PAPERS ON FINANCE AND COMMERCE.

NO. I.

In the following papers it will be our design to treat the questions of Finance and Commerce in a somewhat different manner from the ordinary and current way. The mere records of the transactions had in the world of money and of merchandise belong to the ordinary method of dealing with all matters that interest the people. The facts—the results—only enter into the consideration, and if serious conflict or serious faults are recorded, no attention is paid to the sources from which they spring, and from which they will continue to spring so long as the sources furnish the causes. All subjects, and all parts of the common interests of humanity, will receive from us not only the attention which the present demands, but if the present brings unhappiness to humanity, or does not bring happiness, the fountains will be examined to discover where the stream takes on its bitterness and its sediment—and, for instance, produces financial disease—with the view of exposing to the people what causes their unhappiness or lack of happiness.

As society is constituted at present, nothing within its interests has so much power for good or ill as money. He that has it is independent—is a free man; while he that has it not is dependent—a slave in some one or other of the forms of slavery. Men recognize that this is an imperfect condition of society, made up, as it is of people born free and equal in the eyes of the law, and by it entitled to their chosen path of happiness. These being the birthright of every one, the construction of society should be such as to guarantee it to every one. As society improves its condition, the advance made will be ever toward 175practical equality in all temporal things. It is the duty of those who labor in the interests of society to lay hold of the future, and bring its conditions into the broadest present application.

Money being the corner-stone upon which society is now built, is thereby that stone of all others which should be perfect, not only in form, but perfect in duration: that is, it should be of such composite elements that time nor change should be able to produce any effect, either upon its external appearance or upon the arrangement of its parts. It becomes apparent, then, at first observation from this standpoint, that our present corner-stone is not one that can endure; it becomes plain that it not only will change, but that it should change, because of its capability to meet the requirement of a perfect corner-stone, upon which society can rest with perfect and continuous security.

Gold has long been the accepted money standard of value. Intrinsically, it has no value other than for the other uses to which it is adapted, but custom and long usage have raised it into the position of a god, before whom the world falls down and worships with as much devotion as Pagans do before their various gods. And, considered as a god, none other has in this day and age one-half the power, nor is any other worshiped with one-half the devotion it is. This may be considered an unjust reflection upon the so-called Christians; but let them, as a class, examine themselves individually, and if the analysis does not sustain the proposition, we shall be very willing to confess our error, and appeal for forgiveness. Gold has been the accepted money standard, but the practice, since the depreciation of our country’s credit, has, to all intents and purposes, reduced it to a mere commodity. Our money is not measured by Gold—Gold is measured by it. It may be said that this is merely for temporary convenience, but nevertheless it is so measured, and the practice has demonstrated that so far as facilitating exchange of products in our own country is concerned, its use might be dispensed with. If it can be dispensed with and trade continue, its importance as money entirely disappears. Would dispensing with its use offer any impediments to commerce with other countries? But this article is simply introductory, intended rather to indicate what our treatment of finance will be, than for the discussion of any of the questions that arise under it. These will remain for future consideration; here we will simply state that we do not believe gold to be a true standard of value; that we do not believe its use as money is at all necessary; that we do not believe that its use as money contributes to general prosperity; 176and that we do believe that its use will be supplanted by a new medium—the true representative of that portion of the real wealth of the country which is at the given time in the process of exchange.

New York, August 25, 1870.

PAPERS ON FINANCE AND COMMERCE.

NO. II.

Finance and commerce are so intimately connected that one cannot be treated without the other being, at least, indirectly alluded to. If these terms are analyzed, their relations will be perfectly understood. Commerce is the simple exchange of something one individual possesses for something another individual is possessed of. This exchange may be between neighbors, or between nations; it is all commerce. In ancient times, articles of merchandise were exchanged for articles of merchandise, but as commerce increased in amount, and its limits became extended, it became necessary to make use of something that should represent value, so that there need not, in all cases, be an actual transfer of property for property. The medium used to facilitate these exchanges was money in its first phases, and out of this necessity have grown all the different monetary devices made use of, at various times, in the history of civilization.

To demonstrate that money is only a convenience and not an absolute necessity, any one has only to observe that frequent purchases, sales and payments are made without the use of money or any other representative of value, but by the direct transfer of value for value. It is plain, then, that money, be it gold, silver or what else it may, if not intrinsically of the value set upon it, but that it represents something that has intrinsic value. If this is questioned, let any one who doubts it procure some gold in its original state and endeavor to make exchanges with it. He will find that no one will receive it, even at its value by weight. Were he to apply to a dozen places where gold, 177in mass, is dealt in, he would be offered a dozen different prices for his article. It is only after gold has passed through the hands of the government, and has received its impress as an indorsement, that it becomes current as money.

It is further to be observed that the time came when even coin became too burdensome to be directly transferred in making exchanges, and something representing it was brought into use. This consisted of bits of paper, containing upon them promises to pay so much in coin, &c., &c.; and under this practice banks of issue sprung into existence, their issues being supposed to represent a gold or coin basis of value. But a full representation alone of coin deposited was found not to supply a sufficient circulating medium to accommodate the movement of produce, and for other uses, and it became customary for the banks to expand their issues beyond the amount of coin on hand, upon the supposition that these promises to pay would never be presented in sufficient quantities to consume their actual specie. But suppositions are only true generally, and hence it came that promises to pay often exhausted the ability to pay, and here began the ills that must necessarily attend a false standard of values.

