The Project Gutenberg eBook of Money, by Hon. John P. Jones.

Land being indestructible and irremovable, is believed to be the embodiment of the idea of intrinsic value. Take, then, a lot on Madison Avenue, New York; it is worth perhaps a thousand times as much as a lot of equal size in a village remote from the city. What proportion of its high price is derived from what is called its greater "intrinsic" value? A lot on that fashionable thoroughfare has no intrinsic attribute, or quality, that is not equally the attribute or quality of the village lot. The difference in its value, or, more correctly, the difference in the estimation in which it is held, as compared with that attaching to the village lot, is derived wholly from circumstances that are extrinsic, not from qualities that are intrinsic.

The action of society in utilizing land in the neighborhood of the city lot by building up around it gives that lot a value greater than one of equal size elsewhere.

But in order that a thing may subserve a useful or beneficent purpose it is not necessary that the quality which enables it to subserve that purpose should be intrinsic or inherent in the thing itself.

To apply this reasoning to the subject under discussion—whatever intrinsic qualities the metal, gold, may possess, they confer no force whatever on gold-money.

The money of a country is that thing, whatever it may be, which is commonly accepted in exchange for labor or property and in payment of debts, whether so accepted by force of law, or by universal consent. Its value does not arise from the intrinsic qualities which the material of which it is made may possess, but depends entirely on the extrinsic qualities which law, or general consent, may confer.

Money is of transcendent importance to civilization. It is the physical agency to which society has assigned the function of measuring all equities, and it is the sole agency upon which that incomparable function has been conferred. It is in terms of money that society computes the material value of all human sacrifice, alike the highest effort of genius and the daily toil and sweat of the millions who labor.

In order to measure equitably the natural and inevitable mutations in the value of other things, money should itself be of unchanging value. That is to say, any given amount of money should, so far as human foresight can regulate it, require at all times an equal amount of sacrifice for its acquisition. Thus, in the case of a contract made to-day, requiring the payment of a dollar twelve months hence, that dollar when due should exact from the debtor precisely that amount of sacrifice, and no more, which would be required had he paid the debt the day after contracting it.

No one will deny that the most important quality that money can possess is that it shall truthfully measure and state equities.

As I have shown by the figures heretofore cited, gold has risen in value between 30 and 40 per cent. since the demonetization of silver. It is not therefore so faithful a measure of value as is silver, which as illustrated by a variety of examples, has maintained almost undisturbed its relation to commodities.

THE VALUE OF MONEY, AS SUCH, NOT IN THE MATERIAL BUT IN THE STAMP. MONEY IS AN ORDER FOR PROPERTY AND SERVICES.

The logic of the situation, and the reasoning of all the leading authorities on money, lead irresistibly to the conclusion that its value does not reside in the material, but in the stamp; in other words, on the legal-tender function impressed on that material. It is an order for property and services.

Money by itself * * * has value only by law, and not by nature; so that a change of convention between those who use it is sufficient to deprive it of all its value and power to satisfy all our wants.

But with regard to a future exchange (if we want nothing at present) money is, as it were, our security that it may take place when we do want something.

John Locke, in "Considerations," etc., regarding money, published in 1691, says:

Mankind, having covenanted to put an imaginary value upon gold and silver, by reason of their durableness scarcity, and not being very liable to be counterfeited, have made them, by general consent, the common pledges, whereby men are assured, in exchange for them, to receive equally valuable things to those they parted with, for any quantity of those metals; by which means it comes to pass that the intrinsic value regard in those metals, made the common barter, is nothing but the quantity which men give or receive of them; they having, as money, no other value but as pledges to procure what one wants or desires.

Baudeau, reputed one of the most eminent of an early school of French economists, says:

Coined money in circulation is nothing, as I have said elsewhere, but effective titles on the general mass of useful and agreeable enjoyment which cause the well-being and propagation of the human race.

It is a kind of a bill of exchange, or order payable at the will of the bearer.

