ast;;; 
 
 ^^ iTSSfi 
 
 Fast and Pending Siluer LegMMM ^^^^ M 
 Bimetdlism Or the I)aid)le Standard Sep. 6, ISM 
 Our Currency Problems Mar. 23^ 1806 
 
 Uw Silver Question for Western Borrowers Aug. 5,1 896 
 A Proper Paper Currency Nov. 28. 1897 
 
 What is ''A Somd Currency?" Feb. 28. 1898 
 
 An Ideal Currency May. 10. 1 WO 
 
 Money and Currency __ Dec. 17* IWT 
 
 ?!^'■?!5»:t'^^f'^X'^■ 
 

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 At (HorttcU ImttecBttH 
 
 JIttiata. S?. 1. 
 
 Hihrats 
 
Cornell University Library 
 
 HG 501.G81 
 
 Past and pending silver legislation, Mar 
 
 3 1924 013 816 008 
 
The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013816008 
 
Past and Pending 
 
 Silver Legislation. 
 
 A Statement of the case presented by Col. 
 Jacob L. Greene, President of the Connect- 
 icut Mutital Life Insurance Co., to the 
 
 Board of Trade 
 
 Of Hartford, Conn., March lo, 1892. 
 
The Board of Trade of the City of 
 Hartford, Conn. 
 
 J. M. Allen, President. P. H. Woodward, Secretary. 
 
 M. H. Whaples, Treasurer. 
 
 Hartford, Conn., March i6, 1892. 
 At a meeting of the Board of Trade of the City of 
 Hartford, Conn., held on the 15th inst., for a comparison 
 of views upon past and pending silver legislation, the fol- 
 lowing statement of the case presented by Col. Jacob L. 
 Greene, President of the Connecticut Mutual Life Insur- 
 ance Company, was unanimously adopted. It is worthy of 
 special remark, that veteran leaders of both political par- 
 ties united in taking the ground that party differences 
 should be sunk in common efforts to preserve an honest 
 currency and public honor. 
 
 It was also voted to print and circulate the paper. 
 
 P. H. WOODWARD, 
 
 Secretary. 
 
Past and Pending Silver Legislation. 
 
 THE Hartford Board of Trade commends to the earn- 
 est consideration of the community, certain elements 
 of the present financial situation, of profound and immedi- 
 ate significance to the status of our currency, demanding 
 early and radical treatment by Congress to avert the most 
 serious consequences to our industrial and commercial con- 
 dition, and to our credit : 
 
 First. At the present time the gold dollar is the basis 
 of our currency, and is, therefore, the actual measure of 
 contract obligations and of domestic as well as foreign ex- 
 changes. It forms so large a part of the currency now in 
 actual use as to be available for the redemption of treas- 
 ury notes and silver coin certificates, thereby preventing 
 the latter from falling to their own proper level of seventy 
 cents or less in the dollar. 
 
 Second. By the purchase and coinage of not less than 
 $2,000,000 in silver in each month, from February, 1878, to 
 July, 1890, and by the purchase since the latter date of 
 four and one-half million ounces per month, to be held as 
 bullion or coined for the redemption of notes or certificates 
 issued against it, we have accumulated an enormous and 
 rapidly increasing store of silver, the use of which as coin 
 currency is rejected by the people at large, and which 
 stored at great expense by the government, is mainly avail- 
 able for currency only through the medium of silver cer- 
 tificates, redeemable not only in silver coin, but also in 
 gold coin, or in treasury notes, at the discretion of the 
 
government, thereby putting upon our stock of gold the 
 burden of maintaining at par a rapidly increasing silver 
 currency, worth only seventy cents in the dollar at the 
 present time, and constantly tending to a decline ; a task 
 which our gold can perform only until the disproportion 
 of silver is so great as to excite serious alarm, and lead 
 to the hoarding of gold ; a condition which will be estab- 
 lished in the public mind so soon as the conviction arises 
 that the change is inevitable, and without waiting for the 
 exhaustion or probably even a very material reduction of 
 our present stock of gold. 
 
 Third. The growing disproportion of silver to gold 
 from the purchases under the law of 1878 had excited 
 grave apprehensions in the financial world, checked by the 
 belief, or at least the confident hope, that wiser views would 
 control before a crisis should be reached ; this hope is well 
 nigh destroyed by the greatly increased purchases and ac- 
 cumulation of silver under the act of 1890, which act 
 was justly regarded as a temporizing concession to the 
 demand for the free coinage of silver which is now more 
 aggressive and strenuous than before, and is more than 
 ever a distinctive element of danger in the situation, es- 
 pecially in view of the fact that the enormous purchases 
 of silver by the government, utilized as currency by cer- 
 tificates, have been powerless to prevent a great, and on 
 the average, steady fall in the price of that metal, from 
 about $1.21 an ounce in February, 1878, to fi.io in July, 
 i8go, and to about ninety cents an ounce at the present 
 time. 
 
 Fourth. The fall in silver under the vast and constant 
 government purchases is absolute demonstration of what 
 was well foreseen by all who had disinterestedly considered 
 the matter, that the action of our government by itself 
 cannot affect the status of silver as money in the markets 
 
of the world ; that that status depends upon its treatment 
 by the whole commercial world, and not by any one frac- 
 tion of it. 
 
 Fiftfi. The forced purchases of silver by government 
 have withdrawn just that amount of an exportable com- 
 modity from our commercial resources and compelled us 
 to supply its place with gold, or with such other commod- 
 ities as we can force upon foreign markets by depressing 
 their price ; thus practically forcing silver to remain here 
 and either forcing gold to go abroad in its place or forc- 
 ing the holders of other commodities to such reduction in 
 prices as will further tempt the foreign market, in order 
 that silver owners may sell at a better price here. 
 
 Sixth. As a consequence of the conditions stated, our 
 stock of gold is now being, and for a long time has been, 
 with a brief interruption, drawn upon from abroad at a 
 rate and for reasons of the most serious interest. 
 
 (fl.) Those of our municipal, railway, and industrial 
 securities which by their terms are payable in lawful 
 money, are practically payable in gold so long as gold is 
 our actual currency basis. They will be of equal credit 
 with securities payable specifically in gold so long as there 
 is no reason to apprehend a change of basis. They will 
 be discredited as such change becomes probable. Such 
 securities held abroad will be returned to us as soon as 
 the apprehension of a change of basis becomes fixed and 
 defined in the minds of investors. This condition has 
 already arrived. Notwithstanding our great harvests and 
 our enormous export trade and our favorable mercantile 
 balance, by which gold should be steadily coming to us, 
 we are sending gold abroad, although the rates of exchange 
 forbid it, and in nearly double the volume, since January 
 ist, as for the same period in 1890 after a scant harvest ; 
 and there is no longer any doubt that this phenomenon, so 
 
long -unexplained, is mainly due to the fact that in antici- 
 pation of a change to a silver currency basis here, when 
 legal tender obligations for principal and interest will be 
 payable in seventy-cent" silver pieces instead of one hun- 
 dred-cent gold dollars, the holders of such securities are 
 unloading them upon us at a rate, and in a volume, that 
 far more than offsets the favorable balance of trade, and 
 so making a draft on our stock of gold of such magnitude 
 as will soon be fatal to its ability to sustain at par the 
 absurdly great and rapidly growing mass of silver cur- 
 rency. 
 
 (^.) Evidently, if this drain continues much longer, 
 and there be no certain sign that Congress will stop the 
 increase of this burden of silver, and allow the present 
 stock to be thoroughly and safely adjusted to the gold 
 basis, our own people must speedily share the conviction 
 existing elsewhere. When foreign investors begin to draw 
 our gold from us ' in liquidation of securities payable in 
 lawful money only, which in a contingency means silver 
 at seventy cents or less, or in greenbacks, the day is not 
 far off when our own people will hoard the gold which 
 can no longer sustain the load of silver. Gold will then 
 disappear instantly from the circulation as currency, 
 causing for the time being a violent contraction of the 
 currency by the amotint of the whole stock of gold in 
 the country, and from that moment it will no longer be 
 the basis of currency, nor the measure of obligations on 
 other than specific gold contracts nor of domestic ex- 
 changes. 
 
 Seventh. Silver having to stand by itself, the silver 
 certificates and notes issued for its purchase then being 
 redeemable only in silver coin, will fall at once to its 
 own level, and a nominal silver dollar will at the present 
 prices for silver, be only a seventy-cent piece. Wages at 
 
a dollar a day will be really only seventy cents a day. 
 Interest on existing loans and dividends at five per cent, 
 will be really at three and one-half per cent. A pension 
 of $12 a month will be really only $8.40 a month ; 
 for by no invention of the imagination, and by no legis- 
 lative enactment, can seventy cents' worth of silver be 
 made to buy more than seventy cents' worth of any other 
 commodity, or uproot that law of trade founded in human 
 nature itself, that men do not part with one item of 
 property except for another item of property of at least 
 equal intrinsic value, or for a perfectly good and convert- 
 ible title thereto. Money borrowed and received at one 
 hundred cents on the dollar before the change, will be 
 paid at seventy cents or less, an absolutely indefensible 
 robbery of the lender by public enactment, for the benefit 
 of the debtor who sought the loan. 
 
 Eighth. Merchants and manufacturers can mark up 
 their goods thirty per cent, or more to make the silver 
 price equal to the gold value, but it will take years to 
 readjust wages and contracts, and the whole machinery 
 of domestic commerce and exchange to a depreciated 
 silver basis, always still sliding downward. 
 
 Ninth. And when such readjustment is accomplished 
 it will affect only our exchanges and business among our- 
 selves. We are a great commercial people, seeking to 
 deal with the whole world ; to sell our products in every 
 market, and to buy from every nation. The price of 
 every commodity that we sell, and of every commodity 
 that we buy, must be fixed in the world's market, and 
 in the terms of the money of the world's market. In 
 our world-wide dealings we can use only the money of 
 the world's commerce, and that is gold; and in dealing 
 among ourselves all these prices must be converted into 
 their equivalent in a depreciated and depreciating silver 
 
8 
 
 currency. The prices in gold must be inflated to meet 
 the discount in silver, and still more inflated to meet 
 the danger of a further discount. All this causes an in- 
 'convenience which is intolerable to a correct system, and 
 a continual loss of great magnitude to be borne by every 
 consumer of every kind of commodity. 
 
 Tenth. Of this inconvenience, this loss, this danger to 
 the integrity of its contracts and of its commercial system 
 and to the credit and good faith of its country and to its 
 solemnly pledged obligations, this great people have been 
 put in a now imminent hazard, and are still further 
 threatened with an almost certain sacrifice, in order that 
 the owners of a single product may, by forcing it upon 
 us, find a more convenient, quicker, and larger market 
 than that of the commercial world, and so be enabled to 
 produce more rapidly, at our expense, than the world de- 
 mands, and thus grow rich faster than the natural market 
 warrants. 
 
 Wherefore we denounce the existing enactments respecting the 
 purchase and coinage of silver, and the proposed scheme of free 
 silver coinage, as involving certain, continual, and irreparable in- 
 jury and disaster to every 7vage-earner, producer, and consumer, 
 to every individual and commercial interest, and to every honest 
 investor ; an injury the greatest to those least able to sustain it ; 
 and we appeal to the senators and representatives in Congress 
 from this State to strive by every proper means both for the de- 
 feat of any measure for the free coinage of silver, and also for 
 the repeal of the existing law for the purchase of silver by 
 this government J and in this appeal we ask every citizen to join. 
 
BIMETALLISM 
 Or the Double Standard 
 
 Rkad before the American Social Science 
 
 Association at Saratoga, 
 
 September 6, 1893 
 
 By yacob L. Greene 
 
 HARTFORD, CONN. 
 
 ttbc Connecticut /Diutual Xite flnaurance Companfi 
 
 1893 
 
Prefatory Note 
 
 This paper was an attempt to set forth in common speech 
 a simple but comprehensive and orderly statement of those pri- 
 mary and unchanging facts of human nature and of human 
 action which always and everywhere cause and control to the 
 last detail the use of money and currency by men in dealing 
 with each other in every relation and capacity requiring such 
 use. 
 
 Its reception in certain quarters has led to the hope 
 that its wider distribution in this form may not be without use. 
 
 'Being restricted in length it necessarily treats many 
 points too briefly, and the temptation to recast some parts 
 was strong. But on the whole it has seemed best to leave it 
 unchanged even in those paragraphs which have special reference 
 to the crisis which was present when they were written. 
 
 Hartford, October 30, 189J. 
 
BIMETALLISM 
 
 Or the Double Standard 
 
 It is not a grateful task to offer an ele- 
 mentary thesis in this presence. But the 
 solution of the problem of Bimetallism does 
 not lie in any new data or hitherto undis- 
 covered facts ; for there are none. It lies 
 rather in such plain statement and in such 
 comprehensive grouping of known and funda- 
 mental facts as will let them give their light 
 without confusion or obscurity and reach their 
 common focus without refraction. The average 
 man, impatient of prolonged attention and 
 careful thought, all too readily assumes that 
 the key to the answer lies in some obscure 
 principle of finance hidden away in hopelessly 
 complex facts impossible of apprehension by 
 the unskilled, and so gives ready assent to 
 any strongly asserted plausibility ; or, starting 
 from the too common postulate, that all 
 human actions and interests finally head up 
 in political acts as their highest expression 
 and ultimate form and are therefore capable 
 
of complete regulation and remedy only by 
 political action, he turns to the legislature and 
 asks for an edict to settle the matter out of 
 hand. But the answer lies in a patient 
 recognition of facts so commonplace that their 
 controlling force is often overlooked : the plain 
 facts of everyday trade and of the use of 
 money and other currency commonly spoken 
 of as money. 
 
 The problem of the double standard is to 
 make two metals of different physical qualities, 
 of different utilities, of widely and irregularly 
 differing cost, and of widely different exchange- 
 able values for equal quantities, perform 
 equally satisfactory, perfectly interchangeable 
 and, therefore, absolutely equal and concurrent 
 service as money, both commercial and legal: 
 that is, to make them, however unequal 
 themselves, equal as measures of all values 
 of things exchangeable, as currency in effecting 
 exchanges, in discharge of commercial balances, 
 and in liquidation of all contracts and judg- 
 ments expressed in terms of money : the cost 
 and exchangeable value of one of which metals 
 has fallen with great rapidity within very re- 
 cent times while the conditions plainly in sight 
 affecting its cost and value indubitably promise 
 to send the two metals progressively apart. 
 It is the question of making some arbitrary 
 
but large number of ounces of silver, deter- 
 mined upon a merely momentary ratio of cost 
 and value, or else by legislative fiat regardless 
 of that ratio, play precisely the same and a 
 constantly interchangeable and equally satis- 
 factory part in the exchanges of the country 
 and of the world, and in the liquidation of 
 contracts, with an ounce of gold: of making 
 each metal do the same work indifferently, 
 equally, always, everywhere, without choice 
 between them, and to keep both in equal use 
 and demand. It is the question of making 
 an admittedly inferior agent perform an iden- 
 tical function in commercial and legal relations 
 with an admittedly superior one by somehow 
 making it everywhere equally effective and 
 equally acceptable. 
 
 The inability of the inferior to make its 
 own unaided way commercially is recognized 
 in the nature of the method relied on to effect 
 its proposed status. 
 
 The method is to procure the national 
 legislature to assume and to decree that a 
 given arbitrary number of ounces of silver 
 is now, always will, must, and shall be equal 
 in exchangeable value and legal efl&ciency to 
 an ounce of gold ; that it shall be so taken 
 and held in alj exchanges and liquidations 
 whether voluntary or involuntary ; and that 
 
the minted aliquot parts of the assumed num- 
 ber of ounces of silver and of the ounce of 
 gold shall be equally and indififerently meas- 
 urers of all values including their own and 
 each other's, of equal value in the market and 
 before the law, and of equal effect as tender: 
 to be of equal value in the market because 
 equal in effect as tender : each metal to be 
 freely coined on demand by the owner of 
 either, thus giving each the apparently equal 
 chance : the remedy for any preference between 
 them in the minds of men being the legisla- 
 tive "Thou shalt not." 
 
 Can the method accomplish the end pro- 
 posed ? Does the actual and effective power 
 of legislation extend that far ? 
 
 What is money ? It is some sort of val- 
 uable property of such peculiar and general 
 acceptability that it readily exchanges for 
 any and every other commodity, and therefore 
 comes to measure in the terms of its natural 
 or conventional divisions or denominations, 
 the exchangeable value of every commodity, 
 whether property or service, for which as 
 currency it is exchangeable. Logically, and 
 in point of fact, its use as currency precedes 
 its use as a measurer of values, and this 
 latter use, as well as its still later artificial 
 legal use as tender, grows out of its use first 
 
9 
 
 as an actual and common currency; as accept- 
 able anywhere in exchange for all other prop- 
 erty because acceptable everywhere for any 
 property. 
 
 What is the origin of money ? It is born 
 of trade. What is its relation ? It is itself a 
 part of trade and an instrument of all trade. 
 And what is trade? It is the voluntary ex- 
 change of commodities for reciprocal advan- 
 tage. What is the primary, invariable, and 
 eternal fact of trade ? It is that one com- 
 modity is never parted with by its posses- 
 sor except for another of equal value. That 
 is the moral law of trade. No one owning 
 a piece of property, or capable of rendering 
 a service, willingly parts with the one or 
 renders the other — unless in charity — with- 
 out receiving another piece of property or 
 a definite service of at least equal exchange- 
 able value, and which for some then pres- 
 ent reason is more desired by the recipient 
 than that parted with by him in the exchange. 
 Property for property ; actual value for actual 
 value ; substance for substance ; something else 
 valuable for every valuable something, and 
 that according to the free will and judgment 
 of the respective owners : that, and only that, 
 is trade, its essence, its form, and its law : its 
 unalterable condition. 
 
lO 
 
 And if, for any reason, one of the com- 
 modities involved in the exchange be not at 
 hand for instant manual delivery, and can 
 be delivered only at a distant place, or to a 
 representative empowered to receive it ; or if 
 delivery of the return commodity be for- 
 borne to a future date, in any such case the 
 person entitled to it may, for a compensating 
 advantage of some sort, be willing to receive 
 in place thereof a good and sufficient contract 
 therefor, a formal paper evidence of the trans- 
 action, a title deed to the thing yet to be 
 delivered, to be fully executed or liquidated 
 at the agreed time and place by the thing 
 itself, failing which damages may be had: that 
 is credit on the one side and debt on the 
 other: credit on the part of him who parts 
 with his property expecting to receive the re- 
 turn parcel to the exchange elsewhere or else- 
 when; credit founded on the faith that the 
 desired piece of property for which he has 
 taken the contract or title deed, will be deliv- 
 ered at the specified ' time and place. It is 
 debt on the part of him who has received 
 his something in the exchange but has not 
 yet rendered his something-else in return. 
 And these facts furnish the definition of every 
 credit and every debt. Every true credit rep- 
 resents something, some valuable property, 
 
II 
 
 parted with in an exchange which is to be 
 completed later on and elsewhere by the deliv- 
 ery of the agreed and equally valuable some- 
 thing-else ; and every honest debt represents 
 the something-else necessary to complete the 
 agreed exchange in which the something has 
 been already received. That is the essential 
 fact of every debt no matter what its form of 
 origin ; whether it arise in the exchange of 
 one kind of property for another kind, or in 
 the exchange of a certain quantity of a cer- 
 tain kind of property for a like quantity of 
 the same kind of property to be delivered in 
 the future. Borrowing, as distinguished from 
 renting or hiring, is simply an exchange of 
 two quantities of the same propert3% the deliv- 
 ery of one of which, by the lender, is immedi- 
 ate and the delivery of the other of which, by 
 the borrower, is postponed to an agreed date 
 and place. It is trade and nothing else. 
 
 Or, the owners of the things exchanged 
 may effect their purpose by an exchange of 
 contracts for, or title deeds^ to, these things 
 respectivel5% delivery and possession to be had 
 elsewhere and at another time in both cases, 
 to the great convenience of both parties. 
 
 But in any and every case it is the prop- 
 erties owned by each and desired by the other 
 that are exchanged ; and the credit or faith 
 
12 
 
 attached to any paper instrument of the trans- 
 action is simply the belief that it will be duly 
 solved by the delivery of the property itself as 
 agreed. There is no other credit or faith 
 known among men in their commercial and 
 financial relations. Any other use of the term 
 is idle breath and covers either a gambling 
 speculation or a specious cheat. 
 
 These propositions cover the whole essence 
 and method of all trade and commerce, 
 whether it be the limited and petty barter 
 between individuals, or that between the prod- 
 ucts of communities or nations massed in the 
 hands of their merchants for those multifa- 
 rious exchanges which are commerce, domestic 
 or international, on the grand scale, involving 
 as their incidents and instruments, transpor- 
 tation, insurance, and those elaborate and 
 refined systems of credit by which the one 
 mass is balanced against the other, and simply 
 the difference in value is transferred from the 
 one side to the other in some acceptable form 
 of property used as a currency. This it is 
 which bewilders the unfamiliar mind by its 
 magnitude and the multiplicity of its instru- 
 ments and detail, and so obscures its essential 
 and perpetual simplicity that men believe it 
 really follows some hidden law, and that trad- 
 ers in multitude may do something else than 
 
13 
 
 that which each man does : that somehow 
 something is exchanged for no something-else, 
 or no title deed to something-else, and that the 
 paper evidence of debt is something apart 
 from, and valuable apart from, the property it 
 pledges to give for that already received. 
 
