In a letter to the London Herald of Anarchy, Mr. J. Greevz Fisher asserts that "government does not, and never can, fix the value of gold or any other commodity," and cannot even affect such value except by the slight additional demand which it creates as a consumer. It is true that government cannot fix the value of a commodity, because its influence is but one of several factors that combine to govern value. But its power to affect value is out of all proportion to the extent of its consumption. Government's consumption of commodities is an almost infinitesimal influence upon value in comparison with its prohibitory power. One of the chief factors in the constitution of value is, as Mr. Fisher himself states, utility; and as long as governments exist, utility is largely dependent upon their arbitrary decrees. When government prohibits the manufacture and sale of liquor, does it not thereby reduce the value of everything that is used in such manufacture and sale? If government were to allow theatrical performances on Sundays, would not the value of every building that contains a theater rise? Have not we, here in America, just seen the McKinley bill change the value of nearly every article that the people use? If government were to decree that all plates shall be made of tin, would not the value of tin rise and the value of china fall? Unquestionably. Well, a precisely parallel thing occurs when government decrees that all money shall be made of or issued against gold or silver; these metals immediately take on an artificial, government-created value, because of the new use which arbitrary power enables them to monopolize, and all other commodities, which are at the same time forbidden to be put to this use, correspondingly lose value. How absurd, then, in view of these indisputable facts, to assert that government can affect values only in ratio of its consumption! And yet Mr. Fisher makes this assertion the starting-point of a lecture to the editor of the Herald of Anarchy delivered in that dogmatic, know-it-all style which only those are justified in assuming who can sustain their statements by facts and logic.

Mr. Fisher replied, in a letter to Liberty, so Mr. Tucker continued:

The central position taken by Mr. Fisher at the start that government cannot affect the value of gold or any other commodity except by the slight additional demand which it creates as a consumer he has been forced to abandon at the first onslaught. If government were to allow the opening of theaters on Sunday, it would not thereby become a consumer of theaters itself (at least not in the economic sense; for, in the United States, at any rate, our governors always go to the theater as "dead-heads"), and yet Mr. Fisher admits that in such a case the value of theaters would immediately rise very greatly. This admission is an abandonment of the position taken at first so confidently, and no other consideration can make it anything else. The fact that competition would soon arise to reduce the value does not alter the fact that for a time this action of government would materially raise it, which Mr. Fisher originally declared an impossibility. But even if such a plea had any pertinence, it could be promptly destroyed by a slight extension of the hypothesis. Suppose government, in addition to allowing the theaters now existing to open on Sunday, were to prohibit the establishment of any additional theaters. Then the value would not only go up, but stay up. It is hardly necessary to argue the matter further; Mr. Fisher undoubtedly sees that he is wrong. The facts are too palpable and numerous. Why, since my comment of a month ago on Mr. Fisher's position, it has transpired that the cost of making twist drills in the United States has been increased five hundred and twenty per cent by the McKinley bill. Government cannot affect value, indeed!