In all seasons of financial distress, gold, as a standard, has failed. The necessities of our late war demonstrated and represented the fallacy of an absolute standard in gold, and happily suggested a better standard. No sooner did the supply of gold at the command of the government fail, than the latter was compelled to resort to its credit, or to a direct representation of the true value and wealth of the country. The credit of the government was the ability and intention of the country to meet the promises of its government, and this ability determined its currency. It was not the amount of gold, absolutely, that the country was supposed capable of acquiring that thus entered into consideration, but the ability of the country to produce certain quantities of merchandise, which should, in time, be sufficient, above consumption, to balance these promises to pay. It was the productive capacity of this country that gave value to its currency and bonds irrespective of gold. The productive capacity of a country is then the virtual standard of the value of its currency, and as gold can only be obtained by the products of the country, its necessity as a medium may be dispensed with. It is now predicted that the sooner gold, as the money god, is dethroned in the hearts and customs of the people, the sooner a sound and perfect system of finance will be inaugurated.

178That there is a true standard of value, and one that can never fail in time of need, nor be made use of for speculative purposes as gold is, must be apparent to every thinking mind. How many of the people of this country, during the last eight years, have received gold or silver for what they have disposed of, or have used it to purchase their necessities? And yet the talk of a return to specie payment is everywhere heard. When will the idol worship of the god of gold be completely abolished?

New York, August 31, 1870.

PAPERS ON FINANCE AND COMMERCE.

NO. III.

We have said that there is a true standard of value, and that this is based in the capacity of a country to pay without infringing upon the country itself; that is, without resorting to an actual transfer of supposed title to any part of its domain for something the domain itself produced. Actual ownership in the soil of a country is an assumption, as has been stated in the “Papers on Labor and Capital.” If the title to any real estate is traced back far enough, it would be found to have originated in the practice of “Squatter Sovereignty.” The inhabitants of a country having the right to make use of the land they occupy, render it more or less valuable, according to the amount they can make it produce, whether it be in the shape of its natural products or those of artificial assistance, or whether it is simply occupied for purposes other than production.

The basis, however, of the value is in the productions of the soil of a country; it matters not how much value may be added by the art of man to what nature furnishes. This would find no scope for action did the earth not first yield the fruits of her bosom to the hand of the artist. The finest cloth, the most delicate silks and laces, the most costly jewels, even the light that robs night of its darkness, are all primarily 179the products of the earth. Without this yielding of the earth there would be nothing. This giving up of the earth to the demands, efforts and desires of man, is the process by which he acquires all his wealth. Even the gold that has so long been called money the earth has yielded, and still yields. When this is considered in its true light, we come to a realization that gold is no more money, absolutely, than any other of the different products of the earth, but with them all it forms the real value standard. Gold is relatively valuable for the general uses it can be made to subserve; so, too, and only so, are all other products. Any other metal might just as well have been selected out of which to coin money as gold. It no longer answers the purpose it has been used for so long. It is not “radical” enough to suit “the times.” It is one of the landmarks of conservatism, reminding us that once it required at least six months to communicate with, and receive an answer from, London, whereas we now know the 5 o’clock P. M. closing prices of stocks in London at 1 o’clock of the same day.

Such annihilation of time and space is entirely ahead of, and above, the era of gold, which must yield its sway to something more elastic, and consequently possible of better adaptation to the constantly varying requirements of the peoples. The world having been so long held in financial bondage to gold, is now approaching a period wherein it will rid itself of the yoke. A very few people in the world rule it. What of the thrones of Europe without the Rothschilds? and what of them if not for gold? The vast debts of those countries alone render crowns longer endurable. Just a little more intelligence among the common people—just a few more newspapers and readers, and the work is done; those who play king, and they who are the real kings, will fall together. Kings rule the people, but money rules kings. This is beginning to be realized, and the realization is not satisfactory to those who produce wealth; they do not care to live under the tyranny of a god they themselves have fashioned. But after gold, what?

New York, Sept 7, 1870.

180

PAPERS ON FINANCE AND COMMERCE.

NO. IV.

If gold, as a medium of exchange, is behind the requirements of the times—and that it is has been pretty fully demonstrated—some reform should be instituted to supply the failure; some reform—not merely to meet the exigencies of present time and circumstances—which should be inaugurated as a permanent change.

Our government, during the last war, was obliged to resort to what was considered then by nearly all people, and is still considered by many people, as very extreme measures, in order to furnish the material by which the war might be carried on. Without the greenbacks we never could have succeeded as we did. To the person who conceived this project we are as greatly indebted as to our generals, who successfully prosecuted the war upon the means furnished through his financial foresight. This was one means of resorting to the credit of the country. If the credit of the country was sufficiently good to furnish it with the means to carry on such an exhaustive war as ours was, it surely should be good for any peaceful time.

For our part, we cannot see the propriety of returning to specie payment; and there is one insuperable objection to it. Gold cannot furnish the circulating medium for the world, and credit must be resorted to; and the necessity of having two kinds of circulation involves difficulties which the mercantile world would be glad to have forever done with.

Why should people be obliged to use one kind of circulating medium to purchase another kind with, and then use this second kind to pay his debts to another party, who will sell it again to obtain what the first person used to purchase it? This is the logic of specie payments. If it is argued that the actual transfer of the gold is not necessary, we would then ask why is specie payment desirable at all? The facts regarding this question are that people have become wedded to the idea that gold is the only possible thing that can be made money, while all 181their practice has been that it is the least entitled to the name of money of anything they have ever used as such.

As has been said, the real standard value of a country is its capacity to produce, and it is this production that requires to be moved, exchanged, bartered or sold. The use of something to represent this, for which it can stand responsible in general terms, is what is required of money. That kind of money which will best meet all these requirements is the best money. That kind of money which has elasticity, that will be plenty when business is active, and that can be readily put to other use for profit when business is less demanding, is the kind the prosperity of a country demands. With a money of this kind, all financial crises would be impossible. It is the possibility of making a stringent market that unsettles financial matters and causes financial destruction. And it is because we have not a financial system of our own that it is possible for exigencies in other countries to unsettle values here. To-day, the price of our securities in London determines the price of gold here. In view of the possible complications in which Europe is liable to be involved any time, and which she must within a very few years be involved in, it becomes a matter of considerable moment, whether our finances are to be governed and guided by the condition of things there, when these things shall come.