 The obvious converse of these propositions 
 brings us forward a step : As all commerce is 
 the free exchange of valuable commodities, 
 and without such exchange there is no com- 
 merce, so nothing but a valuable commodity,, 
 and at its exchangeable value, can enter into 
 an exchange, or into commerce. And as every 
 debt represents only the postponed completion 
 of the exchange of properties, and nothing 
 but property can satisfy the debt and com- 
 plete the exchange, so no form or evidence 
 of debt can enter into voluntary transactions 
 between men unless it is a good and sufficient 
 contract for, or title deed to, a piece of actual 
 property ; and it can enter into the exchange 
 or transaction only at the actual known or 
 supposed value of the property to which it 
 carries the right of eventual possession to 
 transfer which it was uttered. It is the prop- 
 erty and not the very convenient paper which 
 is traded for. The evidence of debt which 
 does not convey and effectually secure the 
 possession of the something-else is not ex- 
 
14 
 
 changeable for' the something. When men 
 lose faith in its ability to bring the prom- 
 ised propert5^ it is waste paper, whether it 
 be the note of an individual bankrupt, or 
 "continental money," or French assignats. 
 
 It follows from the facts of all trade that 
 whatever the world of commerce uses as 
 money, that which is itself universally accept- 
 able for any commodity one wishes to part 
 with in order to secure the something-else, 
 because one is sure that it will, without loss 
 of value, exchange for any particular com- 
 modity he may at any time desire, and in 
 the terms of which the values of all com- 
 modities are therefore expressed, must itself 
 be property ; else it will not buy property. 
 And it has been, must and will be of a sort 
 the most convenient and effective to its pur- 
 pose under all the circumstances of its use 
 for the time being. General and permanent 
 utility, desirability, the narrowest possible 
 range of fluctuation in value, probable future 
 steadiness and practical permanence of value, 
 great durability, and a minimum of bulk with 
 capacity for ready division, are some of the 
 characteristics which qualify any kind of prop- 
 erty to serve as a common currency and there- 
 fore as a measurer of values, and have deter- 
 mined their adoption as such in all ages. As 
 
'5 
 
 between any two substances, two kinds of 
 property, differing from each other' in respect 
 of these things and their consequent cost of 
 use, it is impossible that there should not be 
 a choice in the minds of men using them. 
 The one must of physical and unalterable 
 necessity be preferable to the other for such 
 use. The whole history of money has been 
 the progressive disuse of the primary, crude, 
 bulky, and perishable forms of property as 
 currency, and the natural selection and grad- 
 ual and general, but at first perhaps uncon- 
 ventional, or extra-legal adoption of more de- 
 sirable forms for that purpose. New and 
 isolated communities, having no outside com- 
 merce, have been compelled to use sometimes, 
 as money, even in recent times, forms of 
 property as singular as, and sometimes identi- 
 cal with, those of the primitive tribes whose 
 methods and instruments of exchange and 
 traflBc furnished the terminology which persists 
 to this day. But as commerce has become 
 extended in area and scope, spreads over 
 wider fields and embraces more articles and 
 greater quantities, and becomes complex by the 
 multiplicity of personal relations and services 
 involved, it searches for and uses the less 
 variable, more refined, convenient, accurate, 
 and therefore less expensive instrument. In 
 
i6 
 
 the presence of the more valuable and con- 
 venient the less valuable and convenient will 
 not do, and is never called to do, that 
 complete work which the more valuable and 
 more convenient does more readily, more 
 accurately and certainly and less expensively. 
 The less valuable and convenient thing will 
 never, in actual commerce, measure the value 
 of the more valuable and convenient. It will 
 itself be measured in the terms and quantities 
 of the most valuable and most desired. It 
 will, therefore, never measure the values of 
 other commodities. They will be measured in 
 the divisions of quantity of that most valuable 
 thing which itself measures the value of the 
 less valuable. The most acceptable form of 
 money is the measure of every other value 
 whether it be of some other so-called money or 
 of some other commodity. There never was 
 any other measure in the business world; 
 there never can be any other. It is a physical 
 and psychological impossibility. The best form 
 of currency, the form most acceptable to the 
 commercial world, was, is, and eternally will 
 be, the sole and absolute measure of all values 
 coming in contact with it, until difficulty, 
 inconvenience, loss, expense, and diminishing 
 trade are at a premium among business men. 
 So long as human nature retains the elements 
 
17 
 
 and is accomplishing the fact of progression, 
 the superior will always be the standard as 
 against the inferior. The inferior cannot be 
 other than subordinate and subsidiary. It will 
 do the full work of the superior only in its 
 absence, and then only on the terms of its 
 own conversion into the superior; that is, at 
 such discount as covers the risk and cost of 
 and pays a profit on its use in place of the 
 superior. And whenever coins of the inferior 
 metal have been sought for and preferred, 
 it has been because they, for the time being, 
 contained a quantity of metal in excess of 
 the ratio of their nominal exchangeability 
 with the coins of the superior metal, and were 
 therefore worth more to take out of local 
 circulation for use in arts or for foreign 
 trade at their actual exchangeable value by 
 weight than for domestic trade by count at 
 nominal value. 
 
 Now how far, and in what wise, do sep- 
 arate communities, nations, and countries come 
 under the common operation and effect of this 
 law or fact, and what is their individual share 
 in it ? Or rather, how far, if at all, are they 
 exempt from it? Can they escape it? Can 
 they take themselves out from under its abso- 
 lute domination ? 
 
 Money is merchandise : merchandise which 
 
i8 
 
 for its special quality has taken on a wider 
 function than other merchandise, but which 
 took on that function solely in virtue of its 
 merchantable quality, and can retain that func- 
 tion only so long as it retains that quality in 
 a superior degree. In the world's market 
 money buys by the quantity and quality and 
 present value of its substance precisely as does 
 any other merchandise, and no matter what its 
 substance for the time being may be. In in- 
 ternational exchanges coins do not pass as 
 coins. They are not counted. The substance is 
 weighed for quantity and tested for quality, 
 exactly as iron, wheat, and beef are. Local 
 coining sufficiently certifies to the citizens of 
 that country the proper quality and the con- 
 ventional divisions of quantity, or denomina- 
 tions ; so that counting the locally coined 
 divisions sufificiently ascertains the quantity 
 for local purposes; but, whether abroad or 
 at home, it is still the quantity however ascer- 
 tained that does the business in virtue of its 
 merchantable value. Coinage is of purely 
 local use and convenience. Away from home 
 it certifies nothing sufiiciently to answer the 
 demands of a commerce in which slight frac- 
 tions of value make the difference between 
 loss and gain. 
 
 So long as commerce is purely local its 
 
19 
 
 money can be, and often has been, a kind 
 of property of only locally superior value and 
 convenience. And so long as that kind of 
 property is actually superior locally, and it is 
 not brought into competition with outside 
 better money, it will perform the function of 
 money truly, however clumsily and inade- 
 quately. It will measure other values and ex- 
 change for them, whether it be itself cattle, 
 cowries, or bunches of shingles. 
 
 But when localities and peoples begin to 
 trade with each other, some form of property 
 equally acceptable to each, of superior adapta- 
 bility to the purpose in each, will come to be 
 used as the common measurer of the values 
 of the various commodities of each, because 
 freely accepted in exchange therefor. And that 
 thing which most freely of all exchanges for 
 and measures in its own convenient divisions 
 of quantity the values of these diverse com- 
 modities in and for international exchange, by 
 that very fact fixes also, in its own terms, their 
 exchangeable values for every locality within 
 the countries concerned in the commerce. For 
 the trade of each locality or community be- 
 comes simply a part of the commerce of the 
 whole. And as all local prices of commodi- 
 ties dealt in between communities are con- 
 trolled by and constantly regulated to the 
 
20 
 
 prices of those commodities at the centers of 
 that exchange, so will those local prices nec- 
 essarily find expression in the money used to 
 fix prices at those centers and in no other. 
 That thing becomes the money the terms of 
 which measure all values throughout those 
 countries because only through its use do all 
 the commodities of those countries pass to their 
 final interchange. Hence it is the money 
 which as currency is most readily, freely, safely, 
 and inexpensively exchanged for their com- 
 modities throughout those countries. And if 
 in any of those countries an inferior kind 
 of property be locally used for money, it will 
 be so used only at the inconvenience and 
 expense of casting its market value in the 
 terms of the better money of the commercial 
 world and the exchange of that better money 
 into the poorer local money, with such addi- 
 tion for the risk of further depreciation and 
 for profit on the transaction as the immediate 
 conditions may require. It is only the best 
 money which really measures the values of 
 all commodities subject to interchange: it is 
 the best money which as currency buys most 
 readily, at least loss and the cheapest, and 
 which is, therefore, the cheapest money: it 
 is only the best money which settles the 
 final balance. Therefore is it the money 
 
21 
 
 that measures. The inferior money may be 
 used exclusively as a local currency ; but it 
 will not be used to measure by ; and prices 
 locally expressed in its nominal terms will 
 mark up or down as it marks down or up 
 in the measure of the best, the prices in 
 that remaining unchanged. 
 
 We hear much of the desirability of a 
 cheap money for the people, and of the prom- 
 ised efi&cacy of the double standard in 
 procuring it. What is dearness and what is 
 cheapness in money ? It is a question of the 
 cost at which it performs its functions of 
 measuring values and exchanging for them 
 either directly or by settlement of balances. 
 It is purely a question of the economy with 
 which it does its work. The cheap money 
 is that which does its work at least cost : 
 which is the same thing as saying, with 
 widest and readiest acceptance, with least 
 hindrance and least friction. Dear money 
 is that which costs the users the most to 
 use. And it is not the commodity which is 
 most abundant, of which the greatest bulk 
 can be produced at least cost, that makes 
 a cheap money -by doing its work cheaply 
 — exactly the contrary. It is not a ques- 
 tion of the cost of a given bulk of the 
 article ; not a question of a cheap material, 
 
22 
 
 but of the cheapness of its service; of the 
 relative cost at which it does its work.- 
 Otherwise the Spartan currency would be 
 a cheaper and therefore better money than 
 either gold or silver. The inferior substance, 
 no matter how dignified by law or made 
 venerable by custom, will and can play only 
 an inferior and subordinate and expensive 
 part. Cost is not afifected by sentiment. Trans- 
 portation and storage and handling cost by 
 weight and bulk. 
 
 Now touching the legislative assistance 
 proposed for the inferior metal commodity, 
 let us ask, what can the statute law of any 
 country or of all countries, effect in this 
 matter? How far is true commerce, free 
 exchange, controllable by legislation ? Can 
 legislation abrogate or materially modify a 
 single iota of its essential facts and con- 
 ditions? Can it touch exchangeable values? 
 Can it change human nature, its needs, rights, 
 and essential methods? Can it compel the 
 exchange of something for nothing, of a 
 whole for a fraction, of the superior for 
 the inferior on terms of the latter's own 
 dictation? And if it could do all these 
 things within its own sovereignty, can it 
 reach and control all the parties concerned ? 
 
 Commerce is not the product of statute 
 
23 
 
 law. Its methods and its instruments are 
 not creations of law : they are born of 
 its own unalterable elements and facts. 
 The statute can recognize, sanction, and 
 declare them and provide remedy for the 
 effectual protection of the personal and 
 property rights growing thereout. That is 
 the most and best it can do : all it can do 
 that, is beneficial. It can obstruct, it can 
 make costly, it can burden commerce with 
 burdens alien to its nature. It can rob and 
 destroy. But wherever commerce is and sur- 
 vives it is there and in being by virtue of 
 obedience to its own inherent laws and by 
 the use of its own instruments, and not by 
 virtue but in spite of statutes undertaking to 
 modify or control their operation. Law is an 
 outside instrument of commerce so far as it 
 understands and its provisions harmonize with 
 the facts of trade. It is not its foundation 
 nor its ruler. 
 
 The precise operation by which it is pro- 
 posed to effect the equality of silver with 
 gold as a standard and as a currency through 
 the power of the law, is to declare it a legal 
 tender for unlimited amounts and then allow 
 its unlimited coinage : that is, by compelling 
 its local use as unlimited legal tender cur- 
 rency to force commerce to use it as a 
 
24 
 
 local measure of values. But as the only 
 use of silver as currency which the statute 
 can compel, is as legal tender in discharge 
 of debts payable here, so long as the 
 better gold is in sufficient supply for local 
 metal currency uses, and especially so long 
 as the silver supply is mainly held by 
 the government, and its creditors prefer 
 and it is ready and willing to pay the 
 better money, practically excluding silver 
 from wide circulation, the silver will be used 
 in reality only as a subsidiary or token coin- 
 age in petty trade, and so pass readily at its 
 nominal coin value. Under these conditions 
 its unlimited legal tender function is wholly 
 unused. Whenever that function is generally 
 resorted to, either voluntarily or of necessity, 
 then silver will be at once substituted for 
 gold in the currency and will no longer 
 buy at its nominal value as a token coin- 
 age, but at its commercial value, as coined 
 merchandise ; and the more valuable gold, 
 no longer counting coin for coin with silver, 
 will be taken out of circulation, leaving the 
 depreciated money to pay its debts. While 
 government coins silver on its own account 
 and thus holds the supply, and refuses or 
 fails to use it as a legal metal tender, it 
 protects us from the silver as general cur- 
 
25 
 
 rency and from the loss of gold. But if it 
 must receive silver in unlimited quantity 
 from any and every owner and purchaser of 
 it and return it without cost in coins of un- 
 limited effect as tender, but of inferior com- 
 mercial value or convenience, thus entirely 
 losing control of the application of the 
 tender function and handing it over with 
 the inferior coins to persons immensely 
 interested in applying it; or, if government 
 continues to exhaust its stock of gold by 
 buying silver or otherwise until it has to 
 refuse gold and resort to its silver coin as 
 actual tender, then in either case silver 
 becomes at once the sole domestic metallic 
 currency. But even so, it cannot make free 
 commerce use it except on its own terms 
 and as a merchandise currency ; and as such 
 it will not finally measure values unless 
 it is the best currency of outside commerce 
 as well as of our own. 
 
 The legal tender function of money is a 
 special, artificial, and localized use growing out 
 of and supplementing its commercial use, by 
 extending its measurement of valties to the 
 measurement of damages, and extending its 
 currency use, the application of ^itS/ merchant- 
 able value, to the liquidation nof (i&.nj^ge's( 'aiid 
 of contracts made in its tertns. As /reletting 
 
26 
 
 to the matter of damages, it is in the nature 
 of a remedy. As relating to contracts for 
 money, it declares what commodity is meant or 
 will solve the contract by delivery. 
 
 The extent of the misapprehension respect- 
 ing the rank and potency of the legal tender 
 function was well illustrated by its use as the 
 sole definition of money at a recent notable 
 convention of advocates of silver. One of the 
 speakers declared that " Money is not gold 
 or silver, but the instrument by which debts 
 are legally paid." And this declaration is 
 further instructive as showing the historic 
 continuity of the greenback or fiat money 
 theory with that of the legislative equality of 
 silver with gold. Both theories assume a 
 peculiar efiicacy in the legal tender function 
 to be decreed by the legislature : that political 
 force can override the unchangeable terms and 
 conditions upon which men consent to deal 
 with each other : that the measurement of 
 values is a legal and not a commercial opera- 
 tion : that the commercial value and use of 
 money depends upon and results from the arti- 
 ficial and Secondary office assigned it by the 
 legislature : that what it declares legal tender 
 is therefore,! ex \ vi termini, money of full 
 and perfect commercial efficiency : which prem- 
 ises being granted, the question of the num- 
 
27 
 
 ber of standards passes, of course, into a lim- 
 itless range : from gold to potatoes. 
 
 It is not strange there should be such 
 confusion abroad when the men composing 
 the Supreme Court of the United States have, 
 by a large majority, declared that it is within 
 the constitutional competency and ofi&cial mo- 
 rality of the national legislature to decree 
 that the man who has parted with something 
 on a contract for the future delivery of some- 
 thing-else, may, under all circumstances and 
 conditions, be compelled to receive, not that 
 something-else, not even another piece of prop- 
 erty than that stipulated, but, instead of either, 
 another evidence of somebody else's debt : 
 another contract for the delivery of something 
 else. True, it was the evidence of the debt 
 of the United States which was being consid- 
 ered as the substitute for the property agreed. 
 But as yet under the paper tender the man 
 had received nothing ; and still his claim 
 against his debtor was canceled in law. And 
 the court avers that it is wholly within the 
 legislative competency to declare what thing or 
 instrument may and shall be used as legal 
 tender. Wherefore it is competent and legally 
 proper to legislate that one evidence of debt 
 may be liquidated by some other evidence of 
 debt, ad infinitum, and the something-else for 
 
28 
 
 which something was parted with be thus 
 eternally postponed ; and the second, third, or 
 one-thousandth such pretended liquidation and 
 actual postponement rests upon and also lacks 
 just the same basis in fact and in morals 
 as the first. 
 
 Legislation can, while that decision stands, 
 make anything a mere legal debt-paying cur- 
 rency : it cannot fix its value : commerce alone 
 can do that. It cannot make the standard by 
 which values are measured in the commercial 
 world, nor prevent the values as measured and 
 established by it from being universal, nor 
 enable the local legislative currency to perform 
 its intended work until it is itself first meas- 
 ured and valued and discounted in the terms 
 of the money of that commercial world. It is 
 not the suffrages of men in their political 
 capacity but in their commercial capacity that 
 make the money of the merchant. It is not 
 the legal tender fiat of a government but its 
 voluntary acceptance among men that makes 
 the money of the wider realm. It is not as 
 citizens but as traders, not in our political 
 capacity but in our commercial relations, that 
 we, every one of us, use money. We can get 
 rid of our gold; the world will gladly take it; 
 but we cannot help having our values meas- 
 ured in it by the world which uses both it 
 and our other commodities. 
 
29 
 
 Another mist beclouds the general thinking: 
 the ambitious assertion of the possibility of 
 a purely American system of currency and 
 money, wholly independent of and different 
 from foreign systems of money : a sort of 
 financial jingoism. 
 
 But it is not with any foreign system, not 
 with the money of any foreign government, 
 as such, that American money comes into 
 correlation and by the side of which it must 
 do its work. It is not with pounds, shillings, 
 and pence, francs, florins, or roubles. These 
 are not the essence of money, but merely its 
 local denominations. It is not a question of 
 these : nor yet whether these express quanti- 
 tative divisions of gold, silver, or iron. It is a 
 question of what is the money substance in the 
 exchangeable value of which and by the use of 
 which as currency the commerce of the coun- 
 tries issuing any and all of these local coin- 
 ages of that or any other substance, is meas- 
 ured and carried on with each other and 
 therefore within themselves, actually if not 
 nominally. These countries may or may not 
 be governmentally treating as their local money 
 the money of commerce. If they are so treat- 
 ing it, still it is not with it as British money, 
 or as French money, or any other national 
 money that we come in contact : it is with 
 
30 
 
 it as the money of commerce which these 
 peoples have adopted as their own because 
 it is the money of that world of trade of 
 which they and we are a part : a part, not 
 by virtue of civil legislation, but by their 
 share in its commercial transactions. We are 
 a part of that world by virtue of the trans- 
 actions of our people in it. We are living 
 its life, doing its work, using its methods and 
 instruments, not as a government, not as a 
 nation in its ofl&cial capacity, but as a people 
 dealing with the peoples of the world in per- 
 sonal relation. From that connection, and all 
 of form and substance that it implies, no 
 power can free us until we cease to trade. 
 Our system of money, as dealers in that world, 
 will be actually the system of money of that 
 world, no matter in what nominal terms the 
 local law may compel ^us to keep our books 
 and draft our notes and discharge our debts 
 to each other. Our legislature may set up an- 
 other system and decree another money as 
 tender. It will not be therefore the system 
 nor the money of the world of trade, nor ours 
 in dealing with it. We are a part of that 
 world, but only a part ; and a part is not 
 greater than the whole and does not dominate 
 it. We can neither separate from it nor rule 
 it. We cannot sell in it without also buying 
 
31 
 
 in it : we cannot buy in it without also selling 
 in it. We have to come to daily and hourly 
 free, willing agreement with it for each side 
 of the transaction. And because we are in 
 it and of it, and because by reason of that 
 fact we are what we are as a producing and 
 commercial people, our whole internal com- 
 merce is simply a part of that greater whole, 
 follows its laws, conforms to its life, uses 
 its methods and instruments, in fact whatever 
 it may do in name ; directly if allowed, in- 
 directly and by costly translation if it must ; 
 because not otherwise can it remain a part 
 of the whole, and because it can have no 
 existence except as a part of the whole. We 
 do not live to ourselves. We live to and 
 with all the peoples of the whole earth. And 
 commerce means agreement with them and 
 common use of common instruments, and not 
 our own arbitrary way. Commerce is the 
 agreement of individuals, scattered through 
 the habitable earth maybe ; and in the end 
 and at bottom the law and the power of 
 normal individual life and action are greater 
 and more enduring than the decree of any 
 multitude, howsoever framed. So liberty grows 
 and man leads men. 
 
