We continue our presentation of Gesell’s book on Monetary Reform, which we presented last Monday.

The book is available in full-text online.

Here are five reprentative excerpts, chosen by Greg Martin, which explain different aspects of the Free Money concept:

Excerpt #1

This thorny subject [money] requires knowledge which can only be obtained in practical commerce, and…commerce usually attracts natures incapable of theoretical investigation. Commerce requires men of action, not theorists and ideologists. Commercial pursuits were also, until quite lately, considered dishonourable; Mercury, the God of Merchants, was also the God of Thieves. Commerce was a profession for those who had failed in the schools. Intelligent sons were sent to the university, the rest to the counting-house.

Such is the explanation of the startling fact that although in every other sphere science passes from triumph to triumph, we have as yet no sound definition or theory of metal money. Metal money has been in existence for 4000 years, has during a hundred generations passed through thousands of millions of hands, yet in the management of money every country in the world is guided, not by science but simply by routine.
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Excerpt #2

Confronted with the new money [free money] everyone will be forced to conclude that the traditional custom of storing up reserves of money must be abandoned, since reserve money steadily depreciates. The new money, therefore, automatically dissolves all money hoards, those of the careful householder, of the merchant and of the usurer in ambush for his prey.

…But with the new form of money no one needs to provide for a money reserve, since the regularity of the circulation makes reserves superfluous. The reserves were a cistern, that is, merely a receptacle, whereas the regularity of circulation of the new money will make it a perennially-welling spring.
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Excerpt #3

How Free Money Will Be Judged By The Saver

Free-Money disproves all predictions; none of the dismal prophecies of its opponents have been fulfilled. It was said that nobody would be able to save, and that interest would rise to unprecedented heights; but the contrary has happened.

When I have saved a sum of money I now do exactly what I did formerly – I take it to the savings bank which enters the amount in my savings book. In this respect nothing has changed. It was said that the sum of money entered in the savings book would be subject to the same rate of depreciation as Free-Money, but that is nonsense. The savings bank owes me so many dollars, American Standard, but not the notes that I handed in. And the standard dollar stands above the notes. If I lend somebody a sack of potatoes for a
year, he will not give me back the same potatoes, which have meanwhile rotted, but a sack of new potatoes. It is the same with the savings bank. I lend it $100 and it agrees to give me back $100. The savings bank is in a position to do so, since it lends the money on the same terms, while the businessmen and farmers who obtain money at the savings bank for their enterprises do not keep the money at home. They buy goods for use with it, and in this way the depreciation loss is distributed among all the persons through whose hands the money has passed in the course of the year.

Nothing has changed, then, with regard to the sum to be repaid by the bank. But I now find that I can save a great deal more than formerly.
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Excerpt #4

How Free Money Will Be Judged By The Manufacturer

Free-Money forces its holder to buy: it constantly reminds him of his duty as a buyer through the losses it causes him if he neglects to buy. Purchase therefore at all times and under all possible circumstances follows on the heels of sale. And when everyone is obliged to buy as much as he has sold, how can sales slacken ? Free-Money, then, closes the monetary circuit.

Just as the wares represent supply, so money now represents demand. Demand is no longer a straw to be blown about by any breeze of rumour or politics. Demand no longer depends on the will of buyers, bankers, speculators; for money has now become the very embodiment of demand. The possessors of money are now kept under discipline; money holds the possessor of money like a dog on a lead.

And this is only fair. For we producers or possessors of wares are no better off. We do not control the supply of our products, we are forced by their nature to offer them for sale. The nature of our products – the stench they emit, the room they take up, the risk of their catching fire, the decay they are subject to, their fragility, the change of fashions and a thousand other circumstances – imposes upon us the necessity of selling them immediately after their production. The supply of wares is under an inherent material constraint, so is it not just that the demand for wares, the supply of money, should be under a similar constraint ?
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Excerpt #5

How Free Money Will be Judged By The Unemployment Insurance Office

Since the introduction of Free-Money, applications for unemployment benefit have suddenly ceased; my assistants and I have nothing to do. Money now goes in search of goods, and goods are work, employment. Anyone possessing Free-Money invariably endeavours to get rid of it, either by purchasing goods, or by investing it in a new enterprise, or by lending it to others who are in the position to make use of it. The change is this, that no conceivable circumstances, no personal or political considerations, neither a fall in the rate of interest nor even the complete disappearance of interest and profit, can interfere with the supply of Free-Money. Even supposing that the commercial purchase of goods involved a loss instead of a profit, Free-Money is in exactly the same predicament as all other commodities; these also are offered for exchange, even should their sale involve a loss.

…Thus Free-Money has replaced the official insurance by an automatic insurance against unemployment. Free-Money has become an automatic labour bureau, and I and my 100,000 officials have been turned out on the street. By the irony of fate, the only unemployed in the realm are now the officials of the unemployment insurance office!”