A guinea may be considered as a bill for a certain quantity of necessaries and conveniences upon all the tradesmen in the neighborhood.

Those who use coins in ordinary business need never inquire how much metal they contain. Probably not one person in two thousand in this kingdom knows, or need know, that a sovereign should contain 123.27447 grains of standard gold.

Money is made to go. People want coin, not to keep in their own pockets, but to pass it off into their neighbors' pockets.

Money of every kind is an order for goods. It is so considered by the laborer, when he receives it, and it is almost instantly turned into money's worth. It is merely in instrument by which the purchasable stock of the country is distributed with convenience and advantage among the several members of the community.

The pounds or shillings which a person receives are a sort of ticket or order which he can present for payment at any shop he pleases, and which entitle him to receive a certain value of any commodity that he makes choice.

When persons take a piece of money in exchange for services, or products, they can neither eat it, nor drink it, nor clothe themselves with it. The only reason why they take it is, because they believe they can exchange it away whenever they please for other things which they require.

On that view of money McLeod feels justified in styling it credit, and he quotes in support of such a use of the term credit, Burke's description of gold and silver as "the two great recognized species that represent the lasting conventional credit of mankind."

Prof. Francis A. Walker, Money, Trade, etc., page 25, speaking of carved pebbles, glass beads, shells and red feathers, used as money in certain countries at certain times, says:

They were good money, though serving no purpose but ornament and decoration. They were desired by the community in general; men would give for them the fruits of their labor, knowing that with them they could obtain most conveniently in time, in form, and in amount, the fruits of the labor of others.

Men take money with the expectation of parting with it; this is the use to which they mean to put it.

Money is that which passes freely from hand to hand throughout the community, in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it, and without the intention of the person who receives it to consume it, or enjoy it, or apply it to any other use than, in turn, to tender it to others in discharge of debts or payment for commodities.

Even Bonamy Price, who is wedded to the gold standard, in his Principles of Currency, says:

Gold, in the form of money or coin, is not sought for its own sake, as an article of consumption. It must never be regarded as valuable except for the work it performs, so long as it remains in the state of coin. It can be converted at pleasure into an end, into an article of consumption, by being sold; till then it is a mere tool.

The great philosopher, Bishop Berkeley, one of the most acute reasoners, in my judgment, that modern times have produced, in the "Querist," published in 1710, propounds the following pertinent and suggestive questions:

Whether the terms "crown," "livre," "pound sterling," etc., are not to be considered as exponents, or denominations? And whether gold, silver, and paper are not tickets or counters for reckoning, recording, or transferring such denominations? Whether, the denominations being retained, although the bullion were gone, things might not nevertheless be rated, bought, and sold, industry promoted and a circulation of commerce obtained?

Dugald Stewart, professor of moral philosophy in the University of Edinburgh, in his Lectures on Political Economy (Part I, Book II), said:

When gold is converted into coin, its possessor never thinks of anything but its exchangeable value, or supposes a coffer of guineas to be more valuable because they are capable of being transferred into a service of plate for his own use. Why then should we suppose that, if the intrinsic value of gold and silver were completely annihilated, they might not still perform, as well as now, all the functions of money, supposing them to retain all those recommendations (durability, divisibility, etc.) formerly stated, which give them so decided a superiority over everything else which could be employed for the same purpose.

Supposing the supply of the precious metals at present afforded by the mines to fail entirely the world over, there can be little doubt that all the plate now in existence would be gradually converted into money, and gold and silver would soon cease to be employed in the ornamental arts. In this case a few years would obliterate entirely all trace of the intrinsic value of these metals, while their value would be understood to arise from those characteristical qualities (divisibility, durability, etc.) which recommend them as media of exchange. I see no reason why gold and silver should not have maintained their value as money, if they had been applicable to no other purposes than to serve as money. I am therefore disposed to think, with Bishop Berkeley, whether the true idea of money, as such, be not altogether that of a ticket or counter.

