CONCLUSION.
A universal money for the whole world has been the dream of some
writers. This in many respects would be a convenience, as would a
general uniformity of weights and measures; but its benefits would be
confined mainly to a saving of clerical work, and even this would not
be as great an advantage as might be supposed, since differences in
value of bills of exchange would continue to exist, even as they now
exist between countries using the same money, or even between different
cities of the same country.
Unless the universal money were stable in value, it would be as
dishonest as the existing systems, and to make it stable would involve
its absolute control in volume by some central power to which the
various nations would delegate their authority. Such a thing is most
unlikely to happen. The obstacles of national prejudice and habit are
too strong to be overcome,--as will be evident from a perusal of Mr.
Walter Bagehot's work, "Universal Money,"--and the advantage to be
gained by it is not worth the trouble. A universal money, then, must
be considered as a Utopian dream; and a plan that provides for our own
country an honest money seems to be the highest success to which we can
at present aspire in the settlement of this vital and all-important
question.
Whether future legislation be based on some such plan as the one here
outlined, or whether another can be devised that will more closely meet
the requirements, the fundamental principles we have considered should
be kept in mind in any change that is made.
It should also be clearly understood that no monetary legislation, by
this or any other country, can alter the relative values of all, or
any, of the commodities, including gold and silver, which enter into
human use and consumption, except in so far as such legislation shall
affect their relative supply and demand. All that legislation can
really beneficially do, is to provide a stable standard of value, as it
now provides stable standards of length and weight, and to provide a
medium of exchange that shall always conform in value to that standard,
and shall be at once convenient and economical.
Opinions may honestly differ as to the best means of providing such
a money, but, when fully understood, no difference of opinion can
exist as to the benefit it would be to all classes of society, without
exception.
The labourer gains by employment being more certain and constant; by
the knowledge that open competition with capital will determine the
shares of the joint product which each shall receive,--that he will
not be the victim of an insidious change in money value or, while
receiving nominally higher wages, be perhaps getting lower real wages.
With an honest money, real and nominal wages coincide, and a rise or
fall of wages is known at once as a benefit or an injury. The effect
on wages would be toward an increase, by stimulating production and
enhancing the demand for labour; while the labourer's ability to
purchase more would absorb such increased production and improve his
condition.
The employer of labour would gain by the certainty that his success
will depend more largely on his own ability and endeavour, and less on
causes which are not only beyond his control, but on which he cannot
even calculate with certainty; while the greatest risks to which he is
now subject will be removed.
This applies not only to manufacturers, but to industrial enterprises
of all kinds.
Railroad stockholders would be especially benefited. No other business,
perhaps, carries so large a fixed indebtedness, in proportion to its
value, as railroads, and the stockholders suffer more from an advance
in the value of money than most other owners. The fact that they are
to some extent monopolies and can keep their rates the same, or even
increase them, with money value rising, does not alter the case; for
the amount of traffic will, under such conditions, be lessened, and it
is impossible for most railroads to reduce expenses in anything like a
proportion to the reduction of income from diminished business, because
of the large fixed charges.
Merchants would be benefited by the greater general stability of
prices, and would be relieved of many of the risks of business. They
would, if solvent, have assurance that they could get money when
needed, and the failures would be fewer.
Money loaners would also be benefited. It might seem, at first sight,
as if they would not, since they profit directly by an increase of
money value; but this is a narrow view. While the money loaner, as
before shown, gets an undue and unjust share of the products of labour
and capital when prices are falling, yet the secondary effects of such
a fall,--the increased competition for loans, and diminished demand for
capital for business enterprises,--by lowering interest rates, tends
to offset this gain; and the doubt and uncertainty as to security keep
capital idle as well as labour. The lender gets a larger share of the
total product than he is entitled to, under such conditions; but the
total product is so much lessened as a whole, that his larger share is
less in actual amount than a just share of the larger product would
be, were money honest and prices constant. Moreover, one of the most
important considerations to a lender is security, and this is much
lessened with falling prices, and the loaner is frequently obliged to
take the property which is security for his loan. He does not want the
care and management of it, as it is generally far less valuable in his
hands than in those of the original owner; the latter thereby loses
something which he could use, and the former gains something he has
no use for, and no one is really benefited. It cannot be considered,
therefore, that loaners, as a class, either profit by or desire such a
condition of business depression and panic as is largely produced by
dishonest money.
A few individuals there may be--the leeches or wreckers of society--who
rejoice at and profit by the general misfortune of all; but they are
not, it is believed, sufficiently numerous to make their desires
important or consideration for them a matter of anxiety.