As a nation we are or can be, were it necessary, independent of the world, and are the first and best representative of a republican form of government. Why should we not be the nation to give to the world a reformed currency? The world—or that part of it which has grown to appreciate our kind of freedom—involuntarily turns its eyes to us for patterns of all things that a people during a change of government require. One of the first things a government requires is money. Why shall we not show the nations how to make the best use of their means, and give them a system that will do more for them than any system that has yet been tried, and by so doing also meet our own needs?

The capability to do this would instantly place us at the head of nations, and financially to stand thus, is to complete the measure of our greatness. Politically, we can never be subdued. During our late war there were two millions of men under arms. Just in this proportion, also, should we be powerful financially, and to become so would be to be allotted by the world the lead of it and all its nations.

182

PAPERS ON FINANCE AND COMMERCE.

NO. V.

The gravest of all questions of political economy is that of a country’s money. A very great deal more of the people’s common happiness depends upon money than even political economists generally suppose. Happiness is very closely allied to prosperity, and general prosperity in a country can never obtain unless it is under a sound financial system. Very few people understand what general prosperity means. It does not mean vast sums of gold in the hands of a few of the inhabitants of the country, while the great majority struggle month after month for the absolute necessities of life. There may be a great deal of money in a country and still be very little general prosperity with the common people. The question of money has never been considered philosophically, nor with due regard to the common interests of humanity. It is always viewed from the standpoint of the wealthy, and usually by the wealthy or by those in their direct interests.

The producing classes, however, are beginning to awake to the fact that they have never been represented in any of the legislation that has been had regarding finance and the currency they have been forced to use. On the contrary, they perceive that all legislation has been in the interests of capital, and this perception is what is arraying these supposed two interests against each other. The facts existing have only to be considered to prove that our financial system is unsound, and this should be sufficient to force our legislation to take up the question, and to handle it in the light of the demands of the present, utterly regardless of the superstition that has so long existed about the gold idol.

The objectors to any thing as money but gold, make much of the need of it to make good the balances of trade between different countries. But these forget that gold is nothing but merchandise until the country has placed its indorsement upon it, and that it is this which gives it the character of money, and that it does not derive this character from the fact that it is gold. The indorsement of a country upon gold 183coin is a simple guarantee that it is of a specific purity, after this, its value is determined by its weight. Thus gold sent to other countries to pay balances against us, is sent and received, as so much by weight of a specific quality of gold, and not as so much of our national money. The force of this objection, then, is utterly destroyed by these considerations; and especially so, when this same gold, coined by our government, is recoined by the country we send it to. Here it is distinctly proved that gold is not money, and that it is only a commodity which we produce and part with in exchange for other commodities, and that it is just as valuable for this purpose if it goes direct from the mines where we produce it, to other countries, as it is if it goes by the way of a United States Mint, where it receives the indorsement of the government.

To go still deeper, there is a no more mischievous idea than that all paper money should be redeemable in gold which should alone be legal-tender, because everybody knows that the amount of currency this country demands cannot by any possibility ever be redeemed by gold. It may be redeemed by using the same gold coin over and over again, as it is again and again received and paid; but just here is the difficulty; for ten dollars of currency in reality have to be redeemed by the one gold dollar. This is the practice of specie payments, and a most mischievous one it is, too; it is the sole idea that leads to great inflations, and consequently to great collapses in finances and values. Under this system there never was nor never can be a reliable mercantile value to anything. Fluctuation is its direct result, while speculation, without this, would cease, and the vast horde of mere speculators who spend their whole time in it, would of necessity be compelled to become producers of some kind. It will thus be seen that the first principles of economy are in direct opposition to the results coming from the use of gold as money; and that these declare that something should supersede its use as such that it would be impossible to speculate upon; something that would have such absolute and never varying value as could be positively counted upon to endure a month, a year, a century or a thousand years, as the cases in question should respectively involve. Such a substantial thing might with propriety be called money, and in comparison to it gold would sink into utter insignificance and be forgotten.

New York, September 14, 1870.

184

PAPERS ON FINANCE AND COMMERCE.

NO. VI.

A very fallacious argument has been the rule, because gold has been considered “money,” that all currency is “credit;” this at first blush would seem to be still further strengthened by the proposition that gold is only merchandise. By no means, however, is all currency credit. All bank currency is credit. All currency that is not legal-tender for contracts and debts is credit; but a currency which is of itself legal-tender is money, because it is itself intrinsically valuable. All the uses one has for money it fills; it not only meets all demands that “credit currency” can meet, but it fills other and specific demands that bank currency cannot. It is receivable for nearly all governmental demands upon the people; it pays taxes, and cannot be refused by any one in payment of contracts and obligations. Such a currency has all the features and characteristics of money, except that in our practice it has not been receivable for duties upon imports. Had greenbacks been made legal-tender for all governmental purposes, they would have been “real money,” having intrinsic value, of which nothing short of the absolute destruction of the country and death of its inhabitants could have robbed them. The gold fallacy, however, prevented Congress from seeing the real drift of what they did, and the country, therefore, must yet a little longer be blinded by the thought that gold is the only money.

The only argument which is at all tenable, that converts anything that has all the qualities of merchandise into a measure of value is, that the article thus rendered costs at all times, and in all countries, the same labor to produce it. This test, every one knows, is not applicable to any single thing the earth yields; and as little as to any other does it attach to gold, and, therefore, gold in itself is subject to fluctuation, and can in no sense be considered an absolute measure of anything. This country, since California began to yield her gold, has been a great producer of the precious metal; that is, a certain amount of labor has produced a larger proportionate quantity of it than has generally been 185produced in this or in other countries; consequently we have been large exporters, not of money, but of gold, in its character as merchandise: very much of this has been exported in mass, uncoined, in which condition not even the most rigid gold stickler will pretend it is money.