 The actual inferiority of silver as a cur- 
 rency in this country has been abundantly 
 
32 
 
 shown by the extremely small amount of its 
 use both during the years that it was a legal 
 tender currency first for an unlimited and 
 then for a limited amount, and after it 
 became again an unlimited tender in 1878, 
 coined at the rate of' $2,500,000 a month. 
 Notwithstanding the abundance and growing 
 cheapness of the metal it has been impossible 
 to get more than a very small amount of it 
 into circulation. It is not the kind of property 
 people very eagerly desire in exchange for 
 their property. Nor has the accumulation 
 for these years of uncoined bullion at the 
 rate of 4,500,000 ounces a month made this 
 property more attractive. The men who 
 owned this property as it came from the 
 mines and who have made our government 
 a customer through legislation for that much 
 more of it than commerce will use either 
 as merchandize or currency, themselves prefer 
 the gold in which they immediately make 
 the government redeem its notes issued to 
 them for the purchase of their silver. The 
 silver has not been accepted of commerce ; 
 its purchase has simply caused the utterance 
 of Treasury notes nominally calling for 
 coined gold- or silver indifferently; but, so 
 long as silver is not acceptable and gold is 
 in supply, these notes in efifect call only 
 
33 
 
 for the gold which commerce does accept, 
 and which the silver mine owners therefore 
 want and which the goferHment cannot 
 withhold without suspending. And the acute 
 stage of the problem is reached now that- 
 that supply of gold is so reduced that the 
 limit to the operation has become plainly- 
 visible, and the business world therefore 
 stands to wait its solution : to know whether 
 the dollars it would venture in its enter- 
 prises will come back at one hundred cents 
 or fifty, and withholding these dollars until 
 that answer is made. The issue of Treasury 
 notes for the purchase of silver has veiled 
 the true character of the operation. The 
 cashing of the notes in gold by the sellers 
 of silver reveals that character. We have 
 been swapping our gold for their silver. So 
 does an indirection always carry and conceal 
 a practical fraud ; and so have we allowed 
 that to be done by indirection which in 
 direct terms no one would have dared to 
 propose. Thus has our gold been made to 
 bear in fact most of the burden of currency 
 and all of the asserted legal tender function 
 of silver, which has been mainly useless, 
 and when useful at all has been simply 
 subsidiary throughout. And thus have we 
 learned both that there is and has been in 
 
34 
 
 this country actually but one standard, and 
 that one gold ; and that whatever silver pro- 
 ducers wish other men to think, they them- 
 selves desire gold in exchange for their 
 •product and have been most industriously 
 getting it, and getting it out of the country 
 which cannot use their silver, for com- 
 merce will not take it at the price. 
 
 Doubtless much of the confused popular 
 thinking or feeling upon the matter of a 
 double standard has been due to the supposed 
 need for an increased volume of money, an 
 abundant money, which has been so strenu- 
 ously alleged and generally accepted without 
 real examination, because of the general at- 
 tractiveness of the idea; and because of the 
 apparently implied idea that if it is only 
 abundant it can be more easily had, that is, 
 without earning it or without giving so much 
 or so valuable property for an equal value of 
 it ; forgetful that if it takes less to get it with, 
 it will also buy less when we have got it ; that 
 other things being equal, increase in abun- 
 dance, in volume, means decrease in purchasing 
 power, in exchangeable value in money and in 
 every other commodity, and that, consequently, 
 the more there is the more will be required 
 to accomplish the same transactions. The use 
 of money as actual currency is relatively 
 
35 
 
 diminishing constantly, and will continue to 
 do so. Any money enters into commerce purely 
 as currency ; that is, as merchandise ; and con- 
 versely all merchandise and the bankable 
 credits made against it are currency in the 
 commercial world to the extent of the demand 
 for it in the market for the time being. By 
 the use of bank checks, bank bills, bills of 
 exchange, postal and telegraphic transfers, the 
 whole business world is brought into almost 
 as close contact as neighbors across the street. 
 By their use the exchange of the commodities 
 of one country for those of another is effected 
 and only the balance is remitted in the ' metal 
 used as money. The New York merchant 
 who buys goods in London does not send over 
 money to pay for them. He buys a bill of 
 exchange against some wheat, or cotton or 
 meat or other property, or against securities, 
 that London merchants have bought here, and 
 remits that, and the one property is exchanged 
 for the other. Commerce furnishes its own 
 more convenient currency of this sort to the 
 extent to which the commodities exchanged 
 balance each other, and falls back upon metallic 
 merchandize, metal currency, only to eke out 
 the deficiency on the side which has least of 
 other things to sell. And this use of a purely 
 commercial currency, the instrument of credit 
 
 3 
 
36 
 
 for things sold, increases in volume and effi- 
 ciency with increased volume and variety of 
 product, with every increased facility for 
 intercommunication and every improvement in 
 the machinery of commerce. And what is 
 true as between nations is equally true as 
 between communities in our own country. 
 The transfer of monej^ as currency from one 
 commercial center to another is generally 
 limited to the adjustment of balances. Bank 
 bills, checks, and drafts against goods or pro- 
 ducts sold furnish the main currency of daily 
 domestic commerce, and even very largely and 
 increasingly for retail trade and all personal 
 uses. So conveniently and cheaply does this 
 sort of currency serve the needs of business 
 that so long as it is in good credit, securely 
 based upon and a good title deed to the re- 
 quisite property, it is preferred in use above 
 the best metal. And so common is its use 
 in place of money that in popular apprehension 
 and speech it stands for money; and to borrow 
 money no longer means borrowing the coin 
 itself, but the commercial currency, the use of 
 a commercial credit for the required amount. 
 Perhaps no small part of the confusion of 
 ideas about money arises from the fact that 
 the great bulk of the business of the civilized 
 world, its commerce and its financial trans- 
 
37 
 
 actions, is effected through the use of this 
 purely commercial currency. And using its 
 many forms so constantly as money, speaking 
 of them as money, borrowing and paying them 
 as money, seeing them while in good credit 
 perform so admirably the currency office of 
 money, and seeing money itself perform no 
 other visible office than that of currency, men 
 often fail to discriminate the final test of money, 
 its measuring ability ; and forget that while 
 all money is currency not all currency can 
 be raised to the rank of full money ; the law 
 may decree it ; the world will not so use it. 
 
 The inconvenience and cost of silver in 
 use as currency would be greatly intensified 
 by the adjustment of its coinage to its true 
 present ratio to gold necessarily implied in the 
 idea of a double standard, increasing the bulk 
 and weight of coins fully two-thirds, with the 
 certainty of future readjustments in the same 
 direction. In which connection it may be 
 said, that if it were true that the government 
 fiat settled the commercial rank and the pur- 
 chasing power of legal tender money, the 
 obviously true way to make silver coins a con- 
 venient currency and superior money would be 
 by such legislative reduction of the coinage 
 ratio as would make the silver pieces at least 
 no larger than those of gold of like denomina- 
 
38 
 
 tion. That would be equality by legislation. 
 The further scaling down of either or both 
 gold and silver pieces without impairing their 
 purchasing power would be equally- within 
 legislative competency. 
 
 To sum up what we have been trying to 
 say : 
 
 Let but the people clearly understand these 
 plain necessary facts of human life : that prop- 
 erty sells only for other property, and that 
 nothing but property can buy other property 
 and that therefore money must be property: 
 that while all merchantable commodities and 
 the credits against them are in effect currency, 
 nothing but the commodity most desired and 
 most acceptable of all and most readily ex- 
 changeable for all will or can measure the 
 values of all the rest and be in fact the final, 
 standard money ; that no credit currency is 
 good for anything except as it is a good and 
 satisfactory title deed to the property it 
 promises to deliver: that the principal currency 
 function of any money is to settle balances in 
 the exchange of other commodities ; that the 
 great world of commerce uses and will use as 
 its money only the best money ; that we, as a 
 part of that world, must have our values meas- 
 ured in its money whether we will or no; that 
 we must use its money as our money or pay 
 
39 
 
 the continual loss and cost of using a poorer 
 one; and that our only power of choice is not 
 as to what money we will have all our values 
 measured in and use to settle our balances 
 with, but only as to what we will use as the 
 basis of our purely domestic currency; that 
 the best money is the cheapest because most 
 eflfective at least cost ; and lastly, that no mat- 
 ter how abundant anything we may call money 
 may be, so long as it is worth anything it 
 cannot be had except by giving for it its full 
 commercial value in some sort of property 
 or service ; and that in no way can that 
 money get for its possessor more than its 
 commercial value entitles it to : let but these 
 simple facts be clearly seized, and the idea, 
 of a double standard, of two measures that 
 cannot but measure differently, of an inferior 
 and unacceptable thing to do identical work 
 with the superior and acceptable thing, of 
 using as a con'current and indistinguishable 
 measure fluctuating silver which has got to 
 be first measured itself in gold always and 
 everywhere and buy only by that measure, 
 will drop from the category of political prob- 
 lems and commerce will be left to deal with 
 its own instruments according to its exigencies 
 and according to both their potencies and their 
 limitations. 
 
Our Currency Problems 
 
 ^ 
 
 Jacob L» Greene 
 
Our Currency Problems 
 
 A PAPER 
 
 Read before 
 
 The Hartford Board of Trade 
 
 March 23, 1896 
 
 By Jacob L. Greene 
 
OUR CURRENCY PROBLEMS. 
 
 I ask your attention to the problems which grow 
 out of the specific character and relations of each of 
 the items of the composite and singularly varied group 
 of so-called moneys which constitute that part of the 
 commercial media of exchange in this country of 
 which our government takes official cognizance, the 
 issue and inter-relations of which it assumes to regu- 
 late, and the integrity of which it undertakes to 
 guarantee. 
 
 The items of this group are four: 
 
 I St, Gold, of which we had November i, 1895, ac- 
 cording to the report of the Director of the Mint, 
 $618,078,182, located as follows: $53,945,262 of bullion 
 and $88,951,327 of coin, in the United States Treasury; 
 and $475,181,593 of gold coin, in the banks and in the 
 hands of the people. Against the gold in the Treas- 
 ury, there were gold certificates in circulation for 
 $64,252,069. The gold is the acceptable money of the 
 merchant of each of the countries where our com- 
 merce principally lies. 
 
 2d, Silver, of the nominal amount of $548,367,917; 
 of which $125,078,608 is in bullion, most of it stored 
 in the Treasury; $423,289,309 is in silver dollars, only 
 $58,354,092 of which are in circulation, and $364,935,217 
 are stored in the Treasury; $77,259,180 is in subsidi- 
 ary coin, of which $13,426,421 are in the Treasury and 
 $63,832,759 are in circulation. Against the silver in 
 the Treasury, there were silver certificates in circula- 
 tion for $333,456,236. 
 
 3d, Legal Tender notes of the United States for 
 
$487,773>296, of which $346,681,016 are the remainder 
 of the old greenbacks, originally issued during the 
 Civil War, which are demand notes, but which cannot 
 be canceled and retired when paid by the Treasury, 
 but must be held as a part of its cash and reissued 
 and paid out in the ordinary course of its disburse- 
 ments. $141,092,280 are the Treasury notes issued in 
 purchase of silver at the rate of not less than 4,500,000 
 ounces a month, under the Sherman Act of 1890, re- 
 pealed in 1893. These are not subject to reissue. 
 
 4th, an item entirely distinct from the preceding 
 in most of its characteristics, but grouped with them 
 because secured by government bonds and redeemable 
 through governmental agency, is the $213,887,630 of 
 National Bank Notes. For the present we will dismiss 
 these from consideration, and confine ourselves to the 
 first three items of the group. 
 
 LEGAL EQUALITY BUT COMMERCIAL INEQUALITY OF 
 GOLD, SILVER, AND GREENBACKS. 
 
 Our problems grow out of two main situations. 
 First, our gold dollars, $564,132,930; our silver dollars, 
 $423,289,309, and our legal tender evidences of debt, 
 our promises to pay dollars, of $487,773,296, are all of 
 equal nominal value in law for the discharge of debts, 
 or perfectly equal in legal tender function. The gold 
 dollar, the silver dollar, and the government promise 
 to pay a dollar, are each equally effective to discharge 
 from his obligation the debtor who tenders either one 
 of them. And the government, which has thus made 
 them equal in law, is solemnly and formally pledged 
 to maintain an actual or commercial parity, an equality 
 of market value or of purchasing power, between the 
 three so-called dollars without difference and under all 
 circumstances. 
 
 But, secondly, the commercial parity, the actual 
 equality of market value between these several so-called 
 
s 
 
 dollars, has long since disappeared so far as the mar- 
 ket is concerned, and is maintained solely by govern- 
 mental action and at its cost. Silver bullion, now 
 worth only sixty-eight or sixty-nine cents an ounce, to 
 be at parity with gold bullion, must bring $1.2929 per 
 ounce of fine metal. 
 
 DOLLAR OF THE FATHERS AND THE CRIME OF 1873. 
 
 Prior to 1873, its price had been so far above 
 this figure that the bullion in a silver dollar was 
 worth a trifle more than one hundred cents, usually 
 from two to five cents, and was consequently more 
 valuable in trade as bullion than as a one hun- 
 dred-cent dollar ; and so United States silver dollars 
 could not be kept and were never seen in circulation, 
 and were, therefore, so rarely called for, for any use, 
 that from 1834 to 1873 only about 8,000,000 silver dol- 
 lars were ever coined altogether. Our " daddies " never 
 saw and never used the high-priced silver dollar which, 
 since it became cheap, has been christened in their 
 name to make it venerable. In 1873, the average mar- 
 ket price of an ounce of fine silver was $1.2980, and 
 none was being coined or for a long time had been 
 coined; and the silver dollar, of which there were not 
 a thousand in existence, was therefore dropped from the 
 coinage list as a perfectly useless coin. In 1 876 the value 
 of silver had fallen to $1.15 per ounce. Then from the 
 cheap money repudiationists and greenbackers came the 
 outcry against "the crime of 1873" and the clamor for 
 unlimited -silver dollars worth only eighty-eight cents; 
 and the cry was swelled by the men with new mines 
 and new processes, and desirous of a new market for 
 the illimitable product of their new capacities. And in 
 1878 the Bland- Allison Act was passed, compelling the 
 purchase and coinage of at least $2,000,000 worth of 
 silver per month. 
 
EPFOE-T TO RESTORE THE VALUE OF SILVER: — ITS PRO- 
 GRESSIVE FALL. 
 
 It was sought to reassure the sound money men by 
 the assertion that this use of silver would carry its 
 market price to par and maintain it there; that is, at 
 not less than $1.2929. And, under the stimulus of 
 these enormous purchases, coming upon an unprepared 
 market, the average price of silver in 1878 went up to 
 $1.2048 per ounce, and the value of a silver dollar rose, 
 consequently, to ninety-three cents. But nature's 
 newly-discovered abundance and the new arts pf man 
 began, presently, to get in their fruitful work; and, in 
 1879, the average price of silver was $1.1218 an ounce, 
 and a silver dollar was worth only about eighty-seven 
 cents, about which point the price fluctuated, not very 
 widely, until, in 1885, the average price fell to $1.0897 
 per ounce, and the average value of a silver dollar to 
 eighty-four cents. In 1886 the price dropped to $1.0334 
 per ounce, and a silver dollar to seventy-nine cents and 
 a fraction. In 1887 the price went to $0.9810 per ounce, 
 and the silver dollar to seventy-five cents. In 1888 the 
 price went to $0.9547 per ounce, and the silver dollar 
 to seventy-three cents. In 1889 the price sagged to 
 $0.9338 per ounce, and the silver dollar to seventy-two 
 cents. Great alarm had attended this steady decline in 
 the value of this money metal, and all clear and un- 
 prejudiced thinkers saw clearly the coming end, — the 
 complete upset of our entire currency system and its 
 transfer from a gold basis to that of constantly-depre- 
 ciating silver. But their fears of the voters of the 
 debtor class and the asseverations and blandishments of 
 the owners and producers of silver were potent to make 
 our legislators in Congress believe that a hair of the 
 same dog would cure the bite, and that the way to 
 make silver dollars worth a dollar was for the govern- 
 ment to make silver scarce, by buying it up more 
 freely and stacking it away. So, in 1890, the Sherman 
 
Act compelled tne purchase of 4,500,000 ounces of fine 
 silver per month; and the price jumped up to $0.9668, 
 and the value of a silver dollar to seventy-four cents 
 and a fraction; and, early in 1891, the price went still 
 higher to $1.0901 per ounce, and the value of a silver 
 dollar to eighty-four cents, but falling materially during 
 the year. In 1892 the price of the bullion dropped 
 back to $0.9462, and the value of the silver dollar to 
 seventy-two cents and a fraction. In 1893 the average 
 price went down to $0.8430, and the value of the silver 
 dollar to sixty-five cents. 
 
 FAILURE TO MAINTAIN PRICE OF SILVER. 
 
 Then it was seen, after fifteen years' trial, that 
 government purchases were helpless to affect the 
 price of silver, except disastrously by overstimulating 
 its production; and, after a struggle still fresh in 
 all minds, while every legitimate business interest 
 in the country trembled for fear of a change of 
 monetary standard, the Sherman Act was repealed; 
 and the price of silver has settled to the neighborhood 
 of sixty-eight cents an ounce, and the "dollar of the 
 daddies" which, in the time of the "daddies," was 
 worth from one hundred and one to one hundred and 
 five cents, and which was, consequently, worth too much 
 to use as a hundred-cent dollar, and, which, therefore, 
 they never did use, is now worth only fifty-two cents, 
 and lies unused, on account of its clumsy bulk and 
 weight, and is represented in actual circulation only by 
 certificates payable nominally only in its coinage. 
 
 HOW CHEAP SILVER DOLLARS ARE TEMPORARILY KEPT 
 AT PAR WITH GOLD. 
 
 This enormous mass of depreciated silver is kept at 
 parity with gold in our own markets, solely because the 
 government, which receives and pays out enormous sums 
 of money, is pledged to receive it on such equality, 
 and because the government has never tendered it in 
 
discharge of its debts: lias never compelled a creditor 
 to take silver dollars for his claim. It is maintained 
 at local parity only because government actually substi- 
 tutes gold for it, for every practical purpose, and does 
 not resort to its legal tender use. It is kept out of 
 comparison and competition with gold, and is actually 
 used only as a subsidiary or token coinage. 
 
 The demand notes, or greenbacks, are maintained at 
 like parity because while government undertakes to pay 
 either gold or silver for them, as may be demanded, it 
 does in fact pay only gold, having already borrowed 
 $262,000,000 of gold to enable it to keep its pledge. 
 
 USELESSNESS OF SILVER DOLLARS AND GREENBACKS FOR 
 FOREIGN TRADE DRAWS GOLD FROM TREASURY FOR 
 SHIPMENT. 
 
 Another dominant factor in the situation is this: 
 that, as neither our silver dollars nor our legal tender 
 promises of dollars "go" in the world's market outside 
 our own doors, we have to deal with that world in its 
 own money, which at the present time is gold. When- 
 ever, therefore, we have to settle a balance against us 
 and to send that world its money, these legal tender 
 demand notes, not being available for that purpose 
 themselves, but being in circulation and easily obtain- 
 able, our readiest, easiest, and cheapest way to get the 
 gold is to take the notes, go to the United States 
 Treasury, demand the gold, and ship it. 
 
 CEASELESS REISSUE AND REDEMPTION OF THE 
 GREENBACK. 
 
 As the Treasury cannot cancel the note which has 
 taken its gold, but must reissue and pay it out again 
 as often as it comes back for gold, the government 
 becomes, through this going and coming .greenback, the 
 regular furnisher of gold for our foreign commerce and 
 also for those who have begun to think it worth while 
 to hoard it against a probable change to a silver basis. 
 
So long as, and whenever, the balance is against us 
 in our trade with foreign peoples whom we cannot 
 compel to take depreciated money, nor paper promises 
 of money; whenever our customers abroad send over 
 more merchandise and more of our own securities than 
 they are taking from us, the government furnishes the 
 gold for the difference by redeeming its greenback, and 
 then reissues its greenback so that the operation may 
 be repeated. 
 
 Under these conditions, it is obvious that the parity 
 existing between these several components of what may 
 be called our legal tender currency, is a purely artificial 
 and forced one, maintained only by costly strain; and 
 that the government is a bank of issue to the extent 
 of the amount of these demand notes which it cannot 
 pay off and retire, but must reissue and therefore keep 
 prepared to redeem endlessly in gold. 
 
 NATURAL SOLUTION OF THE PROBLEM. 
 
 The problem is to put an end to a situation which, 
 under existing, conditions, and so often as they recur, 
 is not only taking and will take the world's money out 
 of us with great rapidity, but is running us and will 
 run us still more deeply and very deeply into debt, 
 simply to get more and more of that same money to 
 put up where it can be reached by that same immortal 
 greenback, to be sent abroad and to be borrowed again. 
 
 It would seem as if the best solution of the problem 
 would be the simplest one, the one which any individual 
 so situated would be expected to adopt : — Let the 
 government get rid of the depreciation in our silver 
 dollars, either by an arrangement, if such a thing be 
 possible, — and it isn't, — which will put an hundred 
 cents' worth of perpetually fluctuating silver into them, 
 or — which is the only practicable way — by substitut- 
 ing for them dollars of the world's only standard metal, 
 so that we are not crippled by trying to maintain at a 
 
10 
 
 fictitious value in our own domestic commerce a mass 
 of money which the world we trade with cannot use 
 at our valuation, and the actual value of which' changes 
 from day to day; and then let the government call in 
 its demand debt and cancel it, borrowing so much as 
 is necessary to fund it, and go out of the banking busi- 
 ness, leaving the banks to furnish as much of the retired 
 volume of paper currency as the business of the country 
 demands. For with a continuance of existing conditions 
 we shall soon have borrowed enough to pay, and shall 
 have actually paid, our entire greenback debt, and yet 
 it will not be a dollar less. On December i, 1895, we 
 had already paid gold for $327,000,000 of our green- 
 backs, and yet every dollar of the $346,681,016 is out- 
 standing. The appetite of Oliver Twist was not harder 
 to satisfy. 
 
 SIXTEEN TO ONE FREE COINAGE REMEDY. 
 
