Guernsey Island

Guernsey’s monetary experiment

Guernsey is a small island located in the English Channel. An Anglo-Norman population. This island is located closer to the French coast than to the English one.

At the close of the Napoleonic wars, the island, like several countries, was in pitiful condition, both pydically and financially.

No money

Sea walls, roads, markets were needed.There was no manpower shortage. but there was no money to pay for these works.

The money used by the people on the island was the money from England, the pound sterling. But, like after any war, the financiers were calling back the money advanced to finance the slaughter, and the pounds sterling were very scarce everywhere.

The island had an autonomous government, “the States of Guernsey.” So it had the rights inherent in all sovereign government, among other rights, that of regulating the volume of money incirculation in the country. But, no more ethan any other country, the States of Guernsey had thought of exercising this sovereign prerogative.

An intelligent governor

The island was especially in need of a new market house, and a committee was set up to take care of it. The committee went to see the governor to explain the situation to him:

“We need a new market, but we have no money to build it.”

“With what material are you going to build a market?” asked the governor.

“With stone and wood.”

“Do you have it in the island?”

“Certainly, and in plenty.”

“Do you have workers?”

“Yes again. But it is money that is lacking.”

“Could not your parliament issue money?” asked the governor.

A new idea!

This idea had never occurred to the committeemen, who had never analysed the money question. They knew where to get money when there was some: but they never wondered where money begins or can begin.

The method of taxing when there was money was quite familiar. But the method of injecting the money that is lacking, and of taxing only after, was something new to our administrators.

Issues of national currency 

An estimate of the cost was prepared and the States printed the money required, which was paid to those who either worked on the project or furnished materials for it.

As the new currency was paid out into circulation among the people, exchanges were being expedited. The wage-earners went to the shopkeepers, the shopkeepers went to the producers, the producers bought enough to increase their production.

The currency was accepted everywhere. The government took measures against inflation by decreeing that money would be withdrawn by taxes, so it does not accumulate. And, in fact, the money was retired on schedule by taxes. But, as the increasing activity required a corresponding volume of money, other issues were brought out by the government for other works.

On October 12, 1822, the new Market house was completed and opened. Not a penny of public debt on this public enterprise.

The bankers intervene

At the time of the original issue, there was no bank upon the island. This explain, without doubt, why there was no opposition to the issue of State money.

But ten years after the first issue, the island had become so prosperous, thanks to the activity allowed by a sufficient volume of money, that the banks of England had en eye on this island.

English bankers set up branches in the island and brought the population around to orthodox rules. “It was unsound,“ they said, “to let the government finance its enterprises without getting into debt.”

The bankers did everything to stop further issues to introduce the system of interest-bearing loans to the government and to withdraw from the island the State money that had been paid out into circulation.

There was some resistance, but the bankers won their point, with their usual methods, and on October 9, 1836, the States of Guernsey had abdicated their sovereign prerogative over the control of the volume of money. From then on, the amount of the national currency decreased gradually, and was replaced by money issued by private bankers in the form of loans getting the island into debt.

Nevertheless, there is still about 40,000 pounds sterling ($200,000) of national currency outstanding at this date in the island. (According to Gertrude M. Coogan in Money Creators, published in 1935.)

Why a financial problem?

As we can see, with natural resources, workers, and a bit of common sense, there is no financial problem.

But when shrewd exploiters want to regulate economic activities according to their power and their profit, there there financial problem arises.

Of course, minds in search of arguments to justify the present regime will say that Guernsey was only an insignificant small island; that the control of the volume of money by the representatives of the people is good for a small country, but not for a big country.

All right. Take note of what these gentlemen object to you today. Next week, these same gentlemen will tell you that the mone problem cannot be solved properly in a small territory or a province, but must be brought to a federal or even an international level!

It was not Social Credit yet in Guernsey from 1820 to 1836. No doubt that the development of that time and that place would not have allowed to go as far as to give a dividend to consumers. But it was already a non-debt-bearing national currency, issued in accordance with the possibilities in front of the needs.

