Part 3

But if these banks are mismanaged either ignorantly or intentionally, or managed by designing men, as often they are, who make use of the governmental sanction to swindle the people, as many times they have, where can the people look for redress; where should they look for redress? The government is justly responsible to the people for all such issues, since it did not require real security from the banks, and government should make reparation therefor.

This is precisely our objection to any and all forms of bank issues. There can be no arrangement made so perfect in security to her people as to guarantee them absolutely against all hazard, that will permit the banks to make the profits which they seem to think they are entitled to make from the people. In absolute security there can be no profit. Bank profits demand the circulation of more notes than they have real value to represent. Profits come only from speculating either upon the confidence or the money of the people, and government has no right to protect such illegitimate and unjust practices.

Our present system of banking is a swindle upon the people, which it is simply surprising that they endure as they have and do. For the banks to be permitted to filch from the people twenty-four million dollars per annum is an outrageous villainy which, if comprehended by the people in its true light, could not exist another year. ’Tis true these banks complied with the law passed in a time of dire necessity, and that through them the government acquired the means to conduct the war. But did not the people themselves do even more than furnish money, which was promised to be returned; did they not freely give their lives, which can never be returned, and which the government never thought of promising to either return or guarantee, and that, too, for the pitiful sum of thirteen dollars per month? What comparison is there between the sacrifices made by the two classes of people, the capitalists who have absorbed the wealth of the country and the laborers who still continue to give life, property and vitality to the country. There is absolutely no chance for a comparison; the distinction is too great.

It seems to me that if either class is entitled to superior consideration—to receive millions of the people’s money—it is the common people who so freely offered their lives to save their country, instead of those who simply loaned their money at enormous rates of interest, with the certain knowledge that it would be repaid. The present claims are too preposterous, and deceptive, and too unjust to be long continued.

All bank notes in their ultimate effects are frauds upon the people, and their continuation as a circulating medium is only possible because that part of the people who suffer from them have not yet risen into a proper understanding of the question. The time is, however, near at hand when those who have reveled in the result, of the wear and tear of the muscle, and the sweat of the brow, of the common laborer, will be compelled to produce honestly and equitably everything they would enjoy.

The substitute for all kinds of bank notes as the money for the people should be a purely people’s money—a national currency whose basis of value would be the accumulated wealth of the country, and also its capacity for regularly increasing such wealth. Is there any reliance to be placed in a currency issued by an individual or a number of individuals through an incorporated bank, based upon his or their wealth, which is at all times liable to pass into the hands of other individuals? Yes, there is a presumptive reliance—an indefinite security—but the security is not perfect. In comparison with this security place that of a currency issued by the government, based upon the entire wealth of the whole country, which, no matter how much it might be changed about among the different persons comprising the nation by various contingencies, could never depart from the country; which fact would render it safe under any and all contingencies that could possibly arise, excepting alone the entire destruction of the country and its government by a foreign power; which contingency is not sufficiently imminent to cause any present alarm.

A national currency thus based would have not only all the gold of the country as a basis, but also all other kinds of wealth. Is it not perfectly plain that such a money would be just so much better than common bank notes, with a one-third gold basis, as the total amount of the wealth of the country is greater than such amount of gold? It would be in the most complete sense the people’s money. It would be a system of mutual banking wherein every individual of the country would have an interest, instead of there being a vast number of mutual banking institutions, such as has been proposed by a person of profound financial ideas.

As before stated, my objection to all systems of individual banking is that the basis of their issues is at all times liable to pass from the possession of such individuals; whereas, in a national currency—the money of the people, themselves in the aggregate the basis and security—there could be no such liability; since, if parts of the security pass from original to secondary hands, it is still the basis of the currency, and could never be transferred beyond the jurisdiction of security by the operations of designing or incapable persons. By no possibility could there ever a loss occur to the holder of such a currency, except it be destroyed in his hands.

Undoubtedly the greenback was the nearest approach to a real money that any people of the earth ever made. We have only to observe how admirably it has answered nearly all the purposes for which people require money, to be convinced that it has the very best—the most secure—basis that it is possible for a money to have. It stands representative of the capacity and willingness of the government—the representative of all the people—to pay.

But it is one of the most difficult of things for the people to divorce their minds from the idea that gold is the only possible, real money. Yet the facts attaching to the greenback stand out in bold and indisputable relief, perfectly and entirely dispelling all basis for the idea. Because the greenback was the first step toward a real money that the country ever took, which left gold entirely out of the question, the impression still remains with the people that a return must be made to a gold basis; never stopping to observe how vastly superior the wealth basis is to what the gold basis would be.

Bank note currency, or a currency issued by an individual or by a class of individuals, always carries along with itself the idea and need of redeemability. If, however, there is any thought among the people that the utterers cannot meet their promises of redemption, at that very time when, of all others, confidence is necessary to avoid ruin, they rush to prove the suspected incapacity; and generally they do prove it.