In the paragraph to which Mr. Fisher's letter is a rejoinder I said that "when government decrees that all money shall be made of or issued against gold or silver, these metals immediately take on an artificial, government-created value, because of the use which arbitrary power enables them to monopolize. Mr. Fisher meets this by attempting to belittle the restrictions placed upon the issue of paper money, as if all vitally necessary liberty to compete with the gold-bugs were even now allowed. Let me ask my opponent one question. Does the law of England allow citizens to form a bank for the issue of paper money against any property that they may see fit to accept as security; said bank perhaps owning no specie whatever; the paper money not redeemable in specie except at the option of the bank; the customers of the bank mutually pledging themselves to accept the bank's paper in lieu of gold or silver coin of the same face value; the paper being redeemable only at the maturity of the mortgage notes, and then simply by a return of said notes and a release of the mortgaged property,is such an institution, I ask, allowed by the law of England? If it is, then I have only to say that the working people of England are very great fools not to take advantage of this inestimable liberty, that the editor of the Herald of Anarchy and his comrades have indeed nothing to complain of in the matter of finance, and that they had better turn their attention at once to the organization of such banks as that which I have just described. But I am convinced that Mr. Fisher will have to answer that these banks are illegal in England; and in that case I tell him again that the present value of gold is a monopoly value sustained by the exclusive monetary privilege given it by government. It may be true, as Mr. Fisher says, that just as much gold would be used if it did not possess this monopoly. But that has nothing to do with the question. Take the illustration that I have already used in this discussion when I said: "If government were to decree that all plates shall be made of tin, would not the value of tin rise and the value of china fall?" Now, if the supply of tin were limited, and if nearly all the tin were used in making plates, and if tin had no other use of great significance, it is quite conceivable that, if the decree prohibiting the use of china in making plates should be withdrawn, the same amount of tin might continue to be used for the same purpose as before, and yet the value of tin would fall tremendously in consequence of the admitted competition of china. And similarly, if all property were to be admitted to competition with gold in the matter of representation in the currency, it is possible that the same amount of gold would still be used as money, but its value would decrease notably, - would fall, that is to say, from its abnormal, artificial, government-created value, to its normal, natural, open market value.

Mr. Fisher then came back with another contribution to Liberty - in fact, several of them - in which he attacked the editor and also Mr. Alfred B. Westrup, whose "Citizens' Money" and "The Financial Problem" he had just read. Mr. Tucker's reply, therefore" is a defense of his own position and of that of Mr. Westrup as well, and the controversy develops into a discussion of free trade in banking, of currency and government, and of the equalization of wage and product:

I know of no friend of liberty who regards it as a panacea for every ill, or claims that it will make fools successful, or believes that it will make all men equal, rich, and perfectly happy. The Anarchists, it is true, believe that under liberty the laborer's wages will buy back his product, and that this will make men more nearly equal, will insure the industrious and the prudent against poverty, and will add to human happiness. But between the fictitious claims which Mr. Fisher scouts and the real claims which the Anarchists assert it is easy to see the vast difference.

I do not understand how "'the unvarying failure of unsound currency enactments" makes the interference of government with finance seem less pernicious. In fact, it drives me to precisely the opposite conclusion. In the phrase, "concomitant dwindling of monetary law into a mere specification of truisms," Mr. Fisher repeats his attempt, of which I complained in the last issue of Liberty, to belittle the restrictions placed upon the issue of paper money. @en he has answered the question which I have asked him regarding the English banking laws, we can discuss the matter more intelligently. Meanwhile it is futile to try to make a monopoly seem less than a monopoly by resorting to such a circumlocution as "system of licensing individuals to carry on certain kinds of trades," or to claim that the monopoly of a toot not only common but indispensable to all trades is not more injurious than the monopoly of a tool used by only one trade or a few trades.

It is true that if the mass of capital competing for investment were increased, the rate of interest would fall. But it 'is not true that scarcity of capital is the only factor that keeps up the rate of interest? If I were free to use my capital directly as"a basis of credit or currency, the relief from the necessity of borrowing additional capital from others would decrease the borrowing demand, and therefore the rate of interest. And if, as the Anarchists claim, this freedom to use capital as a basis of credit should give an immense impetus to business, and consequently cause an immense demand for labor, and consequently increase productive power, and consequently augment the amount of capital, here another force would be exercised to lower the rate of interest and cause it to gradually vanish. Free trade in banking does not mean only unlimited liberty to create debt; it means also vastly increased ability to meet debt: and, so accompanied, the liberty to create debt is one of the greatest blessings. It is not erroneous to label evidence of debt as money. As Col. Wm. B. Greene well said: "That is money which does the work of the toot money." When evidence of debt circulates as a medium of exchange, to all intents and purposes it is money. But this is of small consequence. The Anarchists do not insist on the word "money." Suppose we call such evidence of debt currency (and surely it is currency), what then? How does this change of name affect the conclusions of the "currency-faddists"? Not in the least, as far as I can see. By the way, it is not becoming in a man who has, not simply one bee in his bonnet, but a whole swarm of them, to talk flippantly of the "fads"' of men whose lives afford unquestionable evidence of their earnestness.

