sufficient for our present needs. All that will be necessary, then, is to call in all outstanding dollars, whether “fiat,” “silver,” “credit” or “gold-flavored” and issue instead unimpairable census-area dollars, redeemable in freedom, the one thing we really value.
During the war we validated much credit and exchanged for this definite promises to pay in gold. We now make these optimistic promises the partial basis of a flexible currency at the discretion of the Federal Reserve System, limited only by an arbitrary gold ratio of 4o per cent (which by the same political logic may be made 30 per cent, 20 per cent or 1 per cent). It is not gold that lies behind our currency today but political discretion, thinly-gilded.[1] This, in a way, is fortunate since all the necessary precedents are well established for basing currency upon credit and other true but unconventional values.[2] All that is proposed here is to leave the Federal Reserve System, as agent of the community, in control of the issue and validation of currency, but to back that currency with at least 100 per cent of basic economic value, or jeopardized freedom, instead of 40 per cent of uncontrollable gold. We have the minor sanction of precedent and the major sanctions of sanity, science and good-faith.
In face of a volley of protest and dire prediction, we called into being the Federal Reserve System, and gave it the power to make our certificates of value slightly less representative of gold, and slightly more representative of the total sum of national value. It is now the boast of the economic observer that we have thus eliminated “panics.” But we have not eliminated “depressions.” It is a reasonable contention that all we need do to eliminate “depressions” is to follow up our successful empirical remedy, and, in face of further protest and dire prediction, give our Federal Reserve System the power to make our certificates of value representative of total national value. It would occur to the scientist.
