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John Zube, 7 Oxley St., Berrima, NSW 2577           6 July 88

Kevin Dowd, School of Management, Sheffield University, Sheffield S10 1FL, U.K.

Dear Kevin,
            I have only just returned from 6 weeks of holiday with my eldest in Queensland. In the meantime, I have received a stack of fb material from you, with many thanks : 
1.) your October 87 version of your book : The State and the Monetary System.
2.) Yeager : Deregulation and Monetary Reform.
3.) King : On the Economics of Private Money.
4.) White : Accounting for Non-interest-bearing Currency : A Critique of the Legal Restrictions Theory of Money.
5.) Greenfield & Yeager : A Laissez-Faire Approach to Monetary Stability.
6.) Hake & Wesslau : The Coming Individualism. ( The latter is to be on loan only. I will photocopy it and return it soon. According to a cursory look, it appears to be complete, though, contrary to your letter of May 20th.) You may have sent more before and it is somewhere in my monetary freedom stacks to be processed.

Many thanks. A few people as active as you could achieve that the case for monetary freedom could become complete in writing in one or a few spots and that cheap duplicates could be obtained from it at least in one medium like microfiche.

I have also decided to risk whatever little legal risk there exists for compiling at least the dispersed journal articles on monetary freedom since 1974 on microfiche, without bothering about getting copyrights permission first. What's a little illegality when it might help to prevent WW III? Free banking would lead to full employment and this is required to enable us to welcome with open arms sudden influxes of millions of refugees and deserters - offering them self-supporting and well paid jobs. I would also enable us to advice an insurrectionist army to support itself, when the dictatorship it resists does no longer pay its salaries. Need I tell you that the requirement to back up all their private note issues with equal value amounts of rare metals rather than with the goods and services they could produced for each other, would lead them to considerable difficulties? They ought emancipate themselves from this imposition, too, even while they establish and protect a free market for rare metals and private coins made from them, as one of the monetary freedom options. At the same time, I would be the last to deny that it might be a good policy to attract and reward some kinds of deserters, who cannot easily be swayed by a liberating ideology and its propaganda, by e.g. paying them for the weapons they bring with them, and doing this in private silver coins, in sums weighty enough to tear holes in their pockets. Moreover, until they understand our language und a system of competing paper currencies, that are market rated and yet tend to have stable values, it might be wise to pay them for their free labours in silver or gold coins. These could then be easily bought for this purpose on a free metals market. For many it might take a while before they readily handle various paper monies, checques, credit cards etc. And without such a demobilization policy for the armed forces of totalitarian regimes, what chances do we have? We must also offer advice on how revolutionaries and insurrectionists can finance their prolonged resistance actions. Neither competitive gold certificates nor option notes might be sufficient for that purpose and their absence should not prevent a single blow for liberty from being struck. No monetary alternative is good enough for our times if it does not also serve in such extremities. 

The copy of The Coming Individualism by Hake/Wesslau, ends with page 347 and with an apparently concluding remark. It is also followed by a printer's notice. At most there might have been an appendix, bibliography or index that followed but I think you would have copied them and they would have been mentioned in the contents listing. Perhaps you had another title in mind which you did not copy completely. While I had no notion that I might be able to cheaply reproduce whole boks, I often photocopied only short segments of special interest to me and to some extent I pursue this policy even now, with very old economics texts where only some of the monetary sections are of interest to me. 

I have still not got around to compile my wanted list or update the listing I made in PP 647. If I had a complete one, it might also act as a deterrent by its sheer size. Moreover, I cannot immediately or very soon film as much as I would like to see on film - or even read as much.

I would, indeed, be interested in Bentham's IN DEFENCE OF USURY, 1787. I had noted the title before but never came across it. The anti-interest bias is still strong among many of the monetary freedom people and thus this classic work would be helpful. That you find it still "interesting" is also a good indication for me. However, it being a first edition and that old, could it stand the strain of being mailed here and back and, most importantly, being photocopied, without losing too much of its market value? Perhaps we acquire sometime and from somewhere a less valuable copy as a basis for a microfiche edition?

I got so far only to page 40 in your book, last night. I agree with most of its general premises and conclusions so far but not with all of the particular ones, especially regarding the desirability and competitive advantage of convertibility mitigated by option clauses. On this more some other time. For 2 short expositions of a different point of view you should probably read Dr. Walter Zander : Railway Money and Unemployment and his A Way Out from Currency Chaos.

