Part 2

Transitory wealth consists of all those products of labor of which direct use is made to maintain life or to add to its comforts and happiness, and which, by such process, are absorbed into and become a part of the life of humanity. Transitory wealth, it will be seen, is much the more important of the two, since, if people only possessed permanent wealth, their life could not be continued an hour by it, unless there were a possibility of exchanging it for the necessities of life.

It would seem that all kinds of wealth are intrinsically valuable, since its various kinds may be either directly used to maintain life or may be exchanged for those which will maintain life. Wealth and intrinsic value, then, mean the same thing.

But what does the term money mean: or has it no necessary significance in the inquiry?

There was a time when there was no such thing or word as money; but at that time there was life to continue, for which wealth was necessary. It seems that wealth had existence before money was thought of. Wealth is substance, of which money is the principle or representative, but which, in itself, has no intrinsic value.

Money is an invention made to represent wealth, or value, in order that its various kinds may be exchanged with facility, or that they may be exchanged without the absolute and direct and immediate receipt and delivery of one product of labor for another product of labor. All the products of labor may be exchanged directly, and without the use of any representative or go-between, which for the time being stands representative of the one or the other, but not so well at all times and under all circumstances. Money is anything which stands representative of any product of labor; that is, that can be made use of to facilitate the exchange of any of the results of labor, which are wealth. A representative of anything cannot be the thing itself, therefore, if money is a representative of wealth it is not itself wealth. Were A, B and C to at all times exchange their products between themselves by direct transfer, they would have no use for money; they would exchange—deliver and receive—actual values. But when A desires from B some of his products, himself not having on hand any of his products which B desires, he receives from B his value and gives him his representative of value—his note—promising that at a future time he will deliver B the actual value which he desires.

Currency is only a form of money, the same as gold is only a form of wealth; and in the same manner that gold is wealth, is currency money. Money being the principle of representation in exchange, everything of which use is made to facilitate exchange in the form of representative value is money. Anything which can be transferred from one party to another, anything that is negotiable which is not actual value of itself, is money. This includes not only all currency, bank notes, but also bills of exchange, the ledger and bonds. These are all representatives of wealth, all demands for payment at a future time of a certain specified sum, and consequently are money. It is quite evident that, with the terms wealth and money, we have all the necessary distinctions which should enter into the abstract question of finance. All other terms are but names for separate kinds or forms of these terms, to be made use of when they respectively arise in making exchanges.

Now, every one must at once concede that that which best represents all of the products of labor will also best exchange them, and is therefore the best money. It is equally clear that gold in no way represents any labor but that which produces it. If gold were a true representative of the results of all other labor, except that which produces it, would it not also be apparent that such labor must be equal to all other labor. Were gold a thousand times more valuable than it is held to be, it would not even then be able to represent all other values. Therefore, gold is a false standard of value, a false representative of wealth.

Many people think and speak as if gold would be of no use to this country if it were to come into disuse as money; that we should entirely lose it as wealth; the very reverse is really true, since we should have just the same quantity of gold that we now have, to be used for the same purposes for which it is now required, to wit: to export to other countries in exchange for imports.

Suppose our imports to amount to a thousand millions dollars per annum, and that we export cotton, corn and pork to that amount, what use would we have for gold except to loan other countries, and could we not loan it as gold, taking their representatives of value for it equally as well as though it were coined into money, having the seal and stamp of the government? It is well known that we do not export gold to Europe as so many American dollars, but as so much gold, by weight of a certain degree of fineness, the stamp of the government attesting to that degree.

Again: Suppose that we had no cotton, corn or pork to give in exchange for our imports, and that we produced a thousand millions dollars’ worth of gold per annum, should we not be equally well conditioned to trade with Europe?

It is seen that the real character and qualities of gold are the same as are those of any other product of labor, which we can exchange direct, for other products of labor which we want more than we do the gold. If at any time the balance of trade is against us, and we have no cotton, corn, pork, gold or anything else to make it good, we must then make it good by our representatives of value—our bonds—to be converted when we shall have these products. This process has been actually going on ever since we began to export bonds, either national, state, county, city, railroad or bonds of other incorporated companies.