In view of these considerations, the attempt--so often made in
discussing the question of money--to set class against class, to lead
labour to consider capital as its enemy, to embitter the relations
between borrower and lender, and between the banks and the public, is
greatly to be deplored. Competitors in a sense these different classes
doubtless are, but so far as an honest money is concerned all are
partners; all would be gainers by it and none losers. Past experience
does not lead us to expect that men will generally become unselfish and
altruistic in their motives in the near future. Business will continue
to be, as it always has been, a struggle for the greatest amount of
commodities with the least labour; and the plea for an honest money
rests not upon altruism, but upon the enlightened selfishness which
teaches that honesty is the best policy, in a money system as in other
things, and that it is not profitable to kill the goose that lays the
golden eggs.
INDEX.
Aldrich Report, the, 83.
Bagehot, Walter, quoted, 54, 122, 197.
Bank-notes, national, proposal for increasing issue of, 146.
Bi-metallism, 46, 67.
Böhm-Bawerk, von, quoted, 4, 7.
Capital and money, distinction between, 104.
Coin. _See_ Money.
Coin and paper money, 22.
Cost of production, 10.
Credit, money forms of, 92.
Currency, an elastic. _See_ Money.
Decline in prices, 90, 101.
Definition of money, 21.
Definition of value, 1.
Demand and supply. _See_ Supply and Demand.
Dollar, gold and silver, 125.
_Economist_, London, on foreign prices, 83, 84, 86.
Ely, Prof. R. T., quoted, 32, 47.
Employers of labour, 102, 199.
_Encyclopædia Britannica_ on money, 35.
Exchange, money as a medium of. _See_ Money.
Existing monetary systems, 51.
Foreign commerce, 112-124;
balance of trade, from an economic standpoint, a misnomer, 114;
international trade, _ib._
France, monetary system of, changed to a gold basis, 70.
Functions and requirements of money, 25.
Germany, monetary system of, changed to a gold basis, 70.
Gold. _See_ Money and Monetary Systems.
Gold production between the years 1850-57 in Australia and
California, 90.
Gold-standard arguments criticised, 98;
Mr. D. A. Wells' fallacy of deeming labour a test of value, 100;
threefold division of the community into labourers, employers of
labour, and money loaners, 102;
distinction between capital and money, 107.
_See_ Stability of Gold and Silver Values.
Gold standard, the, 54.
Greenbacks, 126, 129, 146.
Gresham's law, 57, 59, 65, 67, 149.
Inconvertible paper, 22, 76.
India, English commission on the depression of trade in, 119;
silver currency in, 96.
Invariable money value, necessity for, 28, 40.
Jevons, Professor, quoted, 25, 27, 154.
Labour, productive and unproductive, 14;
three kinds of, as factors in making for the value of a
commodity, 15;
labour not a standard of value, 18.
Laughlin, Prof. J. L., quoted, 46.
Medium of exchange, the, 164.
Mexican exchange, 120.
Mill, John Stuart, quoted, 6, 14, 18, 31, 36, 76.
Money loaners, 103, 200.
Money, definition of, 21;
F. A. Walker's comprehensive definition, _ib._;
paper money and coin, 22 _sqq._;
functions and requirements of, 25;
money as 'a medium of exchange,' 'a measure of value,' and 'a
standard of deferred payments,' _ib._;
Professor Walker's substitution for the term 'measure of value,'
'common denominator of value,' 26;
money as 'a store of value,' _ib._;
qualities necessary to a money material, 27;
invariable value, 28;
fluctuations in money value, 30;
J. S. Mill on the purchasing power of money, 32;
the _Encyclopædia Britannica_ quoted, 35;
money demand and supply, 36;
money actual and money in forms of credit, 38;
an invariable money value, 40;
a change of money value, a robbery, 42;
F. A. Walker, on decreasing money value, 44;
a flexible or elastic currency, need of, 45;
money in all countries a creature of the law, 53.
