Mosaic Economics

Mosaic Economics

Thomas Allen

In Moses the Economist (1947, Editor Ben Williams, Reprinted 2009, American Christian Ministries), C.F. Parker gives his understanding of Mosaic economics as described in the Pentateuch. Some of his descriptions and my comments follow.

– Value. Parker believes that the value of the labor used to provide a product or service determines its value. (Both Adam Smith and Karl Marx held this view.) The opinion of the consumer is irrelevant. Thus, if the labor value of a product is $100 and the consumer values it at $50, the product cannot be sold for $50. To sell it for $50 would cheat the workers of their due wages and would be an ill-gotten gain for the consumer, who has cheated the workers out of part of their wages. For the product to sit on the shelf and deteriorate is better than selling it for less than $100. How the workers are better off losing $100 by the product deteriorating to worthlessness than losing $50, Parker does not explain.

Like most people, he has the cost of labor and materials determining the selling price of the product backward. The cost of labor and other inputs to produce a product does not determine the selling price of the product. The marginal consumer does. What the consumer is willing to pay for a product determines the cost of the labor and other inputs in the production of the product.

– Taxes. Farmers bear the primary burden of funding the government. They pay 10 percent of their crops and increase in herds to the government. (If their herds decrease, does this the government reimburses them for 10 percent of their loss — probably not.) However, they pay their taxes in products and livestock instead of money.

To provide additional revenue (taxes) for the government, Parker extends this principle to manufacturers. Through some convoluted reasoning, he concludes that the use of tools powered by steam or electricity produced by coal, petroleum, natural gas, uranium, water, and now wind and solar makes their products equivalent to agriculture. Consequently, manufacturers would pay the government 10 percent of what they produce. Thus, applying the agricultural equivalency, an automobile manufacturer would give the government 10 percent of the cars and trucks that he produces. A spark plug manufacturer would give the government 10 percent of the spark plugs produced. In like manner, a toy manufacturer would pay the government 10 percent of the toys that he produces. And, likewise, for other manufacturers.

However, if furniture manufacturers or seamstresses used no power tools in producing their furniture or apparel, they pay no taxes. Yet, if they use power tools, such as electric saws and drills and electric sowing machines, they pay 10 percent of their products to the government.

Providers of services are exempted from taxation. For some strange reason, Parker puts miners, who extract God-given ore from the ground, in the nontaxpaying category. Although he is unclear whether extractors of petroleum, natural gas, and coal pay taxes or not, he seems to place them in the nontaxpaying category.

Parker does not address solar and wind energy because when he wrote his book, they were not used to produce electricity, although the wind was used to grind grain, pump water, and move ships. However, based on his agricultural principle, since God provides the wind and sun, people who use them to produce electricity should give the government 10 percent of the electricity that they produce.

– Land. Parker is a proponent of the jubilee where all land returns to the original owner every 50 years. For the Western Hemisphere, this means that all land return to the Indians (who gets the land of the extinct Indian tribes?). Or, it returns to the monarchs of Spain, Portugal, Great Britain, France, the Netherlands, Denmark, and Russia. If the principle of the right of conquest, the land belongs to whoever conquers it, is applied as it is applied to the Israelite’s conquest of Canaan, then the aforementioned monarchs are the original owners since the land was conquered for them and in their name. Consequently, the Indians have no claim. (See “Jubilee” by Thomas Allen.)

– Usury, Loans, and Debt. Of course, charging interest including fees, which is interest by another name, on loans is prohibited. Moreover, all debts are canceled after seven years —not seven years from when the loan is made but a fixed calendar seven years for all loans. Thus, a loan may be canceled a year after it is made. (See “Questions for Anti-Usurers” by Thomas Allen.)

