Part 2

Let the State then enlarge to the utmost degree possible the power of these banks to issue such notes or cheque books; let these be authorised to accept mortgages, deposits and all guarantees from third parties or others, whether directly or more indirectly by the intervention of other public organisms appointed to the work, or even analogous private organisms, of a solvency secured beyond all doubt; let this issue be made for any amounts, however small; let these establishments be even authorised to issue notes similar in form, but blank, or account-books to people without means and only usable on the understanding that all that results in connection with them is at the risk and peril of those transacting business, and we have arrived at comptabilism complete and definitive, even to the point of suppressing the copper coinage.

It is evident that in this way society as it is at present organised, can demonetize the precious metals and establish social comptabilism without in principle having to make any revolution whatever in its present position, it has only largely to increase a portion of its machinery, already existing and in full swing. To sum up, it is a question of a simple change in the machinery of transactions and all society is interested in the realization of such a progress purely mechanical and functional, which moreover has no connection with any doctrine, opinion or party, and is no new invention whatever.

In conclusion, and at the risk of repeating ourselves, in order to explain our idea under all its forms, and to render it accessible to every mind, we think we cannot do better than to recapitulate it in formulating some articles which set forth in principle the basis on which legal arrangements could be made on the hypothesis that the legislative power should determine suddenly to decree the application of «social comptabilism» such as we have defined it in basing it on the guarantee of property, on the employ of account books, with debit and credit entries, and on the use of a stamp or punch to inscribe or obliterate figures.

The articles recapitulate the essential principles of the reform from a point of view wholly general, the only one in this notice we have proposed to examine, leaving for the present absolutely out of consideration details of application which have to be studied and which might vary infinitely.

It is needless to say that we by no means believe that a reform like this can be realized at once, we rather think that it will come by stages, as is always the case in every fundamental change relating to any established order of things.

The intermediary phases would probably be the adoption of the system of comptabilism already in operation in Austria, principally for defered payments, as it is explained in the work of M. H. Denis, already cited (it would be only necessary to add to this system the guarantee of the State, based itself entirely on the guarantee of individual property, in order to enter into the plan of «social comptabilism»), and on the other hand, a large extension of the issue by the State of paper money for that which concerns current payments as proposed by M. De Greef (it would suffice to add the system of stamping as equivalent to signature, the limitation of the use of paper to a single operation, and its regular return to the Accountant's Office, for to make such reforms equally a part of the plan of «social comptabilism»).

Articles setting forth the principles of an organic project.

1.--From ... the monetary system shall be replaced by the comptabilist system.

2.--The National Bank shall become a comptabilistic establishment, commissioned to deliver to individuals, to societies, etc., account books, divided into leaves and squares having a certain significance for the credit, and leaves and squares having a certain significance for the debit, in which the signification of the transactional operations effected, and which at present involve the use of money, shall be stamped[F] respectively to the credit and debit of the account-books of each of the operators in account unities equivalent to the actual franc.

3.--The accountant-general will deliver either blank account-books, or account-books having a certain sum inscribed to the credit of the account-book.

4.--The transactional operations inscribed in a blank account-book will be effected at the risk and peril of the operators. Every-one will be able to obtain such an account-book.

5.--Contrariwise, the transactional operations inscribed in a credit account-book will be made under the guarantee of the National Bank, but only in so far as they concur with the sum inscribed to the credit of that account-book.

6.--Every-one can obtain credit account-books, for a certain sum, either in mortgaging some corresponding property in favour of the Bank, or in offering to it the guarantee of a third party, who should have agreed to a similar mortgage, or ...

7.--An account-book out of use or obliterated, or of which the sum appearing to its credit is exhausted, will be returned to the accountant-general; should such returner of an account-book have a balance, then the accountant-general will open an account in the official books, and enter this balance to that account.

8.--Every individual whose account-book balance is to his credit will be able to obtain credit account-book for a maximum sum equivalent to this balance, if he offers a corresponding mortgage either as before stated, on an existing property, or on property he may acquire by means of the sum thus inscribed to the credit of his account-book.

* * * * *

What has preceded shows how simple, unobtrusive, passive is the part played by the accountant-general.

The books containing the figures signifying what transactions have been effected either to the credit or debit side, with the figures attached identifying those who have made the transactions, are remitted to him.

