SOCIAL COMPTABILISM ITS PRINCIPLE AND GROUND OF EXISTENCE THEORY OF THE MEASURE OF TRANSACTIONAL VALUE

By Ernest SOLVAY

Would it be possible, in a society constituted as ours is, to replace the agency of money by another agency which would have its advantages without its inconveniences, and which could be considered as theoretically perfect,—in other words would it be possible to replace the agency of money by a system which would be the final expression of possible improvement in this matter and the definitive point to which social economics ought necessarily to tend? This is the subject which we propose to consider.

The paper Social comptabilism and proportionalism[A] which was the starting point of the Institute of Social Sciences of Brussels, was necessarily done in a premature fashion, the subject being regarded from too general a point of view, so as to be harmful to a true explanation of «comptabilism» properly so called. It laid itself open to criticism and lays itself open still; it does not satisfy all those who wish to go deeply into the question. On these accounts we deem it our duty, after what the Institute has already published with reference to it, to return again to the subject, limiting ourselves to purely monetary and account-keeping grounds, and an exclusively theoretical explanation of the conception which, connected as it is with the inductive researches of our fellow workers we have submitted to their consideration.

In the first place let us examine into the use of money in society, and to whom it is of use; we will next consider if it is indispensable.

Money presents itself to us as being an indispensable instrument for effecting transactions which are not mere acts of barter, and it presents itself also as having rendered possible,—and this is of capital importance as the sequel will show,—the registering, the writing down or account-keeping of the transactions, if one may so say, which barter did not permit.

Money is exclusively of use to those who enter into commercial transactions. Thus a man who could sufficiently provide for himself in everything without any such transactions, would not have to make any use of money; a landed proprietor may have a considerable fortune and have only a small monetary need, whilst a merchant whose fortune may be much less will find himself in a very different situation: for the greater part of his fortune consisting of merchandise, continually renewed, and consequently engaged in circulation, his monetary need will be considerable. It may therefore be said that the need of money is proportional to the need for commercial transactions.

Beyond what we have just pointed out, has money fulfilled, or does it fulfil any other purpose? We shall see.

If, from the beginning, we could have had a system allowing us to exactly register transactions, would money have been indispensably necessary? In a word, is money in point of fact the particular element in such transactions which caused the writing of them down, or, in reality does not its use hide an agency entirely independent of money? Let us examine this.

But we cannot do so without offering as a necessary preliminary a few words in explanation of the term «transactions», which we have already used and which will continue to be employed in this paper to the exclusion of the word «exchanges».

In our opinion exchange properly speaking,—true exchange and free from the alloy of any foreign element whatsoever, has never been anything but barter; and as soon as the system of barter was left and that of money entered upon, the exchange system was rather abandoned for another system quite different, than that one form of exchange was simply substituted for another form of exchange. And if we have continued afterwards to make use of the word «exchange» it is due more to the force of habit than in order to define the actual condition of things.

What in reality fundamentally characterises barter, is that it is an exchange, carried out on the spot, of goods immediately usable by the two parties, each of them giving one usable thing in order to enter into possession of another; whilst that which fundamentally characterises the operation of selling and buying, by means of money, is that it constitutes an exchange of goods carried out on the spot, of which one form only can be immediately used by one of the parties, the other party obtaining not a real thing but an instrument by which he will be able to procure it. So that the party who has received the money, the seller, has only thus obtained a power to make subsequently an inverse operation, that is a purchase where and when it pleases him. The operation of selling and buying is then nothing less than the exchange of a thing for a power. But can we still make use of the word «exchange» to define such an operation? We do not think so, and it is for this reason that we substitute for it that of «transaction.»

The word «exchange» has continued to be employed after having quitted the system of barter to enter upon the system of buying and selling, by means of money, just as the expression «money» has continued to be used to describe bank-notes, which are only paper having the power of money, as money is an instrument having the power of «things.» Thus we have here an example of the general rule, that the evolution of ideas and of facts, is always more rapid than that of the words which represent them.