If all debt is canceled every seven years, then all paper money and its electronic equivalent including checkbook money become void every seven years. These types of money are obligations, i.e., debts. Parker seems not to recognize this cancellation of credit or representative money, which he believes is real money like full-weight gold and silver coins. His confusion about money derives from his belief that money is a mere token. (See “What Is Money?”,  "What Are the Functions of Money,” and “What Is the Difference Between Commodity and Fiat Money” by Thomas Allen)

Although Parker does not realize it, his anti-usury stance if carried to its logical conclusion forbids farmers from saving part of their crop as seed for the next season. Deciding how much to consume now and how much to save for future consumption involves interest, usury.

Furthermore, even the holdings of Social Security, of which Parker approves, would cease to exist every seven years because they are obligations (debts) owed to the participants.

– Money. Further, Parker has little understanding of commodity money, e.g., gold and silver, and a commodity monetary system, e.g., the gold standard. He believes that the monetary commodity has a different value, usually, a lower value, from the commodity stamped as a coin. Under a true commodity standard, the commodity has approximately the same value as an equivalent weight of the commodity when stamped as a coin. Money has value in and of itself that is independent of any image, words, or numbers stamped on it. The weight of the commodity in the coin is what gives it value and not what is stamped on it. (If the monetary value of a currency exceeds the commodity of which it is made, as with paper money, it represents real commodity money and is, therefore, an obligation to pay real commodity money, i.e., it is a debt payable in real commodity money.)

If he had looked in Genesis, he would have found the attributes of real money, which are quantity, a measure of weight, and substance. According to Genesis 23:16, Abraham bought a burial plot. He paid 400 (quantity) shekels (measurement of weight) of silver (substance). All commodity money has these three attributes, which makes money more than a mere token.

Therefore, a token even if used as a medium of exchange is not Biblical money. When used as a medium of exchange, token money represents money and passes the obligation to pay real money from one person to another. When the seven-year debt cancellation comes, token money becomes a canceled debt, and the person holding it is cheated out of whatever value it had as a medium of exchange.

Nevertheless, Parker is correct about money itself not being wealth. However, the gold in a gold coin is wealth as gold bullion. (See “What is the Gold Standard?” by Thomas Allen.)

– Banks. Banking as known today would cease to exist. People who wanted to save their money in a secured vault would have to pay someone to protect their money in a vault.

As for checking accounts, people would have to pay a depositary to hold their money against which they could write checks. They may also have to pay when a check is cashed or money is transferred from one account to another account. A return to yesteryear where bill collectors visited people’s houses or businesses to collect payment may return. Most likely, people may have to visit centralized offices to pay their bills as that would be the cheapest way of making payments.

– Wages. According to Parker, people should be paid according to their effective endeavors. Also, he seems to argue for a wage system that is akin to what progressives promote from time to time. Some governmental bureaucrats establish a relative pay scale for each type of job based on their opinion of its importance and on the labor required for that job. 

Nevertheless, he maintains that workers who work more efficiently acquire more wealth than less efficient workers. The incompetent and slackers become impoverished. He is a proponent of meritocracy in the workplace, which the free market generally provides when the government does not interfere with employment.

According to Parker’s understanding of Mosaic economics, wealth is fixed and is the aggregate of the rivers, lakes, oceans, soil, plants, animals, atmosphere, and the like. Wealth has nothing to do with human intelligence in organizing and using these resources. Thus, African countries rich in resources should be wealthier than Singapore, which is extremely poor in natural resources, but most are not.

– Stocks. Corporations with publicly traded stock would cease to exist under Parker’s Mosaic economics. Paying dividends on stock is outlawed because the owner of the stock did not earn the money. Moreover, one could never sell a stock for more than he paid for it because that is ill-gotten gain. Likewise, apparently, one could never sell a stock for less than what he paid for it because that would be an ill-gotten gain for the buyer. 