Money in the United States, 125;
greenbacks, national bank-notes, silver and gold certificates,
treasury notes, currency certificates, 126;
gold coin, silver coin, 128;
national bank-notes wrong in principle, 129;
no means to-day of meeting either the increasing demand for money
expanding population and commerce bring, or the sudden demand
that a failure of credit may bring, 133;
results, _ib._;
some proposed changes in our monetary system, 137;
free coinage of silver, 138;
erroneous views confuted, 139;
'greenback' or fiat money proposals, 146;
increase of the issue of national bank-notes a mere makeshift, 147;
divorce of our money from that of other countries only mode of
controlling it and making it honest, 150;
a new monetary system, 151;
standard of value, 158;
medium of exchange, 164;
the national banks as a distributing agency, 167;
complete control of the money volume, 177;
merits of plan considered, 181;
an invariable standard of value, _ib._;
a cheap, convenient, and elastic medium of exchange, _ib._;
prevention of panics, _ib._;
repression of excessive speculation and its reaction, 183, 184;
plan wholly American, 186;
objections answered, 187;
conclusion, 196.
Money system, our, some proposed changes in, 137.
Money value, 29.
Monetary systems, existing, 51;
the gold standard, 54;
Gresham's law, 57;
the silver standard, 65;
bi-metallism, 67;
paper money, 71;
J. S. Mill on inconvertible paper, 76.
New monetary system, a, 151-180.
Panics and hard times, causes of, 45;
panic of 1857, collapse of credit in, 90;
panic of 1873, 91.
Paper money, 71, 78;
Prof. F. A. Walker on, 77.
_See_ Money.
Patten, Prof. Simon N., quoted, 7.
Prices, declining, evils of, 101;
Professor Sherwood on stability of, 48.
Production, cost of, 10.
Purchasing power, 5.
Ricardo, David, quoted, 14, 17, 34, 46.
Sauerbeck, Mr., quoted, 83, 84, 87.
Sherwood, Sidney, quoted, 48.
Silver, _see_ Money;
the silver standard, _see_ Monetary system.
Silver, free coinage of, 138, 139.
Silver famine of the Middle Ages, 82.
Silver production in Nevada, 91.
Silver standard, the, 65.
Silver-standard prices, 94.
Smith, Adam, referred to, 14.
Soetbeer, Dr. quoted, 83, 84, 87.
Stability of gold and silver values, 81-97;
gold standard prices, 81;
European economists on prices, 83;
decline in prices, 90;
silver-standard prices, 94.
Standard of value, the, 12, 158.
Supply and demand, 8;
the immediate determiner of value the relation between supply and
demand, _ib._;
the demand for a commodity determined by its subjective or exchange
value, 9, 10;
close connection between value and the ratio between demand and
supply, 10.
Tauschkraft, 5.
United States, the, stops free coinage of silver, 70.
United States Senate Finance Committee Report on 'Wholesale Prices,
Wages, and Transportations,' 83.
Value and the standard of value, 1-20;
definition of value, 1;
the two classifications--'Value in use,' and 'Value in exchange,' 3;
Böhm-Bawerk on 'Value in the subjective sense,' 4;
John Stuart Mill's aphorism--'every rise of value supposes a fall,
and every fall a rise,' 7;
Simon N. Patten on 'objective values,' _ib._;
standard of exchange value, 12;
exchange value, what determines its constancy or variability, 19;
only one real standard of value, 20.
Walker, Prof. F. A., quoted, 21, 24, 25, 77, 78, 82, 156.
Wells, David A., quoted, 50 _sqq._, 94, 95, 98, 100, 101, 105-111,
119, 120.
[Illustration:
---- Value or Purchasing Power of Gold
.... " " " " " Silver
in per-centages on Values of 1860; assuming that the list of 223
commodities in report of Finance Com. U. S. Senate No. 1394, weighted
according to importance, fairly represents all commodities, and that
their average is therefore of constant value.]
[Illustration: Diagram of Price Variations
Showing average per-centage of change, from prices of 1860, of each of
four lists of commodities, Gold prices.
Platted from tables in Senate Report No. 1394 Finance Com. 2nd Session,
52nd Con.
=== U. S. Senate Finance Com. List 223 Commodities
--- Mr Sauerbeck's List. English prices. 56 "
... Economist List. " " 22 "
,,, Mr Soetbeer's List. Hamburg and Eng. prices
114 Commodities.
]
Transcribers' Notes:
Punctuation, hyphenation, and spelling were made consistent when a
predominant preference was found in this book; otherwise they were not
changed.
Simple typographical errors were corrected; occasional unbalanced
quotation marks retained.
Ambiguous hyphens at the ends of lines were retained.
Index not checked for proper alphabetization or correct page references.
Page 205: Page number for "distinction between capital and money" was
missing from the original text, but has been added by the Transcriber
based on where the subject appears in the book.
Pages 208, 209: The illustrations are graphs, and the symbols in the
Legends represent the data series plotted in those graphs.
Page 209: "Platted" appears to be a misprint for "Plotted."