Hence it follows that we do not need “money” to balance our accounts with other countries; we need particular kinds of merchandise which we have in larger quantities than we have use for, or which other countries need more than they do some merchandise they have which we require more than they do; which system brings about exchange, the sum total of which is commerce. If commerce were left to regulate itself without any interference to prevent the natural flow and reflux of the products of the earth, as stated above, there would soon become established permanent courses for certain products, to take which would still further localize all kinds of labor, and render each of nearly unvarying profit. It is this interference with the natural demand and supply of the various parts and peoples of the earth that breaks down the equilibrium of labor, and makes possible the extreme unequal distribution of wealth.

It will be seen that all questions of finance and commerce are intimately connected, while those of labor and capital grow out of the conditions they make possible and inevitable. To properly understand the relations of capital and labor, and to harmonize them, demands a correct comprehension of the basic principles of economy which relate to finance and commerce. If these were based in correct universal principles, there could be no questions to settle between labor and capital. Hence it is that it becomes specially requisite at this time, when labor is rising to a sense of the unjust position it is confined to, that these questions of finance should be agitated as the most important ones for adjustment. To begin at the root of the evil is the philosophic way to deal with all the ills of society as it is with all ills which result in the gradual evolution of all departments of the universe.

For a measure of value and to aid exchanges, then, there is required a currency, or medium, that does not possess any of the characteristics of merchandise, that is not a commodity nor a product in any sense of those terms, but something that has intrinsic value of itself, being a true representative of value, and of equal and absolute value at all times and under all circumstances and changes. Such a thing would be money, and anything not possessing these requirements is not worthy the name of money.

186The question arises, then, Can there be anything formulated or brought into use that would possess all these requirements under all circumstances? It is quite certain that there never has been, as yet, anything used as money that was as absolute as a dollar, as a pound is as a pound, or as a foot is as a foot. A pound is just a pound under any and all circumstances; so, too, is a foot under the same; and so is a gallon, and so is a cord of wood; whether a greater or less number of any of them are required at one time or another for use, they are always a pound, a foot, a gallon, or a cord, and no more nor no less. Now, what we require is a measure of values of just as fixed and absolute a character as any of these. When this is acquired, then just as unvarying value will attach to the measure of values as there does to those measures. Money is but another name for values, and the dollar is one of the divisions of its measures. There is no more reason why money should fluctuate in its capacity of measuring or of being measured than there is that the foot should grow longer or shorter, or the pound greater or less, and there is just the same reason why it should not.

Then, the products of the earth once placed upon this unvarying standard, the cost of producing each different product would determine its exact value, and in time the producers of each kind would be upon an exact equality in regard to the value of their products. It is the attaching, in practice, of absolute value to something that can have no absolute value which makes possible all the various degrees of poverty that belong to the laboring or producing classes. If these inequalities are to be remedied, there is but one method by which it can be done—that is, to reduce our money systems to the same fixedness that we have reduced all our other systems to. This once done, all labor will gravitate to an equality, and capital will become its best ally instead of, as now, its apparent enemy, while each of these interests, and all divisions of each of them, everywhere in the world, would become mutual, and by so being would prepare the way and lay the foundation for that grand harmonization of society which must precede the practical co-operation of mankind, as brethren, under a universal unitary government of the United States of the World.

New York, Sept. 20, 1870.

187

PAPERS ON FINANCE AND COMMERCE.

NO. VII.

The point has now been arrived at where it is to be considered as decided that gold is not, cannot, be money; that it is a valuable article of merchandise. Its utility beyond this character has not only departed as a principle, but in practice a very considerable portion of the most enlightened people in the world consider it the source of great mischief, and the more the causes of the financial ills we are subjected to are analyzed, the more they will be found to be dependent upon the attaching of a specific value to something that is as changeable in cost of production as it is possible for anything to be.

The philosopher and the best reformer would here step in and say that it is their province not so much to tear down the old as it is to prepare the new that shall take the place of the old. This is the science of all reform. However, before there can be a field prepared in which the new can be used, the defunct condition of the old must be pointed out, and its debris cleared away, so that the new may find space for operation.

This preparation has in reality been already made. The necessities of the Government in the late war broke the first ground for the consideration of this very important question, and prepared the minds of the mass of the people, though, perhaps, unconsciously, for the reception of the idea that it is possible to do without gold; that specie payment is by no means a necessary accompaniment of a sound financial condition, and that a money system which is made dependent upon a redemption by something else, is not only not to be desired, but that it is the real foundation for all financial disasters, because it makes an undue expansion possible. The people who would once have considered a proposition for an irredeemable currency with the utmost alarm now discuss it as one of the things that is sure to be. It is believed by those who have studied this subject deepest that the time has arrived when this government must enter upon the consideration of a permanent change in our financial system, and that a return to the gold standard would be a disaster.

188But, says the objector, how can an irredeemable currency ever be made to adapt itself to the varied demands of the country? How can anything so unsubstantial as a paper currency, without gold support, be made as absolute a measure of values as the yard-stick is of distance? and, if this can be accomplished, where will the elasticity of the currency be found? In general terms it is assumed that, unless the proposed financial system will answer all these conditions—that unless it will be elastic, adapting itself to all the demands that can be made, be they great or small, and at the same time remain absolute in its value, it is not even fit to be thought of, much less to be seriously considered as a substitute for what has been.