– Abundances and Scarcities. Buying items such as generators and food in a region of plenty and selling them in a region of want because of a natural disaster, war, or otherwise at a price above what existed before the disaster is forbidden. One must sell the item at the predisaster market price. (Higher prices mean stronger demand relative to the supply and are a signal for more supply. By fixing prices, Parker denies this signal. He appears to have a great deal of confidence in the integrity and the subjective opinions of governmental bureaucrats to move products from a region of abundance to a region of scarcity. He seems to want to eliminate the free market.)

Moreover, in a region that has an abundance of agricultural products, he would prohibit selling the products below the pre-abundant price. To do so would cheat the farmer. Apparently, the farmer and presumably the consumer benefit more from the excess crops rotting away than from selling them at a lower price.

– Selling Used Items. Selling a used product, including antiques and old masterpiece paintings, for a profit is forbidden. One cannot sell a used product for more than what he paid for it (or the original price if the original price is lower). Consequently, if a person inherits a painting, jewelry, furniture, or anything else whose original price is unknown, he cannot sell it.

Moreover, stamp and coin collecting as an investment would cease to exist. One can never sell a stamp or coin for more than its face value.

– Insurance. Private insurance is verboten. Nevertheless, Parker accepts governmentally run Ponzi schemes like social security, which is often called insurance.

– Conclusions. If implemented, Mosaic economics, as Parker explains it, would be detrimental to today’s economy. A small minority of the country, the farmers and manufacturers, bear the tax burden; the remainder remains untaxed. This dearth of taxes does keep the government small and, therefore, limited. The government could not make up for the shortfall by deficient spending as the cancellation of debt every seven years and the illegality of charging interest would prevent most people from lending to the government.

Further, his explanation of money is flawed. Also, his requirement for governmental price fixing is highly destructive and would create continuous surplus and shortages. He asserts that the value or price of labor in producing and distributing products fixes their value or price; the subjective opinion of the consumer, i.e., what the consumer is willing to pay for the product is irrelevant in fixing its value or price. His demand to abolish interest would cause the consumption of capital until society reverts to the hunter-gatherer stage. (See “Usury” by Thomas Allen.) 

Moreover, Mosaic economics, as Parker explains it, relies heavily on the wisdom, integrity, altruism, and near omniscience of governmental bureaucrats. Although historically and biblically, governments have been much more doers of evil than doers of good, Parker displays a childlike trust and confidence in governments always being doers of good.

Parker is convinced that Mosaic economics as he understands it will eliminate poverty. However, instead of making the country prosperous as he claims, his proposals would impoverish the country.

Copyright © 2022 by Thomas Coley Allen.

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Are the United States a Communist Country?

Are the United States a Communist Country?

Thomas Allen

[Editor’s note: This article was submitted in 1988 to the “Southern National Newsletter” of the Southern National Party.]

