We disagree upon the necessity of stipulating a specified sum of a specific commodity for which the valun would be exchangeable. I hold that this is gratuitous, and you hold it vital. This is the old specie versus fiat controversy that has raged from the beginning of the political monetary system. It involves the effort to legitimize the illegitimate, namely, government issue, and has the further purpose (on the specie side) to supply a particularization deemed necessary for the certitude of the unit.

Since, under the valun system, we abandon the impossible effort to legitimize government issue, the first named purpose has no relevancy to our problem. The second purpose, namely, the convertibility or "deliverability," as you state it, I grant you, has relevancy to any monetary unit. But it is not an issue in the valun system, because the system permits its presence or absence accordingly as its operators believe to be sound. The question is to be resolved empirically by competition.

For instance, if you were conducting a valun bank under your proposed policy, you would ask the board to print on your currency a specie promise. I, on the other hand, would omit this pledge and rest acceptability upon the power of competition to maintain the parity and constancy of the unit. If your plan proved preferable to traders, your bank would attract business and mine would lose business.

I believe that the experience would prove the reverse; while, of course there would be no objection on the part of any trader to convertibility, I believe that there would be no preference. If this were true, your bank would have a competitive handicap by reason of the necessity of investing capital in the commodity reserve, thus imposing a greater overhead with consequent higher charges for exchange service, which would force traders to a non-convertible exchange.

As I conceive the function of a valun bank, it would be merely to administer the credit of its account holders, and not to underwrite their losses, except to charge each a sum for an insurance reserve against losses and to establish a parity of units issued by each account holder through each bank. For a bank to guarantee its account holders that any particular commodity would be available at a fixed price, would be a hazardous undertaking, and entirely uncalled for.

Nevertheless, as you see, there is room in the valun system for both the specie and fiat advocates. I should think that you and your fellow specie advocates would welcome this, the first opportunity you have had in all history to demonstrate to the world that your theory is correct.

So far as I know, there is but one piece of currency in the world that is "deliverable," as you call it. That is the United States silver certificate. Yet we see no preference for it manifested by the public over bills that merely promise other paper. Nor is there demand for redemption—"deliverability." This, by the way, demonstrates that the specie principle may be operable with the fiat principle in the same monetary system. Before 1934, we had the gold certificate as further demonstration.

If, however, you believe that we cannot play marbles with different colored marbles, or that different colored marbles cannot be par in the game, let me remind you that you will have the same opportunity that I hope to have to present views to the board of governors when that body is formed.

You come fresh to the battle, but I, after fifteen years of advocating nonpolitical money, have grown weary of frustrating side issues.