Mr. Fisher seems to think it inherently impossible to use one's property and at the same time pledge it. But what else happens when a man, after mortgaging his house, continues to live in it? This is an actual everyday occurrence, and mutual banking only seeks to make it possible on easier terms, - the terms that will prevail under competition instead of the terms that do prevail under monopoly. The man who calls this reality an ignis fatuus must be either impudent or ignorant.

Mr. Fisher, in his remark that "no attempt is made to show how displacing gold from currency would reduce the price as long as its cost and utility remain what they now are," is no less absurd than he would be if he were to say that no attempt is made to show how displacing flour as an ingredient of bread would reduce the price of flour as long as its cost and utility remain what they now are. The utility of flour consists in the fact that it is an ingredient of bread, and the main utility of gold consists in the fact that it is used as currency. To talk of displacing these utilities and at the same time keeping them what they now are is a contradiction in terms, of which Mr. Fisher is guilty. But Mr. Westrup is guilty of no contradiction at all in claiming that money can be made very much more plentiful and yet maintain its value at the same time that he contends that the present value of money is due to its monopoly or scarcity. For to quote Colonel Greene again:

"All money is not the same money. There is one money of gold, another of brass, another of leather, and another of paper; and there is a difference in the glory of these different kinds of money. There is one money that is a commodity, having its exchangeable value determined by the law of supply and demand, which money may be called (though somewhat barbarously) merchandise-money, for instance, gold, silver, brass, bank-bills, etc. there is another money, which is not a commodity, whose exchangeable value is altogether independent of the law of supply and demand, and which may be called mutual money...If ordinary bank-bills represented specie actually existing in the vaults of the bank, no mere issue or withdrawal of them could affect a fall or rise in the value of money: for every issue of a dollar bill would correspond to the locking-up of a specie dollar in the banks' vaults; and every canceling of a dollar-bill would correspond to the issue by the banks of a specie dollar. It is by the exercise of banking privilegesthat is, by the issue of bills purporting to be, but which are not, convertible - that the banks effect a depreciation in the price of the silver dollar. It is this fiction (by which legal value is assimilated to, and becomes, to all business intents and purposes, actual value) that enables banknotes to depreciate the silver dollar. Substitute verity in the place of fiction, either by permitting the banks to issue no more paper than they have specie in their vaults, or by effecting an entire divorce between bank-paper and its pretended specie basis, and the power of paper to depreciate specie is at an end. So long as the fiction is kept up, the silver dollar is depreciated, and tends to emigrate for the purpose of traveling in foreign parts; but, the moment the fiction is destroyed, the power of paper over metal ceases. By its intrinsic nature specie is merchandise, having its value determined, as such, by supply and demand; but on the contrary, paper money is, by its intrinsic nature, not merchandise, but the means whereby merchandise is exchanged, and, as such, ought always to be commensurate in quality with - the amount of merchandise to be exchanged, be that amount great or small. Mutual money is measured by specie, but is in no way assimilated to it; and therefore its issue can have no effect whatever to cause a rise or fall in the price of the precious metals."

This is one of the most important truths in finance, and perfectly accounts for Mr. Westrup's position. When he says that money can be made very much more plentiful and yet maintain its value, he is speaking of mutual money; when he says that the present value of money depends upon monopoly or scarcity, he is speaking of merchandise money.

As sensibly might one say to Mr. Fisher, who is a stanch opponent of government postal service, that "the immediate effect of the total abstention of government from its protection of the public from the roguery of private mail-carriers would be that a great crop of fresh schemes would offer themselves to those desirous of entrusting any of their letters to others to carry. A very large proportion of these schemes possibly the Majority - would be unsound." Well, what of it? Are we on this account to give up freedom? No, says Mr. Fisher. But, then, what is the force of the consideration?

