In the establishment of our modern super-banking structure the bankers were
bitterly opposed by men some of whom set up national currency control.
Probably the best example of a national currency system that has ever been
developed and put into practice is to be found in the records of the Guernsey
Island Parliamentary institution. During the years 1818 to 1837 Daniel deLisle
Brock, who was Bailiff and President of the Parliament of Guernsey Island,
known as the States (Les Etats), set up and worked out a complete national
currency system.
Brock proved in the very beginning of the 19th century the practical
possibilities of such a system. Incidentally, Daniel deLisle Brock was a
brother of Sir Isaac Brock who, as leader of the British forces, fell during
the war of 1812 at the Battle of Queenston Heights.
Whether or not Lincoln knew of the Guernsey Island experiments I have no
way of telling, but undoubtedly the records prove that Lincoln was of the same
school of thought as Brock who, in the Island of Guernsey, had used national
currency issued by the government of the Island to build first "a monument to
the late governor, new roads, a marketplace, a college, schools and wharves,
to provide for cholera precautions", and, in fact, for all the public
enterprise of the Island. On October 17th, 1816, the government of the Island
wanted to spend £5,000, but they only had on hand £1,000. Under Brock's
leadership, it decided to issue £4,000 in £1 notes and declared that "in this
manner, without increasing the debt of the Island we can easily succeed in
finishing the works undertaken, leaving in the coffers sufficient money for
the other needs of the government." From this small beginning the managed
currency system of Guernsey Island grew until 1837 when, after issuing and
using in the twenty-year period over £80,000, there still remained in
circulation some £55,000 of State notes.
Now, while the amounts involved were small, all the basic principles of a
complete scheme of managed currency were involved in the experiment. Taxation
and rents were relied upon to avoid redundancy of issue, and international
exchange was carefully managed. Describing the situation, a report prepared
under Brock's direction said:
"When the war with Napoleon ceased a general want of employment
arose and consequently distress ensued. Thus at peace, the Island found
itself with little or no trade, little or no disposable revenue, no
attraction for visitors, bankrupt and no prospect of employment for the
poor. Misery and depopulation seemed inevitable. More than five hundred
British subjects had embarked for the United States."
After giving a somewhat exhaustive review of the use of national currency
to relieve the situation and to restore prosperity the report somewhat
boastingly states :
"It is said, the powers of the human mind in society lie at
times torpid for ages; at other, are roused into action by the urgency of
great occasions, and astonish the world by their effects. This has, in some
measure, been verified in this Island, for though nothing done in so small a
community can cause a general sensation, its exertions may yet produce
wonderful results, within its own sphere. It is the duty of the States to
show that, roused by the deplorable situation above described, they took,
and have since pursued the steps best adapted to meet the exigency of the
case, and that those steps have been attended with complete success."
Quite naturally, the bankers organized themselves against Brock, and upon
the ground that "the privilege of issuing paper currency was a vested right of
the bankers which the government had no right to disturb" they overwhelmed
Brock's opposition and induced the representative of the people to restrict
the right of the government of the Island to issue paper currency and to share
that right with the private banks. In the agreement settling the differences
between the government and the banks, it was settled "that the circulation of
government currency notes would never exceed £40,000 and that the banks would
annually supply the government with £10,000 in cash, free of expense, and in
exchange for States notes". The bargain was a compromise, for Brock had
vigorously opposed the right of the private banks to issue paper currency. In
his message to the States meeting held on the 21st of September, 1836, he
unsuccessfully warned the people against giving up the right to issue their
own money. The truths he enunciated on that occasion, like the monetary ideas
of Lincoln, have received all too little attention. Among other things Brock
pointed out:
"If there is one incontestable principle it is that all matters
relating to the current coin of any country have their source in the supreme
prerogative, and that no one has the right to arrogate to himself the power
of circulating a private coinage on which he imprints for his own profit an
arbitrary value. If this is true for metal coins still more is it for paper
money which in itself has no value whatever.... Permission cannot be granted
to certain individuals to play with the wealth and prosperity of society ...
Let the private banks replyto the questions already put: Let them
say what inducement they can offer the public to drive out of circulation
the States notes, the profit on which benefits all, especially the
productive classes, and substitute for it bank notes, the profit on which
benefits only individuals of the unproductive classes?The public
treasury is the heart of the State. Finance is the pivot on which turns the
administration of affairs. The government must retain its sovereign right to
issue currency."
From these observations of DeLisle Brock, made more than a century ago, we
perceive at the very dawn of the modern credit system a representative of the
people endeavoring to secure to government the profits that are available when
token currency and credit are substituted for money of intrinsic value as the
common medium of exchange. Brock was fully aware that under such a system the
government could create its own spending power without costs to the people and
that by the putting it into circulation through the maintenance of public
services the government could provide the people with the volume of exchange
required to sustain progress and prosperity.
Brock was seized of the fact that government, under the new system, should
not carry on the business of selling public services to taxpayers at a profit
to usurers who themselves created nothing. Creating money by minting coins,
printing paper and issuing credits that have little or no intrinsic value
constituted, in Brock's opinion, a possibility of immeasurable value, and he
set up a national currency system to secure the benefit of it to the State. He
perceived that governments, under the new system, were possessed of the power
to create out of nothing, a medium of exchange that had in itself all the
purchasing power value of money based on gold. He saw that if the government
transferred this power to bankers and financed public works and social
services by borrowing from the private money system, the bankers would become
rich and that governments and the people would become poor. On the other hand,
he was aware of the fact that if government exercised the power to create and
issue money the proposition of financing government could be changed from one
of disastrous expense to government and to the taxpayers to one of profit to
the entire community. With this view Lincoln was in agreement.
The experience of the last 100 years has proven that Brock was correct. Our
present condition of bankruptcy demonstrates that the profit that goes with
the first issue of money, which costs less to produce than its money value,
cannot be given away to a private monopoly without disaster to the State. This
profit forms a part of the public domain and obviously should be administered
as a public trust. Knowing that the power to create and issue money could be
used by the government as a means to assist people in the creation and use of
wealth, Brock was aware that no government has the right to farm out this duty
as a privilege to a private monopoly.
Surely no sane person will now dispute the wisdom of the proposition that
the elected representatives of the people have no right to transfer the
nation's power to create and issue money to a private monopoly of usurers
disguised under the name of financiers. But that, unfortunately, is the basis
of our private money system and is the basic cause of our economic troubles.
There is good reason for believing that Lincoln was aware of the Guernsey
Island experiment in national currency.
In some of his speeches Lincoln uses expressions identical and in some
instances the same language that Brock employed.
Thus we see that the idea that government should finance by the direct
issue of currency instead of borrowing at interest was, in fact, a
well-established idea in Lincoln's time.
Lincoln the Monetary
Reformer
Guernsey Money
Reply to this message
