standerd of value,
but
it makes no distinction between gold as ideal standerd of value
and gold as a means of payment, a very important distinction which
v, Beckerath frequently points out. While
making gold the exclusive standard of value (a
free market would give it a predominant position in this sphere anyhow)
it also wants to turn it into an exlusive means of payment, either in coin
form or in forw of 100% covered paper money, (For
the sake of simpilcity I have here generalized the views of various writers
of this school. They do not agree 100% on
this subject and some have
already gone far along the road to monetary freedom.)
The economists of the Austrian
School are certainly right in attacking a paper currency which is so dishonestly
managed that it promises redemption in gold any time without there being
a 100% gold cover available. They are wrong however in also attacking
all kinds of paper money which do not promise convertibility and are not
covered to 100%, or some other percentage by gold, are not legally endorsed
with the legal tender quality but based instead on other foundations which
would keep their exchange value on a free market, their market rate, either
at par with their nominal value (which
might be expressed in gold-weight units) or
very close to it. They are right in attacking
the present-day State paper money, which does not even promise any kind
of cover, has no built-in limits for issues and provides no stable standerd
of value but is instead according to admissions of the currency "authorities"
and according to accepted policies "manipulated".
(Would
the Statist citizens also tolerate the manipulation of the yard or nallon
measure by replacing the standerd units by highly elastic rubber-yards
end rub6er-gallons? Lack of understanding the concrete substance of the
propaganda language of Statist minded politicians end economists seems
to be the main-stay of Statism lists of communist double-talk have frequently
been compiled. We need now (Piet's input:
Joern's grammar was (and is often still) so awkward in such cases, that
I fear it must have hampered his effectiveness as far as he was striving
to become an opinion 'paging publisher; Of course the sentence should go:
We now need) whole
dictionaries against the double-talk on our side, to provide an escape
or liberation route for captive minds. Such a handbook would be only one
of several similar ones ahich belong into the arsenal of overy defender
of freedom.)
At the same time they make
a mistake in asserting like e g. Murrax N Rothbard (in
his very valuable pamphlet: 'What has Government Done to Our Money?', Pine
Tree Press, Raspart College, Box 158, Larkspur, Colorado 80118)
that State paper money cannot possibly have a sound basis. The reader will
find many references to sound State paper money under the each word "tax
foundation" in the index, This
tax-foundation
would
not only work within the present at least partly unjust Statist framework
but also whenever States are reduced in their influence to voluntary members
only and would receive only voluntary tax contributions or fees for their
services. (thy faith is great, dear pal o'
mine)
Probably all representatives
of the Austrian School have the laudable intention of wanting to prevent
qovernments from inflating the currency realizing that no government in
the pursuit of its welfare and warfare policy ever feels and/or falls short
of an excuse for this kind of robbery. (Fraud,
forgery, requisitioning, expropriation and taxation without consent fit
this kind of 'monetary policy' as well) Alas,
most of them vent to achieve this merely by 'imposing' on the government
a 100% gold redemption obligation - while at the same time upholding the
government's monopoly for the issue of money tokens. They do not fully
realize that as long as this money monopoly exists this kind of 'restraint'
is likely to be ignored by any government which is powerful enough to enforce
the obedience of rationally dissenting citizens.
Provided, these economists
have, like Murray N. Rothbard (ibid), advanced one step further and demand
competition in the sphere of banking and banknote-supply - they still insist
on convertibility as the only means of achieving the circulation of paper
promises and stable value reckoning. Thereby they show that they still
have not fully realized the possibilities of o t h e r free
market covers, checks, and limits for the issue of money substitutes made
out of paper. (References to these will be
found in the index under market-rate, discount, acceptance, demand, shopfoundation,
debt-foundation, creditor-cover, tax-foundation etc.)