The issues of national currency by the States of Guernsey caused neither inflation nor idleness. They created activity and prosperity. But these issues did not make any slaves, and that is why the bankers intervened.


Little Guernsey: 200 Years of Debt-Free Money

The single most important task in reversing the police state is to end the Federal Reserve’s power, and the most important thing to do about that is to end debt-created money.

It is also something that the average person can understand. Thomas Edison said, “If our nation can issue a dollar bond, it can issue a dollar bill.”

Instead of every dollar being issued requiring future taxation to pay interest, every dollar can be issued without any future expense. This will allow the government to have more money without people paying as much in taxes (something like this is the way to present it to the uniformed).

Milton Freedman came up with a way to pay off the national debit in one year, and it had the added benefit of virtually ending the power of the central bank in the same time period, WITHOUT causing inflation or any economic disruption (and even if it did, that would not be any worse than the current situation).

His plan was for the government to issue debt-free currency, as Lincoln did. Instead of people using “Federal Reserve Notes,” they would start using “United States Notes,” as they did 100+ years ago.

These notes would be debt-free because they would not be bonds that would be bought by the Federal Reserve. Instead, they would be issued and sent to the banks, which would REPLACE Federal Reserve Notes with these United States Notes. For a period of time, both would be in circulation, though they would look the same, so people could deal with it easily. Eventually, the FRN’s would be gone.

It would likely be a process that would take a matter of months (maybe a year or so), and to prevent inflation, the banks would increase their reserve requirements at the same time, gradually from the current 10% to 100%. That would end fractional reserve banking.

There would be no need for a gold standard. Just replace the debt over time with new currency and slowly increase the amount the banks have to hold on deposit.

After that, the money supply could be increased at the rate of population increase. Then, we abolish the Federal Reserve Act, and end all connections to the World Bank and similar entities.

No more government borrowing also means the troops come home, ending the imperialism, as well as many other benefits. It would be the beginning of the end of the police state.

Then, we could start identifying those who deserve prosecution for the crimes they have committed.

The tiny island nation of Guernsey did something like this about 200 years ago. Although they had a pretty big increase in money supply over several decades, they suffered no inflation because their economy also grew at the same time.

Today, the tiny nation is prosperous, with the 9th highest per-capita income in the world — and they still issue their own debt-free money.

We should start asking people a simple question: Wouldn’t it make sense for the government to have debt-free money, so that it has more available for the people?

If anyone disagrees, we should simply ask them to explain how money is created now. Either they will show they don’t know what they are talking about, or they will have to defend the added cost for no benefit.


How Guernsey Beat the Bankers

ISBN 85694 239 1 
Guernsey Historical Monograph No. 23 
General Editor: J. Stevens Cox, F.S.A. 


The story of how the Island of 
Guernsey created its own money, 
without cost to the taxpayer, 
and established a prosperous 
community free of debt. 



Holloway was a founder member and has been 
Honorary Secretary of the Economic Research Council 
since 1955. He also edits a quarterly journal— Britain 
and overseas. 

He became interested in economic and monetary 
policy in the depression years of the 1 930s and founded 
the Economic Reform Club and Institute in 1936. The main 
objective of this organization was attained with the 
setting up by H.M. Government of the Radcliffe Committee 
on credit and currency in 1957. 

Holloway has made a special study of economic 
questions particularly in relation to monetary policy and 
also international trade and payments. Over the years he 
has lectured to hundreds of audiences including fifth and 
sixth forms at many of the leading public schools, the 
RAF, Navy etc. He is joint author of "Money: The Decisive 
Factor", published in 1959. Other publications include 
"The Case for an Atlantic Free Trade Area" in 1967, 
"Inflation and the Function of Monetary Policy in Britain" 
in 1971 and "Honest Money: The Case for a Currency 
Commission" in 1976. 