And this brings us back to the beginning of the argument—to the point from which the first departure was made. The course that will be pursued, however, after leaving this point this time will not be that of reconnoitring—looking over—the ground to be covered, but a steady, firm and final advance directly toward the objective result desired, which, if a failure is made in reaching, the campaign against gold may be considered a failure. Under the system of currency being good only when it can be redeemed by gold, there is required, to make the currency actually in circulation good, just as many gold dollars as there are currency dollars—that is, if there is at any time in circulation any more currency than there is gold to redeem it, then there is an expansion, which any sudden change in any of the circumstances by which nations are surrounded is liable to convert into a collapse. So long as everything is prosperous, so long as nothing arises to shake the confidence of the people, or to call the attention of any considerable number to the possibility that there is not gold enough to redeem all the currency that is in circulation, so long everything goes well; but so soon as any one of said conditions occur or change, then there is a rush to see who shall get what gold there is; the supply exhausted, the unredeemed currency is valueless. This is the practice and the result of a redeemable currency; the same results will also follow so long as such a system is tolerated.

Everybody knows that there never has been a currency in circulation sufficient in quantity to meet all the requirements of commerce that had a complete basis in gold, and everybody also knows that there is not gold enough in the world to meet this specific requirement. Hence it is that institutions possessing, say $100,000 in gold, put forth and obtain interest upon $500,000 in currency—that is to say, with a real capital of $100,000, which is worth six per cent. interest, they 189really obtain thirty per cent. interest, thus making it possible for them to double their original capital every three or four years. Did those who now so loudly complain of the National Banks receiving interest from the government upon their bonds deposited, and from the people upon their circulation, ever object to the greater enormities of the specie-paying banks?

The only use of money is to facilitate exchanges of what the earth produces, voluntarily or under compulsion. Money, then, has its direct relation to these products as a whole, and can have no special relation to any part of them; if made to enter upon and sustain any such special relation, it is a purely arbitrary law, without foundation in principle, that compels it, and all arbitrary laws belong to the ages past, when brute force was required to guide ignorance; they cannot be long in this age without generating irritation, and such irritation is now being rapidly developed all over the world, wherever the laboring classes have become at all advanced in knowledge. The few can no longer control the many; the many are to control the few. Capital, through false systems of values, has been able to control labor; but the time has nearly come when the producing many will control the accumulated wealth of the world for the benefit of the whole world—not simply and only because they are the many, but because they are to be reinforced by the invincible powers of demonstrated science, which are always to be found operating for the “greatest good for the greatest number.”

New York, Sept. 27, 1870.

PAPERS ON FINANCE AND COMMERCE.

NO. VIII.

Money was invented as a method to facilitate the exchanges of the products of the industry of the world. If this is a true definition of money, the only legitimate money it is possible to have is something that naturally grows out of the uses it is required for. A national currency, then, should be a representative of that which it is its sphere to exchange; that is to say: a currency dollar should stand for a certain amount of the different products, which have been produced 190at the expense of a certain amount of labor. It will be perceived that this representation is upon an entirely different hypothesis from that of a currency which is supposed to represent gold.

To begin with something which everybody can understand: It may be supposed that a farmer, occupying a given quantity of land, can, in a series of ten years, produce an average amount of ten thousand dollars per year to dispose of commercially. During the process of production he is obliged to have, say, eight thousand dollars’ worth of means to enable him to continue the process. Now, instead of his being obliged to obtain credit based upon his prospective crop, he is supplied with a representative currency based upon it; this enables him to purchase from time to time that which he requires. When his crop is harvested, it is disposed of, and his currency is redeemed by it.

Now, make this application general to all kinds of production in the country—which is the only basis of value a country can have—and make the government the appraiser of the value thereof, and the maker and utterer of its representative, and a currency will be obtained that will possess all the requirements and characteristics of money; because it will be used to exchange that upon which it is based and of which it is representative, and which is substantially redeemed every time it exchanges any products of the country.

Now, how shall this system be instituted? In the census now being taken, the value of the total products of the country can be arrived at, which sum total should be used as the basis of issue, and continue as such during the next ten years, at the end of which time the increased products would require another valuation to amend the bases for an increased issue for the next ten years.

A currency thus obtained would possess all the substantial value that could be required of money. It is really the basis of value when gold is used; for how are a people to obtain gold unless they have produce to exchange for it?—which operation is, in reality, nothing more than the exchange of one commodity for another, of which it is not and cannot be representative, while in the case of the proposed currency an exchange is effected for that of which it is representative.

In this view of currency for a country, our system of greenbacks come nearer being money than anything that has ever been in use in this or in any other country. They were based upon the capacity of the country to produce, and had the government confined itself to their use, and had not been obliged to invent some further means to predicate securities, we should now have had a real money currency. Who 191is there to find fault with “greenbacks” as a national currency, provided there are enough of them to transact the business of the country with, and no more than just enough? But they lack one essential quality of real money—they are not receivable for all things that people need money for, and which the government demands of the people. They should have been made receivable for all government demands, even for duties on imports. But the necessities of the government, which was then struggling with all its might for existence, made it a “military necessity” to exact gold for duties on imports, as an indirect way of taxing the people who could afford to indulge in the luxuries of foreign products.

Though not available for duties there never has been in the history of the world so stable and invariable a measure of value as the greenbacks, since government ceased issuing any more than the amount already out. There has been no great financial panic and no considerable unsettling of commercial values. They require that one thing more should be done—they should be given a fixed measure of value. Then nothing more could be required of a currency than would be found in the greenbacks.

The reason, and the only reason, why the people can feel that such a currency may be unstable is the fear that the government may be induced to issue it in greater amount than primarily authorized, and consequently that it would depreciate; but this could not be until the nation should issue more than the value of its property. But for this deficiency there is a good and sufficient remedy, which can be provided and used in connection with the proposed new currency, which is to be based upon the capacity of the country for production, and which will also provide for different seasons or parts of seasons when more or less circulating medium is demanded to fulfill the business indications of the country; and with this it is believed all the objections are covered that can possibly be raised by the most strenuous stickler for a currency with a gold basis, though the government may issue never so great a volume of the currency proposed.

New York, Oct. 3, 1870.

