It is so unusual to find a banker who feels a social consciousness in his work sufficient to ponder the problems of money and banking, that when one meets a thinker like yourself, he is especially appreciated. The banking business is burdened by statutory laws, yet the natural laws governing it are apparently not understood by either the legislators or the bankers themselves.

The contract or the meeting of minds between buyer and seller that forms the basis of money is extremely difficult to define. In fact, it may be questioned whether money has any existence, in a dynamic sense, except at the very moment that it is occupying the minds of traders in the actual process of exchange. I hesitate to assert that money exists only in motion, but I recognize a difference between a bookkeeping record of money and money in action.

It is an interesting speculation whether the volume of money actually in existence at any one time is merely that which is actually in process of exchanging, and whether the record of issues is but authorized or potential volume and the exchange act a process of creating and retiring money from the potential supply. In other words, whether the substance of money is manifested only in exchange action, and whether it becomes a dormant entity after exchange, subject to reactivation by the next buyer.

If money exists only in motion, or if only the active units activate the demand-supply effects upon the price system, are not the other units (so-called savings) practically non-existent, except as potential re-issues?

We understand that the monetary circle has its birth in the issue by one who has credit in the monetary system, and its death is accomplished by the issuer as he turns from buyer to seller. Between his issue act (by buying) and his retirement act (by selling) there are a number of intermediate traders. These may be without credit in the monetary system, and, at least in this monetary circle, are not primary or initiating issuers. But since we recognize that they have the power to retire money from the circle, must we recognize the power to restore money to the circle as a power of re-issue? Do they not, as you have contemplated, have the power to affect the consequences of the credit which brought the circle into existence, and thus share with the initiator the responsibility for making money a benign agent?

Whether every person in the monetary circle is responsible for its equitable operation or only the issuer, is a question that touches the essence of the money compact, which, as stated at the outset, is extremely difficult to define. Is the pledge upon which money rests a pledge of only the issuer, or does it involve also the acceptor? Does the intermediate acceptor in the money circle affect the interests of the past members of the circle and the potential future members by interrupting or breaking the flow, or is the reaction solely upon himself?

It is because questions like these are unanswered, and in many cases not even posed, that I get much satisfaction out of the opportunity for experiment that the valun system permits. Each valun bank would adopt its own credit policy, and it is on credit policy that most of the unsolved problems hinge.