Edward Kellogg
A New Monetary System

Chapter V.
Advantages of the Safety Fund.

The Safety Fund will lend money at a low rate of interest to all applicants furnishing the requisite landed security;  hence every town, county, and State, which has the power to perform the necessary labor, can make internal improvements without pledging its property to large cities or to foreign nations to borrow money.  A few years since, the high and fluctuating rates of interest so depressed the prices of products, that a number of the States were unable to pay the half-yearly interest due on their bonds;  consequently, they fell to a very low price, and many of the holders suffered great losses, while large capitalists were enabled to take advantage of the fall, and to buy the bonds, in some instances, at less than one-fifth of their real value.  The canal bonds of the State of Illinois were bought at from sixteen to thirty cents on the dollar.  A short time after this, in 1845, the purchasers of these bonds made a negotiation with the State to furnish it with a further sum of money to complete the canal, on condition that a mortgage should be given to them on the canal and adjacent lands, securing the money so advanced, and also securing the par value of the bonds bought at these reduced rates, and the interest.  It seemed as if the people thought this money would actually excavate the canal, quarry the stone, and build the locks.  But when they had received the money, they were obliged to build the canal by their own labor, and now that it is completed, to collect the tolls for the transportation of their own products, and from all the merchandise passing on the canal, and give this income to the foreign and other holders of the bonds for merely furnishing a representative of Illinois property.

If the Safety Fund had been established, and money had been issued representing the property of the people of Illinois at an interest of six percent, their property would not have been more encumbered than by being pledged to foreigners at the same rate of interest.  The property that secured the loan to foreigners would have been good security to the Fund.  The interest on the loan would have been gained by the people of the State, instead of being paid to foreigners.  All the interest that Illinois pays to other States or nations, is paid for the use of money, and not for the use of actual capital.  If the people of Illinois had had no capital, they could not have borrowed the money;  if they had ample capital, they certainly ought to have had the power to obtain a proper representative of it at home, instead of being compelled to go abroad far it.  How much greater would have been the prosperity of this State had the Safety Fund been established before she began to make her internal improvements.  The necessary money to carry them through without delay could have been obtained from the Fund at one and one-tenth percent interest, and no embarrassment from a scarcity of money would have been felt in any department of industry.  The improvements would have remained in her own hands, and she would long since have been receiving the advantages of them in tolls and increased facilities of transportation.  But under the present monetary system, she has suffered the loss of credit, and to complete her improvements has been compelled to mortgage her canal and canal lands, and the labor of coming generations.

Millions of money are now paid in interest to foreign nations on our Government and State debts.  Besides, in all our large seaport towns, many foreign capitalists have agencies or banking houses for drawing bills of exchange, dealing in stocks, discounting notes at enormous rates, etc., and in this way immense fortunes are accumulated from our labor.  These capitalists exercise a great influence upon our money market.  When our people shall have an ample national currency, at a low and uniform rate of interest, these capitalists and agents will disappear.  Money-brokers and stock-jobbers, who now live by fluctuations in the money market, will abandon an occupation no longer profitable.

The value of money being made uniform, all kinds of stocks will maintain a uniform value, determined by the percentage interest which they will yield, and the time they have to run before the payment of the principal.  If they bear a higher rate of interest than the legal one, of course they will be above par.  All the State stocks which the States have reserved the light to pay before maturity, will be paid with money borrowed at one and one-tenth percent.  Even if the bonds of some of the States have a number of years to run, these States can much more easily pay five, six, or seven percent interest per annum upon them during the period, than they can under the present monetary system, because the value of their labor and products will be increased.  The same will be true of all private bonds and mortgages having a number of years to run.  A few years will extinguish all these old loans, and then there will be a nearly uniform rate of interest on all obligations throughout the nation.

From what was said in the Introduction, it appears that the farmer or planter is very dependent upon the mechanic for his implements of husbandry, for his house, furniture, books, etc., etc.  The mechanic is certainly not less dependent on the farmer for the materials of his food and clothing, and these are indispensable to his existence.