    The United States are well on their way to becoming a communist country. About 70 percent [revised to about 80 percent] of the trip has been completed as the following comparison with the ten planks of the Communist Manifesto illustrates.
    1. “Abolition of property in land and application of all rents of land to public purposes.” The U. S. government owns 32 percent of the land in the United States. Indian reservations own 2 percent. State and local governments own 7 percent. Zoning, land use, rent control, and similar laws control much of the remaining 59 percent. Thus, governments in effect control most of the land in the country, i.e., have the benefit of ownership, while leaving landowners the responsibility of ownership. Much of the income that one may earn from his land is taxed away, and most of the taxes that a landowner pays on his property have nothing to do with protecting his land. Plank No. 1 has been essentially implemented — 8 points. [When what the Bureau of Land Management has done in recent years, this score needs to be raised to 9 points.]
    2. “A heavy progressive or graduated income tax.” The Sixteenth Amendment gave the U. S. government the authority to levy a progressive income tax. The U.S. government and most States levy a progressive income tax. Plank No. 2 has been implemented — 10 points.
    3. “Abolition of all rights of inheritance.” People still retain the right to will property and to inherit property. However, inheritance is taxed heavily enough that property left often has to be sold, and is, therefore, lost by the inheritor, to raise money to pay inheritance and estate taxes. Plank No. 3 has been partially implemented — 3 points. [Although some tax relief has been given in recent years, this plank still deserves at least 3 points.]
    4. “Confiscation of the property of all emigrants and rebels.” Southerners, whom the conquering horde considers rebels, have had much of their property confiscated over the years. Also, investments in foreign countries, which is a form of emigration, is controlled and restricted by the U.S. government. The U.S. government claims the authority to limit the amount of property that a citizen may take out of the country. Plank No. 4 has been partially implemented — 4 points. [With all the security laws enacted in recent years, the score for this plank needs to be raised to 6 points.]
    5. “Centralization of credit in the hands of the State, by means of a national bank with State capital and exclusive monopoly.” The Federal Reserve Act centralized credit in the hands of the U.S. government. It along with various other federal banking laws has established an exclusive banking monopoly controlled by the U.S. government. Federal debt accounts for a significant part of the reserves of the banking system. They have implemented Plank No. 5 — 10 points.
    6. “Centralization of the means of communication and transport in the hands of the State.” The U.S. government has centralized the control of communication and transportation in its hands. Some of the agencies that have been used to implement this plank are the post office, FCC, FPC, CAB, FAA, FMB, FRA, and ICC. Plank No. 6 has been implemented — 10 points.
    7. “Extension of factories and instruments of production owned by the State; the bringing into cultivation waste lands, and the improvement of soil generally in accordance with a common plan.” The U.S. government has been implementing this plank over the years with such agencies as the Department of Agriculture, Bureau of Reclamation, the Corps of Engineers, and the Tennessee Valley Authority. Although the U.S. government and the States have usually refrained from taking over the ownership of factories, they have not hesitated to claim control of them. They tell employers whom they must hire, the kind of benefits to give employees, the minimum wage to pay employees, and a host of other items that are better left to negotiation between employers and employees because they are rightfully within their purview and not that of the government. Plank No. 7 has been substantially implemented — 8 points.
    8. “Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.” This plank is one that the welfare state has managed to avoid. Plank No. 8 has barely been implemented — 1 point.
    9. “Combination of agriculture with manufacturing industries; A gradual abolition of distinction between town and country, by more equitable distribution of the population over the country.” Zoning, land use, and similar laws are removing the distinction between town and country. Agricultural and tax policies are forcing agricultural operations to resemble manufacturing industry.  Plank No. 9 is well on its way to being implemented — 8 points. [With the U.S. governments and State and local governments adopting laws to implement Agenda 21 and Agenda 2030 to greatly restrict the use of rural land and to force most people to live in cities, this plank has now been substantially implemented and deserves 10 points.]
    10. “Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production, etc., etc.” Plank No. 10 has been completely implemented — 10 points.
    Out of a possible 100 points, the United States score 72 points [revised to 77 points]. That is, the United States have already implemented 72 percent [revised to 77 percent] of Marx’s planks. Therefore, judging by the ten planks that Marx presents in the Communist Manifesto, the United States have almost completed their journey of becoming a communist country.

Copyright © 1988, 2019 by Thomas C. Allen.

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Poor on Law

Poor on Law

Thomas Allen

    In 1877, Henry Varnum Poor (1812-1905) wrote Money and Its Laws: Embracing a History of Monetary Theories, and a History of the Currency of the United States. He was a financial analyst and founder of a company that evolved into Standard & Poor’s. Poor was a proponent of the real bills doctrine and the classical gold-coin standard and, thus, the quality theory of money. He gave little credence to the quantity theory of money — especially if credit money, such as bank notes, were convertible on demand in species. Also, he contended that the value of money depends on and is derived from the value of the material of which it is made and with paper money, its representation of such value.
    In the latter part of his book, he discusses leading monetary theorists from Aristotle (350 B.C.) to David A. Wells (1875). Most of the economists whom he discussed were proponents of the quantity theory of money. We will look at his discussion on John Law. My comments are in brackets. Referenced page numbers enclosed in parentheses are to Poor’s book.
    John Law (1671-1729) was a Scottish financier and gambler. He attempted to revive France by opening a bank to issue paper money. In 1716, he opened his bank, which became the Royal Bank with Law as its director. Reckless lending by his bank led to the financial panic of 1720. Poor reviews Law’s Money and Trade Considered (1705).
    Law argues “that articles of property, other than silver . . . might be made into money, or might be made the basis for the issue of paper money in place of one of silver” (pp. 81-82). [At the time that Law wrote, silver was the primary species in circulation.] According to Law, using items other than silver as money or as the basis for paper money should greatly benefit the public.
    Law declares, “The value of silver as money is its value in barter” (p. 82). He continues:

