2 of the march '68 PEACE PLAN 11,
Public insuranceand compensation money
a reprint of an early thirties article published in Geneva and written by
Ulrich von Beckerath
This file was created near end of nov 98; last minor changes in dec 98
Tripod tool Nedstat installed near the end of nov 98 but not correctly till july 99
Go see what else poetpiet can puzzle people with here
or check the intro to this and other files in this first batch of guest appearances
concerning all sorts of currency issues
5 continues the second half of the Concluding Remarks
on page 256
same for saffle; an example of the bunch of Joycefully funny scanfuzzspell
spills I found along this part of the course (see the intro for more):
MODE OF PAYING CONTRIBUTIONS
1, Due Dates
Societies will not bc able to begin riith fixed contributions payable at regular inervals, They would have unavoidably to commence with periodically collected levies. t might be provided for instance that whenever the accumulated fire-losses reach a ertsen fiaure - in Iran perhaps 56 000 rials - a levy would be announced. However in rder that the insured sufferers from damage should not have to wait too long, they ust, as was also the case formerly in various Prussian provinces receive a written statement from the insurance management that they will be entitled to such and such an amount out of the next levy. On the basis of such a certificate,the claimant could asily obtain a loan either from his neighbours or from merchants, particularly a loan in m a t e r i a l v a l u e s that is, one -not in ready money. After the society as existed for some time, it will, instead of collecting levies at irregular interats end according to need, attempt to collect as far as possibile regular contributins of an equal amount end also to manage by creating reserve funds, on the one hand and on the other by raising occasionally small loans (loans in money or in material values). Heavy levies it will only impose in case of heavy fire-losses. By regularly 218 collaborating with a bank or with a group of merchants more especially with shopkeepers,the society would be in a position to proceed in this way. Should such collabotation, however, not be practicable, thee, at least at the beginning, nothing nould
remain but, according to need, to impose heavier or lighter levies.
Means of payment
The insurance system must be constructed in such a way that if for some reason the ustomary means of payment become suddenly scarce the system would yet operate. The disappearance of coins from a district or from a given economie domain (as from agriulture), or the disappearance of banknotes generally, should not prevent an insurance society from indemnifying losses. As, however, a society can evidently only indemify with what it has received as insurance contributions, it becomes necessary to oranise a system of iaying indemnities end arranging for contributions, which in the vent of a failure ot the current system of payments may be forthwith applicable. Indeed, particularly in Asia, a p a r t of the transactions of the society would h ave t o b e thus permanently dealt with, inasmuch as at present there is not only frequently but perpetually, a deficiency of means of payment in most regions of Asia .
Hence arises the problem whether s i m p l e p a y m e n t s i n k i n d may ot possibly come to replace money payments.
He who has examined an inventory of objects destroyed by fire, - one drawn up on the occasion of a conflagration in a rural district, the sufferer from damage living in humble circumstances, being perhaps a peasant, - is aware that even such an inveniry contains items which could not possibly be replaced by the contributions in kind of the members, not even if the society had many thousand members end these members' belonged to every class of society.
That which any one in some existing community has to offer or has in store at a given moment, is never exactly covered by what another belonging to the same community needs at the same moment. This holds true even if we forget that some sort of t r a n s p o r t has always to take place before the offer can satisfy the demand and that, on its part, the transport labour, too, is subject to the law of supply and demand But ignoring this, the disparity relates also to the point of t i m e at which the offer is first made, and to the q u a n t i t y (as well as to the quality using the term in its general sense) offered.
A carpet or a clock is never wanted at precisely the moment it was first offered. And that which the owner of the carpet or of the clock wouLd desire to have in return for it is never ave' lable at just such time end in just such quantity end quality from the parties requiring the carpet end the clock as would satisfy the need ( demand would not be the right term here ) of the two proprietors This statement holds even if we regard the whoLe earth as an economie unit and if we suppose that the ecomic bond between the Tabriz carpet-weaver or the London clock proprietor on the one side, and, on the other, those who could contribute something to the support of these two and are at the same time ''interested" in their goods would be as easy and convenient as possible' a supposition that is far from completely justified.
All the more is there a disparity in demand and supply between persons belonging to relatively small communities, Indeed, in comparison with the population of the whole earth the population of any country or of any city, end of course the number of the members of even the largest insurance society, is very small.
If therefore all payments in an insurance society were to be made in kind these would have to be confined to objects where the abovementioned disparity would be or could be overcome with relative ease. Thus, peasants could help their neighbours to rebuild a burnt-down barn end to replenish it with cereals, or owners of herds could replace their neighbour's stolen cattle. But if the insured is to have replaced in kind his tobacco pipe, his clock, his carpet, and his kitchen utensils from the belongings of the society's members, it would be found that no rules could be formulated concerning such replacements, at least no rules properly adjusting services and inter-services.
Adjustment is however, easy if t r a d i n g is included end also at the same time a category that enables us to free ourselves from the disparity between supply (219) and need. This category is a means of payment relatively constant in value standardised, end subdivided in appropria e denominations.
With its stable value, this means of payment overcomes the difference in time between the first offer, on the one hand, and the springing up of a corresponding need, on the other. In other words, it bridges the difference in the quality of that which an individual at a given moment is ready to exchange and that which another individual needs at the same time, this by allowing for the fact that a f t e r a c e r t a i n t i m e this qualities of the supply by the one and those of the needs of the other are covered. By its convenient transferability it overcomes, moreover, the disparity between the q u a n t i t y of the goods held ready for exchange by certain individuals and the always different quantity of goods that other individuals are in need of. And the transferability, in turn, is ensured by the appropriate subdivision and standardisation of the means of payment.
Mo n e y is naturally the most convenient means of payment, be it in the form of coins or in that of paper money But i"e statement that no country c a n possess sufficient m o n e y to mediate its whole turnover has been confirmed in practice in hsia from the earliest times end more particularly has agricuLture in Asia suffered for ages from a serious shortage of money, a shortage that is not likely to be removed in the near future. Payment in kind is here also out of the question. Hence there remains only one possible means of payment, the goods warrant.