There is no such thing as independence among men;  they are and must be helps to each other.  Although all useful trades and occupations are mutually beneficial and necessary, yet in most nations a jealousy exists between the agricultural and manufacturing interests.  But in reality the natural tendency of the prosperity of one is to increase the prosperity of the other.  The object of both is to supply themselves and each other with food, clothing, and the other comforts of life.  If an ample supply of money were at all times in circulation, at a uniform and sufficiently low rate of interest, both the farmers and the mechanics would find a ready market for their products;  and the prices of their products would naturally adjust themselves so that both parties would receive an equitable share of the proceeds of their labor.  Each would be justly contributing to the welfare of the other, and each would be benefited by the labor of the other, and would receive an equitable proportion of the products, because the representative power by which the distribution was made, would not be capable by its income of engrossing the products of either party.  But so long as the income power is the all-absorbing power which takes the larger portion of what both these parties earn by their labor, a third party that holds this legal power of income, will take without labor the larger share of what both the others produce.  While the poverty of producers is supposed to be caused by over production, and the sale of too many products, the evil will be attributed to laws favoring one class of producers to the disadvantage of others.  But when the real cause of the oppression, that is, the monopolizing power of money over all the productions of labor is perceived and rectified, the various branches of productive industry will harmonize, and promote one another's welfare.

Some may not understand how the rate of interest on money affects the compensation of labor.  Suppose the owner of a small farm is now obliged to work early and late for a mere subsistence.  He has little or no means to spare for the education of his children, and in fact cannot give them time to attend school.  If this man should be told that the high rate of interest at which money is loaned deprives him and his family of the comforts of life and the means of education, he would very naturally ask: "How can that be?  I never borrow money and pay interest, nor do I lend money and receive interest.  The payment of a high rate of interest by others does not affect me;  it does not diminish my crops.  I raise food for my family, and the produce that I can spare I sell, and buy such other articles as we need, and the storekeeper does not charge me any interest.  I have enough to do to live, without troubling myself about the interest on money."  He is indeed aware that many people live with far less labor than he does, and have many more comforts, and this he attributes to their good fortune.  He does not grasp the subject sufficiently to perceive that the interest on money is a standard or governing power, which compels him to contribute his proportion of the products required to support all the non-producers in this country, and probably some of the capitalists of Europe.  He does not see that a large percent is taken from the price of his products by the purchaser, in order to enable the latter to pay his interest and live by the purchase and sale;  and that, for the same reason, when he purchases, a large percent is added to the price of every article produced by the labor of others.  This difference in price must be sufficient to support all who live upon income without labor.

Let the Safety Fund be established, and interest be reduced to one and one-tenth percent, and after a year or two let inquiry be made of the same farmer about his welfare.  He would probably say, "I am doing very well;  I am much better off than I was two or three years ago.  I send my children to school, and have a good living."  Should he be told that his prosperity was owing to a sound currency and low rate of interest, he might say: "I do not borrow any money from the Safety Fund, and I have no money to lend upon interest.  I raise corn and potatoes as formerly, and sell them to the same merchants.  I do not see how the reduction of the interest on money that other people borrow is any benefit to me."  Although he do not perceive the causes of his past privations or of his present comforts, he will be as sensible as anyone of the improvements in his condition.  If a man suffering intense pain were informed that it was caused by the disorder of a nerve, he might not understand this, nor think so small a cause could occasion such acute suffering.  Apply the proper remedy, let the nerve recover its tone, and the pain cease, and he would be conscious of health, although he might not understand how the pain was removed.  Whether a man understand the laws relating to his physical system or not, he will suffer if any organ do not perform its duty;  and whether laborers understand the constitution of money or not, they must suffer all the consequences of its imperfect or deranged organization.

There will doubtless be a class of objectors to the Safety Fund who will contend that it is by the use of greater talents, and not by the unjust power of money, that a few gain the majority of the wealth in a nation.  But it is evident, that if the greater talents of the few are not dependent upon the unjust power of money and the love of gain by its exorbitant rate percent interest, that diminishing the power of money and greatly lowering the rate percent interest, cannot in the least infringe upon the full and freest use of their greater talents, either for the production or the acquisition of wealth, or for any other just and lawful purpose.

When the natural reward of labor is secured to the laborer, poverty cannot exist in any family whose members are able and willing to work.  And those who can so easily provide for their own wants, will cheerfully contribute to the support of the sick and needy.  They will be able to supply themselves amply with the comforts of life, and have an abundance of time for intellectual and moral culture.  The incentives to vice will be comparatively few.  Avarice first arises from the fear of want;  to remove want will therefore in a great measure remove this vice, and the unnumbered evils which are its attendants.[1]  It is frequently said that the people must reform, and that not until then may we hope for good laws.  Not so: we might as well expect families to grow up virtuous where the parents are cruel, profligate, and vicious, as to expect nations to be virtuous under oppressive laws.  Make the laws a standard of right, and their benefits must secure an improvement in the morals of the people.

