“Government is in reality established by the few; and these few assume the consent of all the rest, without any such consent being actually given.” ~ Lysander Spooner

Lysander Spooner is a fascinating yet overlooked figure in 19th century United States history. Spooner, a libertarian anarchist, successfully challenged the Post Office’s monopoly on mail delivery by offering superior mail delivery services at a cheaper cost. In addition, Spooner was one of the few staunch abolitionists who supported the Confederacy during the Civil War, while promoting alternative methods to abolish slavery in the southern U.S.

Spooner’s essay, No Treason, is a thought-provoking piece of work that I highly recommend to anyway who is willing to challenge the way they think about politics and government.

Lysander Spooner’s American Letter Mail Co.

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Picture a new village, untouched by current monetary laws. People begin exchanging goods through the process of bartering. This makes it difficult to know what you can buy, because the milkman will only need so many of the pouches that you manufacture. Because bartering can be inefficient, unpredictable, and unreliable, the people decide to represent their goods with something of value. They find copper, silver, and gold nearby, all unique, relatively limited (therefore they hold more value than, say, granite), and quite durable. Thus, they can represent their goods with these valuable metals (and to make it more convenient, paper guarantees to those metals).

Money does not get its value through “force” as some believe. When the people in the village were looking for a more effective way to exchange goods, they were not trying to represent force. They were aiming to represent value through metals that were limited enough to have value, had durability, and could not easily be counterfeit (or inflated). Currency is never originally brought about by force or through government.

Historically government has gotten involved in currency for one reason: greed. Kings would debase the metals that the market freely used and valued. Kings would inflate and devalue the currency that was once stable when the market was in control. Government could not debase metals, clip coins, and print unsound paper money and expect people to voluntarily accept it, thus force was necessary to make it happen. Legal tender laws forced devalued government money on the people and markets.

It is difficult for government to grow when people demand that the money be backed by hard goods (such as metals). It is difficult for government to expand its presence when the money supply is stable and in the hands of the people. History clearly shows us that when government wants to expand its state or military presence beyond its usual bounds, it cannot do so without control over the nation’s money supply. Without the control of money, government would have to take every cent it needed directly from the people and businesses, an approach that would become very unpopular in a very short amount of time.

This is why governments have always tried to take control and monopolize money. If people are forced to use government money and cannot create a competing currency, they must use the money the government gives them. Government can then indirectly “tax” the people through inflation and devaluation of the currency. This allows government to grow its boundaries and influence without directly feeling the repercussions of a people who see their property forcefully go out the door to the government in the form of taxes. Monetary inflation is a very indirect and gradual process for government to take money from the people. And it can only work if people are forced to accept the debased and often worthless money. As the money supply grows without solid commodity backing, prices begin to rise, impacting poorer citizens the most.

This brings us to the U.S. Some have argued that the Constitution allows the government to pass legal tender laws and control many aspects of monetary policy. However, on close inspection, this power has been greatly abused and misinterpreted. The Constitution states:

Article I, Section 8: The Congress shall have Power…To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.

Article I, Section 10: No State shall…coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt.

Congress has the power to coin money, regulate its value, but nowhere does it have the authority to force people to accept that money. Congress can create and regulate its money, but it cannot mandate that people use it through legal tender laws. The states are prohibited from coining money and are required to make only “gold and silver Coin a Tender in Payment of Debt.”

Neither the powers delegated to Congress or the states give them the authority to shove a currency onto the people. “Legal tender” means tender in the payment of debt. The states are given the duty to be sure that only gold and silver can be legal tender. For legal and juristic purposes, only gold and silver are legally acceptable in the payments of debt. But this does not give the state the power to dictate the forms of other monetary commodities or economic exchanges that the people and market might come up with. In other words, the state controls the legal use of money in the payment of debt, but neither the state or Congress has authority over the economic exchanges of money in the marketplace.

The Founders did not give the federal government the ability to monopolize currency and force it on the people. There is no power in the Constitution given to the government to restrict currency production and choice of the people and marketplace. In fact, many competing and private currencies functioned efficiently for a good part of the 1800s. Today, however, we accept legal tender laws as a legitimate role of Congress, when in reality they do nothing but unconstitutionally force a worthless currency on the people.

Consider the basic principles of modern legal tender laws. No government force or mandates would be necessary to encourage people to use a widespread, valuable, and sustainable currency. Legal tender laws and government coercion over money are always used to force a currency that would otherwise be worthless onto the people and marketplace. Imagine if the legal tender laws enacted in the 1960s, forcing people to accept Federal Reserve Notes, were repealed today. Who in their right minds would continue using a currency whose value consistently decreases, is in the control of seven central bankers, and in reality is worth nothing more than the paper on which it is printed?

People will often reply that repealing legal tender laws would lead to the creation of hundreds of private currencies and economic chaos. But remember something. Especially in today’s digital, national, and even global economy, a currency would have to be simple, recognizable, valuable, and widespread to have a chance of surviving in the market. People will naturally encourage and use the currency that holds the most value and brings the greatest amount of ease to transactions. If that is the currency produced by Congress, so be it.

Monetary freedom simply gives people the option of throwing off the restrictive chains of a centrally manipulated, inflated, and drastically devalued currency, the symptoms of a government out of control. Competition in money would force government to stay in line, live within its means (both domestically and overseas), and maintain high levels of sensibility and responsibility. History has visibly painted the picture that without control over money, government’s long-term abilities are only as able as those that the people directly delegate to it. Freedom of money plays a major role in ensuring freedom and representation in government.