He sponsored a 'Programme for National Recovery' in 
1967. This programme was supported by 19 economists 
and industrialists and resulted in the publication of live 
research reports which have played a significant part in 
changing the climate of opinion in the sphere of economic 
and monetary policy. 

New Arcade and Market Place, St. Peter Port, c.1840. 
After a lithograph published by M. Moss, bookseller, 

by James Glyn Ford 

This pamphlet, "How Guernsey Beat the Bankers", is a 
reprint of one issued in 1958 by the Social Credit 
Movement. It tells how the Guernsey States from 1819-1836 
manipulated the issue of notes to allow a number of 
public works to be carried out — including both the 
construction of the Guernsey Market and the rebuilding of 
Elizabeth College — without increasing public debt. The 
details are contained within the pamphlet itself. The 
author, rightly, saw this as an anticipation of the idea of 
social credit. As such, for the very different audience that 
will read it now, a very brief background to the ideas and 
history of the Social Credit Movement in Britain may prove 

The Movement's origins lay with the economic theories 
of Major C.H. Douglas, who early this century wrote a 
number of books explaining that the then current economic 
problems were caused by the arbitrary control of the money 
supply by the banks and bankers. He proposed that money 
backed by gold or paper should be replaced by notes backed 
by the real wealth of nations, their goods, plant and 
machinery. A consequence of this would be that the 
parasitic role of bankers in the economy would be removed 
and the economy would as a result expand. 

Social Credit ideas have never become widely accepted 
although in the 1930s they gained some currency. In 1929 
a Social Credit Party was established in Britain under the 
leadership of John Hargrave. The 1930's was a time of 
political upheaval, and the Social Credit Party's para- 
military Greenshirts added another hue to the colourful 
street demonstrations of the decade, with the marching 
and countermarching of Moseley's Blackshirts, the red 
shirted Independent Labour Party and the khaki of the 
communists. At their peak in 1933 the Greenshirts could 
call on 10,000 supporters for their demonstrations in 
Britain's cities. At times the personification of their 
campaign of 'out with the Vipers' (i.e. the bankers) 
took on an anti-semitic flavour. 

The beginning of the end for them came in 1936 with the 
passing of the Public Order Act which banned political 
uniforms. Deprived of the presence that came with the 
impact of marching uniformed ranks they, along with their 
colourful counterparts, faded from the scene. All that 
remains in Britain now is a small group of enthusiasts. 
Elsewhere in the English speaking world the Social Credit 
Movement has had a fitful existence. Both New Zealand 
and Canada have elected Social Credit M.P.'s to their 
national parliaments. At provincial level in Canada they 
have had strong support in Quebec, and in Alberta formed 
the government. Even in these areas they are now 
in decline. 


The announcement by the Chancellor of the Exchequer 
in his budget speech that he intends to set up a committee 
to inquire into monetary and credit policy is bound to focus 
attention on the workings of our financial system. Over the 
years there have been many interesting monetary 
experiments undertaken in various parts of the world. 

These have mainly taken place in small communities but 
they are none the less of interest. For example there was 
the experiment in the island of Guernsey in the period 
following the Napoleonic wars. There ware also 
experiments in the towns of Swanenkirchen in Bavaria and 
Worgl in the Austrian Tyrol which took place in the years of 
depression following the 1914-18 war. Another 
interesting example is the amazing development which 
took place in the island of Gosaba off the coast of India. 
These and similar experiments had one factor in common. 
A depressed and unproductive community was changed in 
a comparatively short while into an active prosperous 
and happy community. 

The story of the island of Guernsey is particularly 
interesting from our point of view for it is a relatively 
easy matter to see for oneself the actual buildings which 
were created — as a result of these experiments. 
For example the Market House and Elizabeth College 
were two examples of the result of the sensible money policy 
adopted by the island Parliament in the early part of last 
century. Other improvements included better roads, a modern 
sewage system; all of which were constructed without a debt 
being incurred by the community. 

These experiments have a considerable bearing upon 
our present monetary policy which, as is being 
increasingly realized, is in need of considerable revision. 
We make no apology therefore for re-telling the story 
of the successful monetary experiment in Guernsey. 