The many names and hints to their locations which you mention in the second and third page of the preface suggest to me, again, the need for an up-to-date listing of those interested in monetary freedom ideas - inside and outside the academe. The academics probably know of each other by now - but, like Hayek, for most of their lives they were and still are largely unaware of monetary freedom advocates outside of their ranks or had only superficial knowledge of their proposals or misunderstood them altogether. To some extent their lack of interest in and knowledge of them is understandable because many ideas of these money reformes were still backward or flawed - and still are. But then the same applies to many of the academics.

Here and in the bibliography you mentioned also unpublished manuscripts. Whenever you are in touch with their authors, you might mention that I am always on the lookout for them. 

I would love to film also this version of your book but if I did, with your permission, it might upset your relation with your publisher and I would not want this to happen. To have to wait to January next year for it to appear, at least for a while, in bookform, is not asking for too much. 

By the way, Conrad Hopman got his latest book, on his computerized clearing, currency and property transfer system, published by the Institute for Social Inventions, quite recently. I have not seen it yet.

Page 7 : "And so the free banking issue was raised again after lying dormant for over a hundred years." - It was only out of sight and mind of most academics, newspaper writers and "practical" business men. But the free banking tradition was carried on by dozens of writers, e.g. John DeWitt Warner, Benjamin Tucker, Arthur Kitson, Riegel, Beckerath, Rittershausen, Mildred Loomis, L. Labadie and a few others. Moreover, a number of people re-discovered this possibility for themselves. Perhaps one day one of us might get around to tabulate the origin and continuance of the idea by listing birth and death dates of advocates, together with the date of appearance of their major writings on this. What was largely amiss was a communication network between them. They knew too little of each other's existence and even if they did, they found it hard to get each other's writings.On page 19 you mention some of those who carried on the free banking tradition. A hint to this should also be on page 7.

Page 8: "...competition would force the banks to make their notes convertible."  You seem to presume : into gold, silver or platinum. For me this is not a primary requirement. A primary AND SUFFICIENT requirement might be convertibility into daily wanted consumer goods and services, convertibility into tax receipts ( as already Adam Smith suggested ) and convertibility into one's own IOUs and other debts, or, generally, convertibility into an account in an efficient clearing house system.

Page 10 : While cowrie shell are not privately PRODUCED, their acceptance as currency was a private act and they did last, as far as I know, for hundreds of years, without having any "inherent" commodity value that I know of. I saw my first cowrie shells recently in a Cairns shell shop. Even carved ones with metal loops to be worn as pendants, cost only 60 cents each. There were various coloured and sized ones and I still don't know which ones or whether all of them were used as money.
And was it a question of "managing to last", on their own merits or rather of having a chance to last without legal prosecution? Think e.g. of the anti-truck legislation and jurisdiction since at least ca. A.D. 1400 and prohibitions of private issues in China, under the rules of the Mongols, ca. AD 1200. The better currencies were often prohibited precisely because they were better. And the legal tender coercion and fraud worked to their disadvantage.

Page 18 : "...to provide us with AN efficient and stable monetary system." Why only one and not several? At least locally several different ones might exist. A parallel currency might have 2 or 3 or even more value measuring metals and it might be supplemented by various index clause arrangements. At the same time, these different standards might be used in dozens of different means of payment and clearing. All over, through unity in diversity, a relatively stable monetary system would be achieved, precisely because it incorporated competion even from new and inferior monetary experiments.

Page 19 : Mention Meulen's first edition. 

Page 20 : Compulsory convertibility by the issuer, on demand, in rare metals, would not only preempt Option Clauses but many other types of notes and clearing house certificates which I for one would find to be not only rightful but economically sound and necessary. If that requirement had not existed or the opinions upon which it had been based had been effectively destroyed 150 years ago, not only monetary history might have taken a quite different turn. Ideas, whether false, imperfect or correct, appear to have something like a life of their own and they are often given a harmful Zombie existence by force of law. Since so many of us remain stuck up on the wrong notions for much or most of our lives, the least that should be demanded is that the theories of no one shoul be binding upon others. Each should enjoy experimental liberty - at his own expense and risk, even in the monetary sphere. Under that conditions notes "as good as gold" would arise and be appreciated and have a competitive advantage over convertible notes. The few who actually needed gold could then achieve their desired conversion on the free gold market. And a run there would be harmless.