Our opinion with regard to «exchange» will be found all the more justified since it will be seen later on that the power conferred by money upon the seller does not exclusively belong to the monetary system, but that it can be obtained, and that theoretically it always could be obtained, in quite another way, without exchanging anything, without having anything to do with money, by simple entry, registering or writing down of figures on paper which is not exchanged, but which remains in one's own hands.

Let us now come back to the question.

We proceed to show that the relative value of things is independent of the unity of value chosen, and that the transactions can be registered, written down, abstraction made of the real, actual value of the material support which has served to fix this unity.

In a general way and within possibly narrow limits, very different and variable according as the case may be, given the existence in actual society of fortunes and desires of all degrees of importance, one can, in principle, admit that theoretically, the value v of a thing or of a certain quantity of goods, is proportional to the average d of the desire to possess it, which the men demanding it have, either on account of its use, or from any other reason, multiplied by the number h of these men and divided by the number o offered of this thing; these three factors d, h and o not being probably in other respects determinable with precision.

We shall then have for the formula of value:

v = u × dh/o

u being a coefficient of proportionality depending on the unity of value adopted.

It will be seen that the term dh/o represents in reality the account of the conditions of the supply and of the demand at the moment and at the place where the value is determined[B]. In substituting E, we have a new term expressive of the value:

v = u × E.

The relatively fixed value of the precious metals has made it possible for the unity of value to be determined on and easily represented by means of a certain quantity of metal, and the actual monetary system is the result, the value of all things having been henceforth expressed by means of the monetary unity identifying itself with the unity of value determined on. But it may in consequence be remarked in looking closely into this, and it is important to do so, that this result has been reached not because the thing: «metal money», has made its appearance, but because thanks to it, a common denominator of the value of things in general has been employed which did not exist before.

Now, as we shall see, this common denominator does not of necessity remain invariably tied to the thing, money, or more generally to any sort of material support which has served to define it at a given moment. Once fixed it may be considered independently of this support; becoming thus a permanent quantity in time and space, taking in consequence the character of a common measure of the transactional value of things and being employed as a unity of measure of that value[C].

In reality this hypothesis could only be made when there was no such thing as money, and a system of barter exclusively prevailing, those engaged in making transactions might have said to themselves. «Let us choose a common denominator of the value of things that we may write down our transactions, and not be any longer obliged to carry on the exchange of usable things when we do not want them, let us take for example the value of a kilogram of wheat here at ... to day, the ... as common denominator and let us calculate directly the value of all other things by this unity.

»Evidently every other thing would be worth as many times this unity as we see men would give kilograms of wheat to possess it, and thus the numerical value of things would be easily established.

»Let us agree further in future always to express the value of things by this initial value of the kilogram of wheat, a value which has only existed during the preceding operation, and which strictly can only have existed for an indefinitely short time, but which can be considered as absolutely permanent, and apart from any necessity of occupying ourselves with the variation of value undergone in time and space by the kilogram of wheat itself.»

It will result that if v' is the value of a thing at any period and at any place of which the originally fixed value was v, the relations will be:

	v = u × E		v' = u × E
whence:	v'/v = E'/E	and	v' = v × E'/E

that is the value v of a thing at any time and place is equal to its initial value simply multiplied by the proportion of the terms which represent the conditions of the supply and demand at the two periods under consideration.

Let us note, that, as it should do the formula v'/v = E'/E shows that the unity is eliminated when the point in question is the estimate of relative values.

It is needless to say that we do not insist on the practical possibility of the determination of the coefficients E and E', which intervene in the preceding formula. We have in effect said that the factors d, h and o, do not appear to us determinable; we limit ourselves simply to showing here, the theoretical possibility of the system.

What is important to remark is that in proceeding, as we have just pointed out, in all estimates of value and in consequence in the registration of all transactions, the variation in the value of the material support, corn, metal, etc. of the unity adopted does not intervene in any way.

It will be further seen and we would insist on this point, that the common denominator of the value of things takes in this system, by the fact of its invariability, the character of a common measure; that it can in consequence be taken as unity, and considered in an abstract way.

