The Practical Realization of the Milhaud Proposals (1934/1935)
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The Practical Realization of the Milhaud Proposals (1934/1935) By Ulrich von Beckerath, 1882-1969 [Taken from Peace Plans #9, compiled by John Zube] An essay on the theory and practice of the monetary freedom required to make the market really free. "Proposals so simple, leaving the economic foundations undisturbed, and appealing so little to force! Certain current symptoms suggest that the world is beginning to get weary of violent solutions, that is, that part of the world which has come to know by experience wars, revolutions, blockades, hunger and trade depressions, and which has come to suspect that all these are somehow associated with defects in our monetary system." U. v. Beckerath, on p. 63. Published first in English, German and French by the Annals of Collective Economy, now re- named Annals of Public and Cooperative Economy, in 1934 and secondly in: "Ending the Unemployment and Trade Crisis", edited by Edgard Milhaud, London, Williams & Norgate Ltd., 1935. Permission for this reprint has been obtained from the present Director of the Annals of Public and Cooperative Economy, Prof. Paul Lambert. The only condition he imposed for the reprint of the money reform articles of U. von Beckerath, Walter Zander and Heinrich Rittershausen, published in the Annals, either by me or later by other publishers is that the Annals are mentioned as source, including the year of appearance. Present address of Annals of Public and Cooperative Economy: Liege, 45, quai de Rome, Belgium. The secretary of the Annals in Genf, Frau G. Calame, Acacias 7, 1227 Genf 24, Switzerland, can supply the volumes required for reprinting. Permission was furthermore obtained from Ernest Benn Ltd., Bouverie House Fleet Street, London E.C. 4, acting for Williams & Norgate, for the reprint of the English edition. Ulrich von Beckerath has transferred his literary rights to me. I welcome reprints. No charge! The English translation was made by G. Spiller, London. Ulrich von Beckerath told me that he is not fully satisfied with this translation. He always tried to be a perfectionist in his written expression. I have there from, with Beckerath's consent, tried to somehow improve this translation, attempting to achieve an as literal one as I could but I do not feel sure that I have not introduced some new mistakes thereby. My English still leaves much to be desired. I would welcome a better translation and hope that this reprint will help to bring it about. For technical reasons the numerous italics in the original could not be reproduced. Some of them were indicated in the original PEACE PLANS issue by spacing and have now been italicized. "Il n'a jamais été de progrès sociaux que seux conçus par un individu lucide et voulus par un individu énergique.'' "There has never been social progress than that conceived by a lucid individual and willed by an energetic individual." - H. L. Follin in: "Paroles d'un voyant" 4 CONTENTS (Page numbers book version) (1) PUBLIC REACTION TO THE MILHAUD PROPOSALS . 5 (2) POINTS DIFFERENTIATING THE MILHAUD REFORM PROPOSALS FROM THOSE OF OTHERS. 6 (3) THE MILHAUD PROPOSALS AS AN INTEGRAL WHOLE 6 (4) A BASIC FLAW IN OUR ECONOMIC SYSTEM. 7 A) The True Nature of a Money Debt. 7 B) Security in Cash Payments and in Non-Cash Settlements. 10 (5) THE MILHAUD PROPOSALS AS A BASIS FOR A NEW SYSTEM OF PECUNIARY SETTLEMENTS 10 A) The Prevailing Money Monopoly as a Cause of Money Shortage and there from of the Trade Depression. 10 B) Exchange of Commodities without Goods Warrants. 13 C) Exchange e of Commodities with Goods Warrants . 14 D) The Placing of Orders as a Factor in the Goods Warrants System 16 E) Short Term Validity of the Goods Warrants 21 F) An Improvement in the Civil Law as a Result of the Milhaud Proposals and as a First Step towards a Social Reform. 22 (6) THE REALIZATION OF THE FUNDAMENTAL CONCEPTIONS UNDERLYING THE MILHAUD PROPOSALS - SHOULD STATES NOT TAKE THE INITIATIVE . 24 A) Purchasing Certificates in External Trading on a Private Enterprise Basis . 24 B) Work Supply Banks As Private Institutions. 29 C) Technical. Details concerning the Issue of Goods Warrants by Work Supply Banks 34 a) Introduction. 34 b) Principles and Business Provisions regarding Loan Transactions of a Work Supply Bank in respect of Short Term Credits 35 I. Means of Payment. 35 II. Legal Form . 35 III. Guaranties for the Work Supply Bank in Loan Transactions . 35 IV. Usufruct Charges for Loaned Goods Warrants 36 V. Return of the Loaned Goods Warrants and Sundries 36 c) Rules 37 d) Principles & Provisions Governing the Obtaining of Credits through the Work Supply Bank 39 I. Nature of the Long-Term Credits Granted by the Work Supply Bank . 