Anything which freely circulates from hand to hand, as a common acceptable medium of exchange in any country, is in such country money, even though it ceases to be such, or to possess any value in passing into another country. In a word, an article is determined to be money by reason of the performance by it of certain functions, without regard to its form or substance.

Bastiat, in his "Harmonies Economiques," describing money, used the following illustration:

You have a crown piece. What does it mean in your hands? If you can read with the eye of the mind the inscription it bears, you can distinctly see these words: Pay to the bearer a service equivalent to that which he has rendered to society. Value received and stated, proved and measured by that which in on me.

No words could more correctly describe the unit in a properly regulated system of money. And notwithstanding the attempt to discredit silver coinage, no piece of money, as I have already shown, would better answer, by its steadiness of value, this description of Bastiat's than would the American silver dollar if silver were remonetized.

So far as it applied to gold Bastiat's description was much nearer accuracy in his day than it is in ours. In his life-time the mints of France and of the Continent were open for the coinage of silver equally with gold, and the money supply of the world was not constantly narrowing by being limited to the yield of a single metal whose annual output would hardly more than meet the demand for the arts.

Were Bastiat alive at this time he would reform his description so as to make it read as follows: "You have an American gold piece. You have had it hoarded in a bank vault for fifteen years. What does it mean in your hands? If you can read with the eye of the mind the inscription it bears, you can distinctly see these words: 'Pay to the bearer 50 per cent. more service than he has rendered to society; value not received or stated on me, but resulting from a cunning manipulation of the law of legal tender, through the influence of the holders of gold and of obligations payable therein, and as a reward to the bearer for having had this money hid away and for depriving society of its use for seventeen years.'"

When people are found everywhere working for money and not for the things which they really need, it is clear that they are working for money, not because of the material of which it is composed, but because it is an order for property which they can at any time obtain by parting with the money. To modify and elaborate Bastiat's description of the crown piece, it might be said of the Money Unit of the United States under a properly regulated system:

"You have a dollar. What does it mean in your hands? If you can read with the eye of the mind the inscription it bears, you can distinctly see these words: To all to whom this may come: Greeting. This is a dollar—a unit of money—part of the great instrumentality created by society to effect the multitudinous exchanges of property and services among men. The amount of its command is constant, because the increase in the volume of money is regulated by the sovereign authority of the nation, with strict regard to the increase of population and demand—hence the value of this unit remains unchanging through time. It is an order for all property on sale, and all services for hire; the proportionate amount of such property and service to which its possessor is entitled being fixed by the universal competition to get it."

Many persons fear an outflow of gold from the operation of what is known as "Gresham's law," namely, that "bad money will expel good." Sir Thomas Gresham, a financier of Elizabeth's time, stated that if a number of the gold or silver coins of any given denomination were deprived of part of their pure metal, and so made cheaper than the remainder, a successful circulation of the coins thus deprived would result in the melting up or exportation of the coins of standard weight. Writing of this, Mr. Jevons ("Money and the Mechanism of Exchange," American edition, page 84) says:

Gresham's remarks concerning the inability of good money to drive out bad only referred to moneys of one kind of metal. * * * The people, as a general rule, do not reject the better, but pass from hand to hand indifferently the heavy and the light coins, because their only use for the coin is as a medium of exchange. It is those who are going to melt, export, hoard, or dissolve the coins of the realm, or convert them into jewelry and gold leaf, who carefully select for their purposes the new heavy coins—

There is, however, a theorem which applies to all money, but which was recognized long before Gresham's time—although it has been erroneously called an "extension" of the law or theorem of Gresham.

That theorem is this: If, in any country, there are two forms of money, each of which is a full legal tender, and one of which can be obtained with less sacrifice than the other, the one requiring the least sacrifice will be the cheaper, and if the unit of that cheaper money will perform in every respect the same function in the payment of debts and settlement of all obligations that can be performed by the dearer money, then, for obvious reasons, the cheaper money will come into universal use, and the dearer money will disappear. But it does not follow that the cheaper money is bad money nor the dearer money good money.