Now, is it not perfectly evident that we have not only produced by labor what we have exported, which we have been pleased to denominate merchandise, but also that we have produced all the gold that has been exported; and in this connection is it not just as much an article of merchandise as is either cotton or corn? Gold cannot at one and the same time be both money and merchandise. If gold is money, so also is wheat, cotton and corn money, since they perform the same services and possess the same qualities as merchandise that gold does.

To be perfectly clear in our conclusions, money must be resolved into its uses and entirely divested of all its fictitious and irrelevant relations. The fact that money is that thing which is made use of to exchange real values must be the initial starting-point, of which sight must never be lost until it is definitely settled what will best perform this service. Anything which can be made use of for any other purpose whatever, is not the best thing to be made use of as money; because the demand for such a thing for such other purposes destroys its positive value as money by causing fluctuations in its exchanging power.

It is a grave financial error for this country to endeavor to return to gold as money. All the practices under the gold standard have been positive and ample refutations of the arbitrary value accorded to gold. A dollar in gold can only exchange a dollar in value in any other substance; and the practice of issuing a greater amount of bank notes than the bank has gold dollars to redeem them by, is a legalized system to rob the people; since it is evident that a bank having three hundred thousand dollars in notes in circulation, and only one hundred thousand dollars in gold in its vaults, can redeem but one-third of its circulation if it be all presented at once for redemption. All the other securities of a bank, such as its discounts, personal property and real estate, may become of no value, or may be placed out of reach of the holders of its circulation, so that the only real security for its circulation is what it may have in gold in its vaults. Beside, what right has a bank to receive legal interest on three times the amount of its real security? Is not this a most transparent method of swindling the people? Hence I assert that the use of gold as money always results disastrously to the producers of wealth, and always beneficially to those who are permitted to absorb all their productions.

Another unanswerable reason why gold cannot answer the requirements of money is found in the degrees of value which belong to different products of labor, and which are universally determined by the sacrifice required to produce them. That is to say, all other things being equal, the relative value of products is determined by the time and labor required to produce them. The increase in the value of manufactured material is in exact proportion to the time required and wealth consumed in their manufacture. The value of gold is determined in precisely the same manner; and it is simply foolishness to assert that the value of gold never changes, or that it has the same purchasing power at all times.

Suppose there should be immense fields of gold suddenly developed all over the country, so that it would become as common and plentiful as iron or coal, would it not decrease in value in comparison with other products? That is to say, would an ounce of gold then possess as great a proportionate value to other products as it now does? No one will pretend it. Then gold is just as much the subject of fluctuation as is any other product of labor, and for just the same reasons—demand and supply—which are the great arbitrators of values in all parts of the world.

Everybody knows that for a certain quantity of gold a certain quantity of cotton may be obtained, and for a certain quantity of corn, a horse. The fact that the horse is obtainable by the corn does not convert the corn into money, neither does gold any more than the corn become money because the cotton is obtained thereby. The gold for the time is equal in value to the cotton, and so is the corn to the horse. Now, what is required of money is this: Suppose the gold, cotton, corn and the horse to be of equal value, a person possessing an amount of money representing the value of either of the four can, at his discretion, purchase whichever he may choose; since the money would equally represent the gold, cotton, corn and the horse. Anything that may be used for money that will not do the same thing for any variety of the products of labor, values being equal, is not money in any sense of that term.

Incidentally in this connection, because it has an indirect bearing upon the question under consideration, I wish to call attention to a mistake that has been productive of more financial ills and consequent injustice to a large proportion of the people, who are the wealth producers, than any other single cause, and that is the fundamental error of making land, wealth, which it is no more entitled to be, scientifically, than gold is to be called money. Wealth is that which is produced. Land exists. All improvements made upon land are wealth; but the land proper, never.

In this almost fatal mistake—almost fatal to the humanitarian interests of the so-called common people—which is fundamental in its nature, is found the basis upon which rest the vast disparities in the distributions of wealth, and which gives to certain favored individuals the means of realizing vast fortunes without ever resorting to the production of wealth, or of even accumulating it by trafficking in the different kinds of wealth.

