Category Archives: mutual credit and currency

The Mutual Banking Writings of William Batchelder Greene

The important works are:

  • Equality. West Brookfield, Mass.: O. S. Cooke, 1849. [published anonymously] [74 pages]
  • Mutual Banking. West Brookfield, Mass.: O. S. Cooke, 1850. [95 pages]
  • The Radical Deficiency Of The Existing Circulating Medium, And The Advantages Of A Mutual Currency. Boston: B. H. Greene, 1857. [239 pages]
  • Mutual Banking, Showing The Radical Deficiencies Of The Existing Circulating Medium, And The Advantages Of A Free Currency. Worcester, Mass.: New England Labor Reform League, 1870. [52 Pages]
  • Mutual Banking. Modern Publishers, Indore City, India, 1946

plus a couple of short sections in Socialistic, Communistic, Mutualistic and Financial Fragments (Boston: Lee & Shepard, 1875) and a series of articles published around 1849 in the Worcester, MA Palladium. I have yet to see the articles, so I can’t comment much, except to say that they are explicitly mentioned in Equality as the source of much of that work. The Fragments contains a couple of excerpts, slightly rewritten from the 1870 Mutual Banking, plus “Mr. Phillips on the Currency.”

There were a few surprises as I worked through the various texts. First, despite the difference in length–239 and 52 pages!–the 1857 and 1870 editions are largely identical. The 1857 Radical Deficiency includes the texts of the “applications” of several Massachusetts towns for permission to start a mutual bank. The 1870 New England Labor Reform League edition has a preface by Ezra Heywood and a new “Conclusion.” Second, these editions essentially amount to an edited and somewhat secularized joint reprinting of Equality and and the 1850 Mutual Banking.

The major sections of the 1857 and 1870 works are as follows, with the source of each section in the 1849-1850 works noted:

  • The Usury Laws [from Equality]
  • The Currency [from Equality]
  • The Currency: Its Evils, and Their Remedy [from Equality]
  • Mutual Banking [from Mutual Banking, 1850]
  • Petition for a General Mutual Banking Law [from Mutual Banking, 1850]
  • The Provincial Land Bank [from Mutual Banking, 1850]
  • Money [from Mutual Banking, 1850, originally “Capital”]
  • Credit [from Mutual Banking, 1850]

There’s a bit of shuffling and streamlining of several sections in the 1857 text. Some of the less businesslike language is cut from the earlier editions. The 1850 edition has a substantially less elaborate “petition” in that section, but the 10-point petition used in later editions is appended at the end of the text.

The Modern/Gordon Press edition that is available online generally follows the 1857 and 1870 editions, but with even more simplification and streamlining.

That leaves the whole sections simply dropped from the two early works. Equality has a section on “Equal Laws and Equality Before the Law” and an introduction to “The Banking System” which were dropped, as was the entire second half of the work, “Equality , No. II: To the Philosophers and Politicians.” Equality II is an important piece, tying Greene’s political and financial work to elements from his critique of transcendentalism. It contains one of his strongest defenses of individualism and some of his strongest criticisms of “socialism.” I want to come back to this work in another context, because it anticipates some concerns I think the historians have tended to associate with later works. It should be read with the essays in The Blazing Star, some of the more esoteric Fragments, the A Priori Autobiography, and, probably, with the elements left stranded in the 1850 Mutual Banking:

  • an Introduction, covering the development of mutualist thought from Sparta to the Christian communion
  • a section on “The Proletariat”
  • “Usury,” a section dealing with the problem in largely religious terms
  • “The Cherubim,” a short, esoteric essay on human unity

And that’s pretty much the story. It’s likely that an inclusive edition, containing the important text from all editions, would run to something like 80 pages, with modern type and such–an ungainly thick pamphlet, but maybe still worth putting out there.

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Note on mutual banking

[From Reddit] There have been two phases of mutual banking, I think. There was a practical phase, stretching back into the 17th century, when various land banks and lumbards actually sprung up in places like the North American colonies, where many people had real property but didn’t have ready access to currency. Under those circumstances, access to a circulating medium could be the source of a real economic class divide, and there is a fascinating history of city merchants battling the establishment of mutual currency and credit banks by rural competitors, all of which led to the suppression of the land banks in North America by an extension of the Bubble Act.

That’s the context for the second phase, where a similar form of banking was proposed, often where it was illegal, once again to solve the problem of access (or cheap access) to a circulating medium. William Batchelder Greene’s New England version of mutual banking was a pretty direct attempt to legalize and revive the colonial land banks (although he claimed not to know about them until the 1850s, although he obviously knew about proposals like Kellogg’s “safety fund,” which were similar.) Greene’s neighbors in Western Massachusetts had precisely the right mix of real property and need for currency. The situation for workers in Paris was more complicated, since they were less likely to own real property. This is why Proudhon’s bank would accept a much broader range of securities, and why he explored cooperative marketplace schemes like his proposal for a “Perpetual Exposition.”

The second phase of the mutual bank propaganda went on for a long time, not always, I suspect, in places where the conditions were precisely right. But it was almost certainly a valuable tool for keeping non-governmental currency schemes in the public eye.

Whether mutual banking would make sense now as a transitional method or “after the revolution” as a means of providing a circulating medium depends entirely on local conditions. I am skeptical in both cases, but certainly don’t rule it out in either one.

As for the details of the thing, all the bills of credit issued would be backed by some relatively stable form of security. In essence, each individual provides their own money, and the mutual association simply exists to manage the mutual recognition of value. The percentage of the value of the security which could be issued by the association and/or the amount of insurance levied would depend on conventions worked out among the members. If the percentage remains low, then the danger of loss always rests on the individual members themselves. If members wish to reduce that danger further, then insurance is an option. Obviously, lots of things can go wrong, but the mutual nature of the association is likely to reduce the chances of people trying to take advantage of the system by quite a bit. In a society based on mutual associations, attempting to cheat any of them seems like a very quick route to a very unhappy set of circumstances. But it is probably also the case that even where the conditions are correct to form mutual credit associations, the bills of credit would not be the logical currency for all kinds of transactions. A secured credit currency is fairly “hard,” so it is, for example, good and comparatively inexpensive for use in investment in real property and such. But it might have more overhead than you would want for the cup of coffee or pint of beer you’re going to buy tomorrow, or the week’s groceries, assuming that the community has not simply absorbed minor transactions into some social base.

My personal feeling is that access to raw materials and means of production is probably going to be most seriously changed by changes in property conventions, at least “after the revolution.” And that seems the most elegant and inexpensive way to tackle much of what is wrong with capitalist society.

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