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PAPERS ON FINANCE AND COMMERCE.

NO. IX.

There are several propositions which should always remain in all considerations about money, so that the mind may not be led from its true sphere, and so that it may not be invested with peculiarities and characteristics that never did nor never can belong to money:

First and most important—most important because it is the determining point which gives all that follows tangibility—is, that money, in its primary uses, is a means and not an end. It is a means, because it was invented to assist the people in performing something that could be performed without, but not so well without it. And this is the sole use of money. Because this has been lost sight of and it has been invested with other functions, it has been possible for it to be converted to uses which at times, in culminating, have almost turned the world topsy-turvy.

Second. Money is the medium of exchanging commodities, and when diverted from its legitimate use and is made an end, results will ever follow which must be detrimental to the general interests involved.

Third. All the material value money possesses is so possessed because of the relation it bears to commodities, that relation being representative of or standing for.

Fourth. While money is the medium of exchanges, and while it is in use representative of valuable materials, it is in its last analysis the objective of that department of life of which labor is the subjective, and, therefore, when scientifically viewed, it resolves itself into a principal which is one of those upon which society must be built when a perfect foundation is formulated.

In providing a currency, therefore, to meet the uses which are demanded of it, its scientific feature, as a principle, should be the point of departure, and should be the only guide until it is attained. Labor being the basis of production, is the positive power which reaches forth and expends itself, where money, the other pole of the social battery, is reached; this reaction upon labor completes the circuit, and here is the process which is continually going on: A certain amount of labor—a positive power—produces a certain amount of money or negative result 193The interference with this natural process by extraneous means, through which undue quantities of negative forces are accumulated, is that process which robs labor of its natural and, therefore, just results.

The labor which the people of this country are capable of performing, then, is the real basis upon which money should be formulated, and, as in practice, the results generally are annual in their return, this basis should be measured by all they can produce annually. It follows that the basis upon which money should be uttered is this annual capacity of labor, and there should be sufficient uttered to completely measure this capacity, between which two, when once established, there would be an equilibrium produced, which would only require to be permanently regulated and maintained to insure a perfect harmony in the material interests of society.

For example, let it be supposed that the extremest legitimate amount of currency that would be warranted under the previous rule is one billion of dollars; and that this amount is all that the uses of money require when there is the largest amount of business being transacted. It must be remembered that this is not a redeemable currency, but that it is money; that it is the representative of the wealth of the nation, and that the government, as the head of the nation, has uttered it, upon the soundest and best basis of value any money could possibly have—the productive capacity of the country. In this money system there could be no such thing as the failure of banks to redeem their issues; nor of any loss to be sustained by the individual because of the mismanagement of any board of directors; and what is more than all the rest, in the present systems of society, its value would be sustained by the collective accumulated wealth of the whole country, and it could by no possibility depreciate in value so long as the value of the country was not exceeded by the amount of the issue.

To guard the people against all apprehension of such a result ever being possible, there should be a measure placed upon this currency that will at all times make it just as absolute in its measure of value as the pound is in its measure of weight, or as inches are in their measure of distances. Though this is comparatively a new proposition, and one that but very few minds think a possibility, it nevertheless is just as possible and just as essential—and more so—as all other absolute and arbitrary standards are, that have been invented to give regularity and stability in their respective spheres of use.

This currency—this money—should be made convertible into a United States Bond, which should bear such a rate of interest—say 194four per cent.—as experience has or should demonstrate to be the true point of balance; and the bond should also be convertible into the currency at the option of the holder. The rate of interest should be open to readjustment every ten years, when the estimates for the currency are made. Thus it would come that whenever there should be so much currency in circulation that it would be worth less than four per cent. for business uses, the surplus would immediately be converted into four per cent. bonds; and whenever money for business should be worth more than four per cent., the bonds would be converted into the currency in just sufficient quantities to meet the demand and to restore the equilibrium.

It will be readily seen how perfectly this meets all the requirements of money, and how perfectly all the irregularities of demand and supply are met by it. Thus, when business is dull, and but little money is required, it (the surplus) will be in bonds drawing four per cent. interest; the moment business revives, the bonds will be at once converted, and the currency will meet the demand, and thus the constant conversion of the one into the other will regulate and maintain the equilibrium that all previous systems of money have so signally failed to do.

In our next the advantages of such a system will be still further considered and expounded, so that every one may be able to comprehend that a money system is possible of invention, upon which foreign bankers can not play their long-practiced games to any further one-sided advantage.

New York, Oct. 11, 1870.

PAPERS ON FINANCE AND COMMERCE.

NO. X.

The advantages of a currency which, instead of possessing the capacity of redeemability, is at all times convertible into something that 195is 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.

196It 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 197of 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.

PAPERS ON FINANCE AND COMMERCE.

NO. XI.

In our last, the necessity of urging the consideration of the finance question upon Congress, with the view of having the whole range of the matter brought prominently before the country, was proposed. Of all practical questions that require immediate solution, none is of so much importance to man as this; and none more so to woman unless that of equality for herself is. No country can enjoy a series of years of uninterrupted commercial prosperity when that country has a circulating medium which can be affected by the manipulations of shrewd financiers for their own ends. And no financial policy is more ruinous to the true interests of a whole country than that of a constantly changing commercial valuation upon either personal or real estate, excepting alone in the latter, when it becomes the location of more capacity for actual production.

Real estate, abstractly considered, has no appreciable value. It only becomes relatively valuable when labor can make use of it to produce something valuable from it or by it. Absolutely there can be no individual title to any part of the soil of any country. Taken as a whole, the land comprised within the limits of the authority of any government can be made such use of as such government may determine, but as to actual conveyance of absolute individual ownership, that is impossible, because none of the powers involved in the attempt at conveyance could have had any part in the production of said land, and, therefore, could have no right or authority to transfer it, from the fact of an entire lack of title to transfer.