Page 29 : Should banks have "non-marketable" assets in their portfolios or merely some assets which are not quite as liquid as others are?

Page 30 : That there was also a Swedish free banking tradition was new to me. A complete history of all monetary freedom precedents has, obviously, to be written still.

Page 31 : Not only the share values of individual note issuing banks should be publicized as indicators but, primarily, the market rating of their notes against their own chosen value standard and against that of others. Apart from that, no details of their issue should be kept secret. Investigative financial reporters and consultants, for instance, should always have access to all such records. Computerization would make that easier. So far large banks and especially central banks got away with many fraudulent and outright illegal transactions under the cover of "business secrets". Note issues should, ideally, be at least as public transactions as all transactions by politicans ought to be.

Pages 33/34 : Seeing the many misunderstandings circulating under the terms of "creating" money and credit, one should be careful in using this term. The invention of coins for payments rather than gold dust or nuggets or bullion was creative. But it did not create but merely transformed pre-existing money into a more convenient format. The "cutting up" of inconvenient large and uneven-figured sound commercial bills, temporarily, until the bill becomes due, into small and conveniently denominated and easily recognizable bills ( banknotes, under the banking principle or real bills doctrine), withdrawn largely through the repayment of the original bill, using these small bills or notes as means of payment, was a creative act, going much beyond the convertibility requirement of the currency principle, but it was one that did not create a value out of nothing but merely transformed an existing value into a more conveniently transferable one. If you have a 10,000 pound note and find it hard to pay your bills with it and exchange it into smaller notes and coins, your act does not "create" money, either. Only the act of inventing "change" was creative.
And if a bank issues new gold redemption IOUs, then it does not really create extra liquidity out of nothing, at will, but, rather, puts a heavy obligation upon itself, one that could easily drive it into bankruptcy, if it finds itself for one reason or the other unable to fulfill its promise. It is an empty sale, a dealings in futures, a speculation that is involved. Much of the old terminology to describe this sitation is deceptive.

Page 35 : "Nor could they simply create specie at will as they could print notes to deal with a deposit run." Here, too, they do not "create" but merely transform a book account with themselves into a certified and bearable account against themseles, conveniently in several handy pieces. To use an analogy : It is the difference between moving wheat by container loads or in bags. Wheat is not created in the process.

I wish all those writing presently on monetary freedom questions would all possess and use a compatible computer system with a hard disk of at least 20 MB and would enter their views alphabetically, under catchwords and combine their entries and exchange the combined list and then supplement this compilation, combine the supplements, integrate them and go on like this until the degree of clarification and agreement that can be achieved by mere discussions would be achieved and recorded and could be traced back at any time. Moreover, the remaining differences of opinion that could only be solved by free experimentation and objective evaluation of monetary experiments, would be clarified, too. Modules could make different system compatible. A powerful memory centre could accept different system floppy and hard disks and tapes and integrate them and reproduce the integration in any desired format for further labours upon the collection.
Alternatively, an ideal scanning system could input all the printed, typed and even handwritten manuscripts on the subject into a general monetary freedom data bank with an easy search programme for the whole input. Could one get academic and other monetary freedom advocates to cooperate in this way?
My microfiching effort is just a step in this direction, one that tries to collect the required material at least in one affordable format.
Anyhow, whether I get sufficient help for this project, of alphabetizing free banking ideas, facts and opinions towards an attractive handbook, or not, I will make as much of a start as I can. From handwritten notes compiled since 86, I have during my holiday filled one file with English and 7 with German entries and the first integrated editions, with all its inevitable omissions and imperfections, should fill a fiche or two. When I started a response to you yesterday, I had in mind to make alphabetized comments to your book. But I noted already on the first few pages that this would require many entries per page, sometimes several copies of the same observation under different headings and that this would be much more time consuming than merely pointing out some disagreements in a letter, by pages. Moreover, for such inclusions the final rather than a draft copy should be used.

Enclosed : PP 9,10,40 and, perhaps, some copies of Sagehorn/Meulen letters. Please note that Sagehorn wants this correspondence treated "with discretion".

                          PIOT, John.