Part 31

Not only is this encroachment of the commodity demand on the money supply becoming greater year by year, with the growth of population, but the supply of gold from the mines is itself becoming less, having declined from an average of $137,000,000 between 1856 and 1860 (the period of greatest yield from California and Australia), to an average of $107,000,000 for the past ten years. Of the entire gold supply of the world, nine-tenths of it have come from placer mines, readily discoverable and easily worked, because requiring little or no capital. All known fields of those are practically exhausted, and there is no reasonable prospect of the discovery of others. Hardy, adventurous, and skillful miners from the United States, and capitalists from all countries, have ransacked the world in vain for new fields of gold. Why, then, with the knowledge of those facts before us, should we discard from the full money use and function the only metal that gives to the world any prospect of relief from the money famine from which civilization is now suffering and from which, if silver be not speedily restored to its ancient use and function, the world is destined to suffer much more?

If it be conceivable that the demonetization of either metal were necessary, why demonetize that which promises the greater and more steady yield? If for any reason society should decide that one of the metals should be discarded, should it not rather be that one which promises the smaller future yield, than that which promises the larger?

Silver is the money-metal best suited to the mass of the people, and to the variety and character of transactions that constitute the interchanges of daily life. The supplies of both metals if united by law, in the full money function, would have a steadiness of value which can not be attained by either separately.

TREASURY NOTES SHOULD NOT BE REDEEMED IN BULLION

The proposition to redeem the proposed treasury notes in silver bullion or in anything but lawful money of the United States will never meet the approval of the people.

What the people of this country want is money, and what they should have is money. These notes will represent full value received, the evidence of which is the bullion in possession of the Government. When issued, they will enter into circulation. They will have to do the work of money among the people. They will go to make up the volume of the currency. On the basis of that volume each dollar acquires a certain value, and represents a given amount of sacrifice. On that volume, and on those conditions, bargains will be made, prices established, debts contracted, values adjusted, and equities created. If any portion of that money be withdrawn from circulation (for that is what "redemption" means) without an equivalent amount of money in some other form being issued to take its place, the circulation will to that extent be contracted, every dollar in circulation will increase in value, prices will fall, property-values established on the basis of the larger circulation will shrink, and equities will be destroyed.

The redemption of any number of those notes in silver bullion means the withdrawal of many dollars of money from circulation and the destruction of so much of the money of the country. Money is not a thing that can be destroyed with impunity. It should be kept in use among the people. It is to industry what the blood is to the human body; it is the life-giving and life-sustaining medium. The money volume of a country should not be subject to frequent and violent changes. In a new and growing country, it should be characterized by that steady accretion that characterizes the increase in the quantity of blood in the human body as it progresses from infancy to maturity. It is no more unreasoning, empirical, or unscientific to be alternately withdrawing blood from, and injecting blood into, a human body than to be constantly contracting and expanding the money volume of the country. And as activity of circulation of the blood is essential to the health of the body, so activity of circulation in money is indispensable to the well-being of society. The possession of no mere commodity, whatever its value, will compensate a country for the destruction of any considerable portion of its money, upon the entire volume of which vast equities rest.

MONEY SHOULD BE REDEEMABLE IN ALL THINGS.

Money should be redeemed in all things; not in one thing alone. The peculiar characteristic of true money, that which distinguishes it from all other things whatsoever and constitutes it a prime factor in civilization, is that it is at all times redeemable in any thing that is on sale. Being an order for property, it should be redeemed in any form of disposable property which the holder may desire.

A guinea--

said Adam Smith--

may be considered as a bill for a certain quantity of necessaries and conveniences upon all the tradesmen in the neighborhood.

Any form of money, the condition of whose existence depends on redeemability in one thing alone, can not be money in the full sense, and whenever an urgent demand for real money springs up the other ceases altogether to be money.

The redemption of money should be reciprocal between the Government and the people and between and among all individuals in the community. It should not only be redeemable by the Government by acceptance for taxes but also redeemable by and among the people for all property for sale and services for hire. Its quantity should be so regulated as that its unit (the dollar) should neither increase nor diminish in value, and it should be kept constantly in circulation, and not be permitted to lie uselessly in the Treasury. Any other money than this is to a certain extent counterfeit; it is false money, because when most needed it fails to be money and has to be "redeemed" in something else (gold) which can not be got except at ruinous sacrifice.

It is of the very essence of money--its pith and marrow and protoplasm--that it should be a legal tender, a universal solvent, the ultimate of payment, and redeemable, at the prices ruling, in everything that is on sale. If the volume of such money be properly regulated, while there may from time to time be variations in the prices of particular articles, the general range of prices will be maintained practically undisturbed.

What an absurdity it is for the Government to put its stamp on one thing in order to make it redeemable in another thing imprinted with the same stamp, but which nobody wants except for the purpose of getting a third thing that could have been got just as well without the intervention of the second. As well might he who, wanting water, is given a silver cup wherewith to get it, but on going to the spring is forbidden to drink until he exchanges his silver cup for a gold one.

