Despite serious opposition from the islands private bankers, who even
appealed to the Privy Council, the highest court in the land, AND LOST,
the States, the islands Parliament, revived an ancient privilege they had
used for generations before, they created and issued their own money,
interest free, which they knew would be circulated from contractor to
suppliers to workpeople to tradesmen, and in time paid back to the
treasury as taxation.
In the case of a major building project, the St.Peter Port market hall,
this capital cost was redeemed from rents charged. As there was no
interest the time taken was something like five years.
To a Twenty first century banker all this is anathema of course. Just as
it was to Sydney Webb at the beginning of the Twentieth.
Obfuscation from them is to be expected. Their stock in trade is Debt. The
islands have traditionally dealt in Credit :-)))
I have not seen it noted before in these repeating discussions of the Guernsey case, but Ken's statement below describes it as an application of the State Theory of Money.
QUOTE they [the States] created and issued their own money, interest free, which they knew would be circulated from contractor to suppliers to workpeople to tradesmen, and in time paid back to the treasury as taxation. END
In other words, money is "that which is necessary to pay taxes" in the phrase of Randall Wray.
Ken, the classic text on this is said to be Georg. F. Knapp, published in German in 1905 and translated to English in 1924 (according to N. Angell's book, The Story of Money). I don't have access to my copy of Knapp at this location, but Zarlenga provides a couple of quotes in his recent book, The Lost Science of Money: "Money is a creature of the law. A theory of money must therefore deal with legal history." The key to the performance of money as legal tender is its acceptability for payment of taxes. "Our test, that the money is accepted in payments made to the States [sic] offices."
In Norman Angell's account of the Guernsey Market House (I do not have the Grubiak book), the technique was to issue notes for paying workers and buying materials. Then, those who used the house would be required to pay their rents or fees in those notes.
That feature, of being acceptable for payments to the State (i.e. payment of taxes) is said to be the central feature of the State Theory of Money in expositions by contemporary proponents such as Geoffrey Ingham (The Nature of Money)...