The Way Out — William A. Peffer
William A. Peffer was a publisher and politician that served as the senator of Kansas from 1891 to 1897. He was one of the few Populist Party members that made it to the US Senate, but he only served for one term and was more influential in much of his writing. In 1890, before serving in the Senate, he wrote a pamphlet “The Way Out” which called for democratic control of the money supply and interest rates. Some of the reforms he laid out were implemented in some form later, but even today the piece serves as an eloquent defense of the use of government to benefit the public good, and why certain things should not be used to make a profit. This text is taken from Part II — The Proposition, and some less relevant and more out-of-date sections are not included.
The public good is to be preferred before private benefits, and for that reason the merits of a projected reform may be measured by what, if successful, it would probably accomplish in the common interest without injuring the property or endangering the liberty of the citizen, or interfering with the reserved rights of the people. What is proposed here is to suggest such a change in our monetary and financial system as will make it practicable (1) for the people to have and use money not only on reasonable terms but on equal terms; (2) to avoid panics in the money market and prevent “corners” and other schemes to affect the value or volume of money in circulation; and (3) to reduce annual charges for the use of money on long time to 1 per cent, and 2 or 3 per cent on short time, without injury to present owners of money.
The proposed plan rests upon one fundamental principle, namely: The proper function of money is to serve a public use. In the beginning, money was not needed. It is the child of commerce. It only became useful only as the expansion of trade made needful some convenient medium of exchange, and now it is as necessary in the transaction of ordinary business affairs as common highways are in the movement of persons and property. The citizen, when he lies down at night, should not have any more anxiety about a panic in the money market the next day, or a rise in interest rates through speculation of stock gamblers, than he has about the closing of the highway which lies at his door, or its obstruction by some ambitious neighbor who would traffic in travel, compelling his fellows to pay for privileges to which they are entitled of right. Every citizen is entitled to an outlet. He may not be shut out from the world by his neighbors’ lands. On demand, the state will open a way for him. For stronger reasons, when the common convenience or public necessity requires a thoroughfare, no private interest is suffered to stand in the way of its opening. Individual ownership of land is set aside with no more ceremony than the lawful appropriation of it requires, and the citizen must be content with that. And when more speedy and direct communication between distant points is needed in the common interest, private lands are taken and set apart for public use, the way is opened, a railroad is built and kept in repair for the people’s convenience. While a corporation is permitted to perform all the service and receive all the compensation, it is done as agent and trustee for the people. The work is determined by the legislature, the charges are regulated by law, and in case of failure to discharge its legal obligations, the people through their regularly organized tribunals take possession of the road and its equipments, and provide the needed service. These highways are kept open and maintained at the public expense; the people use them freely and on precisely equal terms. No person may obstruct them, every person may use them. But the traveler must “move on;” the highway must be kept open because it is for the people’s use. The function of the highway is to accommodate the people in the matter of travel and transportation; it is a necessity of civilization, a public necessity, a common need of all the people, and for that reason it becomes the duty of the government, which is the people’s general agent, to see that the need is promptly supplied and permanently maintained.
What the highway is to transportation, money is to trade — a public necessity, and the government is as much bound to supply one as the other, and upon precisely the same terms as to compensation. People use the roads without expense beyond the cost of opening and maintaining them, and it ought to cost them no more for the use of money they borrow. The people supply themselves with roads at the public expense, so should they supply themselves with money — the common medium of exchange — at the public expense, paying for its use only what it costs to supply it. The proper function of money is incompatible with its use as a commodity — an article to be bought and sold in the public markets like what and corn. It should be made by the people for their use and upon the same principle that they make and use bridges, ferries, mills and roads. One citizen should not be permitted to speculate on the necessities of another.
Money is no exception to the general rule for determining market values. Whatever can be obtained for an article in the market, that is its market value, and the demand depends largely on the amount and distribution of supply. A short supply and an active demand enhances prices, not because any moral principle is involved, but simply because the seller can bank on the necessities of the buyer — he can make money out of a short market. The necessity of one is the advantage of another. And as to commodities in general, there is no objection to this rule of trade. It is conceded on all sides that the rule is reasonable and that its operation tends to maintain commercial equilibrium. But how would it work as to things which the people have set apart for their common use and benefit? Some things may be classified — as the industries; one class of persons work on farms, another class in shops and factories, a third go to mining, a fourth engage in transportation, and thus all the workers are employed. There are some things, however, that are common to all the people, in which they are alike interested, not to the same degree, but for the same reason. As to such matters it is better that the work be done by the people for themselves in their own way through some agency specially appointed and kept constantly under surveillance of public authority. All the people of a city are interested in water and light, and though in different degrees the nature of the case will not admit of discriminations. One person may need large quantities of water, another not nearly so much, but not account is taken of that in termination to supply the city with water. It is much cheaper, much more convenient and much better in every way that the city should supply the water and because the people are all alike interested. If people were limited in their correspondence to private mail carriers, the expense would be enormous, and the inconvenience intolerable. Carrying the mails rapidly, promptly and safely is a public need, therefore the people see to it themselves for themselves; the government does the work, and the poor and rich fare alike. One hundred stamps cost the purchaser one hundred times as much as one stamp of the same class costs its purchaser. The government is now trying to equalize the cost of transportation of property over railroads and canals and on rivers, so that there shall be no unjust or unnecessary discrimination in favor of or against particular persons or places, and there is an almost universal demand for legislation prohibiting the free carriage of favored passengers. A Senate committee has just been investigating charges against meat packers that they are defrauding the public in a matter which all the people are interested. Suits have been brought against corporations alleging that they had forfeited their franchises by engaging in enterprises not contemplated in nor compatible with their charters; and people of all parties denounce trusts and other combinations which unnecessarily and unjustly make living more costly. There is a clearer perception now than ever before of the need of the public management, at all events public control of every matter which directly concerns all the people alike. All this comes logically to a free people where from the beginning the poor man enjoyed political and civil rights equal with the rich. Latterly the concentration of large interests have increased the number and the power of rich men, and the deft handling of money by its owners, with the dangerous development of stock and grain gambling, have impressed the masses of the people with the need of legislative interference in behalf of the many as against the few in this particular direction.
While all the people — this includes every individual person — are interested alike in the use of money, that portion of it which is used for lending on interest belongs to only a few persons, and that few control the money markets of the country, always interested in making money scarce and dear, so that the demand will be higher and therefore rates of interest higher. To call in one-half of the money of the country would not only increase interest rates 50 per cent, but it would force prices of commodities down 50 per cent. Owners of money would gain while owners of other kinds of property would lose. This principle has been demonstrated many times in our history and never more plainly than within a few years last past. The possession of money is a power dangerous when exerted in the interest of individuals against that of the community, and it is neither safe nor just to let that power remain in individual hands. The law of self-defense is nature’s law, and it is preserved in human codes. The citizen may be always armed in his own defense, but he should be shorn of every power which endangers the public interests. The money power is the most dangerous foe to republican liberty at this hour; it must be disabled. Fortunately this can be done justly and peaceable, injuring none, benefiting all. The remedy is to take money out of the list of commodities which may be bought and sold for gain, and limit its use to its proper function of serving the people in the conduct of their everyday affairs. Let the government, not bankers and money-lenders, control the money of the country.