Part 02, Chapter 26 : Pinney His Own Procrustes

[Liberty, April 23, 1887.]

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Having exhausted the resources of sophistry, and unable longer to dodge the inexorable and Procrustean logic of Pinney the anti-Prohibitionist, Pinney the Protectionist has subsided, and is now playing possum in the Procrustean bed in which Pinney the anti-Prohibitionist has laid him. But Pinney the Greenbacker evidently hopes still, by some fortunate twist or double, to find an avenue of escape yet open, and thus to avoid the necessity of doing the possum act twice. Accordingly, in his Winsted Press of April 7, he makes several frantic dashes into the dark, the first of which is as follows:(78 ¶ 1)

Our first objection to free money was that the great variety of issues, coupled with a questionable security, would limit circulation to local circuits and subject the bill-holder to harassing uncertainty as to the value of currency in his possession and to constant risk of loss. To illustrate this defect we mentioned the experience of the people with the old State bank bills, which experience, disastrous as it was, did not offer a fair parallel, simply and solely because it was not disastrous enough, the banks being limited and regulated i na measure by State laws and machinery to enforce contracts. Our Boston Procrustes thereupon plunged straight into trouble by denying its similitude, because forsooth the old banks were incorporated institutions not perfectly free to cheat their creditors, forgetting that, in so far as they differed from freee banks, the difference in point of security, scope of credit, etc., was in our favor.(78 ¶ 2)

That is one way of putting it. Here is another. Free money advocates hold that security is one (only one) essential of good money, and that competition is sure to provide this essential, competition being simply natural selection or the survival of the fittest, and the fittest necessarily possessing the quality of security. But they have never held that it was impossible for monopoly to furnish a temporarily secure money. It may or may not do so, according to the prescribed conditions of its existence. Pending the universal bankruptcy and revolution to which it inevitably will lead if allowed to live long enough, the national bank monopoly furnishes a money tolerably well secured. But the old State bank monopoly furnished a money far inferior in point of security, not because it was a freer system,—for it was not,—not because the conditions of its existence were less artificially and compulsorily prescribed,—for they were not,—but because the conditions thus prescribed were less in accordance with wise business principles and administration. The element of competition, or natural selection, upon which the free money advocates rely for the supply of a money that combines security with all other necessary qualities, was just as much lacking from the old State bank system as it is from the present national bank system. Therefore, to say of the State banks that, in so far as they differed from free banks, the difference in point of security, scope of credit, etc. was in their favor is to beg the question entirely; and accordingly, when Mr. Pinney, as sole proof of an assertion that free money would be unsafe money, offered the insecurity of the old State bank bills, I informed him that there was not the slightest pertinence in his illustration, whereby I plunged, not myself, but Mr. Pinney into trouble.(78 ¶ 3)

To get out of it he performs a double which eclipses all his previous evolutions. Finding that he must deal in some way with my statement that the monopoly of money inheres in the compulsory conditions of its issue, chief among which are the government bond basis in the national bank system and the specie basis in the old State bank system, he asks:(78 ¶ 4)

How then about your free banking? Are there not any compulsory conditions? Free bank notes can be issued only by those who have government bonds, or specie, or property of some sort, we suppose, so there are your compulsory conditions, enforced by the business law of self-preservation (for State law is not to be mentioned in Anarchist ears), and the monopoly inheres in these compulsory conditions. Behold, then, the new monopoly of those who have property!(78 ¶ 5)

To this absurdity there are two answers. In the first place, it is not true that under a free banking system notes can be issued only by those who have property of some sort. They can be issued and offered in the market by anybody who desires. To be sure, none will be taken except those issued by persons having either property or credit. But there is no monopoly of issue or the right to issue, no denial of liberty. If Mr. Pinney should claim that this answer amounts to nothing because issue is valueless without circulation, I shall then remind him of my previous statement that the circulation of an abundance of cheap and sound money benefits those who use it no less than those who issue it, and tends to raise the laborer’s wages to a level with his product,—a point which he carefully avoids in his last article, because he knows that he cannot dispute it, having frequently maintained the same thing himself.(78 ¶ 6)

But, in the second place, Mr. Pinney’s argument that the possession of property is a necessary condition of the issue and circulation of money, and that therefore free money is as much a compulsory monopoly as that of the government which prescribes the possession of a certain kind of property as a condition of even the issue of money, is precisely on a par with—in fact, is a glaring instance of—the reasoning resorted to by those friends of despotism who deny political and social liberty on the ground of philosophical necessity. The moment any person, in the name of human freedom, claims the right to do anything which another person does not want him to do, you will hear the second person cry: Freedom! Impossible! There’s no such thing. None of us are free. Are we not all governed by circumstances, by our surroundings, by motives beyond our control? Bow, then, to the powers that be! Boiled down, the argument of these people and of Mr. Pinney is this: No one can do as he pleases. Therefore you must do as we please. It needs only to be stated in this bald form to be immediately rejected. Hence I shall attempt no further refutation of it. Mr. Pinney will please bear in mind hereafter that, when I use the word monopoly, I refer not to such monopolies as result from natural evolution independent of government, but to monopolies imposed by arbitrary human power. He knew it very well before, but he must dodge, and this was the only dodge left. Let the reader note here, however, how his double undid him. He says that under free banking the condition of a secure basis for money would be enforced by the business law of self-preservation, exactly the opposite of his original charge that free money would be unsafe.(78 ¶ 7)

But he is not yet done with this twaddle about compulsory conditions. Read again:(78 ¶ 8)

Mr. Tucker cannot see that there is any difference in principle between a law which absolutely prohibits the sale of an article, and a law which taxes the seller of that article. The tax is a compulsory condition which prohibits till it is complied with. The possession of property is another compulsory condition which prohibits free banking till it is complied with. Therefore there is no difference between absolute prohibition of free banking and the monopolistic condition that practically prohibits a man from being a free banker unless he can put up the security.(78 ¶ 9)

Utter confusion again! Mr. Pinney seems unable to distinguish between disabilities created by human meddlesomeness and those that are not. The law which prohibits a sale and the law which taxes the seller both belong to the former class; the lack of property belongs to the latter, or rather, it belongs to the latter when conditions are normal. It is true that the lack of property which at present prevails arises in most cases out of this very denial of free banking, but I cannot believe that even Mr. Pinney would cap the climax of his absurdity by assigning as a reason for the further denial of free banking a condition of affairs which has grown out of its denial in the past. The number of people who now own property, and the amount of property which they own, are sufficient to insure us an abundance of money as soon as its issue shall be allowed, and from the time this issue begins the total amount of property and the number of property-owners will steadily increase.(78 ¶ 10)

To my objection to his government money monopoly that it would be Communistic robbery to mortgage all the wealth of the nation to secure all the money of the nation, Mr. Pinney can only make answer that the possibility that the government would foreclose the mortgage—that is, increase taxation—would be very remote. As if any possibility could be considered remote which is within the power and for the interest of lawmakers to achieve, and as if it were not the end and aim of government to tax the people all that it possibly can!(78 ¶ 11)