Goods warrants represent a means of payment of which there never need be any shortage. They are not m o n e y, nor are they orders to pay although their vatue is conveniently expressed in money. They are a means of payment s u i g e n e r i s, the full theory of which has yet to be elaborated. But what is most important in this theory wiill be found explained in Milhaud's diverse writings (Annals of Collective Economy for the years 1932 to 1936 ), in any event sufficiently to prove that the practical utilisation of goods warrants in any economie domein where a shortage of money is felt or feared, need no longer cause anxiety. What Milhaud has said about the form of the goods warrant, which alone is of importance for the n a t i o n a l e c o n o m y, namely, the purchasing certificate, is enough to base thereon the system of payment of an insurance society determined to continue its operations even when the last coin or the last banknote has, for whatever reason, disappeared from its domain, returning, however, at once to money payments when, and to the extent that m o n e y is available. We shall presuppose as known the theories propounded end exhaustiveLy proved by Milhaud as well as his numberLess convincing iLLustrations. ( For his theories, see ANNALS OF COLLECTIVE ECONOMY for 1932 to 1936 or his works published by Williams & Norgate London.) Here we shall confine ourselves to showing the possibility of their application to a definite economie branch. For an insurance society two kinds of goods warrants enter into account:
a) Goods warrants issued by the society in connection with its payments for fire Losses end for administrative expenses
b) Goods warrants issued by the members of the insurance society. In practice -that is, in at least 90 % of all payments made by end to the societythe goods warrants issued by the society will be used. The wording of such might reed:
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
GOODS WARRANT for 10 RIALS
issued by the pubLic insurance society ,,.... of .......
In the case of aLl Dayments due to ft, the society shalL accept this warrant in lieu of cash SimilarLy,the members of the society shall accept the warrant in alt eayments due to them,as cash,in accordance with the provisions on the payment of contributions printed below The holder of warrants cen lay no claim to receiving cash or other means of payment of any kind The validity of this warrant expires on ,..., after which the society shalL decide at its discretion whether end on what terms it will ac cept this goods warrant or whether it wi ll regard it as having lapsed.
NUMBER........................DATE .....................S IGNATURE
To pay with such warrants, the society must naturally covenant with its members that in fire-losses, and also so long as they have not paid their contributions, they must accept such warrants in keu of money in their commercial transactions. The society must also arrange with its staff to accept its warrants in lieu of money payments. It will proceed similarly with the suppliers from whom it orders stationary.
Let us now suppose that the society has to indemnify several members who have suffered fire-losses amounting altogether to 50.000 rials An inquirv among the member has elicited that the required levy could only be paid by few of them in cash In that case the society will pay the indemnity in goods warrants and notify this to all members. Furthermore, the society will in the customary way announce the levy, i.e. inform member A that he has to pay 10 rials in money or goods warrants; member B 25 rials; and member C 15 rials. The society will also inform all members that every one ho has not within a stated time, say 2 days paid his contribution in ready money must exhibit a poster stating: "Warrants of the ..., .. Insurance Society are acceped here in lieu of cash payments due to this member ( insert name here ) "
The first text of such a public notice was indicated by Milhaud in a discourse deivered in December 1931 end printed in the ANNALS of the following year, Superficially, it seems to be a question here of a simple, so to speak of a technical, arrangement, but in reality, the import of the basis of the Milhaud goods warrants is very far-reaching.
The first direct conclusion that follows is of considerable importance from the standpoint of monetary theory. The v a l u e of a goods warrant thus based is not nly determined by supply and demand, teut by a third factor which the theory of value as apparently not suff1ciently taken note of, namely just this readiness of certain individuals to accept the warrant in lieu of money when somebody buys from them somehing or makes payments, This readiness is manifestly not a demand, It is even less an offer, nor is it quite identical with c o v e r. In the case of cover the holder of the warrant would have claim to a c e r t a i n q u a n t i t y of goods The goods warrants of warehouses are e.g., covered by the warehouse goods. In exchange for the goods warrant he can obtain a certain quantity of goods at the warehouse In the case of the purchasing certificate, however, the holder is entitled to no more goods than corresponds to the m a r k e t p r i c e, precisely as with the holder a piece of money.
The third element revealed itself very distinctly end was clearly recognised by ie more reflective among the economists at the time when bimetallism existed For example, in France a debtor could for several decades discharge his debt at discreti! either in gold or in 15.5 times its weight of silver. So long as this was so, esperally with such an important creditor as thc Exchequer which accepted both modes of iyment, the ratio between gold and silver could not in any country deviate far from : 15.5, whatever the productive relations of the two metals and whatever the supply and the demand' The readiness of French creditors, although enforceable by the Courts, to consider 15.5 kg. silver as of the same value as 1 kg. gold, almost completely outweighed the influence of supply end demand.
An appropriate name for that third element has not yet become current, !i!e might ril it perhaps readiness to accept" or "readiness to sell". Incidentally remarked: the value of coins resides also in the main on readiness to accept, principally by shops. As frequently contended here, the value of gold end silver is not immanent in use. Nor is it based, except minimally, on the owner of the coin being able, if he res to' to have it worked up for his own use, e.g., as an ornament, as happens frerently in As1a.
Arising out of the recognition that the value of every kind of money is in the rst instance circulatory in nature end also out of the legitimate demand that the lue of money should be made as Plain to the public as technical reasons permit, follows the moral justification of the rule, which in some places is actually realized at shops must have f i x e d p r i c e s and must charge these prices to everybody alike. In countries where o n l y gold coins are legal tender (but thus far ch countries do not exist), the regulation would have to be amended to the effect at the shopkeeper must post up a not1ce in his establishment staling at what exchan 221 ge rates he accepts locally current means of payment other than gold coins. If no such notice were posted up,it would be presumed that he accepted them at par. Without such a regulation even a gold currency is defective because without it the value of gold is not quite accurately determined. Indeed, just because of this dubiousness, it fluctuates more than it would otherwise do - in any case more than the popular conception of a gold price presupposes. The recognition of the importance of fixed shop prices and an obligation to charge these prices to everybody alike is by no means a purely theoretical matter. During inflationary periods Governments bethink themselves of this, because they t h e n clearly perceive that those two obligations enhance the s t a b i l i t y of a currency. Accordingly, during the post-war period, such regulations were probably issued in all countries having an inflated currency.