He adds up the credit and debit account and, if there is a balance, enters it to the account of the possessor of the account-book. That is all. If he comes across mistakes or errors, he rectifies them, notably if he discovers that the statements of the account-books do not agree with the corresponding statements of the account-books of those whose transactions appear there.

The accountant-general acts as a piece of machinery would act. He is a recorder of figures, _a registrar of balances_. If there are no balances to enter he does not even make a registration, and is then only a _legal witness_ of transactional operations. No more is asked of him in order to arrive at the suppression, pure and simple of the monetary system.

But from the day in which the comptabilist system becomes legal to the exclusion of the monetary system, from the moment in which each individual has his personal account introduced into the registers of the accountant-general, his _transactional life_ is henceforth, and for ever, represented on the one side by the mortgages and guarantees that he furnishes in order to obtain comptabilist unities, on the other hand by the balances of his account books that the accountant enters successively and indefinitely to his account. If the whole fortune of each person were treated in such a manner, and it is this we foresee must be the legal situation in the definitely social state (having for sole tax the succession duty, etc., etc.), it is plain that the true function of the accountant-general would be that of recorder of the state, of the shifting social position of each person, the determiner of the diagram of his active, relatively effective life. Each individual would thus have the stereotype of his effective social life cast; each social being would have his effective life formulated, if one may so speak, _by relation_, always by relations, nothing but by relations--to that of all the rest, but in figures, and yet again, in nothing but figures. And herein is seen clearly the fundamental error or profound confusion of those who believe there can be any other thing in the social problem which occupies us than what has just been stated; of those who imagine that capital or fortune must be able at _every moment_, and not eventually, in the sole end of utilising the metal for itself, to be represented by its equivalent in gold or silver; of those who persuade themselves that the words capital and fortune represent anything else than _relative_ social power of action or enjoyment which it is sufficient to record, to make public, purely, simply and legally, as we propose, in order that it may be absolutely guaranteed to each person.

ERNEST SOLVAY.

FOOTNOTES:

[A] _Annals of the Institute._ N^o 1. June, 1894.

[B] If it is not admitted that the term _dh/o_ exactly represents the account of the conditions of the supply and the demand, it could be represented in a more general way by a function F (_dho_) of the elements _d_, _h_, _o_, which are the only ones which ever can, according to our view, intervene in the fixing, for even admitting that things could be regulated to the last point, socialized if you will, these two elements of supply and demand would at least remain always existing and dominant.

[C] It is by design that we employ the expression _transactional value_ in order to differentiate it from a value such as would result from a theory of the measure of value based on work stored up in transactional merchandise, a theory with which we have not here to occupy ourselves.

[D] _Annales de l'Institut_, 1896. N^{os} 1 and 4.

[E] _Annales de l'Institut_, 1896. N^o 5.

[F] We think we ought here to recall (see: _Comptabilism et Proportionnalisme social_) that every-one who makes transactions carries about with him not only his account book, but also a marker or stamp bearing representative figures or signs, identifying his personality and by aid of which he inscribes or obliterates the figures significant of the transactions in the account book of his correspondent.

It is needless to add, that instead of marking,--an operation we have always put forward the better to show that all account-keeping can be done by simple inscription or the registration of figures and without any «exchange» whatsoever, not even of bits of paper--a system could be adopted, for example, consisting of having on the credit and debit sides of the account-books, leaves of stamps more or less analogous to postage stamps, credit-stamps which the buyer would detach from his account-book, and which would be fastened into that of the seller, then the seller would detach from his account-book corresponding debit stamps to be fastened to the debit side of that of the buyer. These stamps would carry naturally besides their signification the same figures or representative signs of the personality of the maker of the transaction as the marker they would be destined to replace.

The comptabilistic system making use of such stamps rather than of marks would be applied to defered payments as well as to current payments, it could be thus used in every case.

The principle of the account-book consists naturally in the book forming a real account with debit and credit--like all accounts in ordinary book keeping,--in which is inscribed in a way which would be regarded as valid, having legal force the sums corresponding to the transactions effected either by being written out at full length, with the signature, or by marking in figures, and indicating at the same time the personality of the party making the transaction, or by means of stamps as we have just seen, or finally by some other way.