Our story opens in the year 1815. It was a year of 
considerable difficulty for the people of Britain but the 
people of the little island of Guernsey were particularly 
hard hit. The effects of the Napoleonic wars had resulted in 
a state of despair on the part of the island community due 
to the acute economic distress then prevailing. 

The following extract from a document presented 
by the States (as the island Parliament is called) 
to the Privy Council speaks very eloquently 
on the state of affairs: 

"In this island, eminently favoured by nature, 
nothing has been done by art or science towards the 
least improvement; nothing for the display or enjoy- 
ment of local beauties and advantages; not a road, not 
even an approach to the town, where a horse and cart 
could pass abreast; and the deep roads only four feet six 
inches wide, with a footway of two or three feet, from 
which nothing but the steep banks on each side can be 
seen, appeared solely calculated for drains to the 
waters which, running over them, rendered them ever 
yet deeper and narrower. Not a vehicle, hardly a horse 
kept for hire, no four-wheeled carriage existed of any 
kind, and the traveller landed in a town of lofty houses, 
confined and miserably-paved streets from which he 
could only penetrate into the country by worse roads, 
left the island in haste and under the most unfavourable 

"In 1813, the sea, which had in former times 
swallowed up large tracts, threatened, from the 
defective state of its banks, to overflow a great extent 
of land. The sum required to avert the danger was 
estimated at more than £10,000, which the adjoining 
parishes subject to this charge were not in a condition 
to raise. The state of the finance was not consolatory, 
with a debt of £19,137 and an annual charge for 
interest of £2,390, the revenue of £3,000 left only 
£600 for unforeseen expenses and improvements. 
Thus, at the peace, this island round itself with little 
or no trade, little or no disposable revenue, no 
inducement for the affluent to continue their abode, 
and no prospect of employment for the poor." 
What a tale of woe. Small wonder that the people were 
depressed and any that could were making their way to the 
mainland. As often happens in communities when there 
are major difficulties, a committee was appointed in 1815 
to consider in particular the overcrowded state of the 
market, of which it was said that "humanity cries out 
against the crush which it is difficult to get out of, 
and against the lack of shelter for the people who, 
often arriving wet or heated, remained exposed 
for whole hours to wind and rain, to the severity 
of the cold and the heat of the sun." 

The committee examined the situation, and came to the 
conclusion that further taxation was impossible. The 
alternative was to try and borrow money from the banks. 
But this entailed the payment of a high rate of interest, 
which they could not afford, particularly in view 
of the fact that these interest payments would continue 
for years and would eventually mean that, although 
the original sum had been repaid in interest charges, 
the capital sum would remain as a debt. 

Fortunately for the people of Guernsey, they had at that 
time among their leaders some honest men of keen 
intellect, who put forward the revolutionary suggestion 
that the States should take advantage of their ancient 
prerogative and produce their own notes to finance 
the rebuilding of the market. At first this proposal 
was turned down. But later in the same yearthe proposal 
to issue State notes was agreed to, for a different 
purpose. The finance committee reported that £5,000 
was wanted for roads and a monument to the late Governor, 
while they had only £1,000 in hand. It was agreed that 
the remaining £4,000 should be raised by the issue 
of State £1 notes, 1,500 of which should be payable 
in April 1817, 1,250 in October the same year, 
and 1,250 in April 1818. "In this manner" they said, 
easily succeed in finishing the works undertaken, 
leaving moreover in the coffers sufficient money 
for the other needs of the States." 


How wise they were is proved by the event. The success 
of this first creation of State money was so great that 
it was rapidly followed by others. In June 1819 the question 
of the market became ever more acute, and it was agreed 
to finance the rebuilding of it, not in the orthodox manner 
by raising a loan, but by the State creating the necessary 
notes "interest-free". 