The conception of r e a d i n e s s t o a c c e p t as an element in the value of means of paymenti which was introduced into economics. Through a practica! illustration furnished by Millhaud, makes it at once clear that the hitherto exist7ng requirements for covering end guaranteeing (or founding) a paper money not convertible into currency goods (e.g,, gold or silver), have not been strict enough. C o v e r might be considered to be that into which a holder of money is entitted to c o n v e r t his money, e g, State loan certificates in the case of the German Rentenbanknotes of 1923 or greenbacks during the American Civil War. A money basis (or foundation) might be considered to be that which lends value to money in transactions generally, e g, the readiness of the State to accept it at per in tax payments. If such an expression could be brought into general use, the man in the streef would refuse to accept as c o v e r for paper money land and buildings or "the wealth of the country", just as the scientific view has long rejected such (in as of "cover". If an attempt were made to introduce such paper money cor,ipulsorily, the man in the streef would ask: "and where is my right to e x c h a n g e at discretion paper money for the stated cover?" Such a question would kill at its inception every inflation, Even where, as in Russia during recent years it is introduced oy compulsion end deceit, such an expression, if in common use would render it futile.
According to the expression suggested here Milhaud's purchasing certificates would be both well covered end well guaranteed weil covered by the goods ready for removal by every warrant holder from the deblor of the issuing centre or from the issu1ng centre itself; welf guaranteed, by the legally enforceable obligation to supply goods for the notes
Although it was known before Milhaud that "real values'', end even newly created real values,did not suffice for coverinn paner money, it is now coming to be recognised that not even a cover with øliquid valuesø suffices to guarantee the stable value of paper money The newly created quantity of paper money must have for its known complementary b a s i s a readiness to accept, at least corresponding to the nominal value of the quantity of paper money issued,his may even be, if necessary, associated with an enforceable demand for the goods waiting to be bought. Sums due to creditors are naturally to be regarded as a basis not worse than goods veld end waiting to be fetched
By properly applyinq the category "readiness to accept" Milhaud's system obviates the danger of the purchasing certificates losing their value (the danger of i n f l a t i o n, i,e,, the danger of a general rise in pricesbycreating additional nurchasina power, which is not the same as the danger of deprec1ation, is obviated by the Certificates havinq no fixed exchange value).This is not achieved in an abstract eanner only apprehended by the trained expert,but in a concrete way easi ly understood by every certificate holder, namely through notices posted up by those ready to accept (Any doubter has only to visit a shop where the notice is posted up, buy there something with his certificate, end thus rid himself both of his doubts end of his certificate, even in times of panic) Roscher came neer to this viewpoint, end even cited in his par. 67 of his "National Oekonocie des Handels und Gewertfleisses8, several examples where depreciation was avoided by readiness to accept; teut he could not divest himself of his prejudice in favour of convertibility. He mentions three cases where the Bank of England was threatened by a "run. -once in 1707; then during the 222 rebellion of 1745, where the declaration of 1,140 merchants that they should accept the notes at par, removed all danger within three hours; and once again during the ten Years' War when Choiseuil's agente daily attempted to sow suspicion among the population notwithstanding the declaration of the London merchants. (The Annals I5, p. 150 - p. 139 of P.P. 194, mentions a case that occurred in Berlin in July 1870) Since the Milhaud system creates alongside the f r e s h purchasing power corresponding proportion of f r e s h readiness to sell, it avoids the creation additional purchasing power in the current sense of the expression; for the nature this power consists precisely in the fact that it is n o t accompanied by a simultaneously created n e w readiness to sell in the circulating sphere of the new money.
Similarly, by properly applying the category of readiness to sell, a deflation becomes impossible where, on a dearth of means of nayeent setting in the authorities and a sufficiently large number of citizens remember at once to apply the principle of the Milhaud system. 'Why this? because within any economic domain where Milhaud's principles are applied, it is possible to create for labour power engaged in a commercially useful manner the corresponding amount of means of subsistence. For every transaction that has become necessary, new payment facilities are simultaneously created ( in essence they are clearing possibilities ), and everybody may be therefore so placed as if he had coins instead of goods awaiting purchasers or bills that have fallen due. No transaction, as happens so often under the system of an "exclusive currency" need be suppressed in order that another may take place e g, the supplying of the population with every means of subsistence, even with articles of luxury, include foreign ones, need not be delayed because there are at the same time important public works to be executed - roads and houses to be built. etc.
In the case of collecting public or private dues from persons who can offer goods services but not money, the difference between the system of "exclusive currency", where simply purchasing power is requisitioned and the Milhaud system where the economy is governed by the sales aspect, becomes clearly apparent. This difference may be observed in a special instance, such as the one examined in this paper, namely that of payment of insurance premiums. But the difference becomes most especially obvious in the illustration given by Milhaud of the payment of taxes with purchasinq certificates, and this in both cases- when in the payment of taxes purchasing certificates issued by the tax payers are used and when the taxes are paid with purchasing certifiates issued by the State on the basis of the goods it offers (namely tax receipts), i.g.,when the tax payments are made with inconvertible State paper money not haying forced rate of exchange. (The Milhaud system would make the ruler of a mediumsized State richer end more powerful than any of his neighbours who perhans rule over much larger, more populous, end more fertile lands, but who do not apply this system,)
In the collection of cues in conformty with the Milhaud system, the receiver of the dues e.g., the tax authority, the insurance society, or the houseowner, does not reduce that quantity of purchasing power among the category of purchasers which that category would dispose of if the cues had not been collected (it is understood that the two social classes of purchasers end vendors are only conceptually differentted end do not represent different sections of society) Hence under the Milhaud system of settlement the category of purchasers does not buy less than it would have bought without the due collected. What happens is on the contrary, as follows. The category of vendors, inclusive of the vendors of labour power, must supply more than it would have had to without the due. Otherwise expressed,with the due this categorically held by the class of vendors. But the category of vendors does not earn thereby more than it would have earned, with lighter sales, without the due.
In the payment of public end private cues according to the Milhaud system, the total number of hours worked by the nation is therefore increased. This may be because the labour power is now set to work (which is a pure advantage) or because the lair power engaged works longer hours or more intensively than before (This is comly regarded as a disadvantage end therefore stimuLates the introduction of machi_ y where none had been used) Indeed James Steuart, whose principal work appeared years before that of Adam Smith, remarked that with a good paper money system subdues, even if high, do not i m p o v e r i s h the population but only raise degree of employment, maybe e x c e s s i v e l y, i e,` crushing it with work when 223 the dues claimed are too high.