The idea of, and necessity for, redeemability, is that which most requires to be divorced from money. Money—real money—should never require to be redeemed. It should always be just as valuable to retain possession of as anything could be into which it may be converted. Anything that requires to be redeemed in order to make it permanently valuable or a representative of value is utterly unworthy the name of money, because it does not truly represent real wealth. It is that currency of which there is doubt about the real wealth it pretends to represent which requires to be made redeemable before it will circulate; and this fact proves most conclusively that it is not money in any true sense of that term: that is to say, it is not that which requires to be converted into substance.

It is readily perceivable that a national currency having continually all the nation’s wealth, accumulated and prospective, as its basis, never needs to be redeemed. This single consideration is of quite sufficient importance to alone warrant its immediate adoption and use upon the standard of wealth. The gold standard is the flimsiest deception of which it is possible to imagine. The people’s talk of approaching a gold standard as the ultimate of appreciation is the merest jeu d’esprit. Gold is now selling at say 113. Suppose that during the next year its price should gradually decline to par, or, in the phraseology of the goldites, their country’s general credit should appreciate to par, would the process of appreciation necessarily stop just at that point? Why should it not just as reasonably continue to appreciate, so that in another year gold would be below the par of the country’s credit? This simple analysis proves beyond all cavil the arbitrariness of the gold standard of value.

The credit of a country increases or diminishes without any regard whatever to its gold producing or paying capacity. It is governed by its capacity for the general production of all kinds of wealth over and above its average consumption. It is just the same with a country as it is with an individual; the individual, to become wealthy and to have a good credit, must not necessarily ever have any gold; but he must be able to produce or acquire more than he consumes by his general expenses. A country must proceed by the same process to become wealthy, and it is simply an absurdity for people to talk of the prosperity of the country when high prices for everything are induced and fostered by a system which restricts general production in order that special production may flourish. Individuals cannot get rich by trading among themselves, no matter if they increase the price of their wares ten per cent. every year. Neither can all the individuals of a country do the same thing. What is required by both is increase in the quantity of what they trade in.

It is not the price of what a people have that constitutes their true wealth, but it is the quantity of their commodities. A barrel of flour is possessed of no more real value if it cost twenty dollars instead of five. It will not maintain life a day longer, let the price even be a thousand dollars. Thus we arrive at the real basis of values—the real wealth—and I have introduced this, precisely for the purpose of showing the high-priced protectionists that they know nothing about true values or true economy, as well as to also show that there is no real wealth except that which conduces to higher ends than its simple acquisition. Wealth as an end is despotism. Wealth as a means is humanitarianism.

But to return from this departure to the main subject. For the idea of redeemability for money there should be substituted that of convertibility. A real money should at all times be capable of being converted into that of which it stands representative. And here we arrive at the last analysis of a real money. It will be readily seen how completely a national currency meets this requirement. It would be representative of the productive capacity of the country, and could always be converted into whatever portion or kind of its products might be required; or into the products of other countries which may be acquired by the direct exchange of our own products.

What more than this can be demanded of money; or what better thing invented as money; or what more capable of inspiring and maintaining an even and legitimate confidence?

National currency being the very best possible money, because it is not only the most convenient but also the most secure, there remains nothing to be done but to continue to so acquaint the people, until they become convinced of the rapaciousness of those systems by which the large majority are compelled to labor all their lives for the very select few. There is no difficulty in arriving at all the initial points necessary to determine the amount required, how it should be distributed and kept in circulation, or how its circulation should be regulated. These are all practicalities of finance.

But there is one thing which has never yet received consideration, which is absolutely necessary to make money meet all the requirements of money, and at the same time to maintain a fixed and absolute value at all times and under all circumstances, which money never has had. From its lacking, have come all the various financial convulsions. And this is, an absolute measure of value.

Can money be measured so that the same fixedness shall attach to it that attaches to everything else with which we have to do? Money itself has always been considered a measure of value; and it is this false stoppage and foundationless position that has made possible all financial discords, irregularities and inconsistencies. Does it appear to be a strange proposition that money should be measured? Why should not a dollar be just as absolute as a dollar as a pound is as a pound; or as a foot is as a foot; or as a gallon is as a gallon? A cord of wood contains one hundred and twenty-eight solid feet, or eight cord feet. It must always be eight feet in length, four feet in height and four feet in width, or some other multiples of one hundred and twenty-eight. A cord can never be any more, never any less than just that measurement. And the same rule holds of everything else with which we have to do; with quantity, time, space and motion. All these have fixed and unvarying modes of measurement. But money, the lever by which all these are moved, has been left to fluctuate as it would—to be moved by every different influence, so that in many instances what should have brought contentment, peace and continuous prosperity, has bequeathed the direct reverse.