The following comment made by the finance committee 
at a later date shows how successful the venture had 
become. It was at the time when a further issue of notes 
was made to diminish the interest-bearing debt to the 
States. The finance committee declared: "The States could 
increase the number of notes in circulation without danger 
up to 10 000 in payment of the debt and the committee 
recommends this course as most advantageous to the 
States' finance, as well as to the public, who, far from 
making the slightest difficulty in taking them, look for 
them with eagerness." 

And so the story went on. On 29th March 1826 a further 
issue was authorized to re-build Elizabeth College, which 
had been founded in 1563 by Queen Elizabeth, and some 
parochial schools. The Bailiff of that time — 
Daniel de Lisle Brock — in his address to the States 
Assembly expressed his belief that the creation of this 
new money was a great benefit to the States, and caused 
no inconvenience because of the great care with which 
it was issued. 

Various other creations of new money took place for 
projects of re-building, widening the streets 
of St. Peter Port, reconstructing some of its buildings, 
making new roads and public works of many kinds. 
The experiments continued over a period of 20 years, 
by which time the people of Guernsey had developed 
from a depressed unhappy state to a position of prosperity 
and happiness. 
The following brief quotation shows how improved was the 
situation as a direct result of the wise and statesmanlike 
action of the Island Parliament. Daniel de Lisle Brock, 
to whom, it seems, much of the credit must go, 
said in 1827:
"To bring about the improvements which are the 
admiration of visitors and which contribute so much to 
the joy, the health and well-being of the inhabitants, 
the States have been obliged to issue notes amounting 
to £55,000. If it had been necessary and if it were still 
necessary, to pay interest on this sum, it would be so 
much taken from the fund earmarked to pay for the 
improvements made and to carry out new ones. To talk of joy, 
health and well-being is a very different story 
from the position in 1815, when it was little or no trade, 
little or no disposable revenue, and no prospect 
of employment for the poor." 

But this happy state of affairs was not to the liking of 
everyone, and opposition to the idea of the Island States 
creating their own "debt-free" money had been growing 
over the years, particularly among the banking interests 
on the island. A new bank, called the Commercial Bank, 
was founded in 1830. This institution, together with 
the old bank, failing to prevent the growing prosperity 
of the islanders, began to issue notes at its own 
discretion, flooding the island with paper money. 

Reference has already been made to the care exercised in 
deciding the quantity of money to be issued by the States, 
and now Daniel de Lisle Brock sought to restrain 
the private banks from this anti-social activity. 

There remains on record his spirited speech to the 
States meeting held in September 1836 on this subject, 
and the following two extracts are of particular interest: 

"No one has a right to arrogate to himself the power 
of circulating a private coinage on which he imprints for 
his own profit an arbitrary value. With these facts before 
our eyes we must realise the necessity of limiting 
the issue of paper money to the needs and customs, 
and the benefit, of the community in general. Permission 
cannot be granted to certain individuals to play with 
the wealth and prosperity of society." 

In spite of all, however, the banks finally won the day. 
Despite a careful search of the records, no explanation of 
what actually happened can be found — merely an exchange 
of letters between representatives of the banks 
and the Bailiff of the Island. In this, the former suggested 
that the States should cease to make further issue, should 
withdraw £1,500 from circulation, and have no more than 
£40,000 in circulation. To this proposal the Bailiff agreed. 

Having read the account of his fighting speech to the 
States, it is difficult to understand what combination of 
forces caused him to give way. But at least it can be said 
that the inhabitants of the island benefited materially 
from the monetary experiment which took place, when the 
island Parliament created its own money — 'interest free' 
over 150 years ago. 


Although the original experiment came to an abrupt end 
in 1836, there was a further development in 1914, just 
after the outbreak of the first world war. The demand for 
an increase in the supply of money was then so great that 
the Royal Court passed an Ordinance making State notes and 
those issued by the Banks legal tender. But the Banks were 
prohibited from increasing their note issue, and all 
additional notes were issued by the States. 

