When mischief is made legal it helps only the mischievous, their friends, and those who enforce the phony legality of the mischief.
Unfortunately, it is just such mischief that the mischievous and those beguiled by the mischief — both then and today — have passed off as a contribution to society, smoothly functioning financial markets, economic growth, and good government. It is nonsense!
Indeed, it is for us in these many pages to clarify this mischievousness so that we might finally put an end to it.
Money was never intended to be a source of theft; rather, it has always been the life-blood of a free-market society (Images 1-12). Alas, when the lifeblood of any living organism is tainted the whole body becomes seriously ill and may very well die, if left unattended. This analogy is not idle.
The Amsterdamsche Wisselbank and the brilliant success of the Dutch, free-market economy would not be our last encounter with sound money, by the way. Simply it would take our second run-in with unsound money during the US War of Independence and the years running up to it, before we would reassert sound money as our medium-of-exchange.
Sigh, climbing a mountain peak is not easy — even if it were only that of Mt. Fuji —, and it cannot hurt every now and then to get a glimpse of where we are going. I hope that you are still with me!
Human beings like convenience. The founders of the ever-growing, global, 7-Eleven chain have made a vast fortune by supplying just this!
Money in the 17th century was heavy, very visible, and awkward to carry. The promissory notes of the banks of Seville (Images 15, 24-27), and the deposit receipts of the Wisselbank (Image 44 and Entry 118) were much lighter and could be easily concealed. After all, money has always been a target of another’s theft (Image 23).
Secrecy is as human as covering one’s genitals while in public, and who would claim that it is not a virtue in defense against theft or a vicious enemy? Unfortunately, secrecy can be quickly turned into a vice when it becomes an expedient for acts of theft and other forms of criminality. Alas, money lends itself to secrecy. This said, secrecy is no more evil when it comes to money, than a gun is evil when it comes to self-defense. It is neither money, nor the gun, that are evil, rather the motivation of those who utilize them! Indeed, money is extremely beneficial to all who use it, when it is properly utilized.
Worse is when we are told that counterfeit is a good when it is indisputably a bad — a false good. No amount of banker, academic, or government hocus-pocus should be allowed to steer us away from this most primitive and profound of logic! Money is far too valuable to a free, human, market society that we should ever allow someone to mess around with its definition. This is, however, what occurred during the last half of the 17th century in London, England.
Please to not misunderstand, anonymous deposit receipts were a stroke of human genius! They were a direct, logical derivation of the fungibility of what was stored in a guildsman’s vault.
When you surrendered a gold or silver coin to a banker, you did not expect to get the same coin in return when you later went to withdraw your deposit. So long as the coin was not debased in some manner, you were quite happy to receive any coin of the same weight and purity. Whose face appeared on it, from which region of the world it came — none of this was hardly important, so long as the weight and purity could be verified and were genuine. Accordingly, you had no reason to insist that the receipt that you received for your deposit had your name on it. Indeed, so long as the receipt fetched the same amount of coin that you deposited, and the value of that coin was genuine, why would you make a fuss? In contrast to the coin, however, the source of the receipt was crucial; you needed to know where to fetch the coin!
Indeed, only a coin collector would insist upon the identical coin, and he would surely be charged an additional fee for its storage and the signature with which it was stored!
In this light, the promissory notes of Seville, the Dutch obligatie, and the bank receipts of Londoner guildsmen were all very similar. There were many different issues of each, but the source was always clearly identifiable and rather immutable on each respective receipt. Moreover, so long as their issuer honored their redemption and returned what was lent or placed on deposit, such paper could be used in society, as if it were real money. Further, if the credibility of the issuer were in question, these receipts could be exchanged for some amount of real money less than the amount written on the receipt. In other words, the receipts could be discounted!
In the end the receipts were a representation of real (sound) money either owed or held by another. They were, by no means, counterfeit! They were a representation of title. They were, legally speaking, no different than a title to your horse or wagon. In the case of the obligatie they were a title to a form of money-in-use — namely, money-ad-prodigo (Image 100-102) —, and in the case of a deposit receipt they were title to stored money-in-exchange.
Both the bond and the deposit receipts were a form of nominal wealth — namely, wealth-in-title, representations of ownership of real money to which you had a title.
In liberty, or not at all,
Roddy A. Stegemann
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