It is often said that men are naturally lazy, and will not labor unless compelled by an urgent necessity;  and it may be objected to the Safety Fund that if laborers are supplied with all the necessaries and comforts of life with far less labor than at present, the effect will be to induce indolence.  This opinion is held mainly by men who have accumulated large properties, and by those who have been placed in easy circumstances by their ancestors, and who, under the present system have the power to impose the necessity to labor.  This class seem to think it their right, if not their duty, to take all the surplus earnings from laborers, that the latter may be kept at work.  If it be true that man is naturally indolent, it will be difficult to show any good reason for compelling the larger part of the race to labor excessively to keep from starvation, while the greater and better portion of their productions is applied to support a smaller class without labor.  There are those, however, who believe that man is naturally industrious.  They know that healthy children are continually active, and that when motives of comfort or pleasure are offered, they are ever ready to make great exertions to possess themselves of the desired objects.  Hence they believe that if the productions of labor were fairly awarded to the producers, the prospect of the comfort and elevation in store for the industrious, would present sufficient motives to secure all necessary and desirable exertion.  This certainly is true unless the natures of the child and the man are radically different.  But if, when a child had made great exertions to obtain some desired object, others should by a secret or visible power prevent his receiving three-fourths of his well-earned reward, and the same exertions should be repeatedly followed by the same results, doubtless he would be discouraged from further attempts.  If under these circumstances he should become idle, or seek to acquire without labor, it ought not to be attributed to natural indolence, but to the want of a reasonable assurance that his labor would be successful.  The situation in which the producing classes of all nations are placed, seems analogous to that of the disappointed child.  It has hence become a very common remark that man is naturally indolent.  If discouragements were perceived by the minds of children equal to those familiar to the laboring classes, they would be so disheartened in their efforts as apparently to change their natures, and we should then have lazy children.  Their efforts also would depend on necessity;  and men and children would be found to have the same natures, and to be governed by similar motives.[2]

As a further illustration of the foregoing principle, we may notice briefly the policy which our Government should pursue in the sale of the public lauds.  If a country is to become wealthy, facilities must be afforded to those who perform the labor necessary to make it rich.  It is generally admitted that a free people will perform more labor, and make greater production than an equal number of slaves.  This seems to prove that those who expect to own and enjoy the proceeds of their labor will produce more than those who are stinted in the necessaries of life by having their products appropriated to the use of;  others.  When large estates are rented, and the landlords take a great share of the earnings of their tenants, the farms are not generally as well cultivated, and the buildings and other improvements are seldom if ever as good as where the farmers are the owners of the soil which they cultivate.  The difference is doubtless owing to the hopelessness in one case that even by severe toil they shall materially improve their condition, and to the prospect in the other of enjoying the fruits of their labor.  To the former labor is a burden, while the latter cheerfully perform a greater amount.  If then our Government desires the improvement of the public lands, encouragement must be offered to those who will purchase and cultivate them.  Speculators who buy and sell them at a tenfold profit, and make no improvements on the lands, add nothing to the wealth of the country;  but purchasers who go upon the land and improve it by their labor, increase the public wealth.  Let then the Government sell the lands to actual settlers only, in parcels not exceeding half a section to any individual.  Let a small part of the purchase money be paid down, and let the balance remain on mortgage at one and one-tenth percent interest until the occupant is disposed to pay it.  In this way the land will at once bring an income to the Government as good as if the whole purchase money were paid and not reloaned at the legal rate of interest.  The Government will be perfectly safe, and the people will pay for and improve the lands.  This will at the same time build up a prosperous and happy people, who will soon add immensely to the wealth of the nation, and who, in improving their own condition, will contribute to the comfort and happiness of others by supplying them with food, and receiving their surplus products in return.  If the laws be such that the people can secure a good living and a handsome surplus without labor, and can earn only a scanty subsistence and no surplus by it, they will seek to exempt themselves from labor.  But if the laws be made such that labor will secure to them a good living and a handsome yearly surplus, while without it they can obtain only a poor living and no surplus, people will incline to labor.  If interest be reduced to a just rate, almost the entire population of the country will be engaged in some species of productive industry, and the laboring classes will be relieved from the support of a numerous body who now live by their wits — that is, by contriving to obtain the products of others without toil.  When money is made a just standard, the injustice of contracts founded upon it will cease, and many laws necessary to support the present unjust standard will disappear.

So long as monetary laws continue a standard that will wrest products from producers, and place and protect them in the hands of non-producers, they will require for their support the aid of the sword and bayonet, because man's natural sense of right revolts against the usurpation and the injustice of such protection.  But when monetary laws shall sustain a just standard of value, which will place and protect products in the hands of their producers, they will of course conform to the natural laws of production, which were ordained by a higher than human power.  The distribution then being according to justice strife will cease, because a man having his own rights respected and protected, will naturally respect and protect the rights of others.  The time is not far distant when this truth will be known and appreciated by all civilized nations, and the mistaken power of legal Might which has such dominion over man, will wither before the meek and peaceable power of Right that exists in the natural laws of a wise and beneficent Creator.