Surprisinqly, most of these
"free market advocates" underestimate the pernicious influence of legal
tender and the possibility of a free market rate for various means of payment
which allows the formation of a discount of means of payment against the
278
standard
of value, e g. gold weight units for account (based
on free gold coin exchanges in the open market),
and thus automatically stops or prevents over-issues, In this sphere they
have hardly advanced economic science for the last 100 years but have rather
slipt back. A century ago the significance of legal tender -and of its
alternative- was rather well known When they attack legal tender they do
it only by attacking "fiat money" in general end wrongly apply the term
'fiat-money" to paper money which is not legal tender- merely because it
is not convertible. Some of these economists, for instance Murray N. Rothbard
end Orval V. Watts, have realized like v. Beckerath did, thatGresham's
law applies only to legal tender money.
But so far they have not yet, like von Beckerath did, drawn all the logical
conclusions from this economie law - largely because of their preoccupation
with one cover only: the 100% one. Ulrich
von Beckerath explored the omissions in the monetary theory of the Austrian
Economists and the monetary freedom potential
they ignored. It is up to these economists now to take note of this scientific
exploration end exposition - or to lose their credibility as scientists
(in the eyes of all for whom this does not merely imply academic qualifications)
end become reduced to mere partizans of one among many other monetary theories.
Ulrich von Beckerath comes to the conclusion that gold in spite of its
being the ideal standard of value - should not be enforced as an
exclusive means of payment, neithetr in form of coins nor in form of 100%
gold-covered banknotes, nor even as the exclusive standerd of value He
shows that redemption into gold by the issuer, this foreign element in
the "circulation" process, should be referred to the free gold market.
This kind of market convertibility would suffice to allay and dispense
suspicion against soundly founded paper money and would permit stable value
reckoning like the old type of gold standerd it would not suffice on its
own but must be accompanied or backed up by ''readiness to accept", a sufficient
"demand", to ensure a "reflux", e g by "shop-foundation". In these exchanges
on the free gold market qold would serve in its ideal capacity for determining
end measuring values and would in no way reduce the turnover in a country
to the amount of golden "measuring sticks" available standard of value.
Gold in coin form or bullion is useful as a means of payment but it is
far from ideal, even dangerous, as an exclusive currency.
To avoid misunderstandings
I am not afraid of stressing again that von Beckerath does not raise any
serious objection against honest, private or even honest government banks
issuing nothing but 100% gold covered banknotes, deposit slips, gold certificates,
or gold cheques - no objection, as long as they are not the customary,
enforced, or exclusive means of payment, and as long as there is no compulsion
to use only gold as a standerd of value (For
some time v. Beckerath did indeed favour the idea of making gold, though
not an exclusive means of payment, at least an exclusive standard of value,
by investing gold weight units and nothing else with the status of legal
tender. He has become more tolerant end freedom-minded since then end recognizes
the right of e,g. index-standard fanatics to a standard of their choice)
3 ) Is a 100% Gold Cover
Necessary and Justified
The theory that it is necessary
end justified end possible to cover all payment trans actions 100% by gold
assumes a continuous end equal distribution and a steady circulation of
gold-money everywhere - completely eliminating the speculative element
existing in every present-day debt contract (an
element clearly described perhaps for the first time by U. von Beckerath),
even in quito ordinary ones like wage end rentcontracts. (What
is here true for exclusive gold currency is equally applicable to an exclusive
paper currency)
While it must be admitted
that gold -if not-interfered with- has indeed a strong tendency in this
direction (stronger than that of any other
commodity) which has been formulated into
the "law of fluctuating gold quantities", this distribution and regularity
of circulation is not perfect enough end includes a dangerous time-element.
Furthermore, the above theorry assumes that price fluctuations follow the
gold fluctuations quite smoothly and are thus harmless. In reality these
price adaptions require 279
time
and in the period of transition prices either tend to run ahead or remain
behind the money supply - thus worsening monetary crises. (Compare 285
ff.)
Furthermore, precisely what
makes gold an ideal money metal makes it also an ideal means for hoarding
(the derogatory name for the keeping of private
cash reserves when the harmful effects under a system of exclusive currency
are considered). As long as gold is an exclusive
currency and is thus considered as the claimable basis of all debt contracts,
that is, as long as there is either no freedom toissue gold substitutes
or no technique is known how to supply privately sufficient stable-value
means of payment made out of paper- many sudden gold coin hoardings or
cash reserve increases) must be expected it does not matter here what reason
or motive started them. Some of these are likety to turn into acute currency
famines.