Mr. Westrup's money not only shows that A has given B a conditional title to certain wealth, but guarantees that this wealth has been preserved. That is, it affords a guarantee so nearly perfect that it is acceptable. If you take a mortgage on a house and the owner insures it in your favor, the guarantee against loss by fire is not perfect, since the insurance company may fail, but it is good enough for practical purposes. Similarly, if B, the bank, advances money to A against a mortgage on the latter's stock of goods, it is within the bounds of possibility that A will sell the goods and disappear forever, but he will thus run the risk of severe penalties; and these penalties, coupled with B's caution, make a guarantee that practically serves. To be sure, Mr. Westrup's money does not assure the holder that the bank will deliver the borrowed articles on demand, but it does assure him that .he can get similar articles or their equivalents on demand from any customers of the bank that have them for sale, because all these customers are pledged to take the bank's notes; to say nothing of the fact that the bank, though not bound to redeem on demand, is bound to redeem as fast as the mortgage notes mature.

The truisms which Mr. Fisher enunciates so solemnly do not establish the absence of any necessity for enabling all wealth to be represented by money. This necessity is shown by the fact that, when the monetary privilege is conferred upon one form of wealth exclusively, the people have to obtain this :form of wealth at rates that sooner or later send them into bankruptcy.

The value of gold would be reduced by mutual banking, because it would thereby be stripped of that exclusive monetary utility conferred upon it by the State. The percentage of this reduction no one can tell in advance, any more than he can tell how much whiskey would fall in price if there were unrestricted competition in the sale of it.

Neither gold nor any other commodity is bought by people who don't want to consume it or in some way cause others to consume it. Gold is in process of consumption when it is in use as currency.

Mutual banking might or might not cause gold to lose its preeminence as the most thoroughly constituted value. If it should do so, then some other commodity more constantly demanded and uniformly supplied would take the place of gold as a standard of value. It certainly is unscientific to impart a factitious monopoly value to a commodity in order to make its value steady.

Other things being equal, the rate of interest is inversely proportional to the residual increment of wealth, for the reason that a low rate of interest (except when offered to an already bankrupted people) makes business active, causes a more universal employment of labor, and thereby adds to productive capacity. The residual increment is less in the United Kingdom, where interest is low, than in the United States,, where interest is high, because other things are not equal. But in either country this increment would be greater than it now is if the rate of interest were to fall.

If gold became as abundant as copper, legislation, if it chose, could maintain its value by decreeing that we should drink only from gold goblets. If the value were maintained,, the volume of money would be greater on account of the abundance of gold. This increase of volume would lower the rate of interest.

A voluntary custom of selling preferentially for gold would not be a monopoly, but there is no such voluntary custom. Where cattle are used voluntarily as a medium of exchange, they are not a monopoly; but where there is a law that only cattle shall be so used, they are a monopoly.

It is not incumbent on Anarchists to show an analogy between a law to require the exclusive consumption of handmade bricks and any law specifying that the word Dollar in a bond shall imply a certain quantity of gold. But they are bound and ready to show an analogy between the first-named law and any laws prohibiting or taxing the issue of notes, of whatever description, intended for circulation as. currency. Governments force people to consume gold, in the sense that they give people no alternative but that of abandoning the use of money. When government swaps off gold for other commodities, it thereby consumes it in the economic sense. The United States government purchases its gold and silver. It can hardly be said, however, that it purchases silver in an open market, because, being obliged by law to buy so many millions each month, it thereby creates an artificial market.

