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Posts tagged ‘Mutual Credit’

Valun mutual money plan

                              Valun mutal money plan as conceived by E.C.Riegel

M. Quigley

M.M.I.I., M.A.

To establish a sound money unit with a constant purchasing power and a money
system that will prevent booms and depressions, inflations and deflations, and
assure constant prosperity and universal circulation, the following plan is

Name of the Unit

The proposed name of the new money unit is valun, a word compounded from VALue
UNit. It will appear in all desired denominations of bills and coins, and
checking accounts will operate like the present.

Valun Exchange

The central clearing house through which checks are to be cleared and from
which the currency bills and coins will be obtained will be called the Valun

How It Will Start

The ideal institutions to start the system are department stores because their lines of
merchandise are so inclusive; and they are well known to the public. They would
not sponsor anything that is not sound and in the public interest, and with
their endorsement the people would have confidence in the new money.

Forming the Exchange

The firms that desired to initiate the system would form themselves into a Valun Exchange
and adopt rules governing the operation thereof.

Mutual Credit

The members of the Exchange would agree on the line of credit for each (probably a
percentage of their previous year’s business). This means that each member
would be allowed to draw checks in valuns up to the stated credit limit. Checks
would be convertible into currency.

Dollar Pool

To quickly establish public confidence in the new currency, the members would agree to pay into a pool, one dollar for each valun issued. This pool would be used to
guarantee to any holder of valuns that he could get dollars in exchange, unit
for unit.

General Acceptance

All the members would announce to the public that they would accept valuns the same as
dollars in their business, or would exchange dollars for valuns. The effect of
this would be to make valuns acceptable to other tradesmen who are not members
of the Exchange. The currency bills would carry the legend: This bill will be
accepted in exchange for goods and services or for a dollar bill of the same
denomination by the firms whose names are printed on the back hereof.


Issue of valuns would, of course, be confined to members who had agreed to the dollar
pool. They would write checks for their purchases, and would cash checks in the
regular way for payrolls.

Pool Cages

The dollar pool would set up cages in the department stores where dollars would be
available to all on demand, in exchange for valuns.

Spread of the System

Because of the dollar pool guarantee, any merchant and employee would accept valuns and thus there would be many merchants besides the sponsors who would trade in
valuns. No one would, of course, be obliged to do so, except for competitive
reasons. Such dealers could open checking accounts in the Exchange but would
not have credit, and, of course, would not pay into the dollar pool.

End of First Phase

The first phase is intended merely to demonstrate the feasibility of the plan and to win
public confidence and to lead to the accomplishment of the ultimate purpose of
the plan, which is to completely separate the valun from the dollar and all
political money units. The time when this can be accomplished will be
automatically determined by public reaction.

Parting of the Ways

It should be noted that the dollar pool will buy Valuns with dollars but not dollars with
valuns. In other words, the valun will be guaranteed to not fall below the
dollar, but there is nothing to guarantee the dollar from falling. In fact, the
dollar is sure to fall, and that is the main reason for starting the valun
system – to protect valun users against inflation and to maintain a constant
price level.

At the outset all goods will be priced the same in dollars and valuns. For
instance, a pair of shoes will be priced $10 and V10. In due course the
inflationary factor in the dollar will cause the dollar price to rise to say $10.50
but the valun price will remain V10. Thus the public will discover that the
valun is worth $1.05 and will refuse to exchange one valun for one dollar. From
then on the disparity will increase and therefore, the dollar pool will have
served its purpose and may be dissolved and the dollars and valuns contained
therein, returned to the sponsor depositors.

Thereafter the valun and dollar will each be on their own.
The valun will become the storm center to escape the inflation storm and people
will turn to it in self defense.

Why Price Disparity

That prices should rise in one unit and not in another, or more in one than another,
may seem puzzling, but that is going on all over the world. The dollar is the
most nearly stable unit in the world. Therefore, prices are rising in terms of
other units more than in dollar terms.

When the valun is launched, it will be more stable than the dollar, and will in
fact be the only stable unit in the world. The stability of a unit is
determined by its issue policy. The issue policy of the valun is that its
issuers are solely private enterprisers who issue it only for purchases of
actual values under competitive conditions. The issue policy of a political
unit is that it may be issued for any purpose by the government including all
kinds of non-productive projects. There are billions of dollars issued against
no production – hence the inevitable inflation. Every valun issued will be
against actual value received by the issuer. Thus there will be many more
dollars than valuns bidding for the same goods, with the result that dollars
will decline in power while valuns will remain stable.

The Permanent Set Up

The permanent organization of the Valun Exchange should include any person or
organization. Membership should be of two classes: the A members, those who are
allowed credit, which means the power to overdraw the checking account and thus
create valuns; the B members, those who will have the depositing and checking
right without the overdraft right. It is proposed that the territory of each
Exchange be the state in which it is located. Any person or company in the
world should be eligible for class B membership in any Exchange but will
naturally choose the nearest, and as membership in any locale justifies, a
local Exchange will be opened. Exchanges would be mutually owned by their
members without capital, acting essentially as central bookkeepers and clearing

Governments National, state and local governments should be admitted as members of any Exchange but should qualify only as class B members without the power to create valuns. So far as valuns are concerned, governments should be obliged to balance their-budgets by denying them the over-draft power.

International Exchange

There should be one Exchange devoted to international trade to enable any trader
anywhere to draw a check in favor of any trader anywhere else. This Exchange
should be confined to class B membership. Any credit that an international
trader is entitled to would be secured through some other Exchange and
transferred to the International Exchanges to be drawn against.

International Governing Board

Each Exchange would have a representative on an International Governing Board that
would determine matters of universal interest and regulation. Effort should be
made to permit each exchange to have autonomy within proper limits.

The most important question upon which men differ is credit policy. The Governing Board could set what is deemed to be the most conservative policy and provide therefore a
minimum percentage to be charged for loss insurance, and from there up
graduations of more liberal policies, with appropriate percentages for loss
insurance for each. Each Exchange could then choose its own credit policy. The
appropriate loss insurance percentage would then be added to the check clearing
charge. Thus members of the various Exchanges would pay more or less as their
policy was more or less conservative.

The insurance fund thus set up against defaults would be held by the Governing Board subject to draft by any Exchange to cover any loss from credit default.

Members’ Charges

It is contemplated that the expenses of the Exchanges would be borne by the members
through a per check charge for all checks cleared, thus each would pay in ratio
to service received. No interest charge is contemplated for debit balances and
there would be no loans in the present banking sense, and of course no notes


The currency bills and coins should be printed and minted by the Governing Board
and supplied to Valun Exchanges, so that they would be uniform the world over.


The project of course encompasses an economic world revolution and it is difficult
to forecast all the consequences. The following is a catalogue of obvious

Provide a stable price level.

End the debt-money system. Credit would be extended solely upon the ability to
deliver goods and services.

Abolish interest within the system.

Take the money-creating power out of the hands of government and banks and
place it in the hands of private enterprisers.

Make government
operate on a cash basis; prevent deferred and delusive taxes through inflation.

Assure distribution of goods by distributing money power.

Prevent inflation and deflation; boom and depression

Defeat bureaucracy, fascism, and communism by taking the money power from

Defeat hidden money control from any quarter.

Assure full employment and a high standard of living. Give the people the veto
power over war and government extravagances.

Supply the perfecting element in democracy and private enterprise.

Unify commerce in one world of business, in spite of the separatism of

Copied From The
Papers Of E.C. Riegel Which Are Freely Available On The Web.

Permission Granted
By Spencer Heath MacCallum 25th. August 2009



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