They must have enough houses for protection before the coming winter and must grow food and provender, so they decide that those who are handy with the broadax, saw, and hammer shall assist the few artisans in the building of houses, while the other men, with the assistance of some of the women and the youths, shall grow the crops. But it is understood that when there are houses for all, the work is to be individualistic, except for such work as is of a public character.

When they have reached the point of individual work they hold a meeting and decide that each man of voting age shall render thirty days' public service yearly or pay the equivalent into the public treasury, and shall be subject to call for from one to thirty days additional.

Many individuals rather than perform this public service would prefer to hire substitutes in order to save their own time for the private employments in which they are particularly efficient. The payment for substitutes establishes a minimum common labor wage. In the beginning a man who desired a substitute made arrangements with him and notified the overseer of public works, giving the name of his substitute. The overseer gave the receipts accordingly to the workman, who delivered them to his employer and received his pay; but after a time, probably to save work in making the receipts, they used printed blanks requiring only the filling in of the worker's name and the overseer's stamped signature. These each worker delivered to his employers-the men whose public service he had engaged to work out. The substitutes at first took the receipts in the names of their various employers, one laborer doing the public work for several individuals.

Still later even this was found to be unnecessary, for it involved personal engagements to perform the service, and subsequent settlements of each worker with his employers. Perhaps by the accident of some workman's failure to settle with his employers at the usual time; possibly by the natural and necessary development of the situation, the workmen came to be quite indifferent and careless as to settlements and used the receipts with the grocer, the butcher, the merchant, in fact, everywhere they had dealings.

But most of the receipts were for a week's work, only a few of them being for a less amount, so after a time, on the suggestion of a committee of the workmen, the receipts, or certificates, as they were commonly called, were given in various denominations, from the fourth part of a day to one, two, two-and-a-half, and five-day cer

tificates, and were printed on their best paper and as ornamentally as their facilities allowed.

Very soon after this was done the certificates constituted the larger part of the circulating medium and the people realized that unwittingly they had invented a new money. Gradually as the volume of the certificates increased, the gold disappeared from circulation and silver was used only as fractional currency. Coin did not disappear by "emigration" nor by hoarding, but by finding its way into the public treasury and remaining there because people preferred the certificates.

Let it be noted that these certificates were not "promises to pay," nor were they money in any legal sense; not legal tender, yet they performed all the functions of money. Probably no one of the colonists ever so much as thought of providing by ordinance that anything should be a legal tender.

Thus this money based on service performed came naturally to be the medium of exchange without anyone even raising a question as to its soundness or safety. The certificates passed current on the same basis as coin (a full-day certificate as $2.00). A purchase of goods from a foreign community, however, raised the question as to the safety of the certificates. It was proposed to use the coin that had accumulated in the government vaults in the purchase of the foreign goods, and this at once provoked discussion as to the basis of the circulation power of the certificates. Some thought that every currency should have a coin basis, and the banker thought that the coin in the community had really served as a basis for the certificates, which passed as token money upon the tacit understanding of a return to coin at any time the certificates might prove unsatisfactory. He was very sure a crisis would come before long if the coin were sent away. He raised the question of limiting the issue of certificates, and soon it was evident that this was the crux of the whole question. How to limit them had never been considered, and now it was evident that this was the one point to be made sure of—if it could be.

A board of experts to determine the limit was suggested, but discussion indicated that a board could not tell how much money was needed any better than a single expert could; that in the very nature of things the amount of currency required cannot be settled abstractly, but is governed only by the demands of trade.

A perfect currency is not only elastic in the sense that it will expand to the fullest requirements of trade, but it is as perfect in

resiliency, for no matter to what extent it has been expanded by temporary demand, it will contract as demand abates.

But all this change must be automatic, and not by the dictum of any man or any number of men; not even by the unanimous vote of all concerned. But how shall we arrange so to regulate the quantity of our money that its value shall remain constant? The answer is simple enough. Hitherto we have been requiring from each male citizen of voting age thirty to sixty days of public service each year, for which receipts have been given. These receipts were not payments for service but acknowledgments of service due and rendered. This little government does not pay for anything. It receives what is due it and gives receipts. These receipts pass current because, being impersonal, anyone who is prepared to surrender them to the amount of his services due is thereby discharged of his obligation; shows that he has rendered the service personally or by proxy. By surrendering them he designates for credit to his own account that part of public service for which the certificates were issued; and the certificates go back to be canceled or to be reissued in acknowledgment of further service.