Again Mr. Fisher came back, in his characteristic style, to which Mr. Tucker replied in the following manner:

Mr. Fisher's article is nothing but a string of assertions, most of which, as matters of fact, are untrue. The chief of these untruths is the statement that in exchanging gold we do not consume it. What is consumption? It is the act of destroying by use or waste. One of the uses of gold - and under the existing financial system its chief use - is to act as a medium of exchange, or else as the basis of such a medium. In performing this function it wears out; in other words, it is consumed. Being given a monopoly of this use or function, it has an artificial value, - a value which it would not have if other articles, normally capable of this f unction, were not forbidden to compete with it. And these articles suffer from this restriction of competition in very much the same way that a theater forbidden to give Sunday performances suffers if its rival is allowed the privilege. Mr. Fisher may deny the analogy as stoutly as he chooses; it is none the less established. This analogy established, Mr. Fisher's position falls as surely as his other position has fallen: the position that government cannot affect values, which he at first laid down with as much contemptuous assurance as if no one could deny it without thereby proving himself a born fool. So there is no need to refute the rest of the assertions. I will simply enter a specific denial of some of them. It is untrue that gold is not withdrawn from the market to raise its price. It is untrue that the gold mines are kept open principally to supply the arts. It is untrue that, if gold were twice as dear or twice as cheap, bankers would not lose or gain; the chief business of the banker is not to buy and sell gold, but to lend it. And I believe it to be untrue - though here I do not speak of what I positively know - that English law permits the establishment of such banks as Proudhon, Greene, and Spooner proposed. Mr. Fisher certainly should know more about this than I, but I doubt his statement, first, because I have found him in error so often; second, because nine out of ten Massachusetts lawyers will tell you with supreme confidence that there is no law in Massachusetts prohibiting the use of notes and checks as currency (yet there is one of many years' standing, framed in plain terms, and often have I astonished lawyers of learning and ability by showing it to them); and, third, because I am sure that, if such banks were legal in England, they would have been started long ago.

Another long letter from Mr. Fisher here intervened and the editor of Liberty took up each point and carefully replied to it:

A laborer's product is such portion of the value of that which he delivers to the consumer as his own labor has contributed. To expect the laborer's wages to buy this value back is to expect no more than simple equity. If some other laborer has contributed to the total value of the delivered article by making a tool which has been used in its manufacture by the laborer who delivers it, then the wages of the laborer who makes the tool should also buy back his product or due proportion of value, and would do so under liberty. But his portion of the value and therefore his wage would be measured by the wear and tear which the tool had suffered in this single act of manufacture, and not by any supposed benefit conferred by the use of the tool over and above its wear and tear. In other words, the tool-maker would simply sell that portion of the tool destroyed in the act of manufacture instead of lending the tool and receiving it again accompanied by a value which would more than restore it to its original condition. Mr. Fisher's interpretation rests, furthermore, on a misconception of the term wages.

When a farmer hires a day-laborer for a dollar a day and his board, the board is as truly a part of the wages as is the dollar; and when I say that the laborer's wages should buy back his product, I mean that the total amount which he receives for his labor, whether in advance or subsequently, and whether consumed before or after the performance of his labor, should be equal in market value to his total contribution to the product upon which he bestows his labor. Is this expecting too much? If so, might I ask to whom the excess of product over wage should equitably go?

Every man who postpones consumption takes a risk. If he keeps commodities which he does not wish to consume, they may perish on his hands. If he exchanges them for gold, the gold may decline in value. If he exchanges them for government paper promising gold on demand, the paper may decline in value. And if he exchanges them for mutual money, this transaction, like the others (though in a smaller degree, we claim), has its element of risk. But, as long as merchants seem to think that they run less risk by temporarily placing their valuables at the disposal of others than by retaining possession of them, the advocates of mutual money will no more concern themselves about giving them recompense beyond the bare return of their valuables unimpaired than the advocates of gold and government paper will concern themselves to insure the constancy of the one or the solvency of the other. As for the "something out of nothing" fallacy, that is shared between God and the Shylocks, and, far from being entertained by the friends of free banking, is their special abomination. "Credit without remuneration!" shrieks Mr. Fisher in horror. But, if credit is reciprocal, why should there be remuneration? "Debt without cost!" But, if debt is reciprocal, why should there be cost? "Unlimited or very plentiful money without depreciation!" But if the contemplated addition to the volume of currency contemplates in turn a broadening of the basis of currency, why should there be depreciation? Free and mutual banking means simply reciprocity of credit, reciprocity of debt, and an extension of the currency basis.

