A money system is a vast accounting mechanism. The private accounts that are kept on the millions of ledgers of private tradesmen are all auxiliary to this master ledger which determines the meaning of the terminology in which these individual accounts are kept. Disturb or distort the master ledger and you affect likewise all the millions of subsidiary ledgers in the economy. Society must have a stable money system to preserve its own stability.

When businessmen resolve to set up a money system, they agree to hold in trust for each other goods and services that are pledged against the drafts which they have issued in the form of money. These values—that are held in trust by all for any who may present a money draft therefor—constitute a vast pool, not housed at one place, but scattered throughout the trading sphere. This vast pool of goods and services is the basis or backing for the outstanding money supply. "Reserves" and metal hoards are but window dressing. Only that which is purchaseable is back of money.

While all the traders in the Exchange hold values in trust, none knows who actually may present an ownership claim therefor by the tender of money, and whether there is warrant for such tender. Therefore there must be a central bookkeeper, with an all-seeing eye, that keeps account of who holds values and who holds claims thereto. Some means of conveying this information to and from the central bookkeeper must be available.

For the purpose of fixing in our minds the fact that money exchange is accountancy and that no value attaches to the money instruments, let us assume that the central bookkeeper operates by telephone, without money instruments. A telephones the central office and states that B has ordered some merchandise at a given money price and asks whether B's account will permit the charge. On being assured that it will, the goods are shipped and the central bookkeeper debits B's account and credits A's. Thus a perfect money transaction has been consummated because values were stated in terms of a money unit and value has moved only one way, and from which there has arisen a debit and a credit warranted by the rules of the money system. Yet no instruments have been issued, and thus there is nothing material upon which the mind can fix a value or attach a superstitious power. This demonstrates that money is first of all a concept in accountancy and that it may be expressed verbally. We may go further and assume that, in confirmation of the above transaction between A and B, B sent to the central bookkeeper a duplicate of A's order. Still we think of the transaction as a simple bookkeeping transaction and there is no superstition attaching to the duplicate order.

Let us hold to this bookkeeping concept and assume that, with the order for the goods, B sent via A an order known as a check directing the central bookkeeper to debit his account and credit A's account, and that A sent this to the central bookkeeper instead of a duplicate order. In spite of the fact that the check is known as a money instrument, it is still nothing but a bookkeeping memorandum —and is not in the least mystifying.

Now we will assume that B calls up the bookkeeper and says that it is inconvenient to write checks for petty transactions; and asks if the bookkeeper hasn't some plan for obviating check writing. The bookkeeper says, "yes. I have some bills, in different denominations and coins, that require no signature and are good in anybody's hands." B asks how he can get them. The bookkeeper says: "send me your check for the amount you want and I'll give them to you. I will debit your account for your check in the regular way." Now, because nicely engraved pieces of paper and pretty coins meet the eye, we are in the zone where the greatest superstition arises. To most persons these instruments are money, and nothing else is money. Yet these are but bookkeeping instruments like the check and the duplicate order. In essence, they are the same, but the check is better suited to the purpose visualized than is the duplicate order, and the currency is better suited than is the check for certain purposes. Neither the check nor the currency accomplished anything more than did the telephone call; all were instrumentalities of bookkeeping and each effected a money transaction.

How does the currency spring into existence? As we have seen, someone had to order and authorize it. The bookkeeping method is to set up a special currency authority who has caused to be fabricated the pieces of paper and coins. When a check is written for it, the amount of the check is debited to the account of the check writer who receives the currency and the same amount is credited to the currency authority. Thus the currency is just as much a creation of the check writer as is the check which requisitioned it. It becomes the equivalent of a certified check payable to bearer. No mystery, no magic, nothing awesome. When the currency returns to the bookkeeper, it is credited to whoever returns it and charged back to the currency authority where it is held subject to some other requisition for it. Note that the currency sprang out of a book account, just like the check and that both, therefore, have the same basis.

The currency under the valun system will of course be manufactured at some central plant where adequate safeguards will be set up against theft; and the counterfeiting problem will exist as it does with any money system. It will be the duty of the Central Board of Valun Exchanges to provide the currency in bills and coins on demand of the various Exchanges, so as to provide uniformity and central control.

The promise to pay and promise to redeem or exchange—forms that are used on existing money instruments—will not be used. There is nothing to pay and nothing to redeem in true money. Its purpose is to requisition goods and services, and not to requisition some other form of money. The check form need but say, "Credit the account of .................... and debit the account of the undersigned." The currency bills need but carry the word VALUN and the denomination. Coins need carry only the word VALUN with the fraction they represent such as 1/100, 1/20, 1/10, 1/4, 1/2. The name of the 1/100 would be cend, (Esperanto) the five cend piece might be called the quin, the ten cend piece, the tenth. The material from which the coins would be stamped should be the most inexpensive that would serve the purposes of wear and weight. Some concession might be made to the vending machine industry.