In the previous pages we have discussed the rights of labor and capital for the sole purpose of convincing the public that the rapid increase of capital by percentage, now favored by monetary laws, while it stimulates the enterprise of the few, and naturally and inevitably secures to them great wealth, represses and cripples the enterprise of the great mass of the people, tending to pauperism, crime, and indirectly, but certainly, to the overthrow of the Government, which, disregarding the ratio of the actual increase of property by labor, has given the preference to capital: that justice to labor, while it will secure individual comfort and happiness to all who are able and ,willing to work, will rapidly develop the highest qualities of our nature, and all the resources of our country, and greatly increase the national wealth;  that it will give to civilization an impetus such as the world has never seen, and relieve it from one of its hardest conditions, that of creating desires and necessities which it provides no means to gratify;  that it will silence at once and forever the doubt so often felt and spoken, whether the happiness of the mass of men has been promoted by the change from the savage to the civilized state.  It has been shown that labor constitutes the real treasure of a nation, and without claiming for it anything more than its natural rights, we insist that these should be guarded by the most jealous care of government.  It has also been shown that under existing monetary laws, labor is not and cannot be properly rewarded.  Change is indispensable, and fortunately it can be effected without altering the Constitution of the United States, without the slightest disturbance to the present institutions of society, or real injury to anyone.

It is now for the American people, who have founded their government upon the principles of equality and freedom, to establish the rights of labor, which have been nearly disregarded in all previous time, and only cared for as they have served to minister to the ambition and luxury of courts and nobles.  Let the social position of the laborer, to which he is entitled by the ordination of God in the laws of nature, be ascertained and recognized, and poverty, crime, and most other political and social evils, will give place to competency, virtue and happiness.

The facts contained in this volume show plainly that our monetary system favors the rapid concentration of capital in opposition to the rights of labor, and we deem it warrantable to assume, that nearly all who shall carefully examine the subject, will be convinced that our present laws of distribution are continually doing a great wrong to the people.

Nothing more simple than the Safety Fund need be desired, and the more it is considered, the more adequate it will appear to distribute the wealth to those whose labor earns it.  This system will as certainly reward labor, as the one now in force has oppressed it.  It will infringe no rights of property.  The owners of wealth will continue in undisturbed possession.  They will be able to lend their money and rent their property as readily at one and one-tenth percent as now at six or seven percent.  The dollar received by the rich man in interest or rent will purchase as much as the dollar earned by the laborer;  precisely as at the present rates of interest.  Landowners will be at liberty to rent their land to tenants, work it themselves, or leave it untilled, according to their own pleasure: the low rate of interest will not prevent it from yielding crops.  Capitalists will not be required to favor laborers, nor to give them employment, nor to diminish the hours of toil.  Capitalists and laborers will be free to make their own agreements on these points.  The Safety Fund contemplates no agrarian distribution.  It asks for no distribution of lands and property, and for no contributions of money by either the Government or individuals to the support of laborers.  Laborers will need no favors.  They only require that the Government establish a just standard of value, which will allow them to possess an equitable share of the fruits of their labor.[3]

Who are those directly interested in the adoption of the Safety Fund ?  All agriculturists, manufacturers, mechanics, planters, in short, all who wish to earn a support by honest industry.  Merchants will do a safe business in exchanging products, and their profits will be moderate and sure.  Nine-tenths of our whole population a will receive the pecuniary benefit which is justly their due, and the remaining one-tenth will be left in undisturbed possession of their present wealth, and like their fellow-citizens, at liberty to increase it by any useful employment.  The desire of capitalists to accumulate is often owing to the wish to leave large fortunes to their children.  But if they rightly consider the instability of wealth, they cannot expect all, or even one-fourth of their posterity to remain rich.  Will it not be, to reasonable men, a thousand times more consoling to leave such laws as with a moderate amount of labor will secure to their whole posterity the comforts of life and the means of education, than to leave to their children the money and the present monetary laws, which must in a few years compel the larger part to toil incessantly for a scanty subsistence, and deprive them of mental and social culture ?  Are not just laws a far greater blessing to transmit than any amount of wealth ?  We believe that many among the rich, perceiving the justice and beneficence of this system, will be found among its most ardent supporters.