It is the especial claim of free banking that it will increase production. To make capital fluent is to make business active and to keep labor steadily employed at wages which will cause a tremendous effective demand for goods. If free banking were only a picayunish attempt to distribute more equitably the small amount of wealth now produced, I would not waste a moment's energy on it.

I am interested in securing the greatest possible liberty for banking so that I may profit by the greater competition that would then be carried on between those born with a genius for finance. But what about Proudhon, Mr. Fisher? He was no amateur. He could value, not only a horse, but a railroad, the money kings utilized his business brains, his Manual for a Bourse Speculator served them as a guide, and, when he started his Banque du Peuple, it immediately assumed such proportions that Napoleon had to construct a crime for which pro to clap him into jail in order to save the Bank of France from this dangerous competitor. The suppression of Proudhon's bank was a coercion of the market. And in this country attempt after attempt has been made to introduce credit money outside of government and national bank channels, and the promptness of suppression has always been proportional to the success of the attempt.

I tell Mr. Fisher again that it is a crime to issue and circulate as currency a note promising to deliver iron at a certain time. I know that it is a crime in this country, and I believe that the laws of England contain restrictions that accomplish virtually the same result.

There is no contradiction between my position and Greene's. Greene held, as I hold, that the existing monopoly imparts an artificial value to gold, and that the abolition of the monopoly would take away this artificial value. But he also held, as I hold, that, after this reduction of value had been effected, the variations in the volume of mutual money would be independent of the price of specie. In other words, this reduction of the value of gold from the artificial to the normal point will be, effected by the equal liberty given to other commodities to serve as a basis of currency; but, this liberty having been granted and having taken effect, the issue of mutual money against these commodities, each note being based on a specific portion of them, cannot affect the value of any of these commodities, of which gold is one. It is no answer to the charge of monopoly to say that any one can buy and sell gold coin. No one denies that. The monopoly complained of is this - that only holders of gold (and, in this country, of government bonds) can use their property as currency or as a basis of currency. Such a monopoly has even more effect in enhancing the price of gold than would a monopoly that should allow only certain persons to deal in gold. The price of gold is determined less by the number of persons dealing in it than by the ratio of the total supply to the total demand. The monopoly that the Anarchists complain of is monopoly that increases the demand for gold by giving it the currency function to the exclusion of other commodities. If my whiskey illustration isn't satisfactory, I will change it. If whiskey were the only alcoholic drink allowed to be used as a beverage, it would command a higher price than it commands now. I should then tell Mr. Fisher that the value of whiskey was artificial and that free rum would reduce it to its normal point. If he should then ask me what the normal point was, I should answer that I had no means of knowing. If he should respond that the fall in whiskey resulting from free rum would be limited to such relinquishment of profit as "would be forced upon the dealers by competition," I should acquiesce with the remark that the distance from London to Liverpool is equal to the distance from Liverpool to London.

It is Mr. Fisher's analogy, not mine, that is false and inapplicable. The proper analogy is not between gold and the commodities carried, but between gold and the vehicle in which they are carried. The cargo of peaches that rots on its way from California to New England may not be economically consumed (though for my life I can't see why such consumption isn't as economic as the tipping of silver into the Atlantic by the United States government, which Mr. Fisher considers purely economic), but at any rate the wear of the car that carries the cargo is an instance of economic consumption. Now the gold that goes to California to pay for those peaches and comes back to New England to pay for cotton cloth, and thus goes back and forth as constantly as the railway car and facilitates exchange equally with the railway car and wears out in the process just as the railway car wears out, is in my judgment consumed precisely as the railway car is consumed. That only is a complete product, Mr. Fisher tells us, which is in the hands of a person who applies it to the direct gratification of some personal craving. I suppose Mr. Fisher will not deny that a railway car is a complete product. But if it can be said to be in the hands of a person who applies it to the direct gratification of some personal craving, then the same can be said of gold.