The best money is always the money of the contract, that is to say a money whose dollar, whatever it may be made of, is equal in value to the dollar of the contract. If the money of the contract is the cheapest money, then that is the best money, that is the honest money, and that is the only tolerable money.

If that be the sort of "cheap" money that drives out the dear money, then manifestly the dear money is bad money.

A distinguished official of the Government, who was before a committee of this body the other day, insisted that the proposed Treasury notes should be redeemed in the "best money." I asked him what was the "best money." "Why," he said, "the money that is worth the most." Now, it strikes me, Mr. President, that if you have borrowed a dollar, and, through a badly regulated money-system, are made to pay a dollar worth 25 per cent. more than the dollar you borrowed, you are not paying the best money, but the worst money; not an honest dollar, but a swindling and dishonest dollar.

The creditors tell us that all they want is "good money." They and their friends glibly insist that all obligations must be paid in "the best money." This is the delicate and plausible euphemism resorted to in order to gloss over and, if possible, hide from the world the odious and repulsive fact that what the creditors always want is the dearest money—the money that costs the people the most sweat and toil to obtain and which, as time passes, grows dearer and dearer.

This cry for "the best money" is at last beginning to be recognized for what it is—the cunning device of creditors to "catch the conscience" of the people and play upon the sense of fairness that characterizes the great mass of mankind. These interested parties affect to believe that gold is, by nature, the only money metal, ignoring the fact that until silver was displaced by hostile legislation it was, and for four thousand years had been, the principal money metal of the world. But they will no longer be permitted to hide their sinister purpose under the cloak of a demand for the "best money." The masses of the people are aroused on this subject and are beginning to understand it.

According to all fair canons of construction the best money should be and is a money of unchanging value, a money that exacts from the debtor the same amount of sacrifice that he bargained for, and which is all that the creditor is equitably entitled to receive. In other words, the money of the contract, not a money whose exactions are increasing at the rate of 2 per cent. per annum. As McCulloch says, debts being stated in dollars and cents, it is not possible for the creditor openly to augment his debtor's obligation by changing the figures of the debt.

But, Mr. President, while they can not change the figures of the debt, they are enabled, by a crafty manipulation of the money-volume, to do that which, to the debtor, means the same thing; as the following story will illustrate:

A usurer of the coarser type had lent $10,000 on a neighboring farm, for which amount he took the farmer's note, secured by a mortgage on the property. He coveted the farm, and in his anxiety to secure it took his banker into his confidence. He informed the banker that he wanted to get possession of this farm, but it would bring $15,000 under the hammer, and he did not care to pay so much for it. "I have a subtle chemical," said he, "by which I can obliterate from the note and mortgage all trace of the rightful amount ($10,000), and that done, I can insert $15,000. Then, with the genuine signatures on the note and mortgage I can bring suit, and as the farm will not bring more than the face of the note, I shall succeed to the property."

His friend, the banker, however, advised against this course, which he characterized as not only dishonest, but vulgar, and as subjecting the perpetrator of the act to serious penalties. "Honesty" said the banker, "is the best policy." "But," he continued, "I can suggest a plan by which you may accomplish the same end without running counter to law, or the views of society. Why not join our propaganda in advocacy of 'honest money.' Gold is decreasing in quantity, and as the world has been ransacked for it in vain, it is likely to continue decreasing. If we can strike down the twin metal, silver, and devolve the entire money function on gold, it will double the purchasing power of money. Then the foreclosure of your mortgage will be sure to take your neighbor's farm, and probably leave him in your debt besides. Instead of being punished for this, you will receive the plaudits of the 'best society' for the finesse you have displayed and the firm stand you have taken in favor of honest money, and you will take high rank among 'the wisest and most conservative of our financiers.' If your neighbor makes any objection to your action, you may be able to secure his incarceration as a lunatic, but if not, he will come to be regarded in the community as a dishonest 'crank' who wishes to pay his debts in a depreciated money; for it is the constant and assiduous care of our guild to teach that only the dearest money, that which is the most difficult for the laborer, the farmer, and the mechanic to get, is honest money, and the dearer it is the more honest it is."