 But this solution is opposed by so many interests 
 which can and do powerfully affect legislation, that we 
 must consider their remedy ; which in substance is this : 
 Stop trying to pay in gold, and pay in silver, and compel 
 all creditors of the government to receive their claims 
 in silver ; that is, let the government resort to the legal 
 tender use of silver dollars; and, in order to furnish 
 silver dollars enough, enact the free coinage of silver 
 at the present nominal ratio of sixteen to one, which, 
 although adopted by the "daddies" for their dollar 
 when silver was worth $1.30 an ounce, is alleged to be 
 just as good a ratio when silver is worth only half as 
 much. 
 
 SILVER BASIS DESIRED. 
 
 To the objection that such a step would drive gold 
 out of circulation instantly and place our whole remain- 
 ing currency on a silver basis, at its actual market value 
 of only fifty cents on the dollar, we get three answers : — 
 One is that that is just what is wanted. 
 
u 
 
 LEGAL TENDER STATUS EXPECTED TO KEEP SILVER 
 
 AT PAR. 
 
 The second answer is, that the legal tender function 
 of our silver dollar will keep it at par; that, because 
 you can compel a man to take a silver dollar worth 
 only fifty cents, in payment of a debt due him of 
 one hundred cents, therefore that fifty-cent dollar will 
 everywhere buy one hundred cents' worth of property; 
 forgetting, apparently, that our fifty-cent silver dollar 
 has then got to come into competition with the money 
 of that great world of trade of which we are a great 
 and perpetual part. 
 
 INTERNATIONAL BIMETALISM TO PUT AND KEEP 
 SILVER AT PAR. 
 
 The third answer is from those who see this fatal 
 error and assert that to keep silver at parity with gold 
 at sixteen to one, or at any ratio other than their 
 exchangeable market value, all the great commercial 
 nations whose citizens trade with each other must deal 
 with silver in the same wise ; that what one nation 
 cannot do by itself, that is, make the legal debt-paying 
 power of a dollar the permanent basis and measure 
 of its purchasing power, all the nations agreeing to- 
 gether, and legislating identically, can do. Sq abso- 
 lutely does this theory dominate the United States 
 Senate to-day and bar the way to any other mode of 
 relief from a situation which is simply destructive, 
 and so obstinately is this theory asserted by some 
 political conventions and by men holding apparently 
 different personal relations to the subject-matter, that 
 I beg your patient attention to certain fundamental 
 facts. 
 
 NATURE OF TRADE. 
 
 Trade exists before money. Money is born of the 
 necessities of trade, and is simply its instrument. 
 And trade, no matter how complex its forms, how 
 narrow or how wide its field, what the range of its 
 
12 
 
 objects or the number or character of its instrumen- 
 talities and incidents, is nothing else but the free, 
 willing exchange of one man's property for that of 
 another. The fundamental fact and the everlasting 
 moral element in such exchanges is this: no man 
 willingly exchanges his own valuable commodity, his 
 property, except for another commodity, another piece 
 of property, of at least equal value to him. The whole 
 principle and motive of honest trade, and the absolute 
 condition of permanently prosperous trade, is property 
 for property ; substance for substance ; equal value 
 for agreed equal value. Anything else, no matter how 
 phrased, is robbery of one or other of the parties, 
 and is immediately destructive of real commerce, for 
 it exhausts the party who is made to get less than he 
 is made to give. 
 
 NATURE AND FUNCTION OF MONEY. 
 
 But the direct exchange or barter of scattering 
 commodities by their respective owners is a slow, labo- 
 rious, costly, and inconvenient process. The problem of 
 trade is to bring the scattered owners of needed commodi- 
 ties and the scattered consumers of them effectively to- 
 gether, as seasonably, quickly, and cheaply as ' possible. 
 All the manifold instrumentalities of commerce are 
 merely devices to that one end. And the first neces- 
 sity to that end is some form and kind of property 
 so useful and desirable to all men, no matter for 
 what special reason, and so uniformly and universally 
 acceptable by them that they will, everywhere among 
 these producers and consumers, readily exchange for 
 it any item of property they wish to exchange, know- 
 ing that it will, willingly and without loss, be taken 
 in exchange for any other item of property they may 
 happen to want and whenever they may happen to 
 want it. That kind of property for which all other 
 kinds can be exchanged, which can buy and sell all 
 others, men call money. To serve this use most effec- 
 
13 
 
 tively and economically, it must possess in the highest 
 attainable degree certain qualities: it must have value, 
 real usefulness in itself, for men do not willingly 
 trade valuable for valueless things ; it must keep its 
 value, for men will not trade value for a valueless 
 thing merely because it once had value ; they must 
 have the present substance and not the mere tradition 
 of value ; it must be as invariable in value as possi- 
 ble, that, while it is kept on hand awaiting other 
 exchanges, it may lose as little as possible of its power 
 to buy other commodities ; it must be as nearly imper- 
 ishable and indestructible as possible ; it must have as 
 small bulk as possible consistent with sufficient abun- 
 dance, both for convenience of handling and for safety 
 and cheapness of carriage ; it must be of a sort equally 
 valuable, equally desirable, equally acceptable wherever 
 men trade, else the purchasing power is not every- 
 where equal, and its function so far fails. 
 
 HOW MONEY IS A MEDIUM OF EXCHANGE AND MEAS- 
 URE OF VALUES. 
 
 Wherever men have advanced beyond savagery, 
 they have by custom and common use adopted some 
 then available form of property, possessing more or 
 less of these qualities, as the medium of their ex- 
 changes. So long as, for any reason, that form has 
 had a recognized value and acceptability as wide as 
 the range of trade of that time, it has served its pur- 
 pose, even if imperfectly. When its acceptability has 
 ceased, or has ceased to be commensurate with the 
 field of trade, it has dropped out of use. History is 
 full of instances of disused and abandoned moneys. 
 
 Whenever a particular form of property has served 
 as a medium of exchange, it has necessarily become a 
 measure of the value of every item of property ex- 
 changed by its intervention. When cowries were the 
 medium, everything else was valued in cowries. It 
 was the same way with sheep, cows, cloths, hides, 
 
14 
 
 bunches of shingles, etc. So that intermediate kind 
 or form of property, by first exchanging for which 
 all other kinds of property are exchanged for each 
 other, is, for the time being, both a medium of ex- 
 change and a measure of value of the things exchanged. 
 
 ORIGIN AND USE OF COINAGE LAWS. 
 Whenever a money has been a kind of property 
 which existed in natural units, like cowries, arrow 
 heads, sheep, or other like sort, the conventional unit 
 of exchange has been the natural unit by which the 
 count of quantity would be made. But when the ex- 
 tension of the field of trade and the changed wants of 
 men have compelled such refinements in the quality, 
 bulk, and convenience of the instrument of exchange 
 that the rarer metals were more acceptable for the 
 purpose, some conventional unit of quantity and some 
 universally satisfactory mode of its certification had to 
 be found; and out of this necessity grew the various 
 denominations of money, which are measures of the 
 quantity of the property contained in such units, and 
 also the coinage laws by which the quality and quan- 
 tity of the property so used is officially ascertained 
 and certified for the safety of those who would ex- 
 change their property therefor. This does away with 
 the inconvenient scales and tests of the ancient mer- 
 chant, and allows actual quantity to be accurately ascer- 
 tained by mere count of unworn pieces. 
 
 COINAGE DOES NOT AFFECT VALUE OF MONEY: — ONLY 
 CERTIFIES IT. 
 
 It ought to be a mere truism to say that coinage 
 does not and cannot affect value: that it simply certi- 
 fies the quality and quantity of a certain piece of 
 property, for the information and convenience of that 
 world of trade whose use and mutual agreement alone 
 establishes the value of the property so certified. 
 Coinage does not make copper silver nor silver gold, 
 
15 
 
 nor does it make two grains of one, nor affect in the 
 least degree the rate of their exchange for each other 
 in the open market. 
 
 ORIGIN AND USE OF LEGAL TENDER LAWS. 
 
 To facilitate the settlement of contracts and dis- 
 putes arising from them, the adjustment of damages 
 and penalties, and the avoidance of litigation, legal 
 tender laws are passed, by which a creditor is com- 
 pelled to receive some specified kind of property in 
 satisfaction of his claim and to discharge his debtor 
 therefrom. And as all other property is valued in the 
 terms of that property used as money, and all contracts 
 referring to value sound in money, therefore the form 
 of property used as money is by far the most conve- 
 nient, certainly ascertainable, and reasonable sort to be 
 used for such a tender. As to this theory, all enlight- 
 ened legislation conforms. 
 
 LEGAL TENDER LAWS DO NOT AFFECT VALUE. 
 
 In these days, when not only there are not wanting 
 those who question all the fundamental verities, but 
 those who build parties on their denial, it is proper to 
 remind you that legal tender laws do not affect value. 
 They simply provide a kind of property which being 
 tendered by a debtor in a quantity equal to his ascer- 
 tained debt, relieves him of any further liability. If 
 they declare that an ounce of copper shall discharge a 
 debt due for an ounce of gold, they do not make the 
 ounce of copper worth an ounce of gold: they simply 
 rob the creditor of an ounce of gold. Each respective 
 ounce will exchange for precisely the same quantity of 
 other goods as before. 
 
 Money was not invented to pay debts with, but to 
 buy other property, and must therefore be property 
 itself. Its legal debt-paying function is a purely artifi- 
 cial and conventional incident of its original and per- 
 
i6 
 
 petual use, and comes late in its history. And when 
 any form of it has lost in any degree its purchasing 
 power, the law cannot compel its use for the payment 
 of debts except as it robs one man for the benefit of 
 another. 
 
 ACTUAL EFFECT OF FREE COINAGE OF SILVER AT SIX- 
 TEEN TO ONE. 
 
 When the coinage ratio of sixteen to one was 
 adopted, it was as nearly as possible the actual market 
 ratio of silver to gold. The two metals were thus 
 treated as nearly alike as possible. In order to get 
 one thousand silver dollars, one had to take to the 
 mint $i,ooo worth of silver. But with free coinage at 
 sixteen to one, with the present market price of silver 
 and unlimited legal tender, I can take $500 worth of 
 other property, go into the market and buy f 500 worth 
 of silver bullion, take it to the mint, have it coined 
 into one thousand silver dollar pieces, and compel you 
 to accept them in discharge of my previously incurred 
 debt to you for $1,000 worth of gold or of any other 
 equally valuable property which you had let me have 
 in exchange for an equally valuable amount of prop- 
 erty promised to be delivered to you at a future time. 
 But do not expect to recoup yourself by taking that 
 same $500 worth of silver in the one thousand pieces 
 and going into the market with it and buying $1,000 
 worth of other property with it, just because the law 
 enabled me to compel you to take it for the $1,000 
 worth of some sort of property which you had let me 
 have, on the faith or promise of getting another $1,000 
 worth in return. If it be otherwise, if a legal tender 
 act can make fifty cents' worth of silver as valuable in 
 the market as one hundred cents' worth of gold, it can 
 work the same change in ten cents' worth of silver or 
 a cent's worth of pewter. The value of the bullion, 
 the property itself, is then no longer an element in the 
 question of the value of a silver dollar or of any other 
 
17 
 
 dollar; and the question of the relative production and 
 abundance of silver and gold, or of any other metal, 
 is wiped out. Let us all get a few hundred-weight of 
 iron, pass a law requiring only a few grains of it in a 
 dollar of full legal tender quality, with free coinage, 
 and be rich. 
 
 IMPOTENCE OF INTERNATIONAL BIMETALISM. 
 
 But, say others, while no single nation can, by a 
 legal tender law, make a money buy more in the mar- 
 ket than it is worth as property, an agreement among 
 the nations having commercial relations to make de- 
 preciated silver full legal tender, at an universally uni- 
 form ratio, would put it on a par with gold in the mar- 
 kets of the world. Then would fifty cents' worth of 
 silver, coined in a dollar piece, buy an hundred cents' 
 worth of gold or of any other property. 
 
 Note the answer: Such an agreement and its ac- 
 companying legislation would be absolutely barren, and 
 powerless to effect the proposed result, because trade 
 alone fixes values, and nations as nations do not trade 
 with each other. Governments are not traders. They 
 are not in commerce. They neither buy nor sell. 
 Their individual citizens trade with each other accord- 
 ing to the unchanging element of human interest. The 
 government of ■ each furnishes protection and facilities 
 for trade to its merchants, its selling producers, and 
 its buying consumers. But governments themselves are 
 not merchants. They do not own the exchangeable 
 properties of their citizens. They do not bargain them 
 away. They have nothing to do with their price. 
 They have nothing to do with what is taken in ex- 
 change for them, nor with the rate at which one is ex- 
 changed for the other. They keep the peace, protect 
 property, administer justice, make it safe and conven- 
 ient for their merchants and their customers to deal 
 with each other within their several jurisdictions, en- 
 
i8 
 
 force for them their lawful contracts, and there they 
 stop. They are no part of the world of trade. They 
 can, each within its own territory, rob creditors by 
 legal tender acts which are false to the facts and eth- 
 ics of trade, and so drive away capital; but they can 
 no more change the exchangeable value or commercial 
 function of the money of trade than they can change 
 the exchangeable ratios of cotton, hay, iron, cows, 
 steamships, or any other form of property in which 
 men deal with each other according to their needs and 
 their mutual agreement upon values. If they could, all 
 they would have to do to secure eternal commercial 
 tranquillity would be to enact all forms of property to 
 be money, all unlimited legal tender, fix their ratios to 
 each other once for all, and then let the world run. 
 
 IMPOSSIBILITY OP BRINGING GOLD AND SILVER 
 TOGETHER. 
 
 Wherefore, and in view of the unlimited supply of 
 silver in the mines, within easy reach, and of the new 
 arts by which its cost of production is reduced and is 
 still further reducible, it is absolutely certain that no 
 human device can restore our silver to a par with gold. 
 They have parted forever on the existing ratio, unless 
 and until gold in turn becomes correspondingly abun- 
 dant. Our silver dollars are utterly useless at their face 
 in the markets of the world, and are useless in our 
 own, except as protected by our gold, and are, there- 
 fore, a perpetual and grave menace to our whole cur- 
 rency system, which is thus made to carry $250,000,000 
 worth of silver at a valuation of $500,000,000. 
 
 CONFUSION RESPECTING THE GREENBACK AS MONEY: — 
 TRUE NATURE OF A CREDIT OR PAPER CURRENCY. 
 
 A great difficulty in dealing with our greenback is 
 the false estimation in which it is held by many as 
 actual money, instead of being merely an evidence of 
 debt and a promise to pay money. And a certain men- 
 
19 
 
 tal confusion is more or less prevalent respecting all 
 forms of credit currency, due largely to the fact that 
 they are all as commonly spoken of as money as are 
 gold and silver. 
 
 USE OF A CHEQUE. 
 
 Let us be clear. A refinement of incalculable con- 
 venience and usefulness to commerce is the bill of ex- 
 change, bank draft, or bank cheque. If I buy an item 
 of property from you, instead of carrying my money 
 property around with me and giving you the proper 
 quantity in exchange, I deposit it in a bank and give 
 you a writing which entitles you to receive the agreed 
 quantity of it, which you may take possession of at 
 your leisure, either by getting the actual cash when 
 you want it, or by turning that writing or cheque over 
 to your own bank to get the money and keep it for 
 you until you want to use it, or to transfer it to some 
 one else by a like cheque. And you accept my cheque 
 because you believe it is a good and effective title to 
 the actual property, and furnishes a safe, convenient, 
 and cheap way of handling that property until you 
 want to use it. My cheque for a dollar is not a dollar ; 
 but, if I and my bank are solvent, as you suppose, it 
 is a perfectly good title deed to the dollar which you 
 have taken in exchange for your property, and you 
 finally get your dollar, whenever you want to use it, 
 through the transfer operation effected by the cheque. 
 It is the dollar and ii:)t the cheque you are after; and 
 all you value the cheque for is for the dollar it brings. 
 
 USE OF NOTES AS CURRENCY. 
 But I may not have the dollar, and yet want your 
 property. And if I am a man of honor and possessed 
 of property which can be exchanged for money within 
 a convenient time, and I am willing to pay you for 
 waiting, you may be willing to part with your prop- 
 erty to me now and take my written promise of the 
 
20 
 
 dollar you exchange it for, to be delivered to you 
 later on. But it is for the dollar promised, and not 
 for my promise of it, that you have exchanged your 
 property. 
 
 The same thing is true of any promise to pay 
 money. If uttered by a person, corporation, or gov- 
 ernment, municipal or general, of well known solvency, 
 that is, credited with having the money promised or 
 the resources that will certainly bring it, such prom- 
 ises, especially if "payable to bearer," are exceedingly 
 desirable substitutes for, and exchange as readily for 
 commodities as, the actual property called money, be- 
 cause of their greater convenience. You haven't got 
 to take the money and take care of it until you want 
 it. But it is the property to which they furnish the 
 title, the property they promise, that other property 
 is exchanged for. 
 
 WHAT A DOLLAR IS. 
 A promise to pay a dollar is not a dollar, no matter 
 who utters it or in what capacity. It entitles you to 
 receive a dollar ; it is a title deed to a dollar, like a 
 bank cheque. But a dollar is an actual thing; a 
 definite, measurable, measured, and certified quantity of 
 true property, of actual use, an object of desire as 
 property, of measurable market value, for which you 
 are willing to exchange your property. To call any- 
 thing else a dollar is mere fog. And faith in the 
 paper promise is the faith that it will be redeemed in 
 the property promised ; that the promisor will fulfil 
 his promise, no matter who the promisor is. " The 
 faith of the nation" as a backing for our greenbacks, 
 while they were yet irredeemable and the greenbackers 
 sought to keep them so, was spoken of by them as 
 if it were a separate, supernatural, and sacred entity, 
 a thing apart from any form or substance of property, 
 and yet of absolute and independent value. "The 
 faith of the nation" is simply its obligation to do 
 
21 
 
 precisely the thing it has agreed to do, and the belief 
 of its creditors that it either freely will or else can 
 certainly be made to do so. That belief gone, "the 
 faith of the nation " will buy nothing. It is the money 
 which the promise promises that buys, and not the 
 promise. When the property promised fails, the promise 
 fails. 
 
 LEGAL TENDER STATUS OF THE GREENBACK. 
 
 A most misleading and dangerous complication in 
 the case of the greenback as it stands in the general 
 apprehension, is the legal tender function given to it 
 by Congress. In the hope to aid its circulation and 
 credit during the war, Congress declared that the 
 greenback, the government promise to pay a dollar, 
 should be as effective to discharge a debt or an ad- 
 judicated claim as the dollar itself. If I had prom- 
 ised to pay you $i,ooo on a given day for property 
 actually had of you, you could not get your money, 
 the property itself. You could only get in its place 
 another promise, which for nearly twenty years was 
 actually irredeemable, and which during that time 
 varied in market value, according to the varying 
 chances of its final redemption, from thirty-seven cents 
 to par, as great uncertainty gradually changed to cer- 
 tainty. This compulsory substitution of a new promise 
 by a new promisor, was an actual destruction of con- 
 tracts by preventing their fulfilment, and a complete 
 defiance of the entire ethics of trade. Its only justifi- 
 cation at the time was its supposed actual necessity, 
 and it was only on that ground that the Supreme 
 Bench first denied, but, having been partially recon- 
 stituted, finally upheld the constitutionality of the law 
 by a divided court. But the mischief was done. The 
 court declared that a government promise to pay 
 money — property — was itself money, if Congress only 
 ordered it to be received as such in discharge of a 
 debt. A political party was built on the idea that 
 
22 
 
 that power conferred to discharge a debt by compul- 
 sion of the creditor was of the final essence of value. 
 The political and judicial history of this matter is one 
 of the most singular in our annals. I regret that time 
 forbids its review. 
 
 THE PEOPLE'S MONEY. 
 It was therefore effectively decreed that every cred- 
 itor should be compelled to receive as a dollar the 
 government's promise to pay a dollar, although the 
 promise might at the time be worth only thirty-seven 
 cents in the market. Whereat, some innocently, because 
 ignorantly, but others with political ends, and others yet 
 with personal profit in view, assumed that the arbitrary 
 and compulsory debt-paying power of the paper promise 
 of a dollar made it really a dollar, with full standing in 
 the market, although that paper promise, while it could 
 pay off an hundred cents' worth of debt because the 
 creditor couldn't help himself, could only buy in the 
 market thirty-seven cents' worth of flour. That one 
 fact ought to have made the whole absurdity clear ; and 
 it did, — for men who took the trouble to see all the 
 facts and to think and to remember the moral law. But 
 the demagogue assumed that every debtor wanted to 
 pay his debt in poorer money than he got in contracting 
 it; the speculator saw his chance for fish in troubled 
 waters; and they raised the cry for a cheap money, 
 costing nothing but the printing to produce, and just as 
 good as any other for all purposes, because, forsooth, it 
 had "the faith of the nation behind it," and could, by 
 compulsion of law, pay debts ; and everybody was in 
 debt, and therefore this was the money of the people. 
 And so, the court having ruled that Congress could 
 make a paper promise of a dollar a good enough dollar 
 to pay debts with, no matter how poor a dollar it 
 might be to buy bread with, the compulsory debt-paying 
 quality, and not the bread-buying quality, became the 
 sign and true token of the people's money ! 
 
23 
 FREE COINAGE SUBSTITUTES FOR GREENBACKISM. 
 
 But the false ideas involved in the creation and sub- 
 sequent legislative and judicial treatment of the green- 
 back debt, and thereby fostered in the minds of the 
 people, have by no means disappeared. There is prob- 
 ably no longer a serious danger of the recrudescence of 
 greenbackism as such ; at least to any controlling extent. 
 But its whole outfit of ideas and arguments and its 
 whole corps of champions have been transferred to the 
 sixteen-to-one free silver coinage camp. 
 