Directly we leave the principle above mentioned to look at some intermediary form of its application, a host of combinations offer themselves. The use of stamps for example would permit doing away with the debit side in the account books. The buyer in this case detaches, from his account-book, which becomes now only a credit account book, the stamps corresponding to the extent of the transaction, and he sticks them in the account book of the seller, which is also only a credit one: the credit of the seller increases, that of the buyer diminishes, that is all. If the buyer does not stick his stamps in the account-book of the seller, these stamps can circulate, they would be analogous to bank notes which have been endorsed by writing upon them the name of the first party holding them.

SOCIAL COMPTABILISM

(COMPLEMENTARY NOTE)

By ERNEST SOLVAY

In the last number of these Annals[G], I explained in a manner which I consider definitive, the theoretical conception of comptabilism.

To this point of view it seems to me necessary to add a few words in order to throw light on certain points which the first article did not sufficiently bring out.

We have seen what is the use of money and to whom it is of use, we have considered if it was indispensable. Gold and silver are not a «real commodity» except when they take the form of useful objects, utensils, works of art, etc., the possession of which produces enjoyment. Turned into coin, they lose this character, they become an instrument, an instrument recognised so far as indispensable for obtaining a real commodity, be this commodity material or moral, by an operation which I have designated under the general term of «transaction». Money is not then a commodity in the true sense of the word; on the contrary it is generally obtained by the surrender of a commodity.

It is solely in order to accomplish the «operation» of transaction that money is needed, because this is the method, the means, the instrument which custom has consecrated; and if another practicable method, means or instrument were found in order to accomplish this operation money would no longer be indispensable. Now, this is what comptabilism does.

It is essential to note here that the comptabilistic unities, francs, marks, pounds, etc., would be derived from securities, and not, as with money by the surrender of commodities, that in consequence these unities would no longer have a value by themselves, but simply by the things which they represented.

But apart from that, they could be with held or parted with, they could be borrowed or lent, with or without interest, directly from man to man, or by the medium of banking houses, exactly as in the case of money.

And in fact, if the force of habit required, nothing would prevent their being called money of account or comptabilistic money, since apart from what has just been said as to the way of obtaining them and their nature, nothing would be altered in the current methods, everything would remain as to day both in the organisation of business and of society. And all that might have been said, written or thought until now in an opposite sense to the fore going considerations should be held as contrary to the reality of the facts resulting from comptabilism.

The conception of the comptabilistic system is one quite other than that of the monetary system. There is not the smallest trace of this second conception in the first; it becomes necessary to leave entirely the one to understand the other. In a word the two conceptions mutually exclude each other; the one is based upon _exchange_, the other upon _accounts_, and the two systems derived rest thus on two essentially different principles.

The examination of the theoretical side of the comptabilistic system could not be undertaken through the ideas, nor from the point of view derived from the monetary system. It is necessary first of all to accustom oneself to think and speak of business, finances, etc., abstraction being made of every idea of money and to persuade oneself that transactions--and by transactions I understand every operation, whatever it may be, which gives rise at present to the use of money or its equivalent--when finally analysed, only modify the ratio of fortunes. If these ratios could be continuously recognised and fixed, could be officially registered, money would lose its use. Indeed, money put in circulation by whatsoever an operation is only a means of granting to the one who receives it, the power to acquire subsequently its equivalent, the other who has given the money having diminished by this much this power as far as he is concerned.

Now the comptabilistic system in officially registering this power, acquired on the one hand and diminished on the other, permits the afore mentioned ratios being fixed, and realises entirely the part played by money. Therefore it can entirely be substituted for the monetary system. And let it be said, in its favour, that the power registered in this system cannot itself be lessened by the fact of the fluctuations in price of the metal, as actually now takes place. Moreover, the necessity which exists at this present moment of surrendering commodities to procure the monetary instrument indispensable in transactions, would disappear.

It is evident that it might have been possible _theoretically_ to pass directly from the regime of barter to the application of the comptabilistic system, and if one admits that the conception of this system could have been produced at this far distant epoch, and have been thus used from the commencement,--which in the presence of the laws of evolution of the human mind, could only be a pure hypothesis--it must be immediately granted that the monetary idea could not then have occurred to anyone--and even admitting, which is impossible, that it had occurred all the same to someone, no one would have dreamt of making use of it, so much in the presence of comptabilism would the monetary system have seemed barbarous by its illogical and inconvenient character.

Such are the theoretical considerations which it seems necessary to insist upon.

But if there is a difficulty in comprehending the question from its theoretical side, this difficulty disappears if approached from the practical side.

This is what will be seen on examining the system which M. Hector Denis has gone to study in Austria and which he proposes to realise in Belgium.