In all civilized nations much attention is now directed to the enormous evils of society;  and thousands, yes, we may say, millions of good and benevolent men are endeavoring to do something for their removal. But there is a great variety of evils, and a corresponding variety of opinions as to the means to be used to accomplish the desired objects;  hence reformers split into numerous societies;  and one society combats drunkenness, another slavery, another land monopoly and the oppression of labor, another war.  These are admitted to be great evils, and all who are truly desirous of their removal are the good men of the age;  because they are striving to alleviate the sufferings of mankind, and to improve the moral character and condition of society.  Yet their work will only serve partially to modify these evils, and will never eradicate them, because they are working not at the cause but at the effects.  To remedy the wrongs they must begin at the foundation which supports them, and make that just and right, and then the evils will be easily removed;  as a good house may be easily erected on a good foundation, but on a bad one, the people might always work at the effects produced by it on the work above, and the most that could be done would not prevent its being a rickety, poor building;  while the same labor on a good foundation would have built up a splendid edifice.  And had the foundation of contracts been just, the labor performed during past ages would not only have provided amply for the physical wants of the race, but would have supplied the best means for their moral and intellectual culture.  The root of a tree produces a trunk;  the trunk naturally divides itself into branches, which subdivide themselves into thousands of smaller branches and little twigs.  All these are supported by the root and trunk.  If we girdle one of these little twigs, it will die off above;  but will be likely to sprout out below.  A large branch cut off will die, and in dying will impart new vigor to the other branches;  but killing the root will destroy the tree.  So with the evils of society, most of them spring from one root, and they have become a great tree.  The trunk divides itself into many branches, which subdivide into many other branches, and little twigs.  Girdling this twig, or this or that branch, will never destroy the evil;  but kill the root, and then these large, and thousands of smaller branches and twigs will wither, decay and drop off, and the trunk will die.  We desire to call the attention of philanthropists of every nation, clime, and sect, to the great, hidden evil which lies at the root and below the surface, that they may combine their strength, and by one joint effort directed at the root, slay the thousand great sins of a nation, so that they will at once begin to wither and decay, like the branches and twigs of a tree killed at the root.  If the philanthropists who are now engaged in their works of kindness, and the producing classes who so wrongfully suffer by the present system, would but use their united efforts to have a just currency substituted for the present unjust one, it would be speedily accomplished;  and the consequent moral and physical improvement would be without a parallel in the history of man.  When any nation shall adopt a just monetary system, the abundant supply of comforts, and the good will, peace and happiness which will ensue, will form such a contrast to the present condition of society as to astonish the world;  and all will wonder that the power of money was adequate to the production of so much evil.  By the unjust power of money tyrannies have been built up and sustained, and by making it a just standard of value, and an equitable balance against actual production, it will again demolish them, giving to man his rights throughout the civilized world.[4]

The means necessary to put in operation and sustain the Safety Fund are not confined to the few capitalists who now control the currency, and furnish the Government and the people with money.  Our farmers and mechanics alone have sufficient landed estate to secure several times the amount of money necessary for our currency.  The only thing required is a law of Congress adopting this system.  The passage of this law must be effected by direct petition, and by making the measure a leading question, the people voting only for men who will use their influence in favor of it.  Everyone, thoroughly convinced of the truth of the positions taken in this book, can do something to diffuse a knowledge of them among his friends and neighbors.  The most effectual way to excite interest in the system, and give it prominence, would be to call public meetings and lecture upon the subject.  The objects which will be secured by its establishment, are so evidently in accordance with the principles and aims of the Christian religion, that minister's of the Gospel cannot fail to advocate it with the same zeal that they advocate peace, justice, and good-will among men;  nor can statesmen who legislate for the well-being of their countrymen, refuse it their support.  The public newspapers have great power to awaken the attention of the people, and to disseminate a knowledge of this New Monetary System, and their aid would greatly hasten its adoption.  But more than all, let farmers, mechanics, and all men who earn their living by labor, determine that Congress shall legislate so as to do them justice.


1 [313/*]  See Appendix, K.

2 [314/*]  See Appendix, L.

3 [320/*]  See Appendix M.

4 [323/*]  If we could put an end to its unjust use there is no danger of our Government ever becoming a monarchy, the predictions of Europe to the contrary notwithstanding.  But should the interest on money be regulated by our Government, at Just and equal rates, there would be a Union in this country stronger than any government ever yet established, and, instead of our becoming a monarchy, the governments of Europe would be obliged to adopt our form of government, or very much better their own, for I am persuaded that this oppression of the people who earn the wealth of nations by their industry must, from its severity, cease. — Currency;  the Evil and the Remedy.