To be of the fullest service to civilization whatever medium is used to do the work of money should have full money power; that is to say, it should be a legal tender. It is not sufficient that it will satisfy the demands of the Government for taxes.

Whatever is given out by the Government in payment for services rendered (and there is no other way by which payments can be made from the Treasury) should carry with it to him who has rendered the service and receives the payment, the absolute assurance that in any need, or in any contingency, it will serve him as money. There is no other means by which society can be saved from the effects of panics and monetary crises.

With a watchful and intelligent regulation of the money volume, and with the legal tender function attached to everything that is in use as money, and doing the money work, so that it will serve as a universal solvent, panics will be impossible. Under present conditions when panics come, credit money—money not endowed with the legal-tender function, which, under ordinary circumstances, has always been accepted, is refused, and thousands of millions of dollars' worth of property have been confiscated by creditors, because of the scarcity of legal-tender money. As time advances and the method of doing business on credit becomes more and more extended, the more palpable it becomes that society can preserve itself from these periodical convulsions only by broadening, under proper regulation, the legal-tender basis on which, in the ultimate analysis, all business rests.

There is nothing upon which the prosperity and happiness of a people so much depend as on the integrity of their measure of values.

It is universally admitted that after the making of a contract requiring future delivery of a specified number of pounds, bushels, or yards of any commodity, it would be subversive of all equity and justice to change the capacity of the measure constituting the foundation of the contract. These measures, to be just, must remain unchanged. But how infinitely more important is it that money, which is the measurer of all other measures, should itself be unchanged? Of what avail is it that the subordinate measures remain intact while this, the supreme measure, into which all others are finally resolved, is constantly changing? Its "value" is but another name for its purchasing or measuring power. In the case of all time contracts, therefore, any change in the value of money works a destruction of equity, and one of the first objects of society should be to maintain and enforce equities at all times and in all places. This, so far as money can effect it, can only be done by an intelligent regulation of the volume in circulation.

In a note to his edition of Adam Smith's "Wealth of Nations," (page 502) Mr. J. R. McCulloch says:

Money is not a mere commodity, it is also the standard or the measure by which to estimate and compare the value of everything else that is bought and sold, and if it be, as it undoubtedly is, the duty of Government to adopt every practicable means for rendering all foot-rules of the same length, and all bushels of the same capacity, it is still more incumbent upon it to omit nothing that may serve to render money, or the measure of value—a measure which is undoubtedly of the greatest importance—uniform or steady in its value.

Though a measure of value, money is a much more complicated instrument than a yard-stick, pound weight, or bushel. Were it not so, a child could fix value with the same precision as an adult.

As value resides in human estimation, it will frequently vary as to the same object. An intending purchaser may have one notion of the value of an article, an intending seller another. Money, therefore, is a measure of value in the sense that it is a measure of the average human judgment—from which results price. As Mr. McCulloch says, no means known to science or art should be left untried to keep the value of money unchanging.

When a man promises to deliver money or makes any time contract, he makes a mental calculation as to what amount of property, or of the product of his labor, will enable him to meet his engagement. If he be a farmer, raising wheat, there passes through his mind the sacrifice and toil necessary to raise it, and the quantity he can raise; if a cotton manufacturer the cost of spindles, of looms, and steam-engines; the wages of labor and interest on plant.

