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?