There was a great demand for these States notes, and 
they first had to be printed locally by two firms 
in the island: the Star Company and the Guernsey 
Press Company, who were able to provide what proved 
to be very serviceable five shilling and ten shilling 
notes. These were later replaced by notes printed on 
proper bank-note paper with the customary watermark. 
The local banks have now been absorbed by the Big Five, 
so that there is no other local note issue, other than 
that of States notes which circulate alongside the more 
familiar Bank of England notes. 

Readers who would be interested to follow up the ideas 
contained in this pamphlet are recommended 
the following publications: 

Inflation — is there a cure? by Edward Holloway. 

Expansion or Explosion by Antony Vickers.  

Economic Tribulation by Vincent Vickers 
(one time Director of the Bank of England). 

Great Britain & World Trade edited by Edward Holloway. 

All the above are obtainable from: 
The Economic Reform Club & Institute 
2a Queen's Parade, 
London N 10 

The Magic Isle of Guernsey

By Bill Still

There is a great deal of confusion about how money should be created and managed today in a sovereign nation and whether anything can fix our current worldwide economic problems. I believe this confusion is deliberately generated by those who stand to profit from the current system – a ‘debt-money’ system that is killing the economy of every nation on earth.

The simple fact is that a nation’s money should be created in the public interest. Unfortunately, that is not the case today in almost every nation on earth. Money creation is given over to private banks through the deception that it is being created in the public interest by national central banks such as the Federal Reserve, Bank of England, Bank de France, Deutsche Bundesbank, etc.

Many believe that the only solution is a return to gold-backed money. I do not agree. I think this is yet another deception and I believe world monetary history proves this incontrovertibly. To me, the main point to remember is that it is not what backs the national money that is important; what is important is who controls the quantity!

Despite the nationalistic-sounding names of these central banks, don’t be deceived; they do not create money in the public interest. Every dollar, every pound, every euro is created as an interest bearing debt – primarily owed to – and the quantity controlled by – the commercial banking community.

The reason solution is two-fold:

  • Forbid government borrowing- no more national debt.Nations do not have to borrow. Nations can create their own money.
  • Forbid fractional reserve lending. This is where banks can lend out 10 to 12 times the money they actually have. Banks must go to “full-reserve lending”

In other words, the only way to end this worldwide spiral of depression is for every nation to return to a debt-free money system. Without the money power firmly in it’s control no nation can really be sovereign. In fact, creating money in the public interest is the very definition of sovereignty.

Fortunately, this is not a new or radical idea. It has been used hundreds of times throughout history, but every time it has been employed, it has been attacked mercilessly by the big banking class who lose profits whenever the idea of money creation in the public interest surfaces. So, this is a timeless struggle and nothing less than survival of the human species is at stake, because the debt the current system is generating is the primary cause of the world’s hunger, poverty and misery, and is quickly destroying sovereign democratic governments and returning humanity to a nouveau-serfdom system from which it will soon be unable to escape.

Debt-free money creation has been going on in the tiny island of Guernsey for 200 years. Lets take a look.

Despite the fact that the island of Guernsey has only 30 square miles and a population of only 65,000 people and very little in the way of natural resources except cows; their per capita income is $40,000 per year, 9th highest among the 200 or so countries of the world. What gives? Guernsey has used a money system since 1817 that can serve as a model for the rest of the world to use to escape the ongoing depression of the 21st century.

Despite it’s proximity to France, Guernsey is actually a British Crown Dependency and, to it’s credit, has never joined the European Union. After the Napoleonic Wars,Guernsey was in dire straits. The island’s roads were mere cart tracks, only 54-inches wide. In wet weather they were virtually impassable. There was not a vehicle for hire of any kind on the island. There was no trade, nor much hope of employment among the poor. The sea was washing away large tracts of land due to the sorry state of the dykes.

Guernsey, like most nations at that time (as well as today) had borrowed heavily from the banks. The States Debt was £19,137 with an annual interest charge of £2,390, but the gross national revenue of the entire island was only £3,000, leaving only paltry £610 per annum to run the entire island. In other words, interest paid to banks consumed 80% of the GDP, thus reducing the populace to a state of pitiful serfdom.