198It may be objected that these are merely technical assumptions which the customs of society have never admitted. So, too, may it be objected to all encroachments of scientific principles upon old forms and customs. Nevertheless, science continues to analyze and demonstrate, and the world continues to come more and more under its guidance every year. In the principles of government science has not, until very recently, found grounds of attack. Since it has come to be recognized that there really is a science of society, and consequently that all its structure can be analyzed, understood and guided by its deductions many of the customs and practices that have so long controlled the people are found to be entirely without the support of principles fundamentally necessary to assure a permanently constructive form of society.

Wherever maxims of temporary policy are the guiding rules, there will ever be alternate construction and destruction; but wherever scientific, demonstrable principles are the governing power, there will be found permanency. That “money” is susceptible of analysis, and of being predicated upon a scientific basis is no longer to be questioned. It is a branch of the science of society, and as such must receive consideration as the science itself becomes disseminated among the peoples. It was not many years ago that “the sciences” were unknown in our common schools. It will not be many years hence until the science of society will be a recognized branch of every child’s education in the most enlightened portions of the world. Political economy, which is a branch of social science, is regarded with favor by many now, and, comprehensively speaking, all these questions which have been looked upon as “too abstract” for common comprehension, are found to be the real principles which underlie all social strictures.

First in importance, because it leads to the recognition of the “ultimate condition,” is the question of intercourse between the peoples of the earth. Money, as the means of bringing about this intercourse, should receive primary consideration. Let the fact once be generally recognized that the world is at last tending to “a unity of the peoples,” and financial and commercial unity are the introductory unities upon which to hasten governmental unity. Were these fully established upon a basis of mutual interest instead of upon the policy of each obtaining all the personal and selfish advantages possible, there could no such strifes as the one convulsing Europe to-day ever occur. Thus it appears that the assimilation of the world under one common interest 199is in the first instance a question of a unity of material interests which must serve as the foundation for all others to build upon.

Finance and commerce, then, lie at the very threshold of all the progress that is to be made in the direction of governmental consolidation, and when so recognized they will be rescued from the position that they now occupy as the means only of pursuing selfish interests, and be raised into that of principles and rules of action by which all intercourse must be regulated. Commerce, in its most comprehensive sense, does not apply merely to the exchange of the material products of the world, but to the exchange of intellectual, moral, social and religious products also, and its application thereby becomes common to all the interests of humanity. And as finance grows out of the necessities of commerce, it also becomes equally with commerce a humanitarian question. It is in this broad and general sense that all questions regarding it should hereafter be considered and not upon the basis of how much advantage such a measure will give an individual or a nation over another individual or nation.

Like all other questions that are now coming prominently before the world for solution, this one of finance and commerce rises to the dignity of a question of humanity. They are all to be considered in regard to their application, not merely to nations, but to all nations—all peoples—as forming the basis of the future confederation of the world under one government to be known as the United States of the World, when all the people will be inspired with a common Religious sentiment in regard to their primary origin and their ultimate destiny; when all the peoples will be governed in their relation to each other by the common social sentiment arising from the recognition of the fact that they are necessarily a community of brothers from having a common origin and destiny; when all the peoples will give a common adhesion to and support the deductions of a Universal Science, let those deductions militate as they will and must against whatever of speculation and theory there may still hang like a pall of night over the intellect of man. To all of these ultimate conditions of mankind, finance and commerce must furnish the means of attainment; and being thus the first essentials to the beginning of the actual constructive process which, when completed, will be this grand consummation, they should be treated with that gravity and consideration which is due to so grand a position as they are assigned in the third order of general civilization. Policy should be entirely discarded from all place in the argument, and principles should alone be discussed. When the consideration is fairly 200begun upon this basis, scientific ideas regarding money will be rapidly diffused among the people, who now do not even dream that money can be reduced to the rules of scientific demonstration.

We urge again that this question should receive its proper share of attention at the hands of our next Congress as being the questions upon which the future good of mankind depends more immediately than any other that will be likely to command the undivided attention of it. This once settled upon the true principles, all other questions which all future Congresses will have to consider will be virtually determined by it.

New York, Nov. 4, 1870.

PAPERS ON FINANCE AND COMMERCE.

NO. XII.

In the treatment of these subjects in the general sense in which they become important to all the people the range is very much extended beyond that commonly compassed by those whose interest compels them to temporary considerations for the promoting of immediate interests under the systems in vogue. All such kind of treatment deals with effects, and would never remedy an existing want, nor correct illegitimate practices. If there are wants in existing systems, and if there are illegitimate practices which are possible under them, there is but one way to supply the one or to correct the other, and that is to go to the root of the matter where the causes exist which make these possible.

In this series of articles it has been the endeavor to point out some of the most prominent evidences that our financial system was unsound, and also to show, by as strict an analysis as was possible in the space allotted, what the true basis for a sound financial system was, and where 201it was to be found, and, having done this, such methods of administration were hinted at as would reduce the system, when put into operation, to a permanent and fixed measure of all values, which it was argued was equally as necessary when value is to be measured as the same fixedness is when any other quantity is to be measured.

It has been suggested by some that, in presenting our statements in the terse, undiluted manner we have, that those who have not been habitual thinkers upon this subject might fail to catch the full application of the propositions, and by so failing consider the system impracticable. To obviate such objections we shall, by further treatment of obscure points, attempt to make them plain to all who can understand the English language.

First, a brief re-statement and condensation of the entire outline: Money, being an invention to facilitate the exchanges of the products of labor, it should be formulated with direct reference to the conditions which made the invention necessary, out of which it should naturally grow; and also with direct regard as to how the invention should best meet the required case—that is, the invention should be adapted to the conditions, instead of making an invention without regard to the conditions, and then attempting to force the conditions to comply with the capacity of the invention.