The real reason why it is insisted that all other things than gold shall be exchangeable into gold is that gold is getting dearer by reason of decreasing supply and increasing populations. The necessity for convertibility into gold implies that, in ordinary times, a range of prices higher than the gold range will prevail, and when, by reason perhaps of increased activity of business, redemption comes to be demanded prices are at once precipitated to those of the gold standard and below, to the great advantage of the creditor classes, who, as owners of bonds, may be considered in the language of the stock exchange "long" on money, and to the equally great injury of the producing class, who, being in debt, may be considered as having sold money "short."

The supreme consideration is that the money of a country shall be so regulated as that prices may not fall from any cause inhering in the money system. The value of money--in other words, the sacrifice necessary to obtain it--should be no greater at one time than at another. In order to effect that object of prime consequence, to maintain the value of money unchanging, there should be no hesitancy whatever in changing the material of which it is made.

Nobody who has reflected on the subject for a moment doubts that what gave "value" or exchangeable power to the greenback was not the promise made on its face, without date, to pay a dollar, but the inscription on its back which declared it a legal tender for all dues and demands, public and private, except duties on imports. It was a misfortune to mankind that the words "promise to pay" were printed on it, because by it millions were led to believe that the "value" or exchangeable power resided in the promise instead of in the legal-tender power conferred upon it.

There is no object in redeeming in gold, except to maintain gold prices, that is to say, the range of prices prevailing in gold-using countries, and as those prices are constantly trending downward, any country that insists on maintaining the gold standard must accept the consequences in a corresponding fall of prices. The advocates of the gold standard, in effect, maintain that no matter to what extreme prices may fall, we must be content--we must bow in humble submission to the inevitable, since, in their view, it is more necessary to maintain the sacredness of the gold standard than to establish justice, promote prosperity, or to maintain equity in all time transactions.

It is in no way necessary, on account of any intrinsic or inherent quality of gold, that should have that particular metal, and that alone, for money.

It is boasted that gold is a universal measure. Why is it universal? Why is gold accepted in every country of the world? Not because the gold is wanted for any quality inherent in the metal, but because it is an order for property in gold-using countries, such as England, France, and Germany, whose trade is largely a foreign trade. At whatever rate gold will exchange in England, it will exchange in all countries having trade relations with England, because it is an order for goods in a country with which they are dealing. Will not the money of this country equally, and for like reasons, whether gold or silver, have acceptability in every country with which the United States have trade relations? Not for any quality inherent in the metal, but because it is an order for property in the United States. Will it not be willingly accepted by those who wish to buy in this country?

POSSIBLE EFFECT OF REDEMPTION IN BULLION.

In order to see the effect of the redemption of these Treasury notes in bullion, we have but to look at the possibilities of the situation. Suppose there were in the Treasury $300,000,000 worth of that bullion, which, by the taking up, little by little, and month by month, of the amount not used in the arts, would be taken by the Treasury at or about par. Then, suppose that for any reason, such as fear of approaching panic or otherwise, $100,000,000 of the Treasury notes were suddenly presented for redemption, and canceled, and the bullion as suddenly put on the market, what would it be worth? What would gold bullion be worth if it had not the privilege of coinage, and if $100,000,000 of it, deprived of the money use, was suddenly put on the market? Can there be a doubt that the abrupt output of so large a quantity would have the effect of immediately and enormously depreciating its value? In the case under consideration, the result would be that the silver remaining in the Treasury would not bring one-fourth the sum necessary to redeem the outstanding Treasury notes, so that not only would a heavy loss result to the Government, but, by reason of the sudden and serious contraction of the money volume, an infinitely greater loss would result to all the people.

But if it be deemed a remote contingency that any extraordinary amount would in that manner be suddenly taken from the Treasury, there is another danger which can not be put aside as improbable, but which, on the contrary, is to be looked for with almost absolute certainty, and to my mind, constitutes an irremovable and insurmountable objection to any system of bullion redemption.

A large number of merchants in London need, monthly, millions of dollars worth of silver to make payments in India. They will naturally want to get it at the lowest price, and it is not to their advantage to intensify the competition for it. On the contrary, it is to their direct advantage to depress the price to the lowest possible point.

As the Treasury of the United States would buy silver at the lowest price, the London merchants would refuse to enter the open market in competition with our Government for its purchase. But no sooner could the silver be stored in the vaults of the Treasury, than the agents of the London merchants would appear, and before any opportunity had offered for a favorable change in the price of the bullion, could present as many millions of these notes as might suit their purpose, and receive bullion therefor. A Secretary of the Treasury who conscientiously believed that it was his duty to maintain the gold standard at all hazards, would naturally feel compelled--certainly it would be in his power--to put out whatever amount of bullion he might deem necessary to accomplish that purpose, even if it all had to go.

Thus the United States Treasury would become the convenient and capacious conduit through which silver should immediately flow from this country to England, depriving our people, notwithstanding the legislative measures for their relief, of practically all use of silver as money, inasmuch as the four and a half-million dollars of Treasury notes would be withdrawn and canceled about as soon as issued.