 NATIONAL BANK CIRCULATION. 
 
 The problem respecting our National Bank circula- 
 tion ($213,000,000), which serves most admirably the 
 purposes of a commercial currency for domestic use 
 only, grows out of its limited life, based as it is upon 
 the security of bonds which must mature and be paid. 
 .As this takes place, this form of currency must disap- 
 pear, unless some other basis of security be provided. 
 Its stability and its complete acceptability throughout 
 the United States make it a commercial necessity that 
 it should be in some way preserved for domestic use; 
 and all the more, that, with a return to sound principles, 
 the disappearance of the greenback will leave a large 
 space to be filled by a legitimate commercial credit 
 currency. 
 
 It is not to be expected or desired that the govern- 
 ment should maintain a debt and pay interest on it, 
 for the sole purpose of basing such a currency. Nor is 
 it in the least necessary, even to the maintenance of 
 a bank currency of equal quality in every respect with 
 the present one. Bank currency, a true credit currency, 
 represents, and is the outgrowth of, commercial credits, 
 based upon the vast daily exchanges of property which 
 are effected through the intervention of banks and their 
 operations. Those credits, representing the commercial 
 wealth of the whole country, form the strongest possible 
 
24 
 
 basis for a credit bank currency, provided they be prop- 
 erly secured to the support of that currency. Experi- 
 ence elsewhere shows this to be entirely feasible and 
 wholly satisfactory; with the added advantage over our 
 present system of being the cheapest method that can 
 be devised. Its administration should, of course, be 
 under strict government inspection and control. Such 
 a currency is elastic, expanding when expanding trade 
 requires it, representing as it does the actual transac- 
 tions of trade, and contracting when trade contracts and 
 its balances have been settled, thus avoiding the evils 
 of a redundant currency: a quality not possessed by a 
 currency based on bonds which do not expand or con- 
 tract, and which pay interest, and which cannot be 
 directly used in the redemption of the bank notes 
 predicated upon them. 
 
 PRIVATE BANK CHEQUE CURRENCY. ' 
 
 Not as a part of the financial problems of the gov- 
 ernment, but as a most important item in our actual, 
 effective currency, mention at least must be made of 
 the whole enormous system of private credit currency 
 known as the bank cheque. The total amount of 
 deposits, including money deposits in the National, 
 State, private, and other banks and trust companies, is 
 nearly $5,000,000,000, all available to commerce, both 
 large and small, through this same bank cheque. It is 
 fast becoming to retail trade what the bill of exchange 
 is to wholesale and foreign trade: a transfer of credits 
 and an offsetting of credits, so that only balances are 
 settled in money. And our local clearing houses, in 
 their beautifully ordered system of credit accounts be- 
 tween their constituent banks, are complete microcosms 
 of the whole great credit machinery of the world of 
 trade. Real money plays a continually decreasing part 
 in the exchanges of properties of the world, which are 
 now mainly effected by the exchanges of their repre- 
 sentative credits in banks. 
 
25 
 REVENUE DEFICIENCY AS AFFECTING CURRENCY. 
 
 In order to secure due consideration of the full 
 weight of the true causes which are adversely operative 
 in our present currency system, and to guard against 
 minimizing their force and against confusing their 
 effect with the influence of those things which are not 
 true causes, but merely incidents of present untoward 
 developments, I must not leave our subject without 
 saying that the present deficiency of revenue is of it- 
 self no natural and proper part of a right currency 
 question. And, however unfortunate such deficiency 
 may be, and however unwise the legislation to which 
 it may be attributed, it is an incidental and minor part 
 of our own present currency question, solely because 
 of that thorough unsoundness of our currency system, 
 which has been making such forcible demonstrations of 
 itself for a long time past. Under a right currency 
 system, a temporary deficiency in revenue would be 
 met simply by the necessary borrowing, and would not 
 touch, no matter how great it were, a sound currency; 
 for such an one would be entirely independent of the 
 financial operations of the government and of the con- 
 dition of its Treasury. The net deficiency of revenue 
 in the first eight months of the current fiscal year — to 
 March ist— is only $17,500,000, And the government 
 has on hand, aside from its $120,000,000 or more of 
 gold, a cash balance of $140,000,000 with which to meet 
 the situation. 
 
 DEFICIT AFFECTS CREDIT OF A GOVERNMENT WITH 
 DEPRECIATED CURRENCY ON FALSE BASIS. 
 
 The only significance of this deficit, as to the cur- 
 rency situation, lies in its effect upon the general credit 
 of a government which has undertaken the enormous 
 task of keeping $250,000,000 worth of silver at an ef- 
 fective value of $500,000,000 represented in the circula- 
 tion largely by certificates, while the government 
 
26 
 
 stores the silver; wliich has injected into the volume 
 of paper currency, beside these silver certificates, $141,- 
 000,000 of Treasury notes issued to buy the silver, and 
 which has to redeem, reissue, and redeem again, as 
 fast as required, the eternally returning $346,000,000 of 
 old greenbacks. When the general conditions compel 
 a government so burdened to go largely and often into 
 the loan market to get real money to meet these obli- 
 gations, a surplus or a deficit affects its credit as a bor- 
 rower, and all the more because none of its borrowing 
 is applied to cure the trouble, but simply to tide over 
 until the next wave comes; and, if its credit is hurt, 
 its demand obligations will be converted into gold all 
 the more rapidly by those, both at home and abroad, 
 who fear that the day may come when they will not 
 bring the gold; the more especially will this be the 
 case, when we are so glutted with a paper currency 
 which cannot be contracted, no matter how little our 
 commerce needs it, that it lies unused in the banks, or 
 is employed at only a nominal rate of interest. A de- 
 ficit intensifies and accents all the inherent morbid con- 
 ditions and tendencies, and the difficulties of our pres- 
 ent false system. 
 
 GOLD NOT BORROWED FOR DEFICIT. 
 
 But the $262,000,000 of gold borrowed by us to pay 
 out on greenbacks has not gone to make up a deficit. 
 It has gone to our people who use it to pay the bal- 
 ance against us on foreign account caused by the return 
 of our securities, discredited abroad because of the fear 
 that our government will not and cannot always bor- 
 row gold to carry cheap silver at double its value and 
 to keep furnishing to our people, through the never 
 redeemed greenback, to pay foreign debts with or to 
 hoard, and that we shall consequently come upon a 
 silver basis: a fear that has been strongly accented 
 by the unfriendly manifestations of our Congress and 
 
27 
 
 of a portion of our press, and by the persistent dis- 
 regard by Congress for the great business interests 
 of the country, not only in its refusal of sound legisla- 
 tion of universal necessity, but in its heedless expo- 
 sure of our commercial interests to absolute destruc- 
 tion and our business men to paralyzing fear, to no 
 other apparent end than that its individual members 
 may make personal political capital out of an hysterical 
 show of spurious Americanism. 
 
The Silver Question 
 
 Western Borrowers 
 
 FOR 
 
 If/ If/ If/ 
 
 To the Borrowers of 
 
 The Connecticut Mutual Life 
 
 Insurance Company 
 
THE 
 
 Silver Question for Western Borrowers* 
 
 To the Borrowers of The Connecticut Mutual Life 
 Insurance Company: 
 
 You are asked to read carefully the little pamphlet, 
 "Our Currency Problems," which is enclosed with- this, 
 and to give to the matters of which it treats your most 
 attentive and serious consideration, because of their own 
 great importance and also for the reasons which follow : 
 
 THE FORMER CREDIT OF THE WEST. 
 
 The world has been filled with the story of the 
 Great West : the limitless variety and exhaustless magni- 
 tude of its resources, the marvelous fertility of its soil, 
 the boundless opportunities for successful commercial 
 and industrial enterprise of every sort, affording the 
 most profitable employment for and the amplest security 
 to the one thing it needed and did not possess : capital. 
 The pluck, industry, energy, honor, enterprise, and 
 achievement of its men, the world has been called upon 
 to admire. The development of its agriculture and com- 
 merce, the increase of its population, the multitude and 
 continental reach of its transportation lines, the growth 
 of its great cities and the improvement of its country 
 districts, the rapid and unprecedented multiplication of 
 its wealth, all have been the wonder and pride of two 
 generations of Americans. These things have been 
 unceasingly and successfully exhibited to the world 
 as the true and sure basis for a credit that should 
 
cause outside capital to lend itself confidently and 
 abundantly to Western needs. 
 
 ALLEGED WESTERN INSOLVENCY. 
 
 But now the world is being told that the men who, 
 out of the promising conditions upon which they entered, 
 have wrought such marvels of material accomplishment, 
 who in the organization and the instruments of their 
 industries and commerce, and in their schools and 
 humane institutions were supposed to have laid down 
 the lines for the broadest, fullest, most humane and 
 the wealthiest civilization the world has ever seen, have 
 so burdened themselves with debt and so incumbered 
 the vast resources of that wonderful region, that it is 
 now " but a step to serfdom " ; that, notwithstanding 
 all the universal, magnificent, and still multiplying out- 
 ward evidences of growing wealth, universal bankruptcy 
 threatens unless some easy way be found to free from 
 debt that great garden spot, which has reached the limit 
 of its endurance, and of its ability to produce and pay. 
 
 THE REMEDY, CHEAP MONEY. 
 
 And the world is being told that the remedy for the 
 straits of this great people between the AUeghanies and 
 the eastern Rocky Mountain slopes, is to be found only in 
 a cheap money : one whose dollars shall cost very much 
 less to get than those now in use, but which a creditor 
 can nevertheless be compelled to take for the better 
 money he once loaned at their urgent desire. 
 
 This cheaper money is to be found in silver coined 
 free of charge for any individual, at the ratio of i6 to i 
 with gold, which ratio was fixed in 1834, because it then, 
 when silver was worth $1.30 an ounce, took only 16 ounces 
 of silver to buy an ounce of gold. Now, with silver at 
 only 68 or 69 cents an ounce, it takes 3 1 ounces of silver 
 to buy an ounce of gold. To bring the two metals to 
 the mint on equal terms now, as our fathers sought to 
 
s 
 
 do in their time, would require a coinage ratio of 3 1 to 
 I instead of their 16 to i. But that would make a silver 
 dollar an hundred cent dollar, just as theirs was intended 
 to be, equal in value and in cost- to a gold dollar : it 
 would not be the cheap dollar the great West is said to 
 need to pay its debts with, and as the regrettable alterna- 
 tive to financial and industrial ruin. Keeping the ratio 
 at 16 to I instead of putting it at 31 to i, the market 
 ratio where our fathers put it, instead of having to 
 buy an hundred cents' worth of silver to get coined into 
 a silver dollar to pay his debt with, a man would have 
 to buy only fifty-three cents' worth of silver, get it coined 
 into a silver dollar and make his creditor take it under 
 compulsion of law for the hundred cent gold dollar which 
 he was induced to lend. 
 
 SOME FURTHER EXCUSES ADDUCED. 
 
 To be sure, there are some who say that the creditor 
 will not lose all of that forty-seven cents cut off from the 
 original value of the sum loaned in lOO-cent gold dollars 
 and paid back in the 53-cent silver dollars, because he has 
 had his interest since it was loaned. The usual length 
 of a loan is five years. The usual rate of interest on good 
 western loans is five to six per cent. So a lender has 
 had during that time 25 or 30 per cent, all told for the 
 use of his money ; and so some figure that he gets 
 back from 78 to 83 per cent, of his principal in 53-cent 
 dollars (if they keep up to 53 cents). Of course this view 
 allows nothing for the use of the money which the 
 borrower wanted because he could make it profitable 
 to himself: the idea being, apparently, that if the bor- 
 rower was mistaken in his calculation or unwise in the 
 use of his loan, the lender is the man to stand it, 
 though there is no instance on record where the borrower 
 has voluntarily paid a higher rate of interest than he 
 agreed because his use of the money borrowed was more 
 profitable than he expected. 
 
Whatever rates local lenders to doubtful borrowers 
 upon chattel mortgages or inferior securities may have 
 been able to exact to cover both the use of the money 
 and the chances of loss on the principal, the rate re- 
 ceived by eastern lenders would not nearly make them 
 whole even on the value of their principal, besides losing 
 all their interest, if they must take it back in 53-cent 
 dollars. 
 
 Of course, in this way of dealing a loan is no longer 
 an investment, but a speculation, in which the borrower 
 manages the business, gets all the profit if there is one, 
 and the lender stands all the loss if the borrower is 
 disappointed. 
 
 And there are others who say that when the money 
 was borrowed the lender took the chance of being paid 
 in a depreciated currency. 
 
 So far as known, no borrower has presented that con- 
 tingency to the lender when asking for a loan. He has 
 usually dwelt upon the goodness of his security and his 
 own ability and purpose to pay promptly and honorably and 
 in full, and upon the consequent absolute absence of any 
 risk of loss to the lender; and these things have been 
 urged as the sound business reason both for the creditor's 
 making the loan and for accepting a moderate rate of 
 interest. No borrower, in negotiating a loan, has ever 
 mentioned his hope or expectation that he was going 
 to pay off in any cheaper money than he got from the 
 lender, or his purpose to use his political power to make 
 the government take such a course as should enable 
 him to do so. And, obviously, if the use of the money and 
 the ordinary risk of collecting a presumably well secured 
 debt has been worth only 5 or 6 per cent, as it was agreed to 
 be, the contingency of the loss of half of the principal (which 
 was not mentioned in seeking the money) was not covered 
 by the rate ; and especially was it not, if, all the while the 
 borrower was trying to get his money, he was secretly in- 
 tending to lend himself to such concerted political action 
 
with other borrowers and with the sellers of cheap 
 money metals as should bring about that result. It is 
 not probable that any lender at 6 per cent, ever supposed 
 that his borrower was intending to bring about by 
 his own political act a 50 per cent, reduction in the 
 value of the money in which he was to pay off his 
 borrowings. It needs a good deal more of a margin 
 than 6 per cent, a year to play against loaded dice. 
 
 SILVER AT 16 TO 1 THE CHEAP MONEY. 
 
 The silver-producing capacity of this country has been 
 pretty thoroughly explored and surveyed, and found to 
 be great beyond all imagination and practically inex- 
 haustible. The ores are abundantly spread over a wide 
 area, are now easily and cheaply accessible, and they 
 have come into the ownership of a few who have plenty 
 of capital and all the improvements for rapid and cheap 
 production. 
 
 Therefore it is proposed that every one shall be by law 
 enabled to take 53 cents' worth of silver, more or less, 
 to the mint and have it coined free of cost into a " silver 
 dollar," which every creditor, whether a lender, wage 
 earner, or depositor in a savings bank, shall be compelled 
 to take as a good dollar in discharge of the debt due him. 
 This is relied upon by certain people to save the West 
 from financial, industrial, and social disaster. 
 
 SOME INCIDENTAL QUESTIONS. 
 
 Of course, the question arises whether the men of the 
 West who are said to have so wofuUy miscalculated their 
 own business ability and the resources of their country 
 and so strained their credit as to need such wholesale relief 
 from their freely contracted debts, are not miscalculating 
 now, and whether some more radical cheapening of 
 money will not be ultimately necessary to get them out 
 of the slough in which they are alleged to have landed 
 themselves and all the wealth of the naturally richest 
 section of the world. 
 
There might also be a question, even if these alarming 
 representations of this ruinous use of former credit are 
 true, whether it still wouldn't be better for the solvent 
 people of the country, as well as for the future borrowing 
 ability of the West itself, that debtors and creditors 
 should seek the usual ways of settling excessive debts, 
 rather than by upsetting our present and long-used 
 gold money standard in order to make a wholesale forced 
 settlement. 
 
 ALLEGED BITTER FEELING TOWARD THE EAST. 
 
 But it is being quite plainly intimated from certain 
 parts of the West and by certain persons who assume to 
 speak in its name for campaign purposes, that the people 
 of the West resent as an insult to their intelligence and 
 their honor any attempt on the part of " The East " to speak 
 to them on any aspect of the free-coinage-at-i6-to-i issue 
 in the present campaign; that "The West" has got the 
 political power to decide the matter as it choses, and that 
 it is entirely capable of using that power for its own best 
 interests without any instruction or nagging from " The 
 East " as to what its interests or duties may be under 
 the circumstances ; and that " The East " had better keep 
 still or it may suffer the worse. 
 
 THE RELATIONS OF THE EAST AND THE WEST. 
 
 This attitude of irritable protest against discussion 
 grows out of the fact that the West has borrowed 
 money of the East; and the i6-to-i issue involves the 
 question whether it is going to pay back in as good 
 money as it got, or in a cheaper and less valuable money. 
 Naturally those who are trying to bring about the use 
 of that less valuable money don't like to have that 
 question brought into debate between the borrower and 
 the lender; for it carries within itself matters of the most 
 serious import to the personal rights and duties of both 
 borrower and lender, and to the future of every man and 
 
of every kind and piece of property, and of every industry 
 and enterprise needing to secure at times the use of 
 other people's capital, and needing therefore to be free 
 from the suspicion of intending to confiscate any part of 
 it by a monetary or a legislative or a judicial revolution. 
 If men fully realize these things they will be, both 
 by reason and conscience, cautious and slow in lending 
 themselves to radical changes, and will refuse consent 
 to those which result in dishonored obligations, unsettled 
 values, and the consequent destruction of confidence on 
 the part of those who may have the capital that may 
 sometime be wanted again. 
 
 THE OCCASION OF THE BITTERNESS. 
 
 The men who are striving to bring about such a 
 change seem to think it shrewd to so inflame the 
 mind of the borrower toward the lender that each 
 becomes suspicious of the other ; frank and fair discussion 
 becomes impossible, and hate craftily comes in to justify 
 to one's own conscience an act of injury toward the hated 
 one. 
 
 But so unnatural does this expression of irritable temper 
 appear that it seems incredible that it should be general. 
 It must be a very limited feeling, existing only where 
 there has been a deliberate attempt, for a purpose, to 
 create in the mind of the Western debtor a sense of 
 injury, oppression, and injustice, and a feeling of con- 
 sequent hostility and vindictiveness toward the man who 
 has loaned him the money he asked for. 
 
 HOW THE BITTERNESS HAS BEEN CREATED. 
 
 As a matter of fact, for several years certain journals 
 and certain public speakers have labored incessantly to 
 create just that feeling; and have taken advantage of 
 short crops, low prices, or whatever else might be felt 
 as a hardship, to suggest the idea and to intensify the 
 feeling that the lender, instead of being a friend who 
 
lO 
 
 had, on a proper business basis, furnished useful capital 
 for the profitable use of the borrower and at his request, 
 was his oppressor and relentless enemy who was seeking 
 to destroy him, and whom it was right to injure in any 
 lawful way; that disappointment or hardship made it 
 right to force a settlement with the lender ; and that 
 cheap money, — that is, money that you can buy at less 
 than a hundred cents on the dollar — would be just the 
 thing to pay off with and get even with the oppressor. 
 
 And now these same journals and these same people, 
 said to be working largely in the interests of the owners 
 of the metal or the mines which are to furnish the cheap 
 money, or in their own supposed political interests, 
 loudly object to any utterance on the subject by the 
 lender, and would persuade the borrower that he is in- 
 sulted if the lender has a word to say about their proposi- 
 tion that the borrower should use his political power to 
 get a debased currency in which to pay him off. 
 
 ARE LENDERS AND BORROWERS REALLY HOSTILE? 
 
 But are lenders and borrowers natural enemies ? (It 
 doesn't make any difference where they live.) Does the 
 lender force his money on the borrower ? Does he com- 
 pel him to come under obligation ? Does he create the 
 circumstances which make the borrower desire to put up 
 a new building, or tile or otherwise improve his land, or 
 buy a new " eighty," or give his children some other than 
 a public school education ? Does he then go to the bor- 
 rower as to an enemy or as a friend ? Does the relation 
 change as soon as the loan is made? Does not the 
 Western borrower want the money of the Eastern lender? 
 Has it been of no use to him? Has it injured him? 
 Does he hate the lender just because he had the money? 
 
 WHY WAS THE MONEY BORROWED? 
 
 How came all these hate-creating loans to be made ? 
 Seme fifty to sixty years ago the children who had 
 been reared in the hard and scantily productive toil and 
 
II 
 
 in the diligence, prudence, and thrift demanded on the 
 hard, rocky farms of New England, where for two hun- 
 dred years their forefathers had been painfully conquer- 
 ing a livelihood and building up the commonwealth on 
 the basis of honest lives, sound intelligence, and the fear 
 of God, attracted by the then fabulous natural fertility and 
 the enormous extent of the agricultural lands in what is 
 now the great Middle West, began setting out in growing 
 numbers to make new homes and build a new country 
 under conditions infinitely more favorable than those 
 which had made so hard the lot of their sturdy fore- 
 fathers. 
 
 They were not slow to discover that the marvelous 
 resources of the soil could be far more quickly and profit- 
 ably developed by the use of more money for better 
 improvements, tools, and stock and for more of them, 
 than they possessed. And they turned back to the friends 
 in the old home, some of whom had with thrifty self- 
 denial laid aside their little hoards against their own 
 rainy day or the hard chances of those they must some- 
 time leave behind. To them they described the natural 
 but partially developed value of their lands, and the 
 greater profits the use of their money would bring to 
 their owner ; and they offered their lands as security and 
 promised a better rate of interest than the scanty re- 
 sources of New England could bear. 
 
 And so they got their money and used it and greatly 
 prospered thereby, nor dreamed then that the old Eastern 
 friend had become a greedy oppressor, and robber, and 
 bloodsucker. 
 
 WHERE THE MONEY CAME FROM. 
 