That the Milhaud certificates, on their way from the issuing centre through the national economy end back again to the issuinq centre (where they are then destroyed), frequently change their owners end thereby transfer purchasing power does not invaltdate the above contention Such a transference of purchasing power takes place also, for instance, when mortgage bonds are used in land purchases - a very frequent occurrence - and yet no one would argue that the i s s u i n g of mortgage bonds creates additional purchasing power. It is conclusive here that the fresh purchasing power is compensated at the very moment of its creation by the simultaneously created fresh readiness to sell. This becomes manifest by the second fact, namely that the purchasing certificate,the instrument of the freshly created purchasing power is physically destroyed immediately after its return to the issuing centreÄ thai is, within a short time. Expressed differently, the purchasing certificate must reach a certain quarter where it cen no longer excercise or transfer purchasing power.
Some will be tempted to suspect inflationary intentions behiind this. They will argue that if the purchasing power is really compensated the moment it is created, the whole process 0ight as welf not have taken placet A mathematica! analogy may furnish the answer to this, The quadratic equation, x . x + a x e b does not, notoriously, enable us to determine the unknown x by the ordinary arithmetical rules. If, however we add the quantity a/2 . a/2 to both sides of the equation, which, of course, cannot affect its value, we obtain a term on the left side which is equal to ( x + a/2 ), ( x + a/2 ). This allows us to extract the square root on both sides of the equation, which ot course does not change the value of the equation, end which yields on the left side: x + a/2 If we then subtract the quantity a/2 on both sides of the equation which again cannot affect its value, there is left on the left side x only, end the equation is solved by means of seemingly indifferent, but in reality, indispensable operations The quantity x represents in a sense the quantity of material values which the receiver of cues ( say the state,the municipality, etc. ) claims. The quantities a and b represent the quantity of the material values end the circulating means of payment which he does not claim, teut which are seefflingly bound in an indissoluble unity in the general circulatory process with other material values end with other means of payment. By using the wholly indifferent quantity a/2, which symbolises the purchasing certificates end the associated readiness to sell,the x may be separated end then acquired by the receiver of cues. A chemical simile would equally serve our purpose What catalysers are in chemistry, purchasing certificates are in the national economy, They act by their mere presence, teut take no part in the chemical changes ensuing.
The creation of purchasing power end of an at least equally great additional readiness to sell created at the same time end place (e,g. by means of the certificates issued by an insurance company, certificates which the management end the members accept in payment as ready money end for which the sufferersfrom damage purchase something) is a different thing from the a n t i c i p a t i o n of payments and is not therefore a "prefinancing" either. In a free society, this creation constitutes the only available method of mobilising labour power, whether idle or active, but which is to yield g r e a t e r output. All other types of mobilising labour power amount in the last resort to forced labour end infringe the freedom of a society, easily annihilating it,as happened in the great French Revolution. At the conclusion of this study something w i l l b e said concerning monetary phenomena end their political aspect, with special reference to that historic event.
To mobilise labour power is not the same as occupying it p e r m a n e n t l y after its mobilisation in the Milhaud system the first issue only mobilises labour power, teut oniv through the reaular continuation of issues is labour power permanently employed Should the issue be stopped the employment of the mobilised labour power would also stop (or become dependent on the m o n e y available) the reflux could soon withdraw the certificates from circulation, end everything #ouid be as before the issue This m a y be even desirable, as when a Government, for defence purposes, wishes to mobilise 100 million hours of labour, perhaps for bu~lding a fortress, teut cen only pay for it with its own certificates end not with coins. Accordingly, it issues certificates for 100 mi llion labour hours, imposes a tax of an equi 224 valent amount on the country, but has no intention of employing this supplementary labour power after the fortress is built.
If we are clear as to these concatenations, we shall be convinced that the idee cherished by many economists of the possibility of an "initial sparking", i.e. of the surmounting of the depression by a s i n g l e impulse is mistaken, (Only the Milhaud system c a n rescue us) The suggestion amounts to this that through a single issue of supplementary legal tender a 'dosed' inflation may be produced end that by this means the ~stuck vehicle. of the economy may be restarted. That is we picture to ourselves an economy as a motor car stuck in the mud, a car which is otherwise in perfect conditions end need only be extracted o n c e from the fflud e.g., through an exceptional puil of its engine. The initial sparking is to achieve this.
The above picture is true to this extent that under the present system of exclusive currency every cause of the depression acts "progressively" For instance the unsalability of a tenth part of the annual output of a country may very easily throw out of work for the year not a tenth but perhaes a third af all workers. Measures for combatting the depression have a corresponding "progressive" effect and for every workless re-engaged another is indirectly in demand without our being able to say why. But, to return to our simile the car is n ot in good condition; that is, it is not l u b r i c a t e d; it needs o i l a substance that has to be r e n e w e d like petrol. However in the darkness (feit by minds not yet illuminated by Milhaud's writings) we suspect m u d s t u c k tires when it is really a question of resistance at the a x l e s.
The idea that a 'dosed inflation' is needed, is due to a decided servility towards the State a servility which, moreover, as experience teaches, is rarely associated with the honest desire to serve t h e p e o p l e, this child not yet of age although destined to great things in the future. The ''statist" naively ascribes to the State the right to inflate. (And when the State enacts lees they contain provisions such as par.1895 of the Code Napoleon which practically calls on the class of dabters to further constantly new infLations. In strong contrast the old Prussian legislation endeavouredprimarily to render creditors independent of all monetary changes. (See "Kom-entar zum Alig Preussischen Landrecht", by Koch` vol 1, pp, 783-784 Berlin, 1853, concerninq the interpretation of par. 787 to 789 of par~ I, eleventh title). The German Civil Code is also conceived in that spirit end it required the appreciation laws (more correctly, depreciation laws) of 1925, in order to popularise, at least partly, the opposite conception.)
If, according to widely current views, existing Governments possess eo ipso the right to inflate, they would be justified in applying it to the advantage of their f a v o u r i t e s for the time being without consulting the people, i.e., to the advantage of those who call for an inflation. But current opinion goes even much further, not only in this or that country, but in every land. Everybody enqaged in moulding public oninion hopes at some time or other to become one of the ruler's favourites end in this hope he confers on him also the right to impose taxation as a sovereign, i e, to employ it to the advantage of his favourites for the time being. Both conceptions, that of the right to inflate end of the right to tax correspond exactly to the conceptions ruling for many centuries, e.g. throughout the Middle Ages, when they were even carefully defined They are presumably i n h e r i t e d from that period, in the physiolonical sense of this word like so many other superficialLy very modern mentalities. ( See Annals 1935 p 176ff _ P P. 10 p. 154ff )
But even boundless respect for the State cannot cancel the fact that in our society the collection of taxes is n o t h i n g b u t t h e s a l e o f t a x r e c e i p t s b y t h e e x c h e q u e r (its qoods!) of course, a compulsory safe, teut for that reason, assured. (Louis XTV, would have deemed such a contention a degradation of God's grace; Napoleon, on the other hand, an offence against the deference due to the supreme mi litary commander. Even Stalin could sharply censure in appropriate sovjet terminolony the implied offence against the sovereignty of the proletariat. But Frederick the Great would have apprec~ated this standpoint end probably also Louis XYIII. who was shot at by ultraroyalists because he was a Voltairean end in no way a 100% old style royalist.)