I knew a cotton manufacturer who wanted $10,000. His business was good. He was sober, honest, and industrious; had a thorough knowledge of his trade; managed his employés himself, and took the greatest pains to conduct his business on the strictest business principles. He wanted the money to make some improvements in his factory. He knew how many spindles and looms he had; how much could be done with a pound of cotton, how much it cost, and how much each spindle and loom would do. He said to a capitalist, "I know all about cotton spinning and weaving, and do not know anything about this thing called money, but I want $10,000 of it." Said he, "My cloth is worth 10 cents a yard; it sells at that rate in unlimited quantities by wholesale; nobody can make it any cheaper; but I am not working a gold mine; I am not manufacturing legal-tender paper money, and the only way I can get money is to swap my cotton cloth for it. I will give you my note for 100,000 yards of cotton cloth, which will be equal to $10,000, and will pay 2 inches a yard each year as interest."

This was satisfactory to the capitalist, and the note was made, signed, and delivered accordingly, and the improvements were made in the factory.

During the year everything went smoothly; the spindles and looms worked well, repairs to machinery were light; cotton had been bought at proper rates; and no improved processes had been discovered or applied in the production of cotton-cloth. There was no hitch in any direction.

At the appointed time, the creditor called for his cloth. "I am ready," said the debtor, "to pay the hundred thousand yards of cotton cloth, with interest." When he came to measure it off, however, he was astounded to find he was short. Some painful suspicions crossed his mind. It seemed as though somebody had either robbed him of cloth, or else he had not manufactured as much of it as he had supposed. There did not seem to be so many yards of the cloth as there ought to be. He knew he had used the same number of pounds of cotton that it had been his custom to use for 100,000 yards of cloth and for 200,000 inches of cloth in addition; still, there was no denying the fact of the shortage.

He measured it again and again, and had finally to admit that he was unable to keep his engagement. This was a source of great distress to him. He could not sleep that night. But, the creditor being importunate, the cotton manufacturer next morning borrowed enough cloth from the proprietor of a neighboring factory and paid his obligation. But, not understanding how his carefully made plans had failed, and in order to avoid similar mistakes in the future, he had an examination made of the yard-stick and found that instead of being 36 inches long the yard-stick he had used was 40 inches.

In talking the matter over with his neighbor, the cotton manufacturer said: "I have been swindled; they 'rung in' on me a lengthened yard-stick, by the measurement of which I have paid my debt, and I have therefore paid in reality more than I contracted to pay."

"Well," said the friend, "I do not see that you are any worse off than I am. I borrowed as much as you did, and at the same time; but I agreed to pay my debt in money, and gave my note for $10,000 with interest. The increased command over cloth acquired by the dollars I have had to pay, caused by the demonetization of silver, has juggled me out of as much cloth as you have been juggled out of by the lengthened yard-stick. But you have one recourse; you can put into the penitentiary the man who 'rung in' the lengthened yard-stick on you, while the increase in the value of the dollar which I have paid has been effected in the name of the gold standard and honest money, and leaves me without recourse."

In its ultimate analysis, money is the yard-stick, the bushel and the pound weight of commerce.

When you shrink the volume of money, and so increase the measuring power of the dollar, you lengthen the yard-stick, enlarge the specific gravity of the pound and the cubical content of the bushel, in violation of all equities.

It is utterly impossible to secure a proper regulation of the money volume with gold alone, the yield of which has declined from an average of $130,000,000 a year between 1851 and 1873 to $105,000,000 a year between 1873 and 1889.

Everybody admits that the value of all other things is regulated by the play against each other of the forces of supply and demand. No reason has been or can be given why the value of the unit of money is not subject to this law.

The demand for money is equivalent to the sum of the demands for all other things whatsoever, for it is through a demand first made on money that all the wants of man are satisfied. The demand for money is instant, constant, and unceasing and is always at a maximum. If any man wants a pair of shoes, or a suit of clothes, he does not make his demand first on the shoemaker, or clothier. No man except a beggar makes a demand directly for food, clothes, or any other article. Whether it be to obtain clothing, food, or shelter—whether the simplest necessity or the greatest luxury of life—it is on money that the demand is first made. As this rule operates throughout the entire range of commodities it is manifest that the demand for money equals at least the united demands for all other things.