In 1815, a committee of well-respected public spirited elders was assembled to finance the building of a public market near the the main harbor, Saint Peter Port, so the farmers could more easily sell their products for export. The cost of the new facility would be £6,000. In addition, fixing the dykes would cost an additional £10,000.

Further taxation of the impoverished island was impossible. Borrowing money from the banks would result in even higher interest charges that could never be paid. The committee made a historic recommendation to remedy this dire situation.

The committee recommends that the expense should be met by the issue of State Notes of £1 sterling to the value of £6,000 and that these notes will be available not only for the payment of the new market, but also for Torteval Church, roads to construct, and other expenses of the States.

The committee argued that there was little to fear from inflation because the local banks already had £50,000 of their money (notes) in circulation. As a further protection against inflation, the overly cautious citizens of Guernsey placed redemption dates on the notes of April 1817, October 1817, and April 1818.In other words these notes were good for payment of taxes and good as regular money in circulation until the expiration date was reached. At that time, the notes would no longer be legal tender and the state would destroy them.

In this manner, without increasing the States’ debt, it will be possible to finish these works, leaving sufficient money in the Exchequer for other needs [2].

Once the good citizens realized that these notes would work without the skies falling on the gentle island, additional issues took place in 1820 and 1821. By 1821, some £10,000 of Guernsey notes were in circulation, all created without debt.

It was the most advantageous method of meeting debts, from the point of view both of the public and the states finances.Indeed, the public seemed to realise this fact, and, far from being averse to taking the notes, they sought them out eagerly [3].

The citizenry clearly understood that these Guernsey Notes were clearly government financing in the public interest. They also realized that if there were to be any inflation as a result, at least it was better than no money at all, and at least they could all shoulder the inflation equally.

In 1824, another £5,000 notes were issued for the markets, and in 1826 £20,000 to erect Elizabeth College and certain other schools.

In the bill d’Etat it was a frequent subject for congratulation; and it was stated over and over again by imminent men of those times that without the issue of States’ notes, important public works, such as roads and buildings could not possibly have been carried out. Yet by means of the States’ issue, not only were these works accomplished, but also the island was not a penny the poorer in interest charges. Indeed, the improvements had stimulated the flow of visitors to the island, and with increased trade, the island enjoyed its newfound properity [4].

In 1826, however, the first signs of opposition by the banking community began. A complaint was lodged with the British Privy Council that Guernsey had no right to issue debt-free notes. However the Guernsey (also known as the ‘States’) Financial committee explained the situation to the satisfaction of all, and the matter was closed.

In the next year, surprise, surprise, a new commercial bank opened, called “Old Bank”. They began printing up private bank notes in such quantity that the island became flooded with money. Soon Guernsey feared that inflation would set in, or worse that their own debt-free money experiment would be blamed for the inflation. So a committee was appointed to confer with the banks. What went on in these meetings remains a mystery to this day; but the result was that £15,000 of Guernsey Notes would be withdrawn from circulation and the government would be limited to issuing a grand total of only £40,000 of their own notes. This agreement remained in force until World War 1.

In the wake of World War 1, the banks came under severe restrictions on how much money they could issue. All bank money was being directed towards the war effort. But Guernsey was under no such restriction, probably because it’s experiment was unique, and perhaps forgotten.

Guernsey made good use of her opportunity. By the end of the war, in 1918, Guernsey had issued £14,000, and 40 years later, that had grown to £542,765. Today, private bank notes no longer exist. British money circulates side by side with State Notes.

Naturally, there is a greater demand for the State Notes; no sane citizen of Guernsey wishes to pay debt charges! To enlarge on this theme: In 1937 the States Note money, about £175,000, cost the States only £450 for printing and handling. A loan of the same dimensions would have about £11,383 annually. So can you blame the Guernsey taxpayers for preferring their own money since, under their sensible and benevolent financial system they pay hardly any income tax [5].