39 II. Capital Required for Long Term Credits, 39 III. Administration of Balances at the Work Supply Bank 40 IV. Notice of Withdrawal of Balances at the Work Supply Bank 40 V. Repayment of Long Term Credits. 41 D) Use of Goods Warrants to Finance Manufacturing Operations Occupying a Considerable Time 41 (7) OTHER ASPECTS. 46 A) Payment of Rent with Goods Warrants 46 B) Payment of Dividends with Goods Warrants 46 C) General Objections by "Practical Men 47 D) Issue of Goods Warrants and "Creation of Money" 48 E) Is a Homogeneous. Circulating Medium the Ideal 51 F) Security against Inflation of Means of Payment made of Paper 52 (8) CONCLUSION 57 For an alphabetical index see the end of PEACE PLANS No 11. Contents (Page numbers electronic version) (1) PUBLIC REACTION TO THE MILHAUD PROPOSALS ................................................ 5 (2) POINTS DIFFERENTIATING THE MILHAUD REFORM PROPOSALS FROM THOSE OF OTHERS ................................................................................................................ 5 (3) THE MILHAUD PROPOSALS AS AN INTEGRAL WHOLE ......................................... 7 (4) A BASIC FLAW IN OUR ECONOMIC SYSTEM ............................................................ 8 A) The True Nature of a Money Debt ................................................................................... 8 B) Security in Cash Payments & in Non-Cash Settlements ................................................ 11 (5) THE MILHAUD PROPOSALS AS A BASIS FOR A NEW SYSTEM OF PECUNIARY SETTLEMENTS ...................................................................................................................... 12 A) The Prevailing Money Monopoly as a Cause of Money Shortage and there from of the Trade Depression ................................................................................................................. 12 (5) B) Exchange of Commodities without Goods Warrants ............................................... 15 (5) C) Exchange of Commodities with Goods Warrants .................................................... 16 (5) D) The Placing of Orders as a Factor in the Goods Warrants System .......................... 19 (5) E) Short Term Validity of the Goods Warrants ............................................................. 26 (5) F ) An Improvement in the Civil Law as a Result of the Milhaud Proposals and as a First Step towards a Social Reform ..................................................................................... 27 (6) THE REALIZATION OF THE FUNDAMENTAL CONCEPTIONS UNDERLYING THE MILHAUD PROPOSALS, SHOULD STATES NOT TAKE THE INITIATIVE ........ 29 A) Purchasing Certificates in External Trading on a Private Enterprise Basis ................... 29 (6) B) Work Supply Banks as Private Institutions .............................................................. 36 (6) C) Technical Details concerning the Issue of Goods Warrants by Work Supply Banks .............................................................................................................................................. 42 a) Introduction ................................................................................................................ 42 (6) C) b) Principles and Business Provisions regarding Loan Transactions of a Work Supply Bank in respect of Short Term Credits ............................................................... 43 I. Means of Payment a) In connection with loans. ..................................................... 43 II. Legal Form ............................................................................................................ 43 III. Guarantees for the Work Supply Bank in Loan Transactions ............................. 43 IV. Usufruct Charges for Loaned Goods Warrants ................................................... 44 V. Return of the Loaned Goods Warrants and Sundries ............................................ 44 (6) C) c) Rules ................................................................................................................ 46 (6) C) d) Principles and Provisions Governing the Obtaining of Long Term Credits through the Work Supply Bank ...................................................................................... 48 I. Nature of the Long Term Credits Granted by the Work Supply Bank ................... 48 II. Capital Required for Long Term Credits .............................................................. 48 III. Administration of Balances at the Work Supply Bank ........................................ 49 IV. Notice of Withdrawal of Balances at the Work Supply Bank ............................. 49 V. Repayment of Long Term Credits ........................................................................ 50 (6) D) Use of Goods Warrants to Finance Manufacturing Operations Occupying a Considerable Time .............................................................................................................