Does Money Matter?
A Response to Criticisms by Mr. Wasicki
Edward C. Harwood
[Reprinted from the Henry George News, June,
To the Editor:
I appreciate the trouble that Mr. Wasicki took to comment (April HGN)
on my article 'Does Money Matter?" in the March issue. Perhaps
this reply to his questions will further clarify some of the points
He began by suggesting that I had misunderstood George, and such
indeed seems to be the case if Henry George meant what Mr. Wasicki
suggests by his interpretation of George's statement, ". . . the
depositor in a hank cannot draw money out until he has put money in.
If I correctly understand Mr. Wasicki's interpretation, he thinks that
George used the word 'depositor" as a name or label for someone
who has put money in a bank. In that event, by substituting the longer
phrase in the quotation from George, we have ". . . someone who
has put money in a bank cannot draw money out until he has put money
As it happens, however, even thus reducing George's statement to an
apparent tautology does not prove Mr. Wasicki's point. In order for
Mr. Wasicki to be correct, the statement would have to read something
like this, "If a depositor is someone who has put money in a bank
and is limited in his withdrawals to what he has put in, then it is
true that a depositor in a bank cannot draw money out until he has put
money in." Now if this is what Wasicki thinks George meant by the
sentence first quoted above, that is Mr. Wasicki's privilege, of
course; but I have never had the impression heretofore that Henry
George would have wasted his time in making such assertions. Not only
from the sentence quoted but also from various other portions of
George's writings I had assumed that he simply never had the
opportunity to inform himself regarding the functioning of a
money-credit system. That George saw the desirability of doing so is
apparent from the unfinished portions of his Science of Political
Economy, but that he never had the opportunity to complete the
task is equally apparent.
Mr. Wasicki asserts that "most of the confusion regarding money
arises from the inclusion of credit in the discussion." However,
he nowhere makes specific his own use of the label "money."
Precisely what is he referring to when he uses that name? Jn his
closing paragraph, he says "Money is not a measure of value. It
is the market place where values are measured." Here we have a
seemingly definite referent, "market place," but when we
substitute that phrase for "money" in his next sentence, we
have "Inflate the market place and the market quickly adjusts by
1. Do the labels "market place" and "market"
refer to the same thing?
2. Or is Mr. Wasicki saying, "Increase the quantity of
purchasing media in the hands of potential buyers without
correspondingly in-creasing the quantity of things offered for sale
and in due course prices generally will rise?"
3. If Mr. Wasicki is saying what is indicated in 2, above, is he
not using "money" as a label for the same things I have
called "purchasing media?"
4. If the answer to 3, above, is yes, how much purchasing media
will Mr. Wasicki have left for use if he discards from the sphere of
political economy all credit? (He has earlier asserted, "Now
credit does not properly belong in the sphere of political economy.")
The answer is, about one-sixth of the purchasing media in use.
Mr. Wasicki notes that I have claimed that "the commercial
banking system creates huge totals of purchasing media," and he
asks could they do it without the aid of the government?". The
answer is "yes" rather than the "no" he supplies.
For many decades commercial banks have been creating purchasing media
in the forms both of notes or paper currency and demand deposits or
checking accounts with and without the aid of governments. Anyone who
does not know this to be the case simply has not had occasion to study
the readily available records. I hope Mr. Wasicki understands that
there is no intention on my part to imply he would have any difficulty
in understanding the facts whenever he may have an opportunity to
study them. For anyone who has thought about the subject as much as he
has, such understanding should be easily achieved.
In closing, I should like to emphasize that the word "money"
seems to be one of the slipperiest and hardest to control in the field
of economics. We here have abandoned all hope of using it for
scientific discussion, and in spite of wide study over a long period
of years, I have yet to find a single author able to achieve
consistency and coherence in using the label "money." No
doubt, therefore, it is to Mr. Wasicki's credit that we have
understood each other as well as I hope we have.