All the post-offices in the Austrian Empire are in connection with the Savings Bank, the central establishment of which is in Vienna and which has become during the last few years a thoroughly comptabilistic establishment, in this sense, that,--independent of its primitive aim, it keeps the accounts of over thirty thousand who are affiliated and who annually through this medium do business of which the figures are above a thousand millions of florins.

The Savings Bank exacts from those persons who wish to transact business through its medium, a fixed monetary deposit of 100 florins, without relation therefore to the importance of the transactions which they can effect; it opens for them an account and delivers them, upon request, cheque books which serve to effect the payments which they desire to make. All this is done by the intervention of any post-office of the Empire.

Each time that a cheque is paid by an affiliated person, the Central Office at Vienna is advised by post and returns immediately, also by post, an extract of their account to the two persons concerned. Each affiliated person's account is thus kept to date, and this as much for the Central Bank as for the person affiliated.

Here then are thirty thousand persons who could at a stretch do entirely without money--if their mutual relations were sufficient to permit them to do so for all the necessaries of life, and this result is obtained merely by the fact that an official establishment is willing to undertake to keep the banking account. But it is seen that these thirty thousand persons are but a select few in the mass of the population, since the Savings Bank admits them to carry on transactions merely upon the deposit of 100 florins, thus almost always at the risk and peril of the transactors, as has always been the case so far in regard to cheques. And it is evident that if it were desired to make the system general, it would be necessary to adopt the principle of comptabilism which would mean that the transactions were guaranteed by the property of the persons affiliated.

Here then, as I said, has the Savings Bank of Vienna become up to a certain point a comptabilistic establishment. I may add that the dangers that might threaten this institution, as far as it actually works, spring from its being not entirely comptabilistic, in so far as it still retains the metallic basis.

The deposits received are not left unproductive, they are placed in funds, public or otherwise.

Let a political crisis occur which should cause a rush of withdrawals of these deposits from the Bank and it would be exposed to the greatest dangers. Solely because the institution is based upon current ideas and not upon the comptabilistic system.

In effect, in this latter system, the individual who is affiliated does not make a deposit of monetary unities having a value in themselves, he gives as a pledge a commodity, and according to the value of this commodity he is permitted to make use of more or less unities.

Here then is the ground on which the institution ought to be based. Under these conditions deposits are not necessary. The affiliated person will give a pledge in exchange for his cheque book. The registers of the Central Savings Bank will declare that he is permitted to carry on transactions with _x_ unities, and his cheques will be accepted, as long as he does not go beyond this figure.

In place of a deposit having a value of its own, there is the simply writing down, the entry of a right, and the dangers of the present system would be avoided.

The entry and the writing down constitute the ideal realization of the comptabilistic system. They lead one to understand that the transactional unities have only a fictitious value, that they serve solely to measure the transactional value of things, that their system is thus dependant on the existence of these things.

Ideally speaking, all the transactions, that is to say the changes in the fortunes of individuals, may be written down, may be entered, for example in bank books.

But concerning the practical side, although the entry remains the ideal conception, it may be that the necessities of human relations require other methods of a more convenient nature. This is a side of the question upon which we hope soon to set forth some solutions, but which can be discussed without the theoretical side of comptabilism being introduced.

ERNEST SOLVAY.

FOOTNOTES:

[G] _Annales de l'Institut des Sciences sociales_, of Brussels.

THE ORGANISATION AND WORKING

OF THE

CHEQUE AND CLEARING SERVICE

(CHECKS UND CLEARING VERKEHR)

IN THE AUSTRIAN POSTAL SAVINGS BANK

By HECTOR DENIS

The accumulation and safe keeping of funds, their investment with the triple guarantee of security, productiveness and easy and prompt realization are regarded as the fundamental functions of Savings Banks, and it is in these directions that their development has especially been accomplished.

The comparative studies on these institutions, such as the works of Rostrand and the fine account of Messrs Hamande and Burny testify to the increasing ingenuity of the means of drawing out and gathering up savings, and of the great expansion Savings Banks well conducted can give to divers forms of credit, and will finally be obliged to give them.

But such is the flexibility of this institution that in carrying the spirit of reform into the means of assuring to the depositor the most prompt and convenient disposal of his savings, there ought, in order to apply it to his payments, to be accomplished in the Savings Bank, an evolution equally fecund in a new direction.