The right of creditors to
demand gold seems to be completely harmless if confined to creditors of
honest gold deposit banks charging a deposit fee. But if it is true that
clearing or cheque accounts da turn over much more frequently than cash
(not only that they account for a much larger
share of the turnover - I have still to see detailed statistics of these
relationships) then the sudden reduction of
short-term or immediately withdrawable deposits, clearing or cheque accounts
(if such a withdrawal is permitted and the
permission is inherent in the system), undertaken
in order to satisfy urgent cash needs of the deposit or account owner,
would greatly reduce the turnover notential by reducing the possibility
of clearing and increasing the need for cash when it is already in short
supply. This danger lies in the nature of an exclusive currency and will
therefore persist even if there is no other government meddling in the
monetary sphere than the protection of the exclusive currency against competition.
Especially in revolutionary times the tendency to keep as large cash reserves
as possible, is strong. It will increase the unemployment end depression
which might have caused a revolution in the first place Thus hoarding (or
cash-holding of exclusive currency) tends to further revolutionary
violence. One might paradoxically say that the more gold or another exclusive
currency is hoarded the more the individual hoarder benefits - when he
finally speeds his cash reserve after all other commodities have reached
rock-bottom prices, whiLe at the same time the general economy -including
the hoarders- is correspondingly harmed through the at least temporary
and all too sudden reduction of turnover with all the difficulties this
implies during the period of adapti on to the new relationship between
the monopoly currency in circulation and the volume of oods end services
on the market.
The naturel self-recovery
(two-way price adaption to restore the original
relationship) requires time, In the meantime
great harm is likely to be done in the balance. As v Beckerath treats hoarding
(and how to render it not only harmless but
beneficial) extensively, e,g, on pp. 131ff,
no more need be said here.
The objection of insufficient
adaptability could be likewise raised when there are instead of monetary
fluctuations large-scale fluctuations on the side of the supply of goods
or services like e.g. abundant harvests or widespread droughts, great refugee
waves or large shifts of employment opportunities from one locality to
another (due to technological developments).
Experience showed that the gold currency supply and the price and wage
level are not adapted with sufficient rapidity to permit under such circumstances
all desired turnovers of labour end goods. Instead, as has only too frequently
been observed, goods are destroyed, numerous bankruptcies occur, sales
difficulties persist end famine conditions are approached combined with
unemployment _ instead of low prices end a high standerd of living or high
prices combined with overwork of all able to work (in
order to allow them to earn sufficient money to purchase the high priced
scarce foodstuffs).
Only under monetary
freedom could the local supply of means of exchange adept perfectly to
local fluctuations in the supply of goods and labour services- because
only then would exchange media be based directly on these and would correspondingly
contract or expand - while still stable value units are applied. Compare
this adaptability (details in Beckerath' s
writings) alth the tendency of an exclusive
gold currency in times of a currency shortage. During the shortage formerly
unused stocks of gold ought to be dissolved to relieve the shortage. Instead
the tendency is rather that in balance the hoardings......
