Freedom, Society, and State - Ludwig von Mises Institute

- 2. WILLIAM B. GREENE AND CURRENCY AND BANKING REFORM
An early modification of Warren's thought emerged
in the banking ideas espoused primarily by William B.
Greene, al though Lysander Spooner and Ezra Heywood,
whose ideas along with those of Greene were largely a
prod u c t 0 f what Jame s Ma r tin t e r ms the "cur r enc y r a d i ­
c a lism t hat ace 0 mpan i edand f 0 1lowed the bus i ne s sand
financial panic of 1837,"(38) advocated reforms along
parallel lines. All three believed. that the business
cycle was a direct result of the "money monopoly"
Which, in turn, was seen as a product of legal privilege
conferred by the government upon banks. Thesep
r i v i legesc 0 n sis ted 0 f the res t ric ting 0 f ba nking
rights to those banks chartered by the state, and the
passage of legal tender laws. Their proposals were
designed, at least in part, to make Warren's labor
exchange ideas applicable to an industrial iociety.
A s Gr e e n e saw it, the 0 n I y pur po s e 0 f a ban k wa s
to serve as a clearing-house for borrowers and lenders.
The borrowers were those with just their own labor but
n 0 cap it.a I. The len d e r s had tools and raw rna t e ria I s
but no I abo r e r s. One wit h 0 u t the 0 the r wasuse I e s s .
The funct ion of the bank was to provide the service of
bringing the two together. If banking were free,
Greene believed, competition would eliminate interest
and reduce the payment to the bank to the cost of its
services, which was estimated at below one percent.
However, by getting the government to require a charter
for all banks, creditors were able to all but eliminate
compet it ion in the supply of loans and therefore to
prevent the fall in the rate of interest. Thus state
bank charters placed the creditors in what Greene
called the position "to enable the few to bring the
many under tribute."(39)
Even more important, however, were the legal tender
laws. Since all exchange, inclUding that for
m0 n e y, was e sse n t i all y not h i ng morethan .ba r t e r, a I I
property, they argued, was money. And if any individual
should choose to conduct his exchanges in values
other than gold or silver, they believed that he should
ha vet ha t r i gh t. Lega I tender laws were seen as drastically
altering the conditions of exchange by legally
placing the owners of those particular types of metals
in a monopoly position. By declaring that only gold or
silver were money and that all transactions had to be
made in those metals, the amount of money in circulation
was arbitrarily restricted. This served to bene-
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