In fact this unity served once in a certain place and at a given moment to fix the initial value of things. From that moment it separates itself from the material thing which served to define it, which has momentarily represented it, and which has served as a support in our mind to effect the operations necessary to the relative fixing of the value of things. These operations made, it is of little consequence if the value itself of the kilogram of wheat varies, as is the case with the value of every thing else. Its initial value was for ever fixed, it can be taken as absolutely permanent and immutable,—the fundamental condition which a unity of measure ought to satisfy.

In like manner original values of all kinds are equally constant quantities and anyone from among them might be taken as unity.

In due course the actual values of things alter; varying continually, and it is the same with the kilogram of wheat or with any support whatever that has served to define the unity. The new values will always express themselves numerically by means of the fixed unity, although that has ceased to have a material representation. In practice the new numerical values will be obtained very easily; from the theoretical point of view they are fixed by means of the formula already given:

v' = v × E'/E

a formula which by the way, shows that if it happened that for anything at any moment and at any place, the elements d, h and o took values such that the term (d' × h')/o' should return to a value equivalent to its initial value (d × h)/o, the value of this same thing would again become identical with its initial value.

This formula shows that the value of things is only relatively to be taken for it varies ceaselessly, shifting to as great a degree as supply and demand itself, just as human desire often does,—it is only mathematically fixed in time and space, we would again repeat for an infinitely short period.

This being so it is evident that it becomes possible to put down in writing all transactions by means of the unity determined on. And if this writing down of transactions can be made under a legal form, that is, can be carried out under conditions which have the effect of conferring on the seller a legal right, corresponding to what the thing is worth to him who acquires it, and here we enter into the conception of «social accountancy», it becomes useless, superfluous and even harmful to make a material use of the thing representing the unity of the value adopted.

It is thus that from the beginning, from the very time barter is abandoned and it is no longer necessary to give a kilogram of wheat to obtain possession of a thing, that at that very moment a writing down would confer on the holder of a thing a right representing a value equivalent to it and permitting him to effect under the same conditions new transactions.

If things can thus take place, it will be seen how absurd it becomes to persist in the custom of representing materially a unity which should be detached from the support which has served to define it at a given moment, and which no longer appears as anything but an abstraction permitting in a homogenous manner the arithmetical representation by figures, of the value of things, relatively and individually. This abstract unity ought to be detached from every material tie.

On the other hand, it becomes evident that money does not in the least constitute the indispensable element for effecting transactions. And if at the distant period to which the introduction of money goes back it had been possible to tell beforehand that transactions could be written down in a simple but legal manner, after having fixed as above indicated the numerical value of things by the use of a unity essentially invariable, an enormous error in principle would have been committed if to the unities admitted as estimates of value had been given, as is actually the case now, a representation of them in gold and silver,—the franc, the mark, the pound sterling.

The usage of money has taken from the unity of value that character of invariability which it ought necessarily to possess.

This unity being associated in point of fact with a real article of merchandise, society has been exposed either to want, or to have too much of the matter thus become the indispensable element of transactions, to suffer in fact monetary contractions and dilations, the results of the traffic which necessarily takes place, results which, for a nation producing the precious metals, like the United States does, may possibly end in disaster.

A confusion must necessarily be brought about between the conventional fixed value attached to pieces of gold and silver money and the actual variable value of the very matter of those pieces. The conventional value of a piece of silver corresponds to the value we have called its initial value, and we have seen it was possible to preserve to that initial value the character of absolute permanency. But how can its invariability be assured if a material support is given to it open to incessant fluctuations of value resulting from all the speculations to which what ever can be bought and sold is submitted?

The very fact of the association of the unity of value with an actual marketable article takes away all stability from the base of our estimates of the value of things. If the price of any commodity,—for example, some article of food or manufacture,—rises in comparison with what it was 50 years or a century ago, it is often asked whether the augmentation is real or only apparent and due to the diminution in the value of the metal which supports the unity: it results clearly from what has been advanced that the variation in the value of metal goes for nothing if, it be well understood that the quantity of money in use is supposed to remain exactly proportioned to the needs of the transactions. But when monetary contractions take place, the implement necessary in transactions is wanting, the value of things in general falls, for those who are engaged in making transactions offer their goods at a reduced price to get the monetary implement without which they cannot effect their operations. It would evidently be the same if this implement instead of being in gold or silver, was in wood or paper; and still the same if it was represented only by comptabilist unities.