 It gradually came to be in time that there was scarce 
 a hamlet in New England and the Eastern middle states 
 where little sums, hardly earned and carefully saved, had 
 not gone West to be used by some one who foresaw a 
 profit therein. And even smaller investors, who hadn't 
 
12 
 
 enough to loan, out had a few dollars in a savings bank, 
 or were paying premiums to a life insurance company, 
 saw these aggregated and put into, loans for the uses of 
 Western men who asked for them. 
 
 These people are somewhat startled by the bitter 
 epithets by which they are now being freely desciribed 
 by some Western papers and some Western orators. 
 They are surprised to know that they are robbers and 
 oppressors of the poor, and that they have taken unfair 
 advantage of necessity. The transactions were supposed 
 to be mutually satisfactory. The people at the old home 
 got a better rate for their money ; but the Western bor- 
 rower of it wanted it at the agreed rate and made money, 
 improved and developed his property and greatly in- 
 creased his wealth and in a much speedier way by its use. 
 
 And what was true of individuals was true of the 
 municipalities and the railroads and the great commer- 
 cial and manufacturing enterprises, demanding improve- 
 ments far beyond the power of local capital to supply. 
 The men of the East believed that the safe value was 
 there ; and they trusted both the boasted ability and the 
 integrity of the men of the West to bring their enter- 
 prises to a successful issue, and to keep untarnished the 
 credit which had brought them abundantly the capital by 
 whose use they had thriven. 
 
 THE CONNECTICUT MUTUALS' WESTERN INVESTMENTS 
 FOR FIFTY YEARS. 
 
 The operations of this company illustrate completely 
 the whole matter : 
 
 The average annual premium paid by the members of 
 the Connecticut Mutual is less than $35 : a sum alto- 
 gether too small to make Western loans with by the per- 
 son paying it. But the yearly aggregation of these small 
 sums is available for numerous and extensive financial 
 operations. 
 
 In the fifty years of its existence the Connecticut 
 Mutual has received from its policy-holders over $187,000,- 
 
'3 
 
 ooo in these small yearly premiums. In the same period 
 it has loaned to over sixty thousand different Western 
 men over $141,000,000 of those premiums. In addition, it 
 has loaned over $16,000,000 to various Western munici- 
 palities and corporate enterprises. Over $157,600,000 of 
 its policy-holders' premiums have been thus loaned to the 
 men of the West. Over ten thousand of them are to-day 
 borrowers of over $36,000,000 of these premiums. 
 
 HAVE THESE LOANS BEEN A WRONG AND INJURY TO 
 
 THE WEST? 
 
 Has this company been in all these years, and is it to- 
 day, the hard and greedy oppressor of the many thousands 
 who have used its money? Did not the borrower 
 always seek the money? Was there a case among 
 them all where the borrower did not get his money at a 
 rate of interest which, under the conditions of the time, 
 he did not consider favorable to himself? And did he 
 not borrow the money because he expected it to be profit- 
 able to him at the rate ? Were not the rate and the con- 
 ditions more favorable in every case than those he could 
 have obtained from local capital ? If not, why did he 
 come East for his money? When and how did we 
 become his enemy? 
 
 THE USEFULNESS OF THE LOANS. 
 
 There is scarce a business center of importance in that 
 portion of the West where the Connecticut Mutual has 
 had these borrowers which its loans have not most 
 materially helped to build up and develop. Its money 
 has been a decisive factor in the commercial enterprises 
 and successes of these towns. Ask Chicago and many 
 another great western city. Its money has given to 
 thousands of farmers the opportunity they desired to 
 buy land, improve it, stock it, better their homes, ed- 
 ucate their children, start them in life, and do the many 
 things one can profitably use money for if he has it and 
 
for the use of which he is glad to pay if he hasn't it 
 of his own. And $36,000,000 of it is being so used to-day 
 in city and country. 
 
 And this money has been furnished at a rate which 
 every borrower knows to have been moderate as com- 
 pared with local rates for well secured loans, saying noth- 
 ing of the rates on cutthroat and chattel mortgages. 
 
 OUR RIGHT TO SPEAK. 
 
 It is not therefore as to a people to whom we have 
 done evil, and whose injury we have either sought or 
 wrought, and whose enmity we have deserved, and before 
 whom we ought to stand dumb, as discovered criminals, 
 and in whose sight we have no rights left, save of their 
 grace, that we speak to those who are now asked to 
 use their political power to do to our policy-holders, 
 whose money they asked for and have had and are 
 using, the wrong of paying them back in dollars worth 
 only half those which were loaned them. We speak to 
 men who have been commended to us as true and 
 honorable men with whom to deal, and with whom 
 we have dealt sincerely, whose request we have met, 
 whose need we have served, and who are asked to make 
 the government enable them to pay their debts with 
 a fifty-cent dollar by compelling us to receive it. 
 
 THE EFFECT. 
 
 In the dollars the borrowers pay us we must pay 
 the families of our policy-holders, whose money they 
 now have. Therefore we speak. 
 
 "We say nothing of the effect upon the credit of 
 our people as a whole, and upon their future ability 
 to borrow money. We say nothing of the unsettling 
 of all our commerce and of all our industries and of all 
 our values that must follow the debasement of our cur- 
 rency. We say nothing of the effect upon the credit of 
 this Nation's government, and upon its reputation as 
 
IS 
 
 to commercial honor and integrity for generations to 
 come, and which coming generations as well as ourselves 
 will have to pay for, which must come from what you 
 are asked to do ; although all these things are of the 
 gravest practical importance. 
 
 But we appeal to no motive of personal, material in- 
 terest, present or future. We appeal to that only hope of 
 stable and free order, of honest government and sound 
 sscurity: to every man's sense of that righteousness 
 which in the persons and practices of its citizens alone 
 exalts a nation ; and wanting which, not as a sentiment 
 or an emotion, but as a hard, practical rule of daily 
 living and dealing, the end of this Nation will have 
 begun, no naatter how one "interest" or "class" may 
 be played against another for a distressful and turbulent 
 period. 
 
 We speak to one plain matter of fact : You have had 
 the money of our policy-holders in a currency based on 
 gold, worth an hundred cents on the dollar. You are 
 asked to vote for the free coinage of silver on the i6 to i 
 ratio when the parity or market ratio is 3 1 to i in spite 
 of all the hundreds of millions our government has 
 bought in trying to raise and keep up the price ; and 
 you are asked to do this for the reason, among others, 
 that it will enable you to pay back to our policy-holders 
 some "dollars" costing you and worth to them only 
 fifty-three cents, more or less, and certain, after a possible 
 slight temporary rise, to be worth less as the flood of the 
 whole world's unused silver, and from our own inex- 
 haustible mines, is poured into our market. 
 
 We cannot believe that your minds are open to such 
 an appeal. But in the face of the present great out- 
 cry and the determined efforts of those who make it, 
 and the venomous spirit they are seeking to spread, we 
 should be shamefully remiss in our duty did we fail to 
 call you to consider the proposed political treatment of 
 your financial obligations in the light of its disastrous 
 
i6 
 
 effect upon those men and the families of those men 
 whose money, committed to us, we have entrusted to 
 your integrity and good faith, for your chosen uses, and, 
 therefore, in the assurance of your and their mutual good. 
 Respectfully yours, 
 
 /Resident, 
 
 Hartford, August 5, 1896. 
 
A Proper Paper Currenqr 
 
 WHAT IT IS, AND WHO CAN UTTER IT 
 
 Jacob L. Greene 
 
 An Address 
 
 Delivered before the 
 
 Haftford Board of Trade 
 November 23, >897 
 
A PROPER PAPER CURRENCY 
 
A Proper Paper Currency 
 
 WHAT IT IS, AND WHO CAN UTTER IT. 
 
 No statement can be more apparently trite and un- 
 necessary than this : That the distinguishing character- 
 istic of a paper currency, because its only source of value, 
 is that it is a credit currency ; that it is not money in any 
 accurate sense, for it is not the substance of value, that is, 
 property itself ; that it simply represents either the metal 
 money it promises, or some other actual property sub- 
 stance of a value expressed in terms of that money, which 
 money or value have not yet passed to the possession of 
 the credit-holder, but are promised him thereby ; that it is 
 but a title deed to property purchased, but yet to be de- 
 livered.; that its value as currency depends entirely on 
 the existence of and its control over the money or other 
 property the right to which it conveys. But this simple, 
 but oft forgotten, distinguishing fact bears directly on 
 and determines three points, viz. : {a) Who should utter 
 such a credit— that is, who should be a borrower, emit- 
 ting a currency evidencing his debt and promising its 
 payment to bearer at sight, expecting it to be commonly 
 and unhesitatingly received ? {Jj) Where is the property, 
 whence derived, and by whom held, which is to liquidate 
 the promise ? (c) How is that property secured to the per- 
 formance of the promise ? 
 
 Another fundamental fact, with a like definitive and 
 limiting bearing, is this : Money and those other forms 
 of currency which are not money themselves, but which 
 promise it, are but the instruments of trade, have no use 
 
or existence apart from it, are developed out of, and in 
 their nature and incidents are properly determined by, 
 the exigencies and conveniences of trade, which is the 
 exchange of properties by their owners for mutual advan- 
 tage, one property for another property, either of which 
 may be actual money, or some other form of property sub- 
 stance or of service, measured in quantity by its value in 
 such money. Money is useful and valuable only as it is 
 or can be employed in trade and commerce. The credit 
 currency is truthful and useful only as it has behind it the 
 actual money or other property convertible into money, 
 which it professes to promise or to represent, ready to be 
 produced as properly demanded. 
 
 A third equally trite, but fundamental and determin- 
 ing, fact is this : Government is the organized instrument 
 of a people in their political capacity only, and for the 
 accomplishment of political purposes. Trade is not a 
 political act or matter. The properties it exchanges are 
 not owned by political bodies, but by private persons ; 
 they are not exchanged by governments, but by the citi- 
 zens of governments ; and the ownership and exchange 
 of properties, whether material substances or valuable 
 services, by the citizens of a government are not by 
 virtue of their political relationship nor in their capacity 
 as citizens, whether under one political form or another, 
 but by virtue of the purely natural, economic, mutual re- 
 lations of persons, each of whom has something the 
 others need and needs something the others have. Every 
 relation of trade, of need and supply, of production and 
 consumption, of possession and want, as well as every in- 
 cident of the complex machinery whereby each most 
 effectively answers the call or meets the offer of the other, 
 is purely personal, individual, and non-political ; personal, 
 individual, and non-political in the need ; personal, in- 
 dividual, and non-political in the possession and exer- 
 cise of the talent and faculty which can make response. 
 
 Two main propositions grow inevitably out of these 
 
facts as they bear upon the matter of a credit currency — 
 the one by neccessary exclusion ; the other by necessary 
 inference and as the only alternative : ist, The gov- 
 ernment not being in trade, being neither buyer nor 
 seller, producing and owning none of the properties 
 which enter into trade, and having no property or re- 
 sources whatever except such as it takes from its citizens 
 through taxation for its expenses of administration of 
 whatever character, has no natural relation to the creation 
 of a credit currency except to provide proper and effect- 
 ive legal remedies to safeguard it, and is not the proper 
 party to issue it. Such an act is wholly foreign to its 
 political functions, of which commercial operations are no 
 part in theory or fact. Moreover, government cannot 
 issue a credit currency and get it in circulation except by 
 borrowing the amount for which the issue is made ; nor 
 can it make such a borrowing for such a purpose anything 
 other than a forced loan, unless it pays interest on its cur- 
 rency issue and sells it for what it will bring on its interest 
 basis. It has no property with which to redeem, and only 
 by taxation of its citizens can it pay its debt to them, 
 which act would extinguish the currency itself. Mani- 
 festly, a government cannot be an issuer of a legitimate 
 and permanent credit currency. It can, by coinage, cer- 
 tify the quantity and quality of the money metals brought 
 to it for that purpose by its citizens, and provide the 
 proper remedies and machinery for the enforcement of 
 the many commercial contracts made by them. These 
 are its proper political acts respecting the commerce and 
 business of its citizens. But it has no other natural or 
 permanent relations with trade, the properties involved in 
 and constituting which are the foundation and only source 
 of all true credits — that is, of credits with existing prop- 
 erty behind them for their solvency. For property pre- 
 cedes and creates credit. Credit which precedes property 
 is speculation. 
 
 2d, The only proper parties to issue a credit currency, 
 
and the only parties that can issue one with an actual and 
 permanent basis of value, and one which will expand and 
 contract with the varying commercial needs therefor, are 
 those concerned and engaged in trade itself, from which 
 all credit springs and where it alone really exists and by 
 which it is solved : the parties, that is, which own the 
 properties which create and secure the credit, and are en- 
 gaged in that exchange of them which necessitates the 
 credit and requires the current use of the evidences of 
 that credit until the exchange be effected. The trade 
 relations of all the scattered properties in course of ex- 
 change which are the material of commerce, and the 
 scattered credits growing thereout — the evidence of 
 which credits are, be it remembered, essentially titles to 
 the properties themselves — are all centered in and 
 handled by the banks. The banks, then, under proper 
 governmental supervision and regulation for the perfect 
 protection of the credit currency holder, are the proper 
 and only proper parties to issue a credit currency. Their 
 assets represent the exchangeable wealth of the country, 
 the products of soil, mine, factory, and sea, and all the 
 industries associated with them, in their endless, ever-re- 
 newed flow of production and exchange for consumption. 
 It is this enormous body of properties in perpetual pro- 
 cess of exchange which creates, supports, and solves the 
 credits in the banks, than which, properly secured to the 
 redemption of the banks' currency obligations, there 
 can be conceived no other basis of even approximate 
 value or propriety ; for, in the light of the world's ex- 
 perience both in failure and success, in any reasonable 
 and intelligent scheme of a bank currency based upon the 
 assets of the banks, the currency issues must be limited 
 to a safe percentage of the assets, and these assets must 
 be completely and immediately under effective control by 
 the operation of uniform law. It is a common assertion 
 that a currency issued by government, or one founded 
 upon other debts of the government, has the whole 
 
wealth of the nation behind it for its solvency a promise 
 to the ear which has been broken to the hope through all 
 history. A government currency, no matter what its 
 name or form, has behind it only that margin of the wealth 
 of the country which can be extorted by taxation for the 
 purpose of currency redemption. The question of the 
 solvency of a currency in anywise representing a govern- 
 ment debt is the question of how much taxation the 
 people will stand in order to pay the debt. Our own 
 colonial and revolutionary history alone has been full of 
 answers upon that question, fatal to the truth of the 
 theory. The wealth of the country is actually available 
 for such a purpose in only very small part. 
 
 In the light of these fundamental facts, consider the 
 value and the defects and dangers of our present paper 
 currency, and the essential characteristics of that which 
 should take its place. 
 
 Omitting, for the moment, reference to gold and silver 
 certificates, our present paper currency consists of $346,- 
 681,016, greenbacks, which must be reissued as often as re- 
 deemed; $111,334,280 remaining Treasury notes issued 
 for silver purchases, aiid which may not be reissued, and'so 
 may be dismissed, and about $230,278,969 notes of the 
 national banks secured by the deposit of government 
 bonds. 
 
 It should be constantly remembered that neither our 
 greenbacks nor our national bank note currency represent 
 commerce. They were not asked for by it. They are not 
 a development nor an application of its methods ; they 
 sprung from no exigency of trade ; they were not devised 
 for its convenience. They did not grow out of its credits in 
 the banks. They both represented in their origin and in 
 the details of plan only the exigencies of the financial 
 situation of the government under the sudden and tre- 
 mendous strain of the Civil War, when the paramount 
 question was where and how to get money. The green- 
 backs were a forced loan, pure and simple : evidences of 
 
debt and promises to pay uttered when no money was in 
 hand to pay for pressing necessities. They remain a 
 forced loan, without interest, though the necessity is long 
 past and we have since the war paid off many times the 
 amount of interest-bearing debt. 
 
 It must not be forgotten, though the reminder is as 
 yet scarcely necessary, that the greenback, being reissu- 
 able, is a most effective means of emptying the Treasury 
 of its gold under trade and revenue conditions certain to 
 recur with greater or less frequency, and under which the 
 government will be just as surely subjected to a run as is 
 a bank whose money is wanted more than its credit ; such 
 a run as compelled the government in 1896 to borrow 
 $262,000,000 of gold to meet it: and yet it could not 
 retire a single greenback, but had perforce to leave theili 
 all to work again the same vicious mischief under like 
 conditions. 
 
 The national bank currency scheme was devised 
 to make a market for the bonds of the government among 
 the banks by making the issue of bank currency otherwise 
 than as secured by such bonds practically impossible 
 through the imposition oi a. 10% tax. That is to say, the 
 scheme instead of growing out of the commercial 
 credits centered in the banks, was imposed upon them for 
 the relief of the government. The notes of the banks 
 are not now based on the commercial credits or assets of 
 the banks, are not called out when business and its credits 
 increase, nor retired when both decrease ; but, resting solely 
 on an unmatured government debt and redeemable in the 
 greenback — another government debt bearing no interest 
 — once issued, they remain outstanding, practically re- 
 gardless of the matter of demand and supply, accumulat- 
 ing in the banks of the great business centers, and, having 
 little commercial use, and in the search for some profit- 
 able employment, they glut and demoralize the market, 
 foster speculation and drive out gold when demand is 
 small, and are able to respond but slowly and too late 
 
when trade demand is great and pressing. Moreover, the 
 fact that the issue of bank notes compels the investment 
 of active bank funds in the bonds, and the difficulty and 
 delay in getting the notes redeemed and the bonds back 
 and converted for use as active funds, prevent the issue 
 of a bank currency in those localities and at those times 
 when it would be of the highest use to its business con- 
 stituency. 
 
 For the reasons carried in our preliminary statement 
 of facts, the greenbacks ought to be called in and can- 
 celed. And not only because they are not based upon 
 property and are not a true credit, but because they rest 
 only upon the government's power to tax, and are a 
 forced loan without interest. Intrinsically the whole 
 thing is vicious in every aspect. It is a use of govern- 
 mental power warranted only by that life and death 
 necessity which knows even no ordinary moral, as well as 
 no commercial, law. Its continuance under any but the 
 conditions of its origin puts the government in a false 
 position, accustoms the people to the abnormal and 
 immoral use of power, constantly suggests the extension 
 of that use, keeps the question of a purely government 
 paper currency, with nothing but the taxing power 
 behind it, an eternally open one, makes it a political one, 
 ready to take an acute and most disturbing form when- 
 ever, either from very active trade, the currency is tem- 
 porarily insufficient, or from dull trade, currency accumu- 
 lates in the banks instead of circulating in the hands of 
 the people in exchange for labor and goods. The funda- 
 mental principles of sound finance will never be settled 
 in the popular mind so long as they are thus flagrantly 
 contradicted every day by the government of the nation. 
 Our finance, our commerce and business, and our status 
 in the money markets of the world will all rest upon an 
 unstable basis, at the mercy of every adverse wind of 
 variable opinion and prejudice, however caused, just so 
 long as this situation endures. 
 
lO 
 
 And one of the worst offenses, and the cause of one of 
 the most pernicious influences of the greenback, is the fact 
 that it is a legal tender ; that a man who has promised a 
 dollar, instead of being compelled to pay the dollar, can 
 rid himself by tendering, not the dollar, the thing he has 
 promised, but another promise of it. He can compel his 
 creditor to take, not the promised property, but another 
 debtor and another debt. It imports a standing falsehood 
 into private contracts, and destroys their sanctity. Gov- 
 ernment can do nothing worse than to mislead and 
 debauch the moral sense of its people at the very founda- 
 tions; nor can it do this without also impairing their 
 mental vision and power. 
 
 Touching a national bank currency, it is first to be 
 said that the present scheme, though designed wholly to 
 compel the banks and their assets to the aid of the gov- 
 ernment in distress, has accomplished one thing of incal- 
 culable value to every individual who uses that currency, 
 and a thing which will be most distinctly and absolutely 
 required of any scheme which may be proposed as its 
 substitute. Every note of every bank, no matter what 
 the bank, where it is, or what its condition, being secured 
 in precisely the same manner and degree, passes current 
 everywhere without a thought of discrimination. No 
 scheme ought to be for a moment considered which does 
 not make a like result absolutely certain. This result 
 having been attained with a banking currency based on 
 government bonds, many have regarded it as of such 
 value as to offset the manifest defects and dangers of 
 such a basis, and perhaps many more, associating this 
 result with such a currency, have doubted if such a result 
 could be attained with a currency issued on any other 
 basis. 
 
 Two brief propositions may cover our discussion of 
 this matter : 
 
 ist. The present bank currency scheme is unnatural, 
 forced, temporary, and finally dangerous. 
 
II 
 
 2d, The solely valuable incident peculiar to the pres- 
 ent bank currency, its uniform value and universal 
 domestic circulation, can be just as certainly and satisfacto- 
 rily attained by a scheme of national bank currency 
 which is natural in origin and operation, spontaneous and 
 normal in movement, permanent in its basis, and safe 
 commercially, financially, and politically, beyond perad- 
 venture. 
 
 The present bank currency scheme is unnatural in 
 that it is not a true banking credit currency ; it is not 
 based, so far as the bank is concerned, on its commercial 
 assets, but on its compulsory investment in the govern- 
 ment debt. It is not absolutely redeemable by the bank 
 in actual dollars, but, at its option, in the government 
 greenback promise of dollars. Its final redemption 
 depends upon the government's payment of its bonds on 
 which the issue is secured. Essentially the government 
 is the real issuer, promisor, and redeemer of the currency ; 
 the bank is but its instrument. 
 
 It is forced because any other basis is prohibited by 
 the ID per cent, tax, which would not be needed to com- 
 pel the use of this currency if the scheme were a natural 
 and attractive one. 
 