225 And what is State paper money if tax collection is a saLe of tax receipts? Even if, in order to awaken in the population the necessary awe for it, State paper money were printed from silver plates, as it is said to have been anciently in Spain; even if its acceptance were represented in solemn proclamations as an irremissible patriotic act, as during the American War of Emancipation at Washington's instance, who could not buy hay or cloth for "Continentals" ( Bullock "Monetary History of the United States", p. 66) . The same George Washington who talked another language when his own tenants offered h i m in payment Continentals at par; even if his refusal to accept assignats at per is punishable with 20 years' penal servitude (French Act of 1 August, 1793; Jastrow's "Textbuecher°, vo. \, p 61); even so, State paper money is end always has been a prosaic "p u r c h a s i n g c e r t i f i c a t e f o r t a x r e c e i p t s, end nothing else. (The instances where considerable quantities of material values could be bought for State paper monev, have almost always been of little importance economically, even during the assignat period when the cover of assignats by real estate was my self deception, although many confiscated plots of land were veld for assignats.) Before purchasing certificates were invented, or rather, before the idee under lying them was clear ly elaborated, the mi stake was pardonable, but not so today.
If we take State paper money to be what it really is, namely, purchasing certificates wherewith to buy tax receipts, an economically correct standpoint towards the demand of an initial sparking" by means of a "dosed inflation" at once presents itself. This is irrespective of the fact that in the light of such clear knowledge the old servile feeling complexes cen no longer continue end that such knowledge suggests of itself the demand for a j u s t p r i c e for tax receipts a s w e l l, thereby supplanting the old concepts (A great transformation. Dissatisfied s u b j e c t s are easily disposed of but the dissatisfied p u r c h a s e r has always had his way end eventually goes where he is h o n e s t l y t r e a t e d.)
The right attitude towards the demand for a "dosed inflation" is naturally that an inflation, whether dosed or not, is to be rejected, teut that an issue of State paper money qreater than are the current tax receipts, may be considered, end even must tee, if a shortage of money exists end tax payers are at the same time i n a r r e a r. In such case a supplementary issue of State paper money m a y very welf aid in col lecting the outstanding taxes, end this by overcoming the shortage of means of payment, it could n o t achieve this, however, ff, e.g., there is a deficiency of means of payment in Amoy end the paper money is issued in Shanghai for the payment of the salaries of officials. But for the purpose of collecting tax arrears it is not necessary to issue f o r c e d c u r r e n c y. Ordinary, unforced treasury notes. (this was a very good name for the first Prussian State paper money), would suffice. Indeed, they would serve even much betten As the treasury notes stream back constantly end are then destroyed, whi 1st new notes are issued in those locaLities where a deficiency of means of payment is feit to exist, Milhaud's principle is being realised in the sphere of public administration.
Since considerable tax arrears are always associated with other deflationary phenomena ( e.g. increased in unemployment end in forced auction sales ) which vanish with the possititity of pay~ng the arrears the supplementary issue has set the car going' has, one may say,"supplied it with oit". Thus, superficially, the inflation economist seems to be justified. He misses however, the raising of prices, which, in his opinion,is the main point. But an infiationary increase in prices does not set in, rendering it therefore impossible to buy (say) a farm in Hupei for the price of a silver cinarettecase the peasant was unable to pay his taxes , or acquire a horse owned by this peasant for the price of a few hobna'ls in Shanghai. A forced rate for the newly issued State paper money would mask the actual proce ses accompanying the issue end the subsequent reflux. It would also conceal the limits to inflation, which readily become manifest when there is a free exchange rate. Also, given a forced rate the general public, out of "fear of inflation" , would cease to become creditor in any form.
If we consider how easily all the favourable effects that may rightly be anticipated from paper money, may be obtained from an unforced paper money; furthermore, the destructive effects regularly ensuing from a forced currency even under a well intentioned Governeent, one would be inclined to compare the economists who insist (226) forced currency, with the master builders of the imposing end now excavated castles of Hycene end elsewhere, who, as we kno', also substituted c o m p u l s i o n for the use of m o r t a r end sentenced every building operative to death in whose piece of work a knife could be inserted between the piled up stores. The suggestion that there were other eays would naturally have been stigmatised by the ancient practical men as abstract and sentimental.
When tax payments are not in arrear, an a d d i t i o n a l readiness to buy tax receints does not exist. In this case unforced additional paper money cannot be issud without depreciating it from the beginning, rendering thus impractacable further issues. It would be similar if there were tax arrears, but more paper money were issued than corresponds to the value of the arrears. If then,in order to remove certain deflationary tendencies in an economie domein, additional State paper money is issued end, to render this possible, a forced rate is decreed, inflation becomes inevitable. Such an inflation therefore could not put an end permanently to the prevailing unemployment. Even if for the moment the inflation diminished unemployn~ent it would soon become evident that purchasing power end unemployment have only been t r a n s p o s e d i n t i m e. (Similar to where they have been transposed in s p a c e through taxation for the purpose of increasing employment,) The purhasing power of many who receive this money is a little raised f o r t h e m o m e n t only to be correspondingly mostly m o r e than correspondingly' diminished on the next general occasion when payments fall due. Hence in the middie of an inflation there occur outbursts of unemployment that surprise all concerned (One factor contributing to this effect is that prices being temporarily set in the expectation of continuing further inflation, race ahead of the current overissue of legal tender ffloney. The Ed.) For example, this happened frequently enough in Germany during 1921 end 1923 end most especially after the cessation of the inflation in 1924, when from 7 Aprit on~ards Germany experi enced ona of the worst depressi ons in recent hi story. The inevitable aqgravation of unemployment through inflation is so welf known among reet students of national economies that Talleyrand eas able to predict down to the very details the sharp french deflation that followed the assignat period. (See his speech on September 1790 before the National Assembly, reproduced in the work: "L'inflation', published by Laville, Paris, 1926.)