The additional value silver received from being used as money was because of its qualities which fitted it for that use, and that value was according to the additional demand its use as money occasioned. . . . Money is not a pledge, as some call it; it is a value paid, or contracted to be paid, with which it is supposed the receiver may, as his occasions require, buy an equal quantity of the same goods he has sold, or other goods equal in value to them; and that money is the most secure value either to receive, to contract for, or to value goods by, which is least liable to change in its value. . . . Thus silver having a value and qualities fitting it for money, which other goods had not, was made money, and, for the greater use of the people, was coined (pp. 82-83).

    Poor agrees that “Law was entirely right in assuming that the value of silver was its value in barter” (p. 83). However, Law “was mistaken . . . in asserting that it derives a value from its use as money, unless by its use as money he meant its use as reserves” (p. 83). [Most people who believe that money has value because of the material of which it is made believe that its use as money adds to that material’s value, whether such money is used as reserves or as a circulating purchasing medium.] Poor adds, “It is not their [gold and silver] use as a medium of exchange that constitutes their value: it is their value in the arts and their capacity to serve as reserves that give them their value in exchange” (p. 83). [In Dawn of Gold: The Real Story of Money, Philip Barton argues that gold originally received much of its value as money from its use in religion. William Carlile argues in The Evolution of Modern Money that gold evolved into money from its use as ornamentation as an expression of status.]
    Law argues:

Silver money is more uncertain in its value than other goods, so less qualified to serve as money. . . . Silver in bullion or money changes its value from any change in its quantity, or in the demand for it. . . . [S]ilver or money is dearer or cheaper, being more or less valuable, and equal to a greater or lesser quantity of goods. . . . More durable goods, as metals, materials for shipping, &c., increase in quantity beyond the demand for them, so are less valuable (pp. 83-84).

    Poor comments that Law’s assumption “are exactly opposed to the fact. The value of silver is uniform from the uniformity of its production and of the demand for it. Should there be some excess in production for one or more years, such excess would be taken up at previous prices to be held as reserves (so long as silver is legalized as money)” (p. 84). Poor continues, “Unlike other merchandise, the market for silver is the world. Until the markets of the world are glutted, it cannot fall materially in value from increase of production.” (p. 84). [As long as a country is on the silver standard, the “price” of silver will not change because the monetary unit is defined as a specific weight of silver. When the United States were on a de facto silver standard under its bimetallic system, one dollar would always buy 371.25 grains of silver because the dollar was defined as 371.25 grains of silver. That is, the “price” of 371.25 grains of silver was always one dollar, which was 371.25 grains of silver. {The price of 371.25 grains of silver was not fixed at one dollar, the dependent variable. The dollar was fixed at 371.25 grains of silver, the independent variable.} Moreover, Benjamin Anderson argues in The Value of Money that the supply of money and the demand for money does not determine its value. He argues that the “value of money is a quality of money, that quality which money shares with other forms of wealth, which lies behind, and causally explains, the exchange relations into which money enters.”[1] “Value {of money} is prior to exchange. Value is not to be denned as ‘power in exchange.’”[2] According to Anderson, the social value theory best explains the value of money: “the social value theory is the only way of giving a psychological explanation to the demand-curve, and a marginal value explanation of marginal demand-price.”[3]  Thus, the value of money derives from the value of the commodity of which it is made and from its services as money. The value of the commodity as money combines with the value of the commodity in its nonmonetary use. Like all other commodities, and everything else, the value of the monetary metal and of its use as money is psychological. Anderson concludes, “The physical weight in gold, which itself is an object of social value, is commonly the immediate basis of the value of the dollar to-day, but money may get its primary value from other sources than valuable bullion. Given this primary value, the dollar may get an enhancement in that value from the services which it performs in the social technology of adjustment.”[4].]
    Poor remarks:

Although at the outset some of Law's propositions in reference to money were eminently sound, he was compelled to sacrifice them so soon as he began to unfold his scheme. Those who came after him were incapable of appreciating him where he was right, but were certain to follow him wherever he was wrong. . . . Economists have borrowed greatly from Law, from whom, from the disgrace attached to his name, they could copy without reference and with impunity. They constructed, in great measure, from the ruins he left behind, their grotesque and absurd edifices (pp. 84-85).

    Law proposes to substitute paper money based on land instead of silver. Unlike silver, Law believes that his land-based paper money would not fall in value. Land is more likely to maintain its value than any other goods because it does not increase in quantity. [Law’s notion that land maintains its value is wrong. The value of land can vary greatly, even over a few years. In 1991, the aggregate value of all the land in Japan was almost four times that of the United States. By 2005, land in Japan had lost half its value while land in the United States had more than tripled in value.]
    Poor remarks that no one would borrow or accept Law’s land notes unless they could use them “to obtain coin, or merchandise, the equivalent of coin, — capital that could be used in their industries” (p. 86). Holders of these land notes could not convert them to the land backing them. Whether well secured or not, Law’s land notes “could never get into circulation” (p. 86). To avoid this difficulty, Law declared, “Money is not the value for which goods are exchanged, but the value by which they are exchanged. The use of money is to buy goods; and silver, while money, is of no other use” (p. 86).
    Poor is convinced that Law doubts that people would willingly receive his land money for other articles. Poor remarks, “As he [Law] could not give up his scheme, his principles had to give way to his necessities, and he was forced to assert the exact opposite to that which he had affirmed, and the truth of which he had conclusively demonstrated” (p. 86). Thus, Law declares that money “was not the value for which goods were exchanged, but the value by which they were exchanged” (p. 86). Poor continues, to Law money “was the yardstick by which goods were measured off, — a contrivance to assist in numeration, — a tally or counter to register the delivery of certain quantities or values of merchandise; in other words, value was not a necessary attribute of money” (p. 86). [This notion that money is merely a counter and that value is not a necessary attribute of money is held by most of the writers whom Poor reviews and by today’s fiat money proponents.]
    Law identifies several criteria that make land superior to silver as money. One is that land produces everything, including silver. Thus, silver is just a product. Another is that, unlike silver, land does not increase or decrease in quantity and is, therefore, more certain in its value. Also, unlike silver, land can be improved and, by that, increase the demand for it. Land cannot lose any of its uses whereas silver can. When land is used as money, it does not lose any of its other uses; however, silver used as money cannot simultaneously be used for other purposes. [See “Land-Backed Currency” by Thomas Allen, which explains the inferiority of land as the basis for money.] Poor replies, “A mortgage on real property may possess a high value, and yet bare no other attributes fitting it to serve as money” (p. 87).
    Law also knew that his land money would not be accepted abroad. Therefore, he asserts “that it was not necessary that it ever should pass abroad; that the domestic trade of a nation was alone to be considered” (p. 88).
    About Law, Poor writes:

He took the short cut of throwing his principles overboard without the least compunction, whenever they came into conflict with his purposes. He was a man of action, who never stopped to explain, but pushed right forward to the object he had in view. For him to doubt and inquire would be to give up the contest altogether. His life was a mission to promote, in the first place, the welfare of his own country, by supplying it with money — capital; and every consideration was subordinate to this grand idea (p. 88).