There are numerous examples of this manner of becoming possessed of riches. People acquire title to lands which, by favorable location, come into great demand and consequently rise in value from one dollar per acre to hundreds of thousands of dollars per acre. By what principle of equity and right should any person be entitled to such vast increases in capital invested in land, when it is entirely attributable to the movements of the community which produce it, and in no single particular to the individual? To be so entitled is for the individual to possess advantages over others to which no just communal government should for a moment consent—is to have the right to appropriate to self the results of labor which belong in common to all the people. Such results are against all principles of equity and justice, and is one of the greatest, if not the greatest error of the present, regarding the equities of property, and is the foundation and prophecy of all other kinds of monopoly.

It occurs to me that an objection may be raised to my argument classing gold as wealth, and defining wealth to be that which can be made use of to minister to life, comfort and happiness; or perhaps to the distinction of permanent and transitory wealth. Gold, as permanent wealth, can only minister to man through its exchange for other valuables of which direct use can be made. It may be said that in that sense gold can legitimately be money.

But if there are objectors to this argument, I beg to call their attention to the conclusive fact that gold can never be representative of all other kinds of wealth. It is just as impossible that it should be, as it is that a bridge one hundred feet in length should span a river five hundred feet in width. It must further be remembered that the uses for which money is required demand an invention which can be made use of for no other purpose whatever, and that money is the name of an invention demanded and made for the purpose of facilitating exchanges—for making them easy, convenient and adaptable to all conditions of all persons.

Every attempt ever made to compel gold to answer the demands of money has been a disastrous failure. So long as a country enjoys continuous prosperity under a gold standard of value, it is all well enough. The people make use of an expanded volume of currency in the full faith that prosperity will continue and everything be smooth and right.

But anon a change comes, the nation is precipitated into conditions which require more than its accumulations of gold to meet. That being exhausted, it is inevitable that representation be resorted to. The wealth in the form of gold not being adequate, and other wealth not having been used or accepted as money, paper representatives of it are the only resort. So it appears that when an emergency arises the people are involuntarily pressed to the use of the principle of representation, which is the only scientific thing that can be called money. So that while a paper representative of wealth is, with everything else, a product of labor, it is more than that; it is the embodiment and application of a principle, which other products of labor are not; and all principles are fundamental; are the basis of all permanent and all purely scientific things and truths, while wealth is the realized product of the outworking of principles, directed and appropriated by man for his use and convenience.

The direct inquiry can now be made as to what will best perform what the people require of money; and money is that which can be used to represent real values without an absolute transfer of such values. The basis of all value of this country is our present accumulated real wealth and our capacity to increase it, and this accumulation and the prospective increase may be wholly represented by money and the nation never become bankrupt.

A person may possess wealth to the amount of ten thousand dollars upon which he may issue his representatives of value or promises to pay that value. These representatives of value would circulate among those who believe in the capacity and intention of the utterer to give up to them, when demanded, that which they represent. Everybody by his individual right has the authority to issue such representatives of value, and no government has any right to prohibit their circulation; because the people, as individuals, have the right to take or refuse them. The issue of bank notes is upon the same principle, and so long as the government does not in substance indorse these issues, the people have the perfect right to deal in them—to receive and deliver them.

But there is an insuperable objection—one which cannot be overcome by any governmental requirements—to these representatives being called the real money of the people, since circumstances over which neither their utterers nor receivers can have any control may render them valueless—may make it impossible for those who uttered them to redeem them—and their holders find themselves with bits of paper representing nothing; but for which they parted with real value.

So far as this condition is confined to individuals who had no other reason for receiving them, and no other assurance of their real value than the supposed capacity and intention of the uttering person or persons, it is strictly a legitimate condition; and one with which the sufferers can find no fault; since of their own free will and choice they received the utterers assurances that his representatives were of real value. An individual upon his personal judgment, without undue persuasion, accepts another’s representative; if it prove bad he has himself only to blame for the loss, as coming from an error of judgment; and no power or authority has any right to step in to compel the making of amends for this error. This is the simple doctrine of the rights of individuals, with which no third party has any right to interfere after the occurrence of the fact. But when banks are organized under certain formula of law, framed by the people or their representatives through government, the people receive and pay out their issues—representatives of their value—not because they have special confidence in the capacity and intention of the individuals who compose the management, but because they suppose the management has conformed to those certain forms of law which are intended to render them safe. In this way the government, at least indirectly, gives credit to the bank, and currency to its issues, and the people accept them simply because the government has done so.