 It is temporary, because the bonds upon which it 
 rests will presently mature, and, unless replaced by new 
 ones, the basis and the scheme will disappear together. 
 The whole sentiment of our people is toward the payment of 
 our debt. It is not, and ought not to be, conceivable that 
 we shall maintain a debt solely for the purpose of basing 
 a bank currency on it, paying the bank's interest on it 
 when they add and are asked to add nothing to the credit 
 of the currency, and when the assets of the banks are 
 many times more than sufficient security for all the 
 possible currency needs, and can furnish a currency far 
 more useful and far more responsive to the needs of 
 trade. 
 
 It is dangerous because, being unnaturally based, 
 forced in its relations to banks and their business, and 
 
12 
 
 but temporary through the future disappearance of the 
 bonds, both government, banks, and people are placed in 
 a false and unsatisfactory position, the people are unjustly 
 prejudiced against the banks, the government is certain 
 to be put under increasing pressure either to maintain 
 and increase its debt for bank currency purposes or else 
 to do the more logical and cheaper thing — issue green- 
 back currency pure and simple, with the intolerable cer- 
 tainty of ever-renewed political agitation for its expansion, 
 leading to its degradation in value, and to final catas- 
 trophe. Until the greenback and the government bond 
 bank note disappear to let in a currency which represents 
 the growing wealth of the country and not its debts, the 
 active prosperity of its people and not the taxes taken 
 from them, our currency will remain in politics, which 
 means that all the business of the country will remain in 
 politics, subject to its turbulent movements and menaced 
 by all its contingencies. Nor can we too often or too 
 strongly insist that acquiescence by the highest powers in 
 false principles and the contrivance of shifty devices to 
 accommodate their want of practical fitness, and the per- 
 petuation thereby of mental and moral confusion among 
 the people, impair the truth, clearness, and right force of 
 popular opinion upon all matters of public interest and 
 concern. The effect of false morals, especially when vital 
 .principles of honor and integrity are concerned, cannot 
 be limited to any one subject matter. A sick conscience, 
 like a sick mind, suffers general impairment. 
 
 The sole use of money and currency is in buying and 
 selling commodities. They are solely business instru- 
 ments. Every man's relation to them is purely a busi- 
 ness relation. His use of them is purely a business 
 use. What he needs in them is, therefore, the highest 
 possible degree of stability in value, and universality and 
 uniformity in their acceptability in the business world 
 where alone they are used. We accomplish this in the 
 case of money itself by taking the most valuable and 
 
13 
 
 stable of the precious metals as the standard, using the 
 less valuable, more inconvenient, and more fluctuating 
 metals as subsidiary or token coinage. 
 
 How shall a like stability in value, and in universality 
 and uniformity of acceptance, be imparted to a real credit 
 currency, a true banking currency — that is, a bank's 
 promise of a dollar and of a real dollar (not of some one 
 else's promise of a dollar), payable on demand? Obvi- 
 ously, by putting enough readily convertible property 
 behind it, so secured to the fulfillment of the promise, 
 with such provisions for redemption, all under such over- 
 sight, regulation, and control of the details by the govern- 
 ment, as to make the instant payment of the promise on 
 demand an absolute certainty, and a certainty that shall 
 be understood and recognized by the entire business world 
 needing the use of that currency. 
 
 Because our largest experience of a bank currency of 
 uniform value and general acceptability, regardless of the 
 place of issue, was had with one based on government 
 bonds or debt, the idea of such uniformity has become 
 largely associated in the public mind with that particular 
 form of security ; and because the variable values and 
 limited acceptability of many of the bank issues before 
 the present system were associated with and caused by 
 the variable, irregular, often unregulated and inadequate 
 security of the bank assets, the first thought in many 
 minds is that an abandonment of the present system and 
 a return to one based on the property of the banks would 
 be to abandon uniformity and its cause and to return to 
 the confusion and difficulty of former days. Nothing is 
 more completely erroneous ; and there is no error in the 
 public mind which needs speedier or more thorough cor- 
 rection. The unsatisfactory general character of the cur- 
 rency of the ante-national bank days was due to the fact 
 that it was not generally known how much nor what pro- 
 portion of property, nor how secured, was behind the 
 notes in the case of the different banks ; that in many 
 
14 
 
 cases it was believed to be insufficient and not properly 
 and certainly secured to their payment ; and the official 
 oversight in the different states was variable, usually in- 
 sufficient in plan, often inefficient and perhaps sometimes 
 corrupt in administration. But even in those days there 
 were banks whose notes went everywhere that they could 
 be obtained, because of the knowledge that either through 
 their own correct voluntary practices or through the strict 
 and honest administration of better systems of state super- 
 vision, the proportion of issue to the assets was properly 
 limited, and that the assets would certainly be applied to 
 the redemption of the notes, which was promptly effected 
 as soon as they had -served their use. Witness the uni- 
 versal credit of the banks which redeemed through the 
 Suffolk Bank : " The Suffolk system was never sustained 
 by formal law, but it maintained New Englank bank cur- 
 rency for a generation at par with gold, and prevented 
 any losses to note-holders larger than a fraction of one 
 per cent, of the entire volume of circulation."* If a 
 purely voluntary arrangement between banks themselves 
 was, by virtue of its own simple and obvious business 
 merit, so entirely successful in winning its way, what 
 might not be confidently expected of the same system, 
 defined and enforced by law, with not only the operation 
 of the system itself, but the condition and business of 
 each included bank of issue under close and constant 
 supervision by the goverment, with the two further vital 
 features which the Suffolk Bank system, being a purely 
 voluntary affair, necessarily lacked, to wit : That the cir- 
 culation should be a legal first lien upon all the assets of 
 the bank issuing it, and that a special redemption fund 
 maintained by enforced contributions from all banks issu- 
 ing currency should be provided and kept constantly 
 replenished. 
 
 This brings us to the practical definition of a properly 
 
 * Conant. 
 
IS 
 
 based, properly secured, instantly redeemable, perfectly 
 
 elastic, completely adequate bank currency, certain to 
 follow the volume of trade. That all banks of issue shall 
 
 take national charters, thus bringing them under the 
 operation of one law for all and everywhere, and under 
 one system of uniform supervision ; that the note issues 
 of such banks shall not exceed a certain per cent, of the 
 paid-in capital of the bank, varied, perhaps, under certain 
 specified conditions to meet commercial exigencies ; that 
 such issues shall be an absolute first lien upon all the 
 property of the bank, making note-holders preferred 
 creditors; that the redemption of notes in ordinary 
 course shall be conducted by the banks themselves under 
 appropriate legal provisions ; that the redemption of the 
 notes of failed banks shall be conducted by the govern- 
 ment, it taking the proper steps at the outset to enforce 
 the lien upon the assets ; in order to provide for the 
 instant redemption of the notes of such failed banks 
 without waiting for the conversion of assets, a safety 
 redemption fund, proportioned to the aggregate circula- 
 tion of all the banks, to be established by contributions 
 
 » from the banks, from time to time, as needed, held by the 
 government, to be replenished as often as drawn upon 
 from the assets held under lien, and, if need be, by fur- 
 ther contributions from all other banks. 
 
 These comprehensive, simple requisites of a complete, 
 natural, and all-sufficient system are easily secured by 
 appropriate legislation, the administration of which is 
 without other difficulty than that of thorough organiza- 
 tion and control of an efficient bureau of supervision : a 
 detail only. 
 
 We are fortunate in having near at hand an admira- 
 ble and completely successful example of the working of 
 a system which essentially answers the requirements we 
 have stated. The Canadian bank currency is as univer- 
 sally current and as completely acceptable to the people 
 of the Dominion as is our own to our people. It is based 
 
i6 
 
 on assets, secured by a first lien on them; made instantly- 
 redeemable by a separate redemption fund maintained 
 by the banks under legal requirements, is completely 
 automatic in its working responsively to the needs of 
 trade, giving out the currency in instant response to the 
 commercial demand, and redeeming it as fast as it is no 
 longer needed to carry on business. Our problem has 
 been completely worked out for us to thorough satisfaction. 
 
 Perhaps more attention here to the necessarily many 
 details of a scheme, concerning which there might be 
 found considerable latitude in adjustment, would only 
 confuse and blur the outline sketch of first principles and 
 main methods, which I desire to leave as distinct as 
 possible. 
 
 A word is necessary as to coin certificates. On Octo- 
 ber I, 1897, the gold coin of the United States was 
 $682,437,123; $154,338,370 of this was in the United States 
 Treasury;^ $528,098,753 was in circulation, $36,898,559 gold 
 certificates were in circulation, and $1,535,610 in the 
 United States Treasury. That is to say, 77.38 per cent, 
 of our gold stock is in circulation, in actual use ; only 5.6 
 per cent, is represented by certificates. The $154,338,370 
 in the treasury represents largely the greenback reserve. 
 
 Our stock of silver coin was $452,093,792 in standard 
 dollars, of which only $57,145,770 were in circulation, and 
 $394,948,022 were in the Treasury. That is, only 12.38 
 percent, of our silver dollars were in actual use; 85.18 
 per cent, of them, or $385,152,504, were represented by 
 certificates. I have omitted the small amounts of both 
 gold and silver certificates held in the Treasury cash. 
 No reference is necessary to the subsidiary silver coinage, 
 of which $61,176,415 is in circulation, and $13,455,175 is 
 in the Treasury. 
 
 If the greenbacks be retired, the gold held for their 
 redemption would be paid out and the government would 
 cease to hold gold otherwise than as part of its cash for 
 its current outgoes. Obviously, if our principles are 
 
17 
 
 sound, it should call in the gold certificates, pay out the 
 gold itself, and let it find its way to its natural uses and 
 repositories and become the basis of a sound bank 
 currency, instead of holding it and issuing certificates 
 which just so far interfere with bank issues, while the 
 government has the expense and labor of storing and 
 caring for the gold which it can use only to redeem the 
 certificates. It is a barren operation for the government 
 and a hindrance to a healthy commercial currency. 
 
 For precisely the same general reasons the government 
 should redeem its silver certificates, pay out as much 
 silver coin as commerce can absorb when the way is un- 
 locked, sell the rest, should there finally and after sufficient 
 time prove to be an unusable residue, and let it become, 
 with gold and all other exchangeable property, available 
 to commerce through the coin itself and through its use 
 as a part of the assets of the banks issuing currency. 
 
 When all these things are thoroughly accomplished, 
 and never until then, will the government cease to be em- 
 barrassed by the exigencies and contingencies of com- 
 merce, and to be a perpetual embarrassment and menace 
 to commerce : a naturally extraneous, non-trading factor 
 thrust into the daily account. The government will be 
 free to attend with greatest convenience and least expense 
 and danger to its own proper administration of its political 
 functions. Commerce will be free to attain its greatest 
 magnitude, economy, and prosperity by the use of true 
 commercial methods. 
 
What IS **A Sound Currency? 
 
 By Jacob L. Greene 
 
 ft 
 
 An Address 
 
 Before the 
 
 Boston Boot and Shoe Club 
 
 February 23, J898 
 
What is ^^A Sound Currency*'? 
 
 One of the great difficulties in ordinary discussion 
 and debate upon currency matters lies in the fact that at 
 the outset most men take it for granted that the subject 
 is too vast, too comprehensive, too nearly unfathomable 
 in its foundation principles, and, in general, too intricate 
 and mysterious in its complexities, to be understood of 
 men of ordinary intelligence or by any having anything 
 less than highly specialized training. Many men, there- 
 fore, feel themselves excused from careful and serious 
 consideration of monetary problems, and hold them- 
 selves relieved from any personal responsibility for the 
 right solution of them. They readily justify them- 
 selves in depending upon and following the lead of 
 those by whom they are accustomed to be led in other 
 things, especially in matters political. 
 
 And one of the prime reasons for this common dis- 
 trust of one's ability to deal for himself with money and 
 currency questions lies in the fact that nearly all dis- 
 cussion and debate do not begin at the beginning. It 
 is usually taken for granted by writers and speakers 
 that every reader or auditor has clearly, fii^d firmly, 
 in mind the essential first principles, a;nd keeps them 
 constantly in view. Discussion, therefore,' starts ^q^ on 
 some matter of detail, upon some special feattijre or 
 circumstance, and works backward or forward, up or 
 down, from that special item, through the ma^^e of other 
 details by which it is surrounded, offea^ in a,i^ apparently 
 inextricable tangle of cause and effect. > It is as if one, 
 in studying a tree, should seat himself in the midst of 
 its spreading top, and there, surrounded by branches, 
 
twigs, and leaves in blinding confusion, try to study out 
 the complete plan, the origin, development, order, and 
 symmetry of the whole, and the orderly relation of its 
 innumerable details, instead of standing on the ground 
 beside it, observing first the ground it is rooted in and 
 nourished by, the main stem that rises therefrom, the 
 great branches into which that divides, the subdivision 
 of these into smaller branches and twigs, and ,the cloth- 
 ing of the whole with the outgrowth of leaves which 
 give it shape and color and beauty to the world ; and 
 thus, by beginning at the beginning, and proceeding 
 upward in the order and by the steps by which the tree 
 grew, obtaining a clear idea of its plan and its specific 
 character. 
 
 In trying to study for a few moments a "Sound 
 Currency," I venture to suggest that we so far humble 
 ourselves as to begin at the beginning, at the root of 
 things: that we drop for the moment many questions 
 which relate or have been artificially made to relate to it, 
 and by considering its origin, its orderly development, 
 its intrinsic character, and the function it serves, see if 
 we cannot substitute simplicity for complexity, order for 
 confusion, and clear, indisputable definition for mis- 
 understanding and general haziness. 
 
 IN WHAT MONEY ORIGINATED. 
 
 The primary peaceful intercourse among men is that 
 of trade. jEvery man in the world can do or make some- 
 thing that some oiae else needs ; every man in the world 
 needs- something which he cannot advantageously do or 
 make for hitaself. That responsive interplay of abilities 
 and wants, of demand by one and supply by another, 
 makes comijaerce. Each man who can do well something 
 for others needs for himself something that only others 
 can well do, who alike need again what he can do for 
 them. And so our life together in this world becomes 
 one vast perpetual round of the absolutely necessary 
 
5 
 
 exchange of services. The service which each can 
 render is his property, be it tangible or intangible. The 
 commerce, the business of the world, is the exchange of 
 these properties, whatever their form or nature. He 
 who has property a and needs property b, exchanges 
 with him who has property b and needs property a. 
 
 THE PRIME MORAL FACTOR IN TRADE. 
 
 And we may observe right here the prime fact and 
 the whole moral law of trade : He who has a piece of 
 property of any sort parts with it only for another piece 
 of property of at least equal value to him. He does not 
 intentionally and in the way of business give something 
 for nothing. Service for equal service, property for 
 equal property, value for equal value, is the end, the 
 ground method, the fundamental condition of trade, the 
 only law by which it can exist. 
 
 HOW MONEY GREW OUT OF TRADE. 
 History shows what all our experience daily demon- 
 strates, that as the wants of men grew in number and 
 refinement, the supply of those wants was often not at 
 hand when wanted. The demand and the supply did 
 not always meet in point of time or of locality. The 
 carrier of distant needed goods to the place of demand, 
 and the storekeeper who held them against the varying 
 time of demand, both came necessarily into being. 
 Commerce began to organize. But the return carriage 
 of the bulky goods which the buyer had to sell was often 
 costly and inconvenient, while that of his perishable 
 goods was perhaps impossible. Perhaps what the buyer 
 had to give in exchange was not wanted where his pur- 
 chases came from. The need came for some other form 
 of property, the most readily acceptable at the place of 
 payment and which could be transported thither with 
 least waste, least cost of carriage and storage, and least 
 danger of destruction. And every people, ever3rwhere, 
 
who ever had a commerce, came by common use and 
 consent to employ for payment to those at a distance, or 
 to those who did not want the particular commodity they 
 had to sell, some substitute form of property possessing 
 in the highest degree of the time these prime qualities ; 
 the widest acceptability, the least destructibility, the 
 least bulk in proportion to value, and the greatest cheap- 
 ness of carriage and storage, and the least danger of 
 fluctuation in value. Different kinds of property have 
 been so used by different peoples, and by the same 
 peoples in different ages, as their wants have changed, 
 whether through necessity or taste, and new articles of 
 property have come into use possessing these qualities 
 in a higher degree, and making them, therefore, more 
 available as mediums of exchange. 
 
 MONEY THE MEANS OF EXCHANGING OTHER 
 PROPERTIES. 
 
 And SO grew up that third term in commerce, that 
 substitute property, by which the man having property 
 a, which was bulky, and wanting property b, which wa& 
 a long way off, sold his a on the spot for the substitute c^ 
 which was acceptable to everybody, and small and easy 
 and cheap of carriage, and sent it to be exchanged for b. 
 This third term, this universally acceptable substitute 
 property for which all others would readily exchange,, 
 and by which they could, therefore, have their values 
 exchanged without bringing them together at one spot, 
 was money: the money of the merchant, the thing 
 which alone made extended commerce possible : the 
 thing which could be safely and easily carried to any 
 spot where there was property wanted in any market. 
 And mark this: the money was always property; it 
 was some actual substance, of universal service and of 
 universal desire as property. It was never a myth nor 
 a symbol. It was not a nothing for which men parted 
 with their somethings. It was commercially valuable^ 
 
whether it were cattle, or sheep, or hides, or cowries, 
 or shingles, paid out by count, or pieces of iron, brass, 
 bronze, copper, silver, or gold, paid out by weight. It 
 was something which at the time had universal use as 
 property, therefore universal value, and the most stable 
 value of the time. It had to be property in order to buy 
 other property. The better it was, the better it served 
 its purpose. 
 
 MONEY THE MEASURE OF THE VALUE OP THINGS 
 EXCHANGED BY ITS USE. 
 
 Another fact appeared in the use of these moneys as 
 a means of exchange : the values of the articles ex- 
 changed by being exchanged first into the article used 
 as money, necessarily came to be stated in the terms of 
 that money. Every exchangeable article came to be 
 rated in the one article used as money, for which it could 
 always and everywhere be certainly exchanged without 
 waiting for the final consumer. 
 
 THE TWO FUNCTIONS OF MONEY. 
 
 And thus we get these two great functions of money : 
 it is, primarily, a medium of exchange of other articles 
 than itself, by their mutual exchange for itself, and, 
 secondarily, but necessarily, it is a standard or measure 
 of the relative values of all properties exchangeable by 
 its intervention. 
 
 There are several incidents of the use of money 
 which need careful notice. 
 
 EVOLUTION OF KINDS OF MONEY. 
 
 The selection of the article used as money has every- 
 where undergone an evolutionary process, in passing 
 from an inferior material to a superior as these have 
 appeared in the development of the sciences and arts, 
 and the increasing refinement of men's wants and tastes. 
 The whole history of money has been the progressive 
 disuse of the primary, crude, bulky, and perishable, and, 
 
8 
 
 therefore, the more unsafe and costly forms of property 
 as currency, and the natural selection and gradual and 
 general adoption of forms less open to objection for that 
 purpose. New and isolated communities, having no out- 
 side commerce, have sometimes been compelled to use 
 as money, even in recent times, forms of property as 
 singular as, and sometimes identical with, those of 
 primitive tribes. But as commerce has become extended 
 in area and scope, spreads over wider fields and embraces 
 more articles and greater quantities, and becomes com- 
 plex by the multiplicity of the personal relations and 
 services involved, it necessarily searches for and uses 
 the least bulky, most refined, most convenient, most 
 stable, most accurate, and, therefore, the safest and least 
 expensive instrument. 
 
 WHAT IS A CHEAP MONEY. . 
 
 A really cheap money is that which does its work at 
 least cost ; which is the same thing as saying, with widest 
 and readiest acceptance, with least hindrance and least 
 friction. Dear money is that which costs the users the 
 most to use, in wear, tear, fluctuation, and transportation. 
 And it is not the commodity which is most abundant, of 
 which the greatest bulk can be produced at least cost, 
 and of which, therefore, a great bulk must be used to 
 buy anything else of value, that makes a cheap money 
 by doing its work cheaply — exactly the contrary. It is 
 not a question of the low cost of a given bulk of the 
 article ; not a question of a cheap material, but of the 
 cheapness of its service ; of the relative cost for wear, 
 tear, handling, and safe keeping, at which it does its 
 work. Otherwise the Spartan currency would be a 
 cheaper and, therefore, better money than either gold or 
 silver. Or, better yet, we should go back to primitive 
 barter. A very large bulk of iron can be produced for 
 ten dollars. But that ten dollars' worth of iron would 
 make a very costly piece of money to use. 
 
STANDARD MONEY AND SUBSIDIARY MONEY. 
 