The statement that the issue of unforced purchasing certificates creates additional p u r c h a s i n g p o w e r neither in the public nor in the private economy (in the sense hitherto attached to the expression), teut that such an issue,by augmenting output, creates a temporari ly increased readiness to sell wi ll be found described concretely on one of the later pages of this chapter ( p. 299) by means of the example of a saddler who is insured in a public society operating on the principles here expounded teut who cannot pay his premium with money This example may serve as an analogy for the collection of taxes from persons aho notwithstanding that the issue of State paper money has been correctly made, cen yet neither procure this nor any other means of payment, although anxious to do so. Such persona, if they possess useful material values intended for safe, or cen offer useful services might be permitted to pay their taxes with purchasing certificates made out by themselves, teut with a surcharge. This should correspond to the amount of inconvenience occasioned to the Exchequer in negotiating such certificates. The surcharge might be less, if at least a few friends of the taxpayer were ready to accept these certificates in lieu of ready money It might be dispensed with altoqether when a whole village ( for instance ) declares itself ready to accept at per the certificates of their fellow citizen, or if a group of at least 100 persons is ready to act thus for at least six months. By issuing such edicts, a statesman would promote the organisation of persons into mutual payment associations (an idee first pronounced by Knapp, teut rediscovered by Rittershausen in our day) which could only be advantageous for his work end his country, What a difference beteeen t h i s statesman end another who for instance, in order to buy uniforme of the value of 1.000 gold coins believes that he must c o m p e l the country's tailors to regard his paper money as of the same value as his qold coins; who is thereby brought to the issue of a forced currency; end who stands thus always with one foot in the inflation stream The statesman who teaches (227) his people to provide itself with its own means of payment, should there be a shorta~ ge of these for any reason, does for it almost as much as did that leader in primitive times who first taught his people to provide itself with its own f i r e when that bestowed by heaven (i e, that lighted by an accidental lightning ray) had become extinguished. As late as the last century the Pesherahs of South America lacked a leader of this sort (The memory of such individuals, who are regarded by the fire priests of their time as very inconvenient heretics", is kept alive in the Prometheus legend)
Since everv possibility of applying the principles of the Milhaud system throws light on all other possibilities of its application as sell as on the principles of the system itself the foregoing generalisation of the payment of insurance premiums in conformity with the Milhaud system of settlement to the payment of dues generally was perhaps not superfluous, let us now return to the goods warrants of the insurance societies.
The value of the goods warrant of an insurance society is therefore primarily maintained at par by reason of the readiness to accept them on the part of the policy holders end of the society itself. Nor may we estimate at nil the d e m a n d of those insured in the society, who possess ready money end aho, at the least fall in the discount rate of the warrants, buy them up so as to dispose of them at per to the society In fact, when, for whatever reason, the discount rate is high enough, say reaching 10%, members possessing ready money would find it advantageous to buy up the warrants end pay them in to the society staling that they were for meeting f u t u r e levies. Here the problem arises how such reserves micht be i n v e s t e d. One way would be to grant loans to members who desiretoprovide themselves with fire fighting appliances, e g, fire ladders, manual extinguishers, end the like. The loans could be granted as amortisation loans,the society's goods warrants being used both for the loan itself end for repayments. loens to communities for acquiring fire engines end other firefighting appliances would also enter into consideration. Moreover, Governments could do much for fire protection, if they exempted from taxation every capital investment intended for producing fire-fighting appliances in this way Asiatic towns could in 30 years possess as efficient fire protection arrangements as European towns.
To return, however, to the exchange rate of the goods warrants undoubtedly, so long as ready money exists among those who owe the society contributions, the rate of the goods warrants cannot drop much below per, A discount cen, of course, only arise, if either some holders of goods warrants form a wrong opinion about the value of the warrants end therefore dispose of them at a price below their real value, or if the society pays out more in goods warrants than is justified by the contributions falling due fairly soon. As soon as the discount on the goods warrants exceeds 1%, it becomes advisable to examine at once the books of the society to ascertain the amount of outstanding levies, end to inquire into the sum involved in the outstandina qoods warrants and the manner of their issuance, end, finally, to make public without delay the result of the investigation. Besides, those persons who disposed of their goods warrants at a discount, should be asked why they chose to lose and why they did not preferably pass on the goods warrants to partjes who would have accepted them at par.
A discount probably always arises owine to individuals who are n o t members of the society or to members who have paid their contributions end are therefore not bound to accept the goods warrants, drawing a distinction in sales between goods warrants and ready money Where the issue is p r o p e r l y organised by the society no one in the society;s district will tend to decline to accep! the goods warrants at par. On the contrary, normally numerous persons who are not members will also post up nofices declaring themselves ready to accept the warrants in lieu of ready money (see Milhaud), end this simply so as to increase their turnover.
For the sake of clarity, let us examine the case of the insured A, B, and C in the above illustration, who respectively owe contributions of 10, 25, and 15 rials. If for instance, A is the owner of a flock of sheep he will be in a position when selling wool hides, or live sheep to accept a society's goods warrant for say 10 rials, as he would accept 10 rials in silver. He can then take the goods warrant received in payment for his goods and remit it to the society as his contribution.B is perhaps 228 a peasant. in that case when selling corn or vegetables, he can accept goods warrants to the value of 25 rials as ready money and pay these in at the society. C is perhaps a shopkeeper. He can accept goods warrants to the value of 15 rials when selling his wares, and may, in his turn, pay in goods warrants the contribulions he owes to the society
Purely theoretically considered it would suffice that every insured in arrear with his contribution, need only accept such a numberof goods warrants in payment as would correspond to the amount of his contribution. In practice, however, friction might ensue thereby. Hence in order to augment the possibility of utilising the society's goods warrants, each insured in arrear with his contribution, must be required if necessary, to accept in payment goods warrants to at least double the amount of the contribution. (V.B. Greene, in his 'Mutual Banking', which was rescued from oblivion by Henry Meulen,reaches a very similar conclusion, namely that a member of a mutual bank has, if necessary, to accept the qoods warrants of his bank up to double the amount he owes it. In developing his exchange bank, Proudhon equally considered that the members must accept the warrants at the~r nominal value, teut demanded, going in this far too far, that every member must accept e v e r y amount,)
Without a doubt the total amount of goods warrants issued by an insurance society assuming a conscientious end capable manageMent, would be always covered by the obligation to accept them of numerous persona, all of whom cen offer effective values It may, of course,happen that an insured possesses or produces material values for which there is no regular demand. The ivory carvers of China, who carve those ivory balls twenty of which are sometimes worked into one another,each moving freely, and of which even the smallest innermost displays carved figures these ivory carvers are sometimes obliged to wait for years for a purchaser (These art products cen be admired in European museums, In Buddhist temples they are shown to the faithful in order to impress on them what human patience end care cen accomplish when they have a definite goal in view.) Would such a craftman's obligation to accept serve as welf for cover as that of a beker or of a rickshaw owner? To judge fairly such a case it should be remembered that the ivory carver would not present an essentially different risk if he undertook to pay, not with goods warrants teut with m o n e y. If he lived in London end was insured there his position end that of his insurance office would not be different. if he did not render payment within the period fixed by the insurance conditions, his insurance protection would come to an end whether he lived in london or in Tabriz, whether he paid in goods warrants or in gold coins, But would not the cover of the goods warrants suffer if some insured did not pay, or if they carried on a business which only allowed them to make payments at long intervals? This is so, end if there were many such serious cases, the society would be obliged to impose an additional contribution on those insured who, technically end economically, do not represent such an abnormal risk as an ivory carver precisely as an European mutual insurance office that has indemnified losses out of a raised loan, teut half whose members, for some reason, suddenly ceases paying. Dangers to which a n y mutual insurance office in a n y country, although it does not issue goods warrants, is exposed cannot be fairly regarded as special dangers arising out of the goods warrants system, ehen it concerns a society operating with such warrants.
