The Freedom Of Exchange Is
The Foundation Of All Freedoms - Part I
Thomas Greco, whom we have quoted from
time to time in this report, wrote something a few years ago
about the work of E.C. Riegel:
�Throughout my career as a monetary
transformer, I have drawn heavily upon the profound and
insightful writings of Riegel (1878-1954). I�ve learned more
about money from him than from any other source.
�Riegel left a great legacy of writings
and correspondence which would have been lost to us, except
for the fact that Spencer MacCallum happened to meet him a
year before his death and recognized the greatness of his
�As I�ve said before...Why go
prospecting when we�ve found the mother lode? Riegel�s
material is the mother lode of monetary truth.�
The following introduction and article about E.C. Riegel are
by Christopher M. Quigley,
www.wealthbuilder.ie, Mr. Quigley holds a Bachelor
Degree in Management from Trinity College/College of
Commerce, Dublin and is a graduate of the Marketing
Institute of Ireland. He actively trades utilizing the
principles set out in the modules of the Wealthbuilder
course, which has been developed over the last 9 years as a
result of research, study, experience and successful
In a life spanning over 70 years one of the greatest
students of money and its meaning was the American E.C.
Riegel. Many regarded him as a genius for his understanding
of the nature and functioning of money as a human and social
institution. This essay is an introduction to his main ideas
on this subject as increasingly people are beginning to
realise the need for a more stable monetary unit. In
essence, in his book �Flight From Inflation� he identified
money as the mathematics of value and argued that for a
democracy to thrive the �money power� must be free.
He (Riegel) basically viewed any
political economic monetary system as socialist. For this
reason he was at odds with Adam Smith's view of the world.
Indeed he felt that Smith in his Wealth Of Nations
pre-empted Marx as a social theorist. Regardless of his
views, Riegel has come to be respected for his unswerving
belief in mankind and his heroic efforts to champion
practical freedom based on the realities of exchange systems
based on value.
The freedom of exchange is the
foundation of all freedoms, and the freedom of exchange
unencumbered is the truest democratic freedom of mankind.
Civilization began with exchange and exchange began with
whole barter, i.e. things traded for things. The first
improvement on whole barter was indirect barter. This was
the practice of utilizing commodities of common use as
reserves to be later traded for items of immediate need.
The adoption of precious metals, such
as gold and silver developed this trend. This step reflected
a growing emphasis upon facility in exchange. Accordingly,
through the passage of time a new means of completing
transactions arose through the practice of depositing
precious metals with goldsmiths, who in turn issued
warehouse receipts. Such pieces of paper became negotiable
through custom, and so purchases could be effected by their
Acceptance of negotiable gold receipts,
i.e. promises of future delivery, marked the first real step
toward the utilization of money. It was at this point that
barter was finally fully split into two halves, with the
buyer receiving value and the seller receiving only a claim.
This was the first faint glimpse of the tremendous
liberating power of money. We can also see that the ideal of
money is to split barter absolutely in half, without any
limitations imposed upon the seller.
Hence we realise that money is a device
that operates within the trading community for that
community's own self-interest. The necessity of splitting
barter into halves in order to motivate trade is the
motivating force: sellers want to sell and buyers want to
Money is issued by a buyer. Such a
money issuer, however, must in exchange for the goods and
services he buys from the market, place other goods or
services into the market. Thus money as a money instrument
is evidence of a purchase that is issued by a purchaser to
the seller. Therefore money is actually backed by the value
surrendered by the seller and potentially backed by a value
in the possession of the next seller.
To print bills and mint coins is not to
issue or create money. This has no more monetary
significance than if you were to write a cheque and leave it
in your chequebook. Instruments that have not been put into
exchange are non-existent in the world of exchange and
money. Money simply does not exist until it has been
successfully accepted in exchange.
Hence two factors are necessary to
money creation. A buyer who issues it, and a seller who
accepts it. Since the seller expects in turn to reissue the
money to some other seller, it will be acknowledged that
money springs from mutual interest and co-operation among
traders and not from authority.
It is a fallacy to think that a
government can issue money. Money can be issued only by a
buyer for himself, and he must in turn be a competitive
seller to recapture it and thus complete the cycle. This
competitive co-operation for goods and services creating
value in the market is actually what makes money work.
This competitive situation, in which
the trader redeems his original monetary issue, through the
sale of his own goods and services assumes that the
community's money will maintain its stability. All enigma as
to what causes money to circulate and maintain its power is
thus dissolved by comprehending this natural law of money
This law states that the legitimate
issue of money is confined to personal enterprisers in the
market place, since they alone, by the logic of their
situation, are able issuers of value. Thus in essence: money
is issued by a purchaser but it must be issued by a
purchaser who can and is prepared to issue value; it is a
tradesman's agreement to carry on split barter among
We thus see that money is the
mathematics of value exchanged based on mutual agreement.
The monetary instrument is but the evidence of the
consummated trade. It is a mistake to attribute purchasing
power to the instrument, for it has none. It is merely the
conduit through which purchasing power flows; such
purchasing power lying in the commodities or values
exchanged. From this analysis we can deduce that commercial
banks do not �lend� money. They in fact permit the
�borrower� to issue money.
Flight From Inflation The Monetary Alternative, by E.C.
Edited by Spencer Heath MacCallum & George Morton.
The Heather Foundation of Los Angeles, California