Enclosed is a draft of the proposed constitution of the board of valun banks. The purpose is to make it as simple as possible and, except for the projection of a principle, to leave the board free to exercise judgment on the questions that will arise.

In the prospectus of the New York Valun Bank, you will observe that the word money does not appear. The process of the bank is described as "trading by transferable credits," which is really a definition of money. I am continuously at cross purposes between the impulse to make a truthful statement and to yield to expediency as a defense against the reactions that spring from the universal ignorance and superstition of money. In the present promotional effort, I have used the terminology current in business, and yet I inwardly rebel in calling the over-draft bookkeeping entry on the books of the bank, "credit."

This is really not credit in the accepted sense, as it delivers nothing of intrinsic value. It is merely authorization to the member in a debit position to tender a check or checks to some suppliers—who are the actual extenders of credit if they accept the tender. And they do not extend credit to the remitter, but look to some other members to make good. A valun check, like a dollar check, is merely a draft on the market where the real creditors and debtors function, while the bank is merely the bookkeeper.

Now, should we call the bookkeeping entry which authorizes the remitter through the process of red ink figures to tender checks to the market, "credit?" Or should we adopt a more honest name, such as "overdraft power" or "initiating power” or "unearned drawing power," as distinguished from earned drawing power, which is based upon an entry resulting from the deposit of a check which is evidence of having delivered value to the market? Or should we, for expediency's sake, leave undisturbed the psychology established by banking practice and let account holders and the public think that the bank actually extends credit?