HOW THEY INVENTED MONEY.
The people on the island--both laborers and employers--were, however,
fully agreed that life was too short to waste a good part of it in
a game of "blindman's-buff" on a large scale--for such this attempt
to conduct exchanges on a basis of direct barter substantially was;
[1] but they nevertheless also clearly perceived that the game
would continue to be played, to the interruption of all material
progress, unless some other method of exchanging could be devised
and adopted. Under the guidance, therefore, as it were, of instinct
(Robinson Crusoe encouraging), and without any enactment of law,
Twist, Needum, Pecks, Diggs, Friday, Friday's father, Will Atkins,
and every body else, by common consent, agreed to select and adopt
some single commodity which all should agree to take in exchange
for whatever of products or services they might have to dispose of;
so that whenever any one had any thing to exchange, he might first
exchange it for this commodity, whatever it might be, and then with
such intermediate object purchase at such times and places, and in
such proportions as he might desire, whatever he might need. And the
moment this was done, civilization on the island took a long step
forward, and the first great embarrassment growing out of the attempt
to exchange exclusively by direct barter was removed. The tailor was
no longer in danger of starving; the mason had no longer any anxiety
about procuring clothing, and the laborer received as pay for his
labor something which gave him an equivalent in meat, drink, lodging,
and other necessities which he might need, without trouble; every man
giving freely of his goods or services for the intermediate object,
because he knew that every other person desirous of exchanging would
be willing to do the same.
Again: the selection of some commodity or article, and the investing
it by common consent with a universal and comparatively unvarying
purchasing power, also solved the second perplexity, inasmuch as it
provided a measure or standard, for ascertaining the comparative value
or purchasing power of every other exchangeable commodity or service;
and in precisely the same manner as the length or weight of any thing
is ascertained, i.e., by comparing it with some other thing which
the community have universally agreed to recognize as a standard of
length or weight--as, for example, the rod of wood which we call a
yard-stick, or a piece of metal which is termed a pound. "My loaves
are each worth ten pieces of the intermediate commodity," said Needum,
the baker! "My coat," rejoined Twist, the tailor, "is worth a thousand
pieces!" The terms of fair exchange between the baker and the tailor
would therefore have been one hundred loaves for one coat.
The general name given to the commodities or articles which the
people of different countries universally accept in exchange, as the
equivalent for all other commodities or services, and as the measure
of values, is money.
The commodities or articles which have been selected by men at
various times and places to serve as this universal equivalent,
intermediate agent, or medium for facilitating exchanges, have been
exceedingly various. Among the North American Indians, and the early
settlers who came among them, wampum and beaver-skins were used as
money; among the natives of West Africa, money consists of small
shells called "cowries;" in Abyssinia, the common money of to-day
is salt; in Chinese Tartary, it is cubes of pressed tea; and within
a comparatively recent period small cakes of soap have been used as
money on the west coast of Mexico. Among pastoral people of antiquity,
cattle and sheep were so extensively used for money that our common
English word pecuniary has its derivation from the old word pecus,
signifying a flock. And while we read in Homer that the price of
the armor of Glaucus was one hundred head of cattle, we also know
that the Zulus of South Africa pay their debts to-day in cattle,
and reckon their wealth by the same standard.
Money, therefore, existed before statutes, and exists and is used
to-day among nations who have no written or acknowledged code of laws.