“With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.” – F.A. Hayek

“Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” – George Washington

“All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation.” – John Adams

“Whoever controls the volume of money in any country is absolute master of all industry and commerce.” - James A. Garfield

“We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people.” – Daniel Webster

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Oppressive monopolies will never be created by consumers and free individuals. If a “monopoly” were to appear in a free society because people liked the product, low price, and high quality, why should that be considered illegal? If a business grows in size because people voluntarily buy its product, there is nothing in the least oppressive about it. Today, though, the government is on the hunt for companies who are too big and represent a danger to consumers.

In 1914, through the Federal Trade Commission Act, the Federal Trade Commission (FTC) was established. Its mission in a nutshell is to engage in “consumer protection” by patrolling for and breaking up anti-competitive monopolies. Sounds nice, doesn’t it? Unfortunately, the logic still doesn’t make sense.

In a free market economy people are given the freedom to use their money in the ways they see best. In nearly every case, this involves finding the best product for the lowest price. When companies like Wrigley’s, YouTube, Google, and countless others have a strong and growing market share, it is because people find their services and products the best value.

What the FTC assumes is that there are cases when a business will gain huge control over a market and use that to crush competition. The question you have to ask is, How did that business become that large in the first place? In a free market it would occur voluntarily from consumers, and its success would remain dependent on the people who got them there to begin with. If its customers were to back out and the company failed to change its practices, the business would not last. In a true, voluntary free market system it is the regulatory power of the individual, not a government agency, that controls the fate of a business.

“Consumer protection” is not something the government can empower through an agency. The one role the government has in protecting the consumer is protecting the consumer’s right to make its his own decisions without the hand of government influencing the decision through force. When the government starts making the regulatory decisions, the power of individual decisions (which a free market is built upon) becomes greatly diminished, skewed, and loses much of its influence.

A recent example of the FTC’s intrusion is its dealings with Whole Foods’ $565 million buyout of Wild Oats over the course of 2007 and 2008. The FTC charged that because of the buyout, Whole Foods would suddenly be able to dramatically increase prices, destroy competition, and essentially control the organic food retail market. There are several faults with the FTC’s theories.

For one thing, Whole Foods and Wild Oats, while some of the larger national organic food chains, do not have near that much influence over the organic food industry. The theory assumes that Whole Foods and Wild Oats purchase all the organic produce in the country, therefore controlling the supply. This in itself is ludicrous. Whole Foods’ revenue over the past year has totaled approximately $8 billion, while the sales of the organic food industry reached approximately $25 billion last year.

Secondly, Whole Foods brought on a good deal of debt to achieve the buyout. Raising prices beyond what consumers are willing to pay would lead to the company’s bankruptcy rather quickly. There is nothing forcing people to shop at Whole Foods, yet the FTC again makes this assumption.

Third, and most obviously, there are many stores where organic food is widely available as the industry quickly increases in size. The FTC made its attacks based on the strange idea that Whole Foods and Wild Oats controlled the organic food industry. There is no reasoning or statistic basis for these arguments, yet because it was the bidding of the FTC, the legal battles waged on for about one year.

What’s especially ironic here is that while this battle was being waged in the name of “consumer protection”, billions of dollars was being handed out to Fannie Mae and Freddie Mac, two government-created corporations who you could say do have near monopolistic power over areas of mortgages. Don’t forget Bear Stearns, AIG, the auto businesses, and all the banks who were given billions of taxpayer dollars. Where was the FTC fighting for “consumer protection”?

When the government says that a company is “too big to fail,” doesn’t that mean it has a monopoly status? Since when does the government decide which companies can and can’t fail, all while funding the FTC to investigate, accuse, and battle individual businesses?

Anti-competitive businesses, which is the FTC’s stated purpose to prevent, are not created and do not succeed with a free market system. But they most certainly are created with a government-influenced economy where the government grants special favors to businesses, punishes others, and decides what companies succeed and fail. A free market, in which people can make their own decisions, will not and does not create harmful monopolies. Harmful monopolies can only be created with help from the government in one form or another.

With the escalation of unnecessary and abusive antitrust laws, government-supported and government-created corporations, and government bailouts, one thing is becoming much more clear. A business is no longer created for the benefit and liking of the customer, it is built for the approval and bidding of the government.

It is no longer the customers who control the fate of a business, but the government. It is no longer the individuals who have the supreme regulatory power, but the government. It is no longer the shareholders’ responsibility to control a business, but the government. It is no longer the people who rule the government, but the government who rules the people.

Truth, though, is never-ending and in the long run is the one thing that is sure to be victorious. Governments, tyrants, and central planners use everything in their power to destroy the laws of truth, freedom, and responsibility. But history has shown that it is those very laws of truth, freedom, and responsibility that lead to the inevitable destruction of deceitful principles, manipulation, and fraud, no matter if it is brought about by individual people or entire governments.

Therefore, it is these laws of truth, freedom, and responsibility, that will bring us back to our senses:

It is the customers who control the marketplace, not the government. It is the shareholders who make business decisions, not the government. A business is created to serve the people, not the government. Businesses answer to customers, not the government.

It is the people who know the best for themselves. Not the government.

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