click
here to go to part 2
some miscellaneous additions
by JZ
The SCHOOL OF LIVING PRESS, after repeatedly
printing-articles on monetary freedom in A WAY OUT ( e.g., in the Jan/Feb
66 end the Oct 67 issues ) announced the reprint of the monetary freedom
essays of BENJAMIN R. TUCKER under the title 'Money and Banking'. Order
from Heathcote School of Living Centre, Freeland, Maryland, U S A., for
$ 1.75
The INTERNATIONAL FREEDOM ACADEMY, Sec Gen. Finn Andreen, Alstroemergatan 33, Stockholm K, S w e d e n, offers an international forum for the discussion of the problems of individual freedom and free enterprise. It tries to co-ordinate the activities of all similar organizations, publishes an address list, FREE ENTERPRISE TRENDS and pamphlets
E D-
I T O R I A L
( 1 ) These
three special issues on monetary freedom contain as many words as about
600 pp of a work like Murray N Rothbard's ~Han Economy and State. ( 2 vol
altogether 985p, Van Nostrand, U.S.$10.75. ) If I charged you as much as
e.g Rampart Journal of Rampart College does, for ? issues ( less voluminous
~ p.a., US ~ 7.50, I would have to ask vou for at least $ 25 for my sories
of 12 issues' Admittedly, my printing, paper and bindinq quality is not
as good - but I have to use much more primitive equipment and have thus
to invest much more labour. As this journal is not on the general market
for books end magazines nor as yet known to all libertarians and peace
lovers who might be interested it cannot command a free market price. Anyhow,
I intend to increase subscriptions in the future, though not tenfold, The
resultant reduction of my subscribers will, I trope, help me to catch up
with my correspondence.
In the meantime I can only offer again apologies to all those whose LETTERS
I have so far left unanswered. Very frequent ly,the more I appreci ate
a letter and the writer and the more I think that it deserves a welt considered
answer the longer the letter remains unanswered, as a rule far beyond the
limits of politeness.
There were some complaints about the smallness of the PRINT. This print
is in reality larger than most newsprint end comparable to the print-size
of many pocket books.
Line-lenqth and intervals should not be real obstacles to skilled ànd
interested readers witfiout eye defecte. The lack of sharpness of the letters
-due to the way stencil and ink duplication process which I have still
to use- may, combined with their smallness make reading a bit difficult
for some. But why weren't you using a good magnifying glass? You have not
got one? Do I have to enclose one in my next mailing?
In other words, I do not believe that the customer is always right. Furthermore,their
contributions do not cover my expenses and their reading comfort does not
concern me so much that I would be willing to double my expenses and my
work. You are not going to reed these essays as a result? Your loss would
be greater than mine!
Such complaints have in some cases brought about a certain suspicion in
me Therefore, i appeal to you not to let the smallness of the arint end
similar details serve you as an excuse end rationalization for not undertaking
the effcrt required for intelligentty reading, studying end thinking through
the monetary freedom practices and principles here described A real effort
is required end it cen be tiresome. These articles were not written for
your entertainment end you may have to be mentalLy quite rested and perhaps
even at your best in order to cope with many pages at one sitting. This
has, I assert less to do with the size of the print than with what the
print tries to convey, if new ideas were always easily understood the sensible
ones would always prevail in a short time. Certainly, you know at least
some sensible ideas which are still fighting an age-old battle against
overwhelming odds of prejudices.
ALPHABETICAL
INDEX
I have
so often in private conversation blamed authors end pulishers for not supptying
a comprehensive alphabetical index that at last I feit caught in-a trap
of mv own making, My conscience demanded the supply of an index for P.P.
911 11ow more than ever before I understand the extra effort involved and
the hesitation of authors and publishers to supply this service Nevertheless
now as before I hola that such an effort is worth it for all who are not
blessed with perfect recall. Another summary of von Beckerath's views and
proposals should not be necessary and might only be misunderstood like
most other generalizations. After putting a really large amount of work
into compiling the alphabetical index I prefer therefore to ask you to
make frequent use of it -provided you want to understand the monetary basis
of economie freedom.
COPYRIGHT
information: The third lengthly
work of von Beckerath' in this issue, was reprinted with permission from
the English translation of the originally German work which was first published
by the Annals of Public end Co-operative Economy., now at Liege 45 quai
de Rome Belgium, - in either 1937 or 1938 in four languages. I do not know
the German title, The English edition which I copied was published in cooperation
with the 'Annals' by Williams, 8 Norgate, London, 1938, (Probably most
of the impressions were stamped in during W.W. II's paper shortage - like
so many other valuable works,
REPRINT is free end desired
Provided the source is mentioned.