During the entire experiment in Guernsey, from 1817 to date, there has at no time been a threat of inflation from the creation of State Notes. At all times, the States were very careful in the issue and cancellation of notes according to their ability and requirements [6].

Today, Guernsey remains an island of prosperity. As author Ellen Brown puts it:

“Guernsey has an income tax, but that tax is relatively low (a “flat” 20%), and it is simple and loophole free. It no inheritance tax, no capital gains tax, and no federal debt. Commercial banks service private lending, but the government itself never goes into debt. When it wants to create some private work or service, it just issues the money it needs to pay for the work. The Guernsey government has been issuing it’s own money for nearly two centuries. During that time, the money supply has mushroomed to about 25 times its original size; yet the economy has not been troubled by price inflation, and it has remained prosperous and stable.” [8]

Once you understand the Guernsey story, you have to admire the modesty of their website:

“Guernsey’s ability to look after its own fiscal affairs has meant that it has been able to foster a favourable tax climate. This has led to many offshore banks, fund managers and insurance companies establishing here. Whilst the traditional industries of flower growing, fishing and dairy farming still playing an important part, contributing both to the varied economy and to the islands character. Guernsey also has its own stamps and currency, and while the British pounds can be used on the island, Guernsey pounds cannot be used in the UK.”

But the question may arise,what keeps them from printing too much. They watch inflation closely, and the calculations are all completely transparent, run by a committee of citizens, and open for all to see on their website.

That’s all they care about – is this causing inflation? They expand as much as they want as long as it causes no inflation.They don’t care about theory. Born out of desperate need, they found out the secret of money and have gone quietly gone about using it and thereby have a high standard of living and very low taxes.

Fortunately, the Guernsey experiment is not an aberration. It has been tried time and time again, and when the quantity is controlled in the public interest, always with success. The bankers, however inevitably attack these in-the-public-interest, debt-free government issues of money. Debt-free money is in everyone’s interest except bankers’. Typically, they will use their money and influence to create some financial emergency then bribe sufficient politicians to convince them to vote for legislation giving the bankers monopoly on issuing all the nation’s money as a loan, thereby stripping the nation of its ability to issue its own money debt free.

During the depths of depression of the 1930’s, the majority of economists in the US discovered this monetary reform solution. In 1936, Frank D. Graham, professor of economics at Princeton University offered his perspective in the American Economic Review:

“What we need is not control of banking but a government monopoly of the supply of money, with commercial banks left to lend on short-term…out of capital funds, debenture borrowings, and real time deposits. Such a system… is an indispensable prerequisite to regulation of the money supply on which all attempts to bring greater stability into our economic system, through monetary means, must inevitably be based. We are certainly not likely to get stability so long as the supply of money remains even partially in the hands of those who have no responsibility for the total issue and no motive to do other than increase it as far as law, and a merely selfish prudence, will permit.”

There is a way for citizens and their governments to take back the money-creation power of the banks. Yes, bankers are experts with money, but they are experts in maximizing their profits and rarely have much interest in the public interest. Freeing your government from borrowing money from bankers is the first, and most important, step for national freedom an prosperity. It is also THE most important step to limiting governmental overspending. If a government cannot borrow, it MUST live within its means.

Debt-free, government issued money – where the quantity is properly controlled in the public interest – has always worked to promote low taxation and maximize freedom the People.

  1. Grubiak, Olive and Jan; The Guernsey Experiment ( 1960, 1999 reprint, Bloomsfield Books, Sudbury, England ), p.8.
  2. ibid
  3. ibid
  4. ibid, p. 8-9
  5. p.11
  6. ibid, p 11-12
  7. ibid, p.12
  8. Brown, Ellen h., Web of Debt, ( Baton Rouge, Louisiana, Third Millenium Press, 2007), . p. 100-101



  1. Somehow the ideas, here written, will become well known and the world will be transformed for the better. Over the last 60 years there has been progress and I pray that it will continue.

    Liked by 1 person


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