Freedom, Society, and State - Ludwig von Mises Institute

fit the creditors in three ways: [1] by reducing the
amount of money that could be loaned it kept the interes
t ra te high; [2] it enabled those pr i vi leged few possessing
the metals to control the monetary system. And
since the business of the nation could not be conducted
by simple or direct barter it therefore enabled them to
con t r 0 1 n ear 1y eve r y aspe c t 0 f the e conom i c a f fair s 0 f
the country. As Heywood remarked, "since money is the
common measure of products, and eXhange must be made in
the accepted currency, it is apparent that if speculation
control this medium, dictating its nature, amount,
and value, they are masters of both labor, and trade,
and can tax us on the chance to do business, ,and also
for the privilege of living";(40) and [3] combined with
other laws allowing the owners of specie to issue notes
up to twice the face value of the specie, the legal
ten d e r I a ws per mit ted c red ito r s toea r n pr 0 fit s by
s pecui a tingin 0 the r p eo pies' mi s e r y: "N ow the banks
have everything in their hands," said Greene,
They make great issues, and money becomes
plenty; all other commodities
become dear. Then the capitalist sells what
he has to sell, while prices are high. They
draw in their issues, and money becomes
s car c e , allot her c omm 0 d i ties become
cheap. The commun i ty becomes distressed for
money, individuals are forced to sell property
to raise money -- and to sell at a loss on
account of the state of the market: then the
capitalist buys what he desires to buy, while
everything is cheap • The operation of
the banking system is evident ••• (41)
s u c h s p e cui a t ion wasseen as the ca use 0 f the bus i n e s s
cycle with all its attendant fluctuations and uncertainties.
Moreover, the legal limitation of money to
gold and silver reduced the supply of money, theyargued,
below that which was necessary to purchase all of
the goods produced, thereby intensifying the business
cycle.
Perhaps the most interesting arguments against
government banking laws were advanced by Lysander
Spooner. Adhering to a Lockean natural rights position,
Spooner argued that every individual owned his
own body, and by extension, whatever he produced by his
own labor, whether physical or mental. If a person
really owned his property, it followed that he had a
right to contract to dispose of it in any voluntary way
h e c h 0 s e . Con seq u e n t 1 y, hear g uedin his Co n s tit utional
L'aw Relative to Credit, Currency and Banking,
II To iss u e b ill S 0 fer e d it, t hat 1 S, prom iss 0 r y not e S ,
190