To enable the valun system to render the check clearing service rendered by banks—without their luxurious quarters and extensive units and branches—it is proposed that only one Exchange be set up for each state; in any satisfactory quarters, even if it be in an industrial section. This plan precludes the necessity for members to visit the Exchange, and relies entirely upon the mails for conveying deposits and returning vouchers. Such a plan must provide the means for drawing and depositing currency and to serve this need it is proposed to have Valun Currency Counters in business neighborhoods.

NEIGHBORHOOD CURRENCY COUNTERS

A Valun Currency Counter would be authorized by a franchise issued by the Valun Exchange to an applicant member located in a business neighborhood where there might be sufficient demand to justify. The primary function of the V.C.C. would be to accept deposits of currency or checks for currency on demand. Members requiring currency would issue checks payable to the Counter dealer— who would surrender the currency just as is now done by banks. If a member wished to dispose of currency, the Counter dealer would issue his check for it. If the member wished to store cash with the Counter dealer overnight or the weekend, he could do so and be guaranteed against loss. The Counter dealer would of course have to provide himself with a safe and adequate burglary protection. The currency would be available to the Counter dealer from the Exchange by some safe conveyance but it is believed that there would be but little occasion for currency to return to the Exchange—because a dealer finding himself long would probably also find some other dealer, in the same city or neighborhood, who was short—and who would buy the surplus with his check.

The secondary function of the V. C. C. dealers would be to buy valuns for dollars, or dollars for valuns, at the current rate of exchange. Since all valun members would (at the outset) be obliged to do business on both a dollar basis and a valun basis, and since some non-members would sometimes come into possession of valuns, the need for such "foreign exchange" service is obvious. The existence of such a money market would serve the additional purpose of establishing an official differential between the dollar and the valun, for the purpose of pricing goods and services in both units.

The Counter dealers would be organized in the Valun Currency Counters Association and would report their valun-dollar dealings daily to their central office where the exchange rates would be determined after business hours every day, and wired to the members of the Association every morning. These rates would of course be determined by the law of supply and demand. If valuns be in greater demand than dollars, the dollar price of valuns would rise. If there be greater demand for dollars, the dollar price of valuns would decline. It is expected that there would be a continuous trend favorable to the valun (i.e., the dollar price of valuns would show a trend rise) but there may be reactions, and the daily variation would probably be irregular.

The V.C.C. Association, as it announced the daily exchange rate, would supply a guide to merchants for the double pricing of their wares in valuns and dollars. Thus if the valun rate were announced as $6.65, it would mean that any merchandise bought by the merchant on a valun basis and given the usual mark-up, would be multiplied 6.65 times to get the dollar price. If an item be bought on a dollar basis and given the usual markup, a deduction of 85% would be made to arrive at the valun price. This percentage would be announced publicly every day so that buyers, as well as sellers, would know the differential.

There would be no agreement among dealers to follow these price differentials and this would not affect the scale of prices of different dealers. However, if a dealer did not follow the differential in his valun and dollar pricing, the tendency would be for buyers to purchase, at the Currency Counters, valuns or dollars whichever gave them an advantage with the merchant who had failed to follow the official differential in his pricing. This in turn would work to the disadvantage of the merchant when he came to convert his dollars or valuns, one into the other. The influence of the Valun Currency Counters would therefore be to make the differential between dollar and valun uniform in all shops, however much their price scales might vary. At the outset, the practice would be to quote prices exclusively in dollars, with the discount for valuns. As valun trading gained the ascendency the practice would probably be adopted of quoting exclusively in valuns, with the premium rate in dollars.

The Valun Currency Counters would be privately owned and conducted under the terms of the franchise issued by the Valun Exchange. All services rendered by them would be subject to an appropriate fee which would be stipulated by the Exchange or regulated by competition. Whatever the cost to the members might be, it would be less than the cost of maintaining branch Exchanges after the manner of the present banking system with its many units and branches luxuriously equipped.

The checks that pass through the Exchange would be its continuous stream of income by reason of a charge on each check cleared, and this per check charge should be minimized by economies wherever possible. There is in the valun system no need to do the pretentious thing—to inspire public awe and blind confidence. There is no occasion for window dressing or display of any kind. The system is to be a matter of fact institution—serving the simple needs of exchange, reflecting the democratic control of its members, and serving them essentially as community bookkeeper.