It is also of importance to a clear understanding of this subject to
recognize at this point another fundamental fact, namely, that there
is no evidence that any nation or people has ever adopted, in the
first instance, any article or commodity to use as money which did not
possess, by reason of some inherent or intrinsic desirable qualities, a
natural purchasing power or value. And a little reflection will make it
obvious that this must have been so from necessity. For in the absence
of all law defining what money should be, and regulating exchanges,
the adoption of any article to serve as money which represented
little or no effort for its production or accumulation would enable
the shrewd, the idle, or unscrupulous, easily, and without fear
of punishment or restraint, to take from the rest of the community
products which represented the expenditure of time and labor, without
giving in return any equivalent. Thus, for example, if dried leaves,
or pieces of paper with such marks as any might choose to stamp or
scrawl upon them, had been invested with a universal purchasing power,
the primary practical result of the use of such money would have been
to enable somebody to obtain something for nothing, or to permit those
who would not work or save, to rob those who did. The people on the
island, being uneducated, never did any such foolish thing; but when
they came to study history, they found out, to their great surprise,
that the people of other countries had repeatedly used things worthless
in themselves as money; and many years afterward a man who aspired
to be a great teacher even came to the island from the United States,
and endeavored to convince the people that it was a great defect to use
any thing as money which had any intrinsic value as a commodity. [2]
The children of the first school he attempted to talk to soon made
his position embarrassing by reading from their histories that the
people of every country, especially the poor and ill-informed, who
had ever attempted to facilitate their exchanges by using something
as money which had no intrinsic value, had in every case been so
swindled and robbed, as a consequence, that sooner or later they
were always compelled, as a measure of simple self-protection, to
abandon its use, and in its place adopt something as money which had
a generally acknowledged and comparatively permanent inherent value
or purchasing power as a commodity.
The following were some of the narrations which the children found
and read out of their histories:
"In December, 1861, a poor soldier's widow put into the
savings-bank two hundred dollars in specie, and then removed with
four young children to California. In July, 1864, when gold stood
at two hundred and eighty, she sent for her money. In return, she
received a gold draft for eighty-three, accrued interest at six
per cent, included."--Henry Bronson, Nature and Office of Money.
"The morals of the people were corrupted (by the Continental
irredeemable money) beyond any thing that could have been believed
prior to the event. All ties of honor, blood, gratitude, humanity,
and justice were dissolved. Old debts were paid when the paper
money was worth no more than seventy for one. Brothers defrauded
brothers, children parents, and parents children. Widows, orphans,
and others were paid for money lent in specie with depreciated
paper."--Breck, Sketch of Continental Money.
"The assignats gradually dwindled down to nothing, involving
the whole land in ruin--excepting a few lucky speculators--and
resulted eventually in national bankruptcy. When thousands of
wretches, even before the final collapse of the assignats, were
committing suicide to escape starvation, war was a blessing;
and Napoleon was the instrument by means of which all Europe was
made to feel the results of worthless money, either directly or
by inoculation, from its maddened victims."--Notes on the French
Assignats, and their Influence.
"He had to pay four hundred dollars for a hat; for a pair of boots
the same. He wanted a good horse, but was asked a price equivalent
to ten years' pay." "My six months' earnings will scarce defray the
most indispensable outlay of a single day. * * * For a bed, supper,
and grog for myself, my three companions, and their servants,
I was charged, on going off without a breakfast next day, the
sum of eight hundred and fifty dollars."--Life of General De Kalb.
"In all, from first to last (1835 to 1841), the amount of
notes, bills, drafts, bonds, etc., issued by the Treasury of the
Republic of Texas, and serving to a greater or less extent as a
'circulating medium,' amounted to $13,318,145, or at the rate of
more than two hundred and sixty dollars per head of the entire
population. If paper issues serving as money could have made a
people rich, the Texans ought to have been the richest people in
the universe. In January, 1839, Texas treasury-notes were worth no
more than forty cents on the dollar; in the spring of 1839, they
were worth thirty-seven and a half cents; in 1841, from twelve
to fifteen cents; and in 1842 it required, in the characteristic
language of the times, 'fifteen dollars in treasury-notes to
buy three glasses of brandy-and-water without sugar.' 'By this
time there was little circulating medium of any kind in Texas;
but this was no great calamity, as the people had but little left
to circulate.' The evils the system did were immense, and such as
for which, even were it so disposed, the Government could afford no
compensation to the sufferers."--Gouge's Fiscal History of Texas.
Again, one of the principal objects for which money was devised and
brought into use was to serve as a measure, or standard, for estimating
the comparative value of other things. But it seems hardly possible
to conceive of a person desirous of using money for such purpose,
selecting an article to measure values which in itself possesses no
value, or costs no labor to produce, any more than he would select
as a standard for measuring length something which had no length, or
as a standard for measuring weight something which had no weight. The
people of the island must have been unusually stupid if they did not
from the outset, therefore, clearly see that nothing can be reliable
and good money under all circumstances which does not of itself possess
the full amount of the value which it professes on its face to possess.