Part 02, Chapter 27

[Liberty, May 16, 1891.]

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Liberty is asked by the Mutual Bank Propaganda of Chicago to answer the following questions, and takes pleasure in complying with the request.(79 ¶ 1)

1. Does the prohibitory tax of ten percent imposed by Congress on any issue of paper money other than is issued by the U. S. Treasury limit the volume of money? If not, why not?(79 ¶ 2)

Yes.(79 ¶ 3)

2. Whence did the State originally derive the right to dictate what the people should use as money?(79 ¶ 4)

From its power.(79 ¶ 5)

3. If an association or community voluntarily agree to use a certain money of their own device to facilitate the exchange of products and avoid high rates of interest, has the State the right to prohibit such voluntary association for mutual advantage?(79 ¶ 6)

Only the right of might.(79 ¶ 7)

4. Do not restrictions as to what shall be used as money interfere with personal liberty?(79 ¶ 8)

Yes.(79 ¶ 9)

5. Has the question of free trade in banking—i.e., the absence of all interference on the part of the State with making and supplying money—ever been a matter of public discussion?(79 ¶ 10)

Yes.(79 ¶ 11)

6. What effect does the volume of money have upon the rate of interest?(79 ¶ 12)

I suppose the intention is to ask what effect changes in the volume of money have on the rate of interest. Not necessarily any; but any arbitrary limitation of the volume of money that tends to keep it below the demand also tends to raise the rate of interest.(79 ¶ 13)

7. Can the business of banking and the supply of money be said to be under the operation of supply and demand where the State prohibits or restricts its issue, or dictates what shall be used as money?(79 ¶ 14)

Inasmuch as they often are said to be so, they evidently can be said to be so, but whoever says them to be so lies.(79 ¶ 15)

8. Is there such a thing as a measure or standard of value? If so, how is it constituted, and what is its function?(79 ¶ 16)

There is such a thing as a measure or standard of value whenever we use anything as such. It is constituted such either by force or by agreement. Its function is implied in its name—measure of value. Without the selection, deliberate or accidental, conscious or unconscious, of something as a standard of value, money is not only impossible, but unthinkable.(79 ¶ 17)

9. What becomes of the standard or measure of value during suspensions of specie payment?(79 ¶ 18)

Nothing. It remains what it was before. Certain parties have refused to pay their debts; that’s all.(79 ¶ 19)

10. Are you in favor of free trade in banking, including the issue of paper money? If not, why not?(79 ¶ 20)

Yes.(79 ¶ 21)