The advantages of a currency which, instead of possessing the capacity
of redeemability, is at all times convertible into something that is
itself productive, cannot fail to be appreciated by all who have given
any attention to the science of money. Theories regarding this branch of
social science have been about as destructive to the proper development
and understanding of the science as religious theories have been to that
of a proper appreciation of the functions and the benefits of religion.
The last have at all times stood in the path of progress. So, too, have
the first. And for this reason are we to-day almost at the mercy of
those who are possessed of the accumulated wealth of the world, which in
combination would be a power sufficient to control all government in its
interests, and thus it would be enabled to bring the world again under a
despotism to which that of past despotism would hold no comparison.
In such a money system too much circulating medium could never be
uttered, for the moment a surplus quantity over the demands of
legitimate business was in circulation, that moment it would begin to be
converted into the four per cent. bonds; so that if there were two
thousand millions uttered, it would always be worth just four per cent.;
and if there were but five hundred millions uttered, it would never be
worth any more than four per cent. Thus it is plainly to be seen that
the government would always be necessitated to provide just as near the
amount of circulating medium demanded as it would be possible to arrive
at, _and no more_; for on any such surplus it would, as a matter of
course, be obliged to pay the interest provided, which thus becomes the
absolute measure of value that money requires to make it substantial,
and which is required to deprive it of that capacity for producing great
commercial inflations, which, in the financial history of this country,
develop and burst about every second decade, and which produce not only
the complete destruction of all purely speculative enterprises, but also
the most wide-spread and fearful demoralization in all legitimate
business.
Under such a money system, speculation, with all its accompanying
demoralization, would rapidly depart from all classes of society. It is
a notorious, yet unappreciated fact, that speculative enterprises lie at
the foundation of all financial disorder, for which, if a remedy can be
provided, the very considerable talent and time which is now devoted to
it would be turned into channels of general usefulness and
productiveness. Production is the foundation of all wealth, and,
consequently, to increase wealth, production must be increased.
Speculation is that spirit which constantly saps the vitality of wealth,
and, therefore, society has no greater nor more debasing enemy than
speculation.
It may be objected to by some that speculation leads to national
development; that in many of the wild railroad, emigration, city and
other schemes, that have been projected and carried through under its
stimulus, the welfare of the country has been subserved. To this
ingenious objection it may be answered that, under a sound financial
system, these enterprises would have been undertaken everywhere when the
demands of the country warranted them, and because there was a demand
for them, instead of for the pure purposes of individual or corporate
speculation. One of the best results that would flow from this change of
incentive would be, that no “Bubbles” could be palmed off on the unwary
by “flash” advertising, which would burst at some future time, to the
destruction of some deluded victims of unscrupulous financiers.
It is one of the most fatal of commercial errors to suppose that large
general prices are an evidence of prosperity. On the contrary, it is
true that when the prices affixed to any kind of property are larger
than its real capacity for production, it is an expansion which must at
some time collapse, to the detriment of the holder. Thus, whenever
property is valued at such a price that it cannot be used to pay a
certain per cent. income, its value is expanded, and though this
expansion may continue under the pressure of a so-called prosperity, and
become general, even country-wide, if the general productive capacity of
the country cannot sustain this increased value, collapse must as surely
come as results follow causes. Even in this demonstration it is
conclusively shown that the productive capacity of the country is the
_real_ measure of value, and that, _finally_, no matter how irrelevant
the process of wealth and prices may have been to it, _it is the power
which ultimately measures all values_.
This appears to us such a plain proposition that it seems almost
superfluous to present further arguments to prove the desirability of at
once proceeding to make the productive capacity of the country the basis
of value upon which to issue a currency to meet the legitimate demands
of the people for the purposes of exchange. The attention of all who
realize the unstableness of our present system, and the desirableness of
providing against the tremendous fluctuations it is capable of, is
called to the necessity of uniting to bring this matter prominently
before the NEXT CONGRESS, with the view of having it thus brought
prominently before the _country_, and of having it thoroughly analyzed
and understood. When analyzed and comprehended, the idea of a _gold
basis_ will forever depart from all progressive minds, and the impetus
the new money system will thereby receive will never be checked until
its science is developed into general national practice.
NEW YORK, Oct. 27, 1870.