It remains now to be seen what should be the attitude of the society to members who cen pay their contributions neither in money nor in tho society's goods warrants. In the sequel we shall find that in the last resort the principles of the Milhaud system of settlement suggest in such instances the acceptance of the deblor's own purchasing certificate as welf as an attempt to negotiate it before the creditor proceeds to his 'ultimo ratio', i e a forced auction safe. Such a debtor's purchasing certificate might be made out atmost exactly as would the goods warrant issued by a society, only that the deblor would be described therein as obligee end the text would be phrased s o m e w h a t less technically. For the sake of greater clarity, here is such a text: (See overleaf after the next paragraph The Ed)
The document made out by the debtor should be called purchasing certificate whilst the documents made out by the society, since nothing concrete is to be bought with them, might preferably be called goods warrants although the financial principle remains the same in the two cases. Accordingly, the dehtor is obliged to accept his own 229 purchasing certificate in keu of ready money when somebody buys something of him or renders payment on any legal ground. It would also conflict with the principles of good faith if the deblor refused to name the persons who are likely to make payments to him shortly or are responsible for makina payments to him The society or the holder of the certificates may then endeavour to dispose of them to those persons
P U R C H A
S I N G C E R T I F I C A T E
This certificate will be accepted by ( name end address ) in keu of ready money to the amount of
10 R I A L S
in all payments due to trim. The above named will make no differences between legal tender end this certificate, nor inquire before acceptinq payment whether settlement is to be in legal tender or in this certificate. The above named is ready to inform the holder of those persons from whom he expects payments within the following two weeks. The validity of the certificate expires on ..... After that date the above named will decide at his discretion about the acceptance of this certificate, reserving to himself the right of repudiation
Date ...........Signature.............Certified by creditors.........Date...........Signature ...........
The inconvenience occasioned by
the debior transforming into a purchasing certificate made out by himself
the demand for payment made on him by the society should be fairly compensated.
The amount need not be smaller than the inconvenience end expense the deblor
would have incurred in selling his goods, for this has not to be incurred
by the creditor.
In highly commercialised countries such as the United States,it is calculated that safe costs amount to approximately half the amount paid by the consumer, In Asia safe costs must be far higher. Moreover the society for which this is an additional kind of activity, has to go to relativety greater trouble to negotiate the purchasing certificate of say the owner of a flock of streep, than the latter would have to take, seeing that it is his avocation. to sell sheep, Also, according to universal usage, accrued interest is to be added where the deblor delays payment Howiver since these surcharges only meen that the debtor who offers his own purchasing certificates is, notwithstanding the increase in the amount, not worse off than if he had paid in current means of payment, there should be added another surcharge high enough to induce him to do his utmost to procure the necessary current means of payment for settling with his creditors before offering his own ,purchasing certificates. These various considerations sunyest that it would not be unfair if a society's debtor who perhaps owes it contributions to the amount of 50 rials, should be obliged to make out a purchasing certificate for about 150 rials (or 3 certificates of 50 rials each), if he leaves its negotiation to the society.
Should, however, an insured show ill will, leaves it unanswered, there would only be left the alternative, at least under the present Legal system even with a society applying the Milhaud system, to proceed, as is the rule all the world over, to a forced auction sale.
For the payment of indemnities, the society will not always be able to utilise purchasing certificates issued for single deblors. I t will, however frequently be possible for it to pay its suppliers with them. Here is an illustra~ion. Suppose a daddler owes the society 100 rials, teut is unable to pay because it is winter time end fe' saddles are bought thee, In that case the society may perhaps accept a purchasing certificate in payment, the saddler undertaking to accept lt in keu of 300 rials in cash when he next sells a saddle. The society would perhaps be able to utilise such a certificate when it buys, e g., a cabines or a typewriter. Allowing for a discount of 50%, the supplier will readily accept the certificate in payment end would probably find somebody who will in turn, accept it at a discount end thus secure for himself a very cheap saddle. (to prevent misunderstandings, it may be stated that in his writ 230 ings Milhaud does not propose such a surcharge. But Milhaud has shown how in the cases he treats namely those relating to external trading end wage payments, a purchasing certificate cen be converted into a g e n e r a l means of payment, so that the creditor requires no surcharges to be fully satisfied. here, however, we are discussing cases where the tyro (novice or beginner The Ed.) might think that the Milhaud system is inapplicable. Actually, this is a mistake)
Similar reflections to those relating to contri6utions in arrears are applicable to payments to the society in discharge of l o a n s it grants, loens granted in cases where the damage done is greater than the society according to its conditions was bound to meet or even justified in meeting; also loens serving as an investment for its reserves Suppose the society has granted a fermer a loan to enable him to purchase a fire appliance end the time has come for him to tender the society 500 rials in part payment. Suppose, moreover, that there is in this region a great shortage of ready money. Assume also that this region has been free for some time from fires so that the society had no occasion to set in circulation its own goods warrants,Then it may very welf happen that a farmer who is quite willing to pay end who has much produce to dispose of is yet not in a position because of the aforementioned aonev shortage, to pay the 100 rials. In such a case the society, if for special reasons it does not grant a respite will, to the farmer's advantage as well as its on, accept his purchasing certificates in convenient denominations.