If you would appreciate these essays
as much as I do, you would do your utmost to get them reprinted in a larger
issue t an the 500 copies each I could afford. I undertook my effort largely
in the hope of finding some sponsors or a publishing house for a larger
'normal' publication-But the number of monetary freedom advocates I found,
is still so small that I can satisfy this demand fros my small scale private
reprint.
TRANSLATION: As I do not possess
the German original of this work I could not even try to improve the translation.
U.v. Beckerath found it frequently incorrect.
CENSORSHIP INFLUENCE:
In this essay aLso the author could not openly
defy the Nazi regime end trope to survive, I trust that most libertarians
are able to reed between the lines end make the necessary deductions end
additions themselves, As a rather obvious precaution against Nazi censorship
the author quoted Nazi utterances, e g on pp 7,56,149 03,251 (compare also
index references under Goebbels, Goering and Hitler) and s?ressed references
to Bismarck, Frederick the Great, Prussian traditions.
Leaders and leadership and, naturally, had
to omit references to the noteworthy Jewish
tradition regarding monetary affairs. Is there another religion which makes
honesty in monetary relationships a religious duty? (I
wonder what a Taoist would say to that)
UNDERDEVELOPED COUNTRIES:
Ulrich von Beckerath describes the problems
of underdeveloped countries as due mainly to three factors:
1.) a continuous currency famine, increased,
not mitigated by
2.) inflationary currency policies of their
governments and
3 ) lack of insurance cover,
He provides detailed cures for all three points.
A more complete case could have been made to
point out the relationship between lack of economic develonment end lack
of monetary freedom. A future peace plan will deal with this using India
as an example
REPETITION
You will find frequent repetitions of certain
ideas, explanations and
examples on these pages - and can still bet on
it that most of them will be misunderstood nevertheless. As v. Beckerath's
essays were so far never printed together and appeared first spread over
an interval of 5 years and were moreover never indexed the repetitions
are largely excused. The matter dealt with is so new and complicated for
most that the repetitions are not to be considered as a nuisance but rather
as a help.
I had wanted to help a libertarian group to collect
addresses and to further the compilation and publication of a comprehensive
list of libertarian organizations, magazines and individuals- of all shades.
Therefore I printed free on page 153 an appeal for help - and Procotly
forgot to mention the address to be contacted
Mr. Cole S. PATTERSON, Sec. AUSTIN LIBERTARIAN
ASSN., 1105 `1 12th St., Austin Texas.
The three special issues on monetary freedom,
PEACE PLANS 9 - 11,are presently still for sale at $ 1.00 together.
ADVERTISEMENTS :
So far sti l l only $ 2 .00 or US$ 2 50 per half
page A 8 ~ or US' 5 -per full page.
Only one page per advertiser per issue. Condition:
~ntiTotalitarian!
ADDRESSES WANTED of all interested at least in one aspect of monetary freedom'
ROBERT ANTON WILSON ( 7428 North Paulina St. Chicaqo, Illinois 60626 ) wrote me a note in which he mentioned that "Larry LABADIE, of Suffern, N Y '' ( 20 De Baun, N.Y. 10009 - J,M. Zube (John has a production of Labadie's poetry forthcoming; he did the masters while I was there) "has records of 1000 currency reform attempts in U.S.A. history Two years ago, he lived in a town - Yellow Springs, Ohio - which had used auxiliary currency during the Depression. In all cases Federal authority finally intervened. - America is a free country, isn't ft? - Please keep thinking about the possibility not only of a monetary reform- but of a monetary revolution' J Zube.
NEW INDIVIDUALIST REVIEW,
Ida Noyes Hall, Univ. of Chicago, Illinois 60637
_ an independent journal associated with no organ1 zati on or political
party, believes that in the realm of politics end economics the mest valuable
system guaranteeing proper respect for individuality is that which historically,
has gone by the name of classical liberalism; the elements of this system
are private property, civil liberties, the rule of law, end, in genera!,
the strictest limits placed on the power of government. It is the purpose
ot the Review to stimulate and encourage exploration of important problems
from a viewpoint characteized by thoughtful concern with individual liberty.