Copyright © 2017 by Thomas Coley Allen.

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Endnotes
1. B.M. Anderson, The Value of Money (New York: The Macmillian Co., 1917), pp. 8-9).

2. Ibid., p. 9.

3. Ibid., p. 42.

4. Ibid., p. 591.

Land-Backed Currency

Land-Backed Currency

Thomas Allen

    Some people recognize the absurdity of the current monetary system based on the concept of backing bank notes and the electronic equivalent with promissory notes that promise to pay with bank notes that promise to pay nothing. They have been taught that gold is the worst sort of money — even worse than the current monetary system. So, some suggest backing the currency with land. Unfortunately for them, land makes low quality money.
    For any commodity, including land, to serve adequately as money, it needs to be portable (relatively high value per unit of weight), homogeneous or uniform, durable, divisible, recognizable, highly marketable (highly liquid, universally acceptable), and stable in value. Also, the commodity used for money should be fairly scarce, but not too scarce. Furthermore, it should have a high stock-to-flow ratio, that is, the quantity of the commodity readily available for use as money is high compared with the newly added supply.
    Portability. Land scores extremely low in portability. How does one transport a square kilometer of land from Iceland to New Zealand? Presumably, the land could be dug up and transported by ship. Then, how deep does one dig? Moreover, the cost of transporting the land probably would far exceed the value of the land.
    Homogeneity. Land scores extremely low in homogeneity. In valuing land, location is vitally important. Land in the City of London has much more value than an equal area of land in central Greenland.
    Durability. Land scores high in durability, especially if its use is ignored.
    Divisibility. Land scores high in divisibility. It can be subdivided to where a magnifying glass is needed to see it.
    Recognizability. Land also scores high in recognizability. Everyone can recognize land.
    Marketability. Land scores low in marketability. It cannot be transferred in seconds from one owner to another without a significant, often a great, loss in value. Moreover, days may be needed to transfer land ownership legally. Thus, land is not highly liquid. Also, land is not universally acceptable as payment for goods, services, and debt.
    Stability. Land scores low in stability of value. In 1991, the aggregate value of all the land in Japan was almost four times that of the United States. By 2005, land in Japan had lost half its value while land in the United States had more than tripled in value.
    Scarcity. Land scores extremely low in scarcity. Next to salt water, it is earth’s most abundant commodity. It is the most abundant commodity if the land beneath the oceans is counted.
    Stock to Flow: Land has an excellent stock-to-flow ratio. The amount of new land being formed is insignificant compared to existing land. Also, land being destroyed is insignificant.
    Land scores high in durability, divisibility, recognizability, and stock to flow. However, it scores low in portability, homogeneity, marketability, stability, and scarcity. The negative attributes of land as money far outweigh its positive attributes. They make land an extremely poor quality money. (On the other hand, gold scores very high in all the aforementioned attributes that high quality money should have. Thus, gold makes an exceptionally high quality money.)
    In spite of being a poor quality money, land has been used to back currencies that were redeemable in land. An example of a land-backed currency is the assignat.
    Soon after the revolutionists came to power in France, they established a land-backed paper currency called the assignat. Land that the revolutionary government had confiscated from the Catholic Church, the Crown, and Royalist refugees backed the assignat. Buying land from the government redeemed the assignats, i.e., the government convert assignats into land. When the assignat became legal tender in 1790, it traded at par with specie. By 1796, its value had dropped to zero. Even the death penalty and the Reign of Terror could not maintain its value. In 1796, the government replaced assignats with mandates, another land-backed currency that could be converted into land. Mandates circulated only a few months before they, along with assignats, lost their legal-tender status and became worthless.
    In conclusion, unlike gold, which is high quality money, land is low quality money. Any monetary system based on land or backed by land results in low quality money.

Copyright © 2016 by Thomas Coley Allen.