While population remains stationary, the demand for money will remain the same. As the demand for one article becomes less, the demand for some other which shall take its place becomes greater. The demand for money therefore must ever be as pressing and urgent as the needs of man are varied, incessant, and importunate.

Such being the demand for money, what is the supply? It is the total number of units of money in circulation (actual or potential) in any country.

The force of the demand for money operating against the supply is represented by the earnest, incessant struggle to obtain it. All men, in all trades and occupations, are offering either property or services for money. Each shoemaker in each locality is in competition with every other shoemaker in the same locality, each hatter is in competition with every other hatter, each clothier with every other clothier, all offering their wares for units of money. In this universal and perpetual competition for money, that number of shoemakers that can supply the demand for shoes at the smallest average price (excellence of quality being taken into account) will fix the market value of shoes in money; and conversely, will fix the value of money in shoes. So with the hatters as to hats, so with the tailors as to clothes, and so with those engaged in all other occupations as to the products respectively of their labor.

The transcendant importance of money, and the constant pressure of the demand for it may be realized by comparing its utility with that of any other force that contributes to human welfare.

In all the broad range of articles that, in a state of civilization, are needed by man, the only absolutely indispensable thing is money. For everything else there is some substitute—some alternative; for money there is none. Among articles of food, if beef rise in price, the demand for it will diminish, as a certain proportion of the people will resort to other forms of food. If, by reason of its continued scarcity, beef continue to rise, the demand will further diminish, until finally it may altogether cease and center on something else. So in the matter of clothing. If any one fabric become scarce, and consequently dear, the demand will diminish, and, if the price continue rising, it is only a question of time for the demand to cease and be transferred to some alternative.

But this can not be the case with money. It can never be driven out of use. There is not, and there never can be, any substitute for it. It may become so scarce that one dollar at the end of a decade may buy ten times as much as at the beginning; that is to say, it may cost in labor or commodities ten times as much to get it, but at whatever cost, the people must have it. Without money the demands of civilization could not be supplied.

Money was the most potent instrumentality in the evolution of society from a low to a high plane of civilization. It is valueless to man in isolation. It is indispensable to man in organized society. It is as necessary for the proprietary distribution of wealth as railroads and steamships are to its physical distribution. The aggregate force of the demand for money in any country depends upon the numbers of the population; with a stationary population the demand is steady, with an increasing population the demand increases, and in order to maintain undisturbed the equation of supply and demand the volume of money should be increased in at least a ratio corresponding to that of the increase of population.

There are certain circumstances that to some extent disturb the relations between population and money supply, such as the broadening of the areas of population, and the multiplication of money centers. These circumstances might render necessary a larger percentage of increase in the money volume than would be indicated by the increase of the population.

But under any circumstances the smallest money-increase that will suffice to maintain the equity of time contracts is an increase corresponding to the increase of numbers of the population.

Under conditions of unvarying demand and unvarying supply the value of the unit of money would be unvarying. If as population and demand increase the supply of money be proportionately increased, there is no possibility of a change in the value of the unit of money.

The constant and unceasing effort to exchange services and all forms of property, which have but limited command over the objects of human desire, for money, that sole instrumentality that has unlimited command over such objects, is, and ever will be, eager, intense, and unwavering.

With population and consequent demand rapidly increasing how do the advocates of the gold standard expect to increase the money volume of the country in this proportion, while the yield of gold, instead of increasing in proportion to demand, is every day becoming less and less capable of meeting the requirements of the arts alone?

THE QUANTITY OF MONEY IN CIRCULATION SHOULD INCREASE IN A RATIO NOT LESS THAN THE RATIO OF INCREASE OF POPULATION.

It will be admitted that if the population of a country be increased by any given percentage there will be a proportionate increase in the demand for all articles that supply human needs. If the population increases by 3 per cent., there will be needed 3 per cent. more house-room, 3 per cent. more furniture, 3 per cent. more food, 3 per cent. more of all things that enter into consumption. These things can only be got by a demand first made on money. Then why not 3 per cent. more money?