It does not concern us that there are more yards of cloth at one time than another, provided that yard-sticks are all of the same length. But what would concern us would be this: That if with increase of the quantity of cloth the length of the yard-sticks should increase proportionately; or with the decrease of the quantity of flour the pound should decrease in like proportion therewith. Now this is just what has always been true of money; its real value increases and decreases, just in proportion as those things which it professes to measure have increased or decreased in quantity. Instead of these things being exchanged or converted into something measured by as fixed a standard as they are, the attempt is made to measure them by something which constantly increases and decreases in representative capacity. In other words, a dollar is not at all times one and the same thing. Sometimes it is but seventy–five cents, and sometimes a dollar and a half. That to say that seventy–five cents at one time possess the same representative power that a dollar and a half does at another time, which is in substance to say that money has no measure.

Now what is desirable and indispensable is to give money a fixed measurement, which shall be just as absolute in its measure of the value of money as the pound is in its measure of weight, or as the yard-stick is in its measure of distance. There never is any more cloth, though there be a thousand more yard-sticks. Nor is a yard-stick ever any longer or shorter, if the quantity to be measured is increased or decreased a thousand-fold. Now just to such a fixedness must money be reduced before it will subserve its best purposes and uses, and the only way this can be done is by that method which will also remove the only possible objection there can be brought against such a national currency as is proposed. This objection is that by over-issues of currency its value would or might be depreciated.

Let it be supposed that the country’s extremest need to meet the demands of the greatest amount of trade is a billion dollars currency. At certain times there are greater and less demands for money, which, under our present practices, make a dollar, to-day, worth four per cent. per annum interest, and to-morrow increase it to ten per cent. It must be remembered that we are now speaking of an irredeemable currency, the representative of the wealth of the nation: that the government representing the nation has uttered it, in behalf of the people, upon the soundest and, in reality, the only sure basis of value any money can have—the productive power and capacity of the nation.

An over-issue is the only thing to be guarded against. The government must be prohibited by some absolute law from resorting to the process so well known in railroad management as the “watering process.” And this is to be accomplished in the following manner: This currency—this money—must be made convertible into a national bond, bearing such a rate of interest while in the hands of the people as shall be determined upon as “the true measure of value”—say three or four per cent.—which experience would necessarily determine as the true point of balance; and the bond also convertible into currency at the option of the holder.

In other words, the people should demand that the Government issue one thousand million dollars in bonds, bearing three per cent. interest, payable in currency, and that it issue one thousand million dollars of circulating medium or money to be loaned to whomsoever deposits the bonds as collateral; all loans to be made at three per cent. per annum; to be for six months, with two renewals of three months each, one-half payable on each renewal. The principle underlying the time being that all credits should be settled with each year’s products.

The operation of such a system can be very easily traced. Whenever there should be so much currency in circulation that it would be worth less than four per cent., the surplus would at once be invested in the four per cent. interest-bearing national bond; and when business should revive and the demand for money to transact it should make money worth more than four per cent., then bonds would be converted into currency again until the equilibrium should be re-established. And whenever the demand should be such that all the money would be converted, and money still be worth more than four per cent., then the government should issue enough to produce the equilibrium.

Thus it is seen that the four per cent. or the three per cent. interest-bearing national bond becomes the fixed measure of value for money. It would always be worth just that amount—never any more; never any less. The gallon measure always gives just the same quantity of molasses. The yard-stick always gives just the same quantity of cloth. The pound weight always gives just the same quantity of sugar. So, too, would this measure of money always give just the same amount of real wealth, or its representative, every day, week, month or year, whether applied to wealth in business, to bonds, or to money at interest. An oscillation would be perpetually maintained; first, conversion of currency into bonds; next, conversion of bonds into currency; and whenever the supply of currency should be deficient, then the issue of more by the government to meet it. Thus there would be a people’s money regulated to financial equilibrium, which is the ultima thule of convenience for exchanging the products of industry.

It may be remarked, parenthetically, here, that even three per cent. per annum interest is altogether too greatly in favor of capital. A careful calculation of interests and general increase of the nation’s wealth discovers that less than a two per cent. interest is required to make the capitalist and the laborer stand upon an equality. Had I the time I would be glad to present you some figures to show to what condition we are tending. I will simply remark, however, if capital continue to receive the present rates of interest for the next thirty-five years, at the end of that time it will have absorbed all the wealth of the country. That is to say, that interest compounded at the rate of 6 per cent. upon the present Banking Capital will amount to a sum larger than the present aggregate of wealth together with the same rate of increase which has governed it during the past, added thereto. Is not this a sufficiently alarming fact to cause people to stop and consider the despotism into which they are rapidly merging?