By revealing entirely new payment facilities, the preceding examples make it clear that the principles of the Milhaud system of payment, if the system has operated long enough in any country, would finally transform the debt legislation to the advantaoe of creditor end deblor alike This transformation will be accomplished through the deblor, before he is threatened with a forced safe, being permitted to issue purchasing certificates which the creditor then utilises Similarly, the courts would condemn the deblor to issue purchasing certificates, if intheir iudgment the country suffered from a general shortage of means of payment or if for other reasons the debtor could not procure sufficient means of payment, at least not aithout sacrifices that could not fairly be demanded of trim. Even should the deblor refuse to issue purchasinq certificates or leave unanswered a demand to do this, a court pronouncing judgment in conformity eith the principles of the Milhaud system, would, of existing leggislation permitted it, not proceed at once to decreeing a forced safe. The court would issue purchasing certificates f o r the debtor, i e., in his name, which the debtor would then be oblined to accept in payments in keu of money Only if this procedure provel impracticable,or if it appeared disadvantageous for the creditor (which would rarely be the case) would the court refrein from providing the creditor with purchasing certificates. If the creditor on the other hand, should be unable despite his endeavours, to utilise the certificates within a certain time he would have to bear the loss. The surcharges represent the insurance premium for this contingency.
The increase in the amount owed if the creditor accepts the deblor's own purchasing certificates, would differ according to whether the system is generally applied in a country or not. That is, if the system is generally applied, there would be no lack of merchants or banks which would deal specifically in utilising the certificates of deblors unknown to the general public end ehose purchasing certificates could therefore not be utilised for general payments Correspondingly the creditor's difficulties in utilising the deblor's purchasing certificates would diminish or even disappear. The banks or merchants concerned could perhaps take over the creditores purchasing certificates at a discount of 50¢p end still earn a net 30%, rendering it hence unnecessary to more than double the original sum owed. i.e. to raise the amount high r than would correspond to the middleman's 15¢ of the amount of the purchasing certificate.
After the introduction of such a system, cases such as occurred in Germany before the war and no doubt in all other countries, would become practically impossible. Thus a house of the value of 100 000 marks, realised 1.000 marks at a forced sale. Of course, possibly both debtor end creditor were ruined thereby. As already pointed out in No. 1 of the Annals of 1934 ( p. 22f of PP 9 ), this suggests the need of farreaching legislative reforms. The International Law Association should consider this matter at one of its coming conferences.
231 After suitable legislation had been passed end trede had adjusted itself thereto within a few, perhaps ten or twenty years, a surcharge of about one third of the original debt would suffice to indemnify the creditor end the middlemen dealing in purchasing certificates of a deblor unknown to the public, instead of currently negotiable means of payment. It is certain that legislation indemnifying a creditor in this way instead of immediately ordering as is now the custom in almost all countries, a distraint,would introduce a quite different end more farreaching p r o t e c t i o n o f p r o p e r t y, both that residing in claims end any other, than has hitherto been attained by debt legislation. The latter has thus far set itself the impossible goal of always securing for the creditor exclusive currency end yet not to destroy the productive energies of the country Hence one day it onesidedly favoured the creditor end the next the debtor.
The mistaken principle of the hitherto prevailing legislation concerning the repayment of loans may be expressed as follows. This legislation has misapprehended the fundafflental differende between the repayment of a loan end the returning of a d e p o s i t u m i r r e g u l a r e, i e, of a deposit where the recipient is not required to return the objects deposited, but objects of the same kind, as is the case, say, when cereals are stored in gra1n elevators Legislatures then began to distinguish the two kinds of repayment. This was the case in German legislation, more particularly in the "Allgemeines Landrecht fuer die Preussischen Staaten, which appeared in 1794, teut was already drawn up under Frederick the Great This was superseded in 1900 by the German Code of Civil Law. ) In part I eleventh itle, per 793, we read regarding loans : If the value of a loan has been tendered in shares mortgage bonds, or in other documents payable to bearer, the repayment must take ptace in documents of the same kind. also per 715: When a loan is granted, goods must not be tendered instead of money .
The difference between a d e p o s i t u m i r r e g u l a r e and a loan is of the utmost importance from the economie viewpoint To consider only one aspect In the case of a d e p o s i t u m i r r e g u l a r e the uprightness of the de6tor demands that the recipient of the d e p o s i t u m should n o t p u t i t t o u s e but p r e s e r v e it properly e g., as in the case of cereals stored in elevators With a loan, on the contrary, the uprightness of the deblor demands that the loan should be p u t t o u s e in order that it might earn the amount to be repaid together with the interest. Christ, who showed himself a wellinformed and wise economist in many of his pronouncements, stressed this in his parable of the ten talents, L u k e, chapt 19.
The debt documents appropriate to a d e p o s i t u m i r r e g u l a r e are d e p o s i t c e r t i f i c a t e s (e g warrants), to which, accordingly, the p r i n c i p l e o f c o n v e r t i b i l i t y unreservedly applies for money loens, ho~ever, there is only one appropriate form of settlement that a creditor may claim: the purchasing certificate not money, Least of all gold coins The principle of convertibility should be entirety excluded from legislation dealing with the repayment of money loens. Prior to the discovery of the purchasing certif~cate, these two juridical principles were necessarily shrouded in obscurity
After well informed merchants end jurists had for centuries collaborated at determining the special nature of a warehouse warrant, the nineteenth century saw at last the development of special deposit legislation independent of general debt legislation. One day the purchasing certificate will similarly be recognised by jurists as a legal instrumént s u i g e n e r i s and become then also a subject of special legislation
It would fall outside the scope of this study to submit detailed proposals on future legislation regarding payments. We may say this, however, once i t i s recognised that the purchasing certificate issued by the deblor represents the s o l e means of payment which is a l w a y s and with certainty available, end that all other means of payment are only available by a happy chance (even if the probability should amount to 99%), legislation will have to take account of this nee conception Every contract relating to the tendering of a p a r t i c u l a r means of payment apart from the purchasing certificates issued by the debtor, will be considered in the future as an u n c o v e r e d s a l e of this means of payment by the debtor.
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