But hitherto we have done only such public work as estimates called for without any reference to creating a circulating medium, and if this has given us the proper amount to use as money it is simply a happy accident. There is one way and only one way to determine how much public work should be done, and that is to provide employment for all who cannot be more profitably engaged in private employment.

Naturally you will ask how this can be done. It is very simple, as most great truths are. All the change we need to make in our present method is an ordinance authorizing and commanding the board of public works to employ all unskilled laborers who apply, at two certificates per day (as we have been giving), and as many skilled laborers as may be needed, at such compensation as is necessary to secure the number required. While I do not think it important, it may be well for technical reasons to provide in the ordinance that the certificates shall be legal tender.

The way in which this plan will work to accomplish what we seek is this: If at any time, for any reason whatsoever, more than the natural proportion of labor had gone into public work, there would then be less than the natural production of private wealth, and prices of commodities would be above normal because of relative scarcity.

Private employers would then offer somewhat more than the public wage, thus drawing labor away from the public service and restoring the state of balance. On the other hand, should more than the natural proportion of labor be engaged in private production the prices of commodities would fall because of their abundance. Some of the privately employed labor would then be released and would go into public work, restoring the balance. In fact, there will be no noticeable shifting from private to public employment and back again, except of those whose private employment is seasonal in character. The state of balance will be preserved just as the water level in two connected reservoirs, each having variable supply, is preserved, by flow of the water from one to the other.

In a large community, one of many millions, my opinion is that there would be no noticeable shifting from public to private work and back again, except of those laborers who habitually do so because of the irregular character of their private employment. Indeed, we may find that except for those intermittent workers there will be no shifting. I suspect the ultimate development will be that most young men will serve an apprenticeship in public work, and the currency volume will be adjusted by the slightly varying average time they remain. This apprenticeship work, if it all goes into the public service temporarily, should be a very accurate gauge or index of the currency, for if we can imagine a perfectly even standard of business, that is, unvarying prosperity, the demand for money should be in proportion to the number of producers, and the apprentices are the enlisting force in the industrial army.

On the other hand, if there should ever be too many certificates in circulation their value would fall slightly, or business would become more brisk at prevailing prices and workers would be drawn from public to private employment (not many but a few) and cancellation by payment of taxes would bring about adjustment.

To summarize this system of natural money: The ideal money is redeemable by service. It is because all the individuals of a nation owe services to the government and because the surrender of the currency cancels that service, that they receive it in exchange for goods. The last person who gives service or goods in exchange for such money, and then, instead of having it redeemed again, turns it in to pay his taxes, has given it its final redemption. It is not the function of government to redeem money. The money is not a governmental debt, but the government's receipt for a debt paid,

and there is no obligation on the part of the government except to acknowledge it as such receipt and receive it in lieu of service.

D. The Regulation of Government Paper Currency

115. METHODS OF REGULATING GOVERNMENT PAPER The following methods have been used in regulating the issues of government paper currency:

1. Full specie reserve method.-By this method the issuing government retains in its coffers metallic money equal in amount to the paper issued. The paper is thus a true representative currency, serving merely in lieu of so much specie.

2. Percentage specie reserve method. With this method a specie reserve equal to a certain fixed percentage of the paper must be held by the issuer. The amount of paper may be changed with changes in the amount of reserve.

3. Minimum specie reserve method.-A certain fixed minimum quantity of specie is held as reserve, and the paper outstanding against this may or may not be increased or decreased.

4. The uncovered issue method.-A certain fixed amount of paper may be issued, secured by bonds, etc., and beyond this amount any quantity may be issued if backed by a full specie reserve.

5. The elastic uncovered issue method. This method differs from the above only in that the uncovered issue may be extended in time of emergency.

6. Property reserve method.-Land or other real estate, or personalty such as bonds, stocks, etc., may be used as security for government paper currency.

7. Revenue payments method.-A free issue of paper money which relies on its acceptability for taxes in lieu of coin to keep up its value.

8. The deferred convertibility method.-Notes may be issued promising to pay metallic money at some future date, either definitely fixed, or dependent upon political or other contingent events.

9. Fiat method. The government may give freely issued paper full legal-tender power and command its acceptance in payment of all obligations. It is irredeemable.

10. Limited issue method. The issue may be definitely restricted in amount in order that an active demand may prevent depreci