Directly it is conceded that man must make transactions then, if an implement is indispensable to that end, be that implement paper or comptabilist unities, he will make sacrifices to procure it and will for this object part with some of his wealth, and therefore the value of things will in a general way fall. While if this implement is in excess, that is if there is monetary dilation, as excess of the implement is of no service to the great bulk of those who transact business, who only want what is necessary to effect their transactions and nothing more, it will be found that the value of things cannot be affected by this as it is in the preceding case.

We would say that if this implement is in paper, or represented by accountancy unities, its excess would do no harm, nor have any effect on the value of things, when in the contrary case as we have just seen, this value would fall. But if it is in gold or silver and instead of being stored up in the iron safes of the banks it circulates amongst those who transact business, these last will seek to get rid of it, not because as in the preceding case it is a mere implement of transaction, but as a valuable metal, and in consequence of withdrawal of this kind the value of things will be raised.

When we say that the value of things in general would rise in a case of monetary dilatation occurring in the way we have put it, and that it would fall in the case of monetary contraction pure and simple, it is because we are allowing that the supposed want or excess of money would make itself generally felt amongst those engaged in transacting business. If it only affected a special class of such persons, if gold or silver were only wanting or only circulated amongst them, it is needless to say that the rise or fall in prices would only affect the commodities in which their special property exactly consisted. We believe it right to attempt to give as logically deduced from the preceding formulas this note of precision in a rather complex question, which, as we think, has not always been rightly looked at, and that, in consequence of the fact that in money, a marketable article of variable value, is associated with a unity which ought to be invariable.

In our epoch of exact science and profound insight into phenomena and things, it is no longer possible to err on the very basis of a question of an interest so general and so vital as this relating to the monetary system. The suppression of such a defective instrument as money and its substitution by a mere simple writing down of transactions, but legally guaranteed,—a system which we have entitled «Social Comptabilism» demands the study of every economist who wishes progress independently of any dogma, doctrine or party. The time is at hand in which by the force of circumstances it must be carried into effect in highly civilized countries. Germany, almost entirely educated to-day, should have no reason to oppose its adoption, if she saw clearly the advantages which social comptabilism presents and the difficulties and inconveniences which would disappear on its use. It would be a great error to imagine that any kind of economic revolution is necessary to establish it. In Belgium M. De Greef[D], in his «Essais sur la monnaie, le crÉdit et les banques», has shown how simple, logical and profitable it would be to approach it by rapid strides resting on the fundamental principle of «social comptabilism»,—the guarantee of property. M. H. Denis[E] in his work on the «Organisation et le Fonctionnement du service des chÈques et des virements À la Caisse d'Epargne postale de l'Empire d'Autriche», shows how such comptabilism has been already approached in what chiefly relates to deferred payments, in a great country, which although it does not generally lead the way in progress, seems to have correctly apprehended what relates to the machinery money masks and wrongly represents.

We shall only add one more observation in justification of the way we look at the matter, it is that in our country there is in principle at the present time in the financial organisms patronised and guaranteed by the State, all that is needed to realize «social comptabilism». Does not the National Bank of Belgium, as well as the Bank of France, among our neighbours to the west, issue bank notes,—and from our point of view, these notes represent unities of comptabilist value—to all those who offer them sufficient guarantees. In exchange for a deposit of securities, or for well known signatures, paper is obtained, notes equivalent to metal money:—this is already on the road to social comptabilism.

In place of that, let these banks issue notes, counters—only possible to be used once—or rather bankbooks containing leaves or fractions of leaves, or squares having a meaning equivalent to that of notes or counters, or able in some way easily to realize that meaning, and which would be simply obliterated in case of transactions accomplished and the working of comptabilism is fully seen although only at the threshold of the system.

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.

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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.

[G] Annales de l'Institut des Sciences sociales, of Brussels.