The present monetary circulation of this country including gold, silver, and paper, is represented to be $1,700,000,000. As our population doubles in thirty years, the rate of increase is 3¹⁄₃ per cent.

If the money volume be not increased by a proportion at least as great as this, the true relation between the supply of money and the demand for it will not be maintained. The demand increasing as the population increases, while the supply either does not increase at all or increases in a degree incommensurate with the demand, the money volume shrinks and the purchasing power of the unit becomes greater by reason of the increased keenness of competition to get it. This is but another mode of stating that the prices of all products of human labor decline. Prices falling, business ceases to be profitable, stores and work-shops close, and men are relegated to idleness.

THE QUANTITATIVE THEORY OF MONEY—THE VALUE OF EACH DOLLAR DEPENDS ON THE NUMBER OF DOLLARS OUT.

Thus by the universal competition to get it the value of the dollar is made to depend upon the number of dollars that are out. This is a principle that lies at the very foundation of the science of money. The law, stated broadly, is that the value of each unit of money in any country at any given time depends on the whole number of units in circulation in that country. The larger the number of units out, population remaining the same, the less must be the value of each unit; the smaller the number of units out, population remaining the same, the greater the value of each.

Notwithstanding the variance sometimes found between the premises and the conclusions of economic writers, there is no economist of repute who does not admit this to be a fundamental principle.

On the theory I have propounded therefore 3¹⁄₃ per cent. of $1,700,000,000, or $56,000,000, is the minimum amount of money that should be added to the currency of this country during the present year.

Assuming the population of to-day to be 65,000,000 and the ratio of its annual increase 3¹⁄₃ per cent., the population of next year will be 67,166,600. The percentage of monetary increase to be provided for that year should therefore be baaed on the increased number. And so on for each succeeding year.

I have thought best to collate a variety of citations from the most distinguished authorities on financial economy to support my contention that, ceteris paribus, the value of each dollar depends on the number of dollars in circulation.

Money, while the same quantity of it is passing up and down the kingdom in trade, is really a standing measure of the falling and rising value of other things in reference to one another, and the alteration in price is truly in them only. But if you increase or lessen the quantity of money current in traffic in any place, then the alteration of value is in the money.

The value of money in any one country, is the present quantity of the current money in that country, in proportion to the present trade.

It is not difficult to perceive that it is the total quantity of the money in circulation, in any country, which determines what portion of that quantity shall exchange for a certain portion of the goods or commodities of that country.

It is the proportion between the circulating money and the commodities in the market which determines the price.

The amount of money current in a state represents everything that is purchasable on the surface of the state. If the quantity of purchasable articles increases while the quantity of money remains the same, the value of the money increases in the same ratio; if the quantity of money increases, while the quantity of purchasable articles remains the same, the value of money decreases in the same ratio.

And again, in whatever degree, therefore, the quantity of money is increased or diminished, other things remaining the same, in that same proportion the value of the whole, and of every part, is reciprocally diminished or increased.

The value of money, other things being the same, varies inversely as its quantity; every increase of quantity lowering the value, and every diminution raising it in a ratio exactly equivalent.

Alterations in the cost of the production of the precious metals do not act upon the value of money, except just in proportion as they increase or diminish its quantity.

The value of money in any country is determined by the amount existing. * * *

That commodities would rise or fall in price in proportion to the increase or diminution of money, I assume as a fact that is incontrovertible. * * *

There can exist no depreciation in money but from excess; however debased a coinage may become, it will preserve its mint value; that is to say, it will pass in circulation for the intrinsic value of the bullion which it ought to contain, provided it be not in too great abundance.

In this case Ricardo's illustration is the supposed case of a country actually using one million gold pieces each containing 100 grains. He maintains that they would be of the same purchasing power, if the Government took out 1 grain, or even 50 grains, the quantity remaining the same, but that if, from the grains so deducted, an additional number of pieces were struck, a corresponding depreciation would result.