This is a point which should be thoroughly comprehended, for in it lies the whole fault of making gold a measure of value, and we therefore shall attempt to offer a common illustration directly in point.

Let it be supposed that there is a stream which, to accommodate travel, requires to be bridged, and that the bridge has to be constructed and moved to the stream. The first procedure would be to determine just how long the bridge must be to span the stream. It would then be constructed and moved to the stream, which it of course would span. But suppose persons knowing there was a stream to be crossed, but not knowing its breadth, had gone to work and constructed the bridge and then had attempted to compel it, when too short, to extend across the stream. This would have been a case of attempting to compel the conditions for which the invention was made to accommodate themselves to the invention. And this has been just what the world has been all this time doing in attempting to compel the conditions for which money was invented to accommodate themselves to the possibilities of gold, which was invented as money without any reference being had to the functions it was to perform, or to the conditions it was required to meet.

202It would be just as reasonable and just as sensible to attempt to compel a house to perform the functions of a bridge as it is to attempt to compel gold to perform the functions of money, for gold is not nor cannot ever be made to meet the requirements for which money is demanded; whereas, money should be of such character as to fully meet the requirements for which it is used, but should not be possessed of any qualities that would render it useful for any other purpose whatever, so that there could be no possibility of its ever being used for any other purposes, which impossibility would forever make speculation impossible.

It is believed that we have made clear the purposes for which money is required and also clear that it is utterly futile to attempt to compel any invention to meet those requirements where it is not formulated for the express purpose. We have heretofore shown that gold is a purely arbitrary standard which has no scientific relations whatever to the product of labor which it is required to measure, but that it is itself a product, and as such requires to be measured. A gallon of molasses would never be thought of as a measure of distance, but it would be just as reasonable to expect it to measure it as it is to expect a certain quantity of gold to measure the value of a horse. A horse may be exchanged for a certain amount of gold. So, too, may a horse be exchanged for a certain amount of wheat, but that process does not make either the horse or the wheat money. Money is that which can equally represent the wheat, the horse and the gold; and anything that cannot do this is not money.

Hence it is seen that every step we take in examining the true bearings of the money question brings us nearer and clearer to the proposition already made—that the capacity for production is the true basis of value.

New York, Nov. 11, 1870

PAPERS ON FINANCE AND COMMERCE.

NO. XIII.

We are perfectly aware of the very many objections which arise in the minds of the people to such a currency as has been proposed, but 203the thoughtless one of “What! an irredeemable paper money! Oh, no! that will never do; that means utter repudiation,” which is the most commonly made, scarcely merits attention. Will those, who so earnestly place themselves in opposition to a convertible currency, stop and consider for just one moment. What is the ten-dollar gold piece you have just received for a ten-dollar note good for? Will it feed or clothe you? or will it directly minister to any of your needs or to those of any of your family? Directly, it will do none of these things for you; but you can have it really redeemed by something that will feed, clothe and minister to all your requirements. You will thus perceive that you have been and still are laboring under a foolish delusion regarding this precious metal, for you have all the time been getting your paper money redeemed by your gold money, which you finally are obliged to redeem by that which is really valuable—that which it takes to maintain life and make it desirable.

Now, you know very well that the gold there is in the world cannot redeem or represent the values of the world. Were it a thousand times as valuable as it really is—that is to say, could the consent of the world be obtained to making the amount of gold which now represents one dollar to represent a thousand dollars—there would be a possibility of the gold in existence representing the value of the world; but as no such result as this is anticipated, it is in vain for you to cling to any such mythological and speculative theory.

Again: What terrible outrage would your conscience sustain if you would give a little calmer consideration to a proposition which you have always heretofore rejected without thought. With your gold you have been able to obtain that which you required to sustain and make life agreeable. These necessities, then, are the really valuable things of the world. What objection, then, can you make that can have the sanction, even of your own reason, to at once admitting that these are the only real values the world contains, and consequently—because legitimately—that whatever is money must be a representative of these valuables: and also and further, that anything bearing the name of money, which does not justly and fully represent the sum total of these, is not money in the true sense of that term.

Again: Money may be considered the negative pole of the battery of value. To all things there are two extremes and a mean, the evidence of perfection being that there is always an equilibrium sustained between the extremes through the medium of the mean. Products are positive existences which go forth to administer to the demands of 204human nature, and expend themselves in the negative returning force, money; which, in being brought back to the point which it represents, becomes a positive power itself, having the capacity to obtain labor which restores what has been expended, and thus the circuit is complete and nothing is lost; the same products exist and the same representation of them also exists. If, perchance the return of the products is not always immediately made, the power to return them is never lost, though that may be in a thousand years.

Thus it will be seen by all, if they will but give the necessary attention, that the proposed currency which shall be representative of the products of labor is not only the only natural money there can be, but that it can never appreciate nor depreciate, because every twelve months it is worth just one twenty-fifth part of itself—for it is believed that this per cent. of increase is the true balance between accumulation and production; if, on trial, this balance should be found too small, or too much in favor of production, it would be increased; and if found too large, or too much in favor of accumulation it could be reduced. This must be a subject of test, and when tested, legislation can increase or decrease the standard of value by making the “measure” larger or smaller, just the same as it does other “measures.”

We believe that the inauguration of such a money system would be the beginning of the “leveling down and the leveling up” of the capitalist and the laborer, and that such a thing as practical equality will be impossible under any less radical and comprehensive change from present systems. It is to be hoped that that large proportion of the whole people which is represented by the classes that desire to be “levelled up,” will give this most serious matter their most serious attention. We are aware that it is a subject but little understood, and that the prejudice of the people is in favor of the money god, gold. But, as in religion, so will it be in money; when reason and common sense are admitted to the debate, mythologic spectres and theoretic fancies will begin to assume their true shapes, and the realities to arise from the depths in which they have been confined.

New York, Nov. 25, 1870.

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