The Ways and Means of Free Exchange and Credit

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F. Coignet. "The Ways and Means of Free Exchange and Credit." The Spirit of the Age. I, 6 (August 11, 1849), 81-82.

THE WAYS AND MEANS

OF FREE EXCHANGE AND CREDIT. BY F. COIGNET.

Numerous and important as have been the labors of the Associative School, there are still branches of social science, which have not been integrally explored, and others which have not as yet been expressed in distinct formulas.

It is necessary that this should be done to attract many men, who are now diverted from us, and who will not, I fear, join our body until they have discovered by experience the illusion of their present schemes.

Is it said, that it is the duty of these men to explore and elaborate in practical details the transitional problems with which they are specially occupied, and whose general formula has been given by the Associative theory; that illusions in credit must precede a true and rational system of credit, as alchemy preceded chemistry. &c? This may be true—But nevertheless is it sad to see such men giving in their adhesion to Mr. Proudhon because he has announced Freedom of Credit, without clearly understanding the conditions:—

That only the Communal Counting-House can give freedom of exchange:

And only the Association of Capital and Labor can give freedom of credit.

If Mr. Proudhon's Bank could secure freedom of exchange and credit, and so effectually solve that problem, and if on the other hand, the Phalansterian doctrines could not yield results as favorable to society, it might be reasonable and just to support the Bank of Exchange.

But unfortunately this Bank can not produce the good which Mr. Proudhon anticipates: for it is based on an error of reasoning to which he is sufficiently prone, as thus:

Freedom of exchange and credit should exist in a perfectly organized society; realize freedom of exchange and credit then in actual society, and it will become a perfectly organized society. Mr. Proudhon is here guilty of the fallacy of mistaking the end for the means. Fourier committed no such blunder. He recognized that a True Society would ensure freedom of exchange and credit; but in order to attain that end, he proposed means of attaining it, namely:

The Communal Counting-House as the means of free exchange.

Association of Capital and Labor as the means of free credit.

The kind of fallacy above illustrated is more common than would be at first supposed. Thus the Communists say: "Fraternity will prevail in perfect society,—by realizing fraternity then in actual society we shall make it perfect." They forget that before fraternity can be put into general practice suitable conditions must be provided, which conditions can be found in social organization only. Fraternity is the end, organization the means.

The Political Economists have fallen into a similar error. A good society, they say, would establish Free Trade; by realizing free trade, then, we should have a perfect society. They too mistake the end for the means.

Mr. Proudhon bases his whole system on an error in his political economy, and this error springs from his blind hatred against capital and property. In preparing his bunk indeed, his object was less to benefit the condition of the working-classes, than it was to make an attack upon capital. He wasted therefore to seek a reform in that one of the existing institutions whose action is most evident, the Currency.

But in so doing he fulfils the old proverb, "he drops the meat and grasps at the shadow;" for is not the cause more important than the effect, and should not the reform of the cause precede that of the effect? The cause of currency or a circulating medium is the circulation of products; and were there no products to be exchanged, there would be no need of a sign of exchange. By reforming the circulation of products then, he would have reformed also the currency; which is only an effect, and by thus proceeding logically he would have reformed at one blow the defects of the whole system of circulation.

Now this is just what Fourier actually did. His end was the universal well-being, the general diminution of the prices of products, and not the abolition of capital, of the mercantile class or of acquired rights. He found in the Communal Counting House the means of reforming Commerce, and thus at once insured—

Freedom of Exchange;

Equitable Commerce;

Diminution of Prices of Produce;

Lessening of imposts and customs-duties;

Abolition of speculation and stock-jobbing;

The return of parisitical commercial agents to productive labor;

The cessation of bankruptcies;

and a thousand other equally important reforms. And all this he would have obtained by peace, union, the conciliation of all interests, without the need of destroying any thing, or renewing any thing.

Mr. Proudhon, on the contrary, having mistaken the cause for the effect, is powerless to reform the effect, and wastes his strength in useless though gigantic efforts. He has been forced to oppose every thing. In history, be finds as a hinderance in his way, interest, property, capital, revenue, &c; for having made his grand mistake, he finds it necessary to break the whole chain of past events in order to carry society by one leap from the present to the future. To fulfil this simple end his process then is abolition, liquidation, destruction. Every argument must become a death blow; and he finds no stopping place in his horrible work of execution. He stirs up hatred; provokes anger; and drives class against class in headlong strife. And the result of the whole controversy, as presented by Mr. Proudhon, is the extermination either of proprietors or of the producing classes.

How is it possible that an intellect, apparently so logical, should commit so gross, so cruel a mistake in policy? He has not comprehended, that though it might be easy, in some lands, to overthrow a minority of privileged persons, it is wholly otherwise in a country where three-fourths of the nation are interested in upholding privilege, that is to say, property and capital. Here the problem is reversed; the question no longer is how to destroy, overturn, demolish, abolish, liquidate,—for there is no power to carry out their designs on the part of the overturners, &c. On the contrary, the object should be to preserve and uphold, by making the producing classes possessors, proprietors, capitalists.

The true problem is; how, by a better organization of exchange and production to augment the amount of wealth, and to make all participators in it. Besides these grand errors, Mr. Proudhon has yielded to the strange illusion of forcing the country to accept his badly guaranteed bills of exchange, when it refused to accept even the beet guaranteed paper. This obstacle alone would have sufficed to paralyse the bank of exchange, even without the other more important objections.

But now it must be granted that to Mr. Proudhon belongs the merit of having fixed attention generally upon the transitional reforms of circulation. And spite of the evil consequences which the realization of his schemes would induce, we all owe him thanks, for society will be saved by a reform of its exchange, and it should be grateful to Mr. Proudhon, even if he has not pointed out the true remedy for the evil.

That remedy we owe to the genius of Fourier. He it was, who forty years ago, by means of the science whose laws he had discovered, foresaw the abyss towards which modern society was hastening; and who as the means of salvation, taught that:

The Reform of Exchange, that is to say, of Commerce and Banking, will be found in the Communal Counting House.

And the Reform of Production and Consumption in the free and voluntary Association of Labor and Capital.

If social science is true, there can be no other remedy. Freedom of Exchange is the end to which the Communal Counting-House is the means—Freedom of Credit is the end, to which the voluntary association of Capital and Labor is the means. Hereafter I propose to show that these two reforms will destroy pauperism, secure for all classes well-being, make all proprietors and capitalists, besides securing many other advantages no less important.—Translated from The Democratie Pacifique by W. H. C.


  • François Coignet, “The Ways and Means of Free Exchange and Credit.,” The Spirit of the Age 1, no. 6 (August 11, 1849): 81-82.