 It is to be noted that a new and better money never 
 completely supplants the use of the older and inferior 
 all at once ; they always continue along together at least 
 for a time, the use of the superior increasing and that of 
 the inferior decreasing according to the commercial 
 exigencies of the time. And note, also, that in the 
 presence of the more valuable and convenient money, 
 the less valuable and convenient will not do, and is 
 never called to do, that complete and universal com- 
 mercial work which the more valuable and more 
 convenient does more readily, more accurately and 
 certainly, and less expensively. The inferior is never 
 the complete alternate of the superior. The less 
 valuable and convenient money will never, in actual 
 commerce, measure the value of the more valuable and 
 convenient? It will itself be measured in the terms and 
 quantities of the most valuable and the most generally- 
 desired money. Therefore, although it may have a 
 limited, local use as a medium of exchange, it will never 
 measure the values of other commodities, even if its 
 local use be so re-enforced by law that it drives the 
 superior money out of use as currency. They will be 
 measured in the divisions of quantity of that most 
 valuable and most generally desired money which itself 
 measures the value of the less valuable money. The 
 most widely acceptable form of money is the measure of 
 every other value, whether it be of some other money 
 or of some other commodity. There never was any 
 other measure in the business world ; there never can be 
 any other. It is a physical and psychological impossi- 
 bility. The best form of money, the form most accept- 
 able to the commercial world, was, is, and eternally will 
 be, the sole and absolute measure of all values coming 
 in contact with it and exchanged through it and in 
 which that world deals, until difficulty, inconvenience, 
 uncertainty, loss, expense, and diminishing trade are at 
 
lO 
 
 a premium among business men. So long as human 
 nature retains the faculty and is accomplishing the fact 
 of progression, the superior will always be the standard 
 as against the inferior. The inferior cannot be other 
 than subordinate and subsidiary. It will do the full 
 work of the superior only in its absence, and even then 
 only on the terms of its own hypothetical conversion 
 into the superior ; that is, at such discount as covers the 
 risk, inconvenience, and cost of, and pays a profit on, its 
 use in place of the superior. 
 
 THE LEGAL CONVENTIONS RESPECTING MONEY. 
 In the use of money as the universal instrument of 
 commerce, certain convenient conventions have arisen, 
 which have been given the force of law, the precise 
 nature of which needs to be very clearly defined and 
 firmly held in mind. 
 
 ORIGIN AND USE OF COINAGE LAWS. 
 Whenever a money has been a kind of property 
 which exists in natural units, like cowries, arrow heads, 
 sheep, or other like sort, the conventional unit of 
 exchange has been the natural unit by which the count 
 of quantity would be made. But when the extension of 
 the field of trade and the changed wants of men have 
 compelled such refinements in the quality, bulk, dura- 
 bility and convenience of the instrument of exchange 
 that the rarer metals were more acceptable for the pur- 
 pose, and therefore replaced the more primitive moneys, 
 some conventional unit of quantity and some universally 
 satisfactory mode of its ascertainment and certification 
 had to be found ; and out of this necessity grew the 
 various denominations of money, which are merely state- 
 ments or measures of the quantity of the property 
 contained in such units ; and hence grew also the coinage 
 laws by which the convenient denominations already 
 used by merchants are recognized and the quality and 
 
II 
 
 quantity of the property so used and specified is officially 
 ascertained and certified for the convenience and safety 
 of those who would exchange their property therefor. 
 This does away with the inconvenient and perhaps 
 doubtful scales and tests of the ancient merchant, and 
 allows actual quantity to be accurately ascertained by 
 mere count of unworn pieces of officially certified weight 
 and fineness. 
 
 COINAGE DOES NOT AFFECT VALUE OF MONEY :— ONLY 
 CERTIFIES IT. 
 
 It ought to be a mere truism to say that coinage does 
 not and cannot affect value ; that it simply certifies the 
 quality and quantity of a certain piece of metallic property, 
 for the information and convenience of that world of 
 trade whose use and mutual agreement alone establishes 
 the function and the value of the property so certified. 
 Coinage does not turn copper into silver nor silver into 
 gold, nor does it make two grains out of one, nor affect 
 in the least degree the rate of their exchange for each 
 other in the open market. It measures their several 
 quantities for the purposes of such exchange. It is the 
 actual market value of the actual material in each that 
 enables it to buy other property; and it buys only in 
 proportion to that value. 
 
 ORIGIN AND USE OF LEGAL TENDER LAWS. 
 
 To facilitate the settlement of contracts and disputes 
 arising from them, the adjustment of damages and penal- 
 ties, and the avoidance of litigation, legal tender laws are 
 passed, by which a creditor is compelled to receive some 
 specified kind of property in satisfaction of his claim and 
 to discharge his debtor therefrom. And as all other 
 property is valued in the terms of that property used as 
 money, and as consequently all contracts referring to 
 value sound in money, therefore the form of property 
 used as money is bj' far the most convenient, certainly 
 
12 
 
 ascertainable, and reasonable sort to be used for such a 
 tender. And to this theory all enlightened legislation 
 conforms. 
 
 LEGAL TENDER LAWS DO NOT AFFECT VALUE. 
 
 In these days, when not only there are not wanting 
 those who question all the fundamental verities, but 
 those also who found parties on their denial, it is proper 
 to remind you that legal tender laws do not affect value. 
 They simply provide a kind of property, which being 
 tendered by a debtor in a quantity equal to his judicially 
 ascertained debt, relieves him of any further liability. If 
 they declare that an ounce of copper shall discharge a 
 debt due for an ounce of gold, they do not make the 
 ounce of copper worth an ounce of gold : they simply rob 
 the creditor of an ounce of gold. Each respective ounce 
 will exchange for precisely the same quantity of other 
 goods as before. 
 
 Money is not a thing invented as a legal tender to 
 pay debts with, but it was and is a property adopted in 
 use to buy other property, and must therefore be treated 
 in every respect as property itself. Its legal tender debt- 
 paying function is a purely artificial and conventional 
 and merely convenient incident of its original and per- 
 petual use, and comes late in its history. And when any 
 form of it has lost in any degree its power to purchase 
 other property, the law cannot compel its acceptance in 
 the payment of debts except as it robs one man for the 
 benefit of another, by enabling him to render back less 
 property than he received. The best money needs no 
 legal tender law behind it to make it go. Legal tender 
 laws were first invented to compel people to receive at 
 its face a coinage which had been clipped or debased. 
 
 LEGAL TENDER PAPER. 
 And let me incidentally observe that if the object and 
 the moral law of all commerce be the honest, veritable ex- 
 
13 
 
 change of one property for another property, a legal tender 
 law which contravenes that prime and eternal fact is itself 
 immoral and destructive of honest dealing among men. 
 If I have had from you a dollar, whether 25.8 grains of 
 gold or a dollar's worth of some other property, and have- 
 promised at a given time and place to give you another 
 dollar, and at that time and place I produce, not the 
 dollar promised, but some one else's promise of a dollar 
 at some other time and place, I am not fulfilling my con- 
 tract; I am not delivering the property for which you 
 gave me your property, and the expectation of receiving 
 which was the consideration for your parting with your 
 property to me before getting mine. And if now the law 
 comes in and says you shall accept from me, not the 
 dollar promised, but some one else's promise of a dollar, 
 and that I am thenceforth free of my obligation, then the 
 law simply compels you to submit to my immorality, to 
 my breach of contract. No law can make that right. It 
 makes no difference whose the promise is. It is only 
 some one else's promise and not the dollar which I 
 promised. I have simply compelled you by law to take 
 a new debtor in my place. 
 
 THE SOUND MONEY METAL CURRENCY. 
 The inevitable logic of all these primary facts is this : 
 the only thoroughly sound money system, so far as the 
 use of money metals is concerned, is one in which the 
 law recognizes the fact which it cannot create nor change 
 and can only recognize, that the most valuable metal for 
 its bulk, and therefore the least expensive in use, the 
 most durable, the most convenient and the least fluctu- 
 ating, and therefore the safest and most widely 
 acceptable, is the only existing and the only possible 
 standard of value ; and one in which, therefore, the use 
 of all other metals for money purposes is left entirely 
 subsidiary in law, as it must and will be in fact. That 
 
14 
 
 is to say, at this day there is and can be for us as a great 
 commercial people no other standard medium of ex- 
 change and measure of values, or basis for the values of 
 other forms of currency, than gold : the standard money 
 metal of the merchants with whom we deal the world 
 over. 
 
 CREDIT CURRENCY. 
 
 A great outgrowth of commerce which creates 
 the second branch of our subject, is that of commer- 
 cial credit among men, on which is founded what is 
 called a "credit currency:" that is, the current use of 
 the formal evidences of that credit, expressed in terms of 
 money, which, if sufficiently entitled to confidence, circu- 
 late in place and in the name of money. And commer- 
 cial credit is the belief among men that a man engaged 
 in buying and selling, who has made a promise to render 
 at a future time and place certain specified property, 
 for the anticipated receipt of which he has already 
 received other property of whatever sort, will certainly 
 fulfill his undertaking, and also the belief that he has the 
 particular property, or the resources convertible into it, 
 which will enable him to perform that promise. He 
 may promise wheat, or cattle, or iron, or dollars, and he 
 may evidence his undertaking by bill of sale, or promis- 
 sory note, or by cheque on the bank where his dollars are 
 deposited. If the commercial world has sufficient knowl- 
 edge of and faith in both his honor and his resources, 
 these paper evidences of his undertakings may pass 
 current in adjusting the transactions of a multitude of 
 other men than the original parties to the credit ; but, 
 observe, only so long as they fully believe the promise 
 will be solved by delivery of the property promised. 
 And it is this belief that makes any promise of money 
 pass current in place of money, whether it be the promise 
 of a man, of a bank, or of a government 
 
IS 
 
 THE DIFFERENCE BETWEEN MONEY AND CURRENCY. 
 
 There are those to whom it yet needs to be said, that 
 a promise to pay a dollar is not a dollar, no matter who 
 utters it or in what capacity. It entitles you to receive a 
 dollar ; it is a title deed to an undelivered dollar. But a 
 dollar is an actual thing, 25.8 grains of gold; a definite, 
 measureable, measured, certified piece or quantity of 
 actual property, of well known and instant value in the 
 market, for which, therefore, you are willing any 
 moment to give its value in other property. That dollar 
 is money. The promise of it is not a dollar, nor is it 
 money. It is currency; good currency as long as the 
 actual dollar is behind it, but only a credit currency, 
 worthless without the actual dollar or the other converti- 
 ble property that will bring the dollar. And it is for the 
 actual dollar promised, and not for the paper promise of 
 it, that men part with a dollar's worth of other property. 
 Recur again to the first ground fact of trade, that men 
 part with property only for property, with value in one 
 form only for equal value in some other desired form ; 
 and to the ground fact of credit, that it represents an 
 uncompleted exchange of properties, a transaction in 
 which one party has parted with his property on the 
 promise of the future delivery of equal property of equal 
 value, in no matter what form, by the other party ; and 
 in these two things we have disclosed the whole essential 
 nature, definition, function, and limitations of what is 
 called a paper or credit currency. It is commonly 
 spoken of as an evidence of the debt of the party issuing 
 it. So it is, in form ; but what makes it go as currency 
 is not the fact that it is an evidence of debt, but that it is 
 also presumptive evidence that the party issuing it has 
 the property wherewith to solve the debt, to redeem the 
 promise : that it evidences the full and ready power as 
 well as the intent to pay as promised. Only as the paper 
 notes are, and are thoroughly believed to be, evidences 
 of that fact, can they find use as currency ; only so will 
 
i6 
 
 they be accepted as good, reliable promises of the future 
 delivery of the property for which we are willing to part 
 with our property now. 
 
 THE PROPER PARTIES TO A CREDIT CURRENCY. 
 Who, then, can rightfully and properly issue a credit 
 currency ? That is, who can issue a paper currency which 
 is not only an evidence of debt, but which also certainly 
 represents adequate property in possession for its pay- 
 ment and is an evidence and guarantee of that indispens- 
 able condition? There can be but one answer: only 
 those who have the effective and perfectly secured con- 
 trol of the property which the credit represents and by 
 which it is to be redeemed. A paper currency emitted 
 by any one else would be simply an evidence of debt and 
 not of property held for its solvency ; a debit currency, 
 and not a credit currency. 
 
 GOVERNMENT DEBT CANNOT FURNISH CREDIT 
 CURRENCY. 
 
 Wherefore, coming to the currency conditions which 
 confront us to-day, we can say, on the negative aspect, 
 that government cannot issue, it cannot make a true 
 credit currency. Government is not in trade. It does 
 not produce, own, buy, or sell, in a commercial sense, any 
 of those properties, the exchange of which make trade 
 with all its incidental industries, and which are owned 
 and traded in by its citizens alone, and which are the 
 foundations of their credit. Its promise to pay rests for 
 redemption on none of these things. It is a pure debit. 
 It has no resource but its power of taxing its citizens, 
 and this is not trade. It can redeem its promise only by 
 the money it gets by taxation. And when it has laid 
 and collected its tax and redeemed its promise which 
 was passing as currency, it has thereby extinguished the 
 currency, and can supply it again only by again going in 
 debt, and so endlessly repeating the round of debt to no 
 
17 
 
 legitimate purpose and of taxation, for its repeated but 
 ineffectual redemption. Upon the enormous political 
 dangers of allowing such a process of furnishing a 
 purely debit currency by the government, for a com- 
 merce of which it is no part nor ought to be, I cannot 
 dwell. Upon the danger and absurdity of it to com- 
 merce I need not dwell. We have only to look straightly 
 and impartially at it in the light of our unimpeachable 
 definitions. 
 
 CHARACTER AND USEFULNESS OF A TRUE CREDIT 
 CURRENCY. 
 
 A true and sound credit currency, so organized as to 
 serve always and everywhere, at the moment needed, 
 and at least cost, must rest upon the commercial credits 
 of the country, which rest upon the whole vast exchange- 
 able wealth of the country in its ceaseless flow of demand 
 and supply. It must have those commercial credits, 
 those liens on this enormous wealth, so perfectly and 
 unquestionably secured to its redemption that nowhere 
 in the land, and at no time and under no conditions 
 shall a shadow of doubt arise as to its instant and con- 
 tinual solvency. It must be free to be issued wherever 
 commerce is of sufficient amount to require that con- 
 venience, and in a volume adequate to that convenience. 
 Its redemption must be so organized that when the 
 transactions which gave rise to the credit and called for 
 the use of the credit currency have been completed, the 
 currency will go at once to be redeemed, instead of 
 accumulating, as it now does, in money centers to wait 
 new commercial developments, glutting the money 
 market meanwhile, and leading to all sorts of specula- 
 tions to employ an idle currency which is practically 
 irredeemable. Such a currency would be perfectly 
 secure and therefore everywhere acceptable. Being 
 based on the transactions which call for its use, it would 
 be issued the moment it was needed, stay out as long as 
 
i8 
 
 needed, and go home when its work was done. It would 
 be issued wherever needed, making places remote from 
 the great centers independent of the supply now to be 
 got only from them, and would thus tend to equalize com- 
 mercial opportunity, to promote trade and to equalize the 
 rate of interest everywhere, bringing that of the remote 
 places much nearer to that of the centers. In a word, it 
 would make the thoroughly distributed issue of a per- 
 fectly secured credit currency everywhere proportionate 
 to, commensurate with, and adequate for the commercial 
 conditions calling for its use, instantly and locally 
 responsive to the call, and disappearing with the need ; 
 a perfectly secured and perfectly flexible currency, 
 geographically distributed proportionably to the com- 
 merce of the country. 
 
 BANK ASSETS THE ONLY BASIS OF A TRUE CREDIT 
 CURRENCY. 
 
 Such a credit currency can be had ; but it can be had 
 only at the hands of the banks in which are centered 
 the whole commercial credits, the effective control of the 
 commercial wealth of the country, which far exceed in 
 value and strength all the government's power to tax. 
 Let the currency issues of the banks, properly limited in 
 proportion to their capital, be made a first lien on their 
 assets, with a sufficient redemption security fund created 
 and maintained by all, redeemable in gold on demand 
 by the banks themselves at their counters or their 
 agencies, all under strict and minute governmental 
 supervision and control, so that there shall be no doubt 
 of its absolute and continual solvency, and we shall have 
 such a credit currency. In no other way is a credit 
 currency, politically and commercially safe, automatic 
 and instantaneous in operation, and always adequate and 
 never excessive, ever to be had. 
 
19 
 
 MONETARY COMMISSION PLAIJT. 
 Such a currency scheme is at last brought hopefully 
 in sight by the plan of the Indianapolis Monetary Com- 
 mission. And here let me for a moment pause to make 
 appeal to your broadest patriotic sense and soundest 
 commercial instinct. It is a plan which, by giving the 
 long -needed currency relief to the remoter and less 
 wealthy localities in the South and West, will tend to 
 develope their commerce to the benefit of every other 
 section, to unify all commercial interests, equalize com- 
 mercial opportunity and privilege, reduce their burdens 
 without adding to our own, reduce friction, destroy the 
 sectional prejudices caused by the present unequal dis- 
 tribution of currency facilities, which is irremediable by 
 any modification of the existing bond-secured bank 
 currency system, and will take away the only serious 
 argument among those people for either printing green- 
 backs or going on to the basis of silver at 1 6 to i when 
 its ratio is 36 to i ; the argument, that is, of the local 
 necessity for & supply of some sort of currency in pro- 
 portion to their production and commerce. It is not 
 that they can want a so-called cheap currency for its 
 cheapness as material ; but because they have been 
 falsely instructed that it is only that kind that they 
 in theif poverty can hope to get hold of. A free, sound, 
 sufficient credit currency will kill free 16 to i silver, 
 and nothing else will. It is for us to show them that 
 the best and, therefore, really cheap currency can be 
 made fully and instantly available to them according to 
 their need. Let us, therefore, take for ourselves and put 
 into their hands this equal, perfect instrument, as useful 
 to them as to us, as easily obtainable by them as by us, 
 and the political dangers to our whole commercial sys- 
 tem and the tension between sections will disappear. 
 
 DEFINITION OF "A SOUND CURRENCY." 
 And now we may sum up, and define what is to-day. 
 
20 
 
 under the existing conditions of the great commercial 
 world of which we are a great part, "A Sound Currency." 
 It is a currency which includes, first, as its legally recog- 
 nized money factor, the free coinage of only the best 
 money metal: the best being that which is of most 
 universal acceptance and doing its work at least cost. 
 That best money metal is indisputably gold, and it is 
 indisputably the world's standard for measuring all 
 other values: the legally recognized use of all other 
 money metals to be, as their actual use is, as merely sub- 
 sidiary, token currency. It will include as its credit 
 factor, not a debit currency redeemable only by and 
 extinguished by taxation, and created and renewable 
 only by the government going always and again in debt, 
 but a credit currency, founded on the whole commer- 
 cial wealth of the country, and created, sustained, al- 
 ways being redeemed and always being renewed by that 
 wealth in its ceaseless flow of exchange and replacement, 
 with that wealth absolutely secured to its instant re- 
 demption in the money factor — gold. 
 
An Ideal Currency 
 
 By Jacob L. Greene 
 
 Pretident Connecticat Mutual Life Insurance G>mpany 
 
 An Address 
 
 Delivered before the 
 
 American Social Science Association 
 
 At Vashiflgton, May JO, J900 
 
AN IDEAL CURRENCY. 
 
An Ideal Currency* 
 
 By JACOB L. GREENE. 
 
 In this brief essay I can attempt nothing more than to 
 indicate the force of those constant facts which lie back of 
 all currency use, vindicating themselves in experience 
 against all legislative interference, and briefly to outline 
 the essential factors of such a currency system as would 
 naturally, and in its main features inevitably, grow out of 
 their unhindered operation: such a currency use and 
 system as would be absolutely correct in its base and 
 scientific in its developments of detail, and which ought 
 therefore, as a natural and perfectly wholesome human 
 instrumentality, to receive the recognition and the sanc- 
 tion of statute law. We may also note some conceptions 
 not yet wholly transcended, which such a system must 
 exclude. 
 
 Currency is anything which by common usage and as 
 a matter of course passes in commercial transactions as an 
 equivalent at some agreed rate of exchange of its unit for 
 any and all purchasable commodities. Currency may 
 have two essential forms : money and credit. An item 
 of currency must be either a thing of commercial value in 
 itself, adopted for the purpose by the usage of the mer- 
 chants of the place and time, in which case it is money ; 
 or it may be a generally acceptable promise of the article 
 which is money, in which case it is a credit currency. If 
 the commodity which is used as money exists in natural 
 units, as when cattle were money, and is measured out in 
 trade by their count, its natural unit will be the unit of 
 the currency in its primary form, and, of necessity, of its 
 secondary or credit form which simply promises a future 
 
delivery of the primary. If the commodity exists in a 
 mass, as in the case of a metal, its monetary unit will be a 
 conventional piece thereof, of a size convenient for use, 
 and of a value convenient for ordinary commercial calcu-' 
 lations. 
 
 In ascertaining those characteristics of a currency 
 which are the indubitable marks of the ideal and scien- 
 tific, we must faithfully follow the leading of the ele- 
 mentary facts of which currency is born and with which 
 it has always to deal, obedient to the moral bond which 
 inheres in them. 
 
 Currency of whatever form is purely an instrument of 
 trade. Its primary or money forms have been always 
 and everywhere, whether among peoples the rudest or 
 the most advanced, themselves articles of trade. The use 
 of these articles as money has been but the common 
 recognition of their universal and peculiar desirability as 
 items of commerce. It is their constant and universal 
 appearance as articles of commerce in general demand 
 and of instant acceptance that has suggested and devel- 
 oped their use as money currency. 
 
 Therefore it is from the fundamental and unchanging 
 facts and moralities of trade as one of the primary and 
 constant forms of human intercourse, rooted therefore in 
 moral law, that we must learn the necessary and unchang- 
 ing characteristics of its currency instruments, and those 
 resultant laws which must shape and govern their con- 
 ventional and special developments if they are to do their 
 work with best effect and least cost. 
 
 Trade is the exchange of commodities: of those 
 things of whatever form or nature which answer human 
 necessity or desire, but which are so conditioned in 
 production and original distribution as to have become 
 individual property in a limited number of hands, and 
 whose relative values find expression in a rate of ex- 
 change or price. The multitude and diversities of human 
 want, the differences in human aptitude and capacity, the 
 
5 
 
 diversities of condition affecting production, manufacture, 
 and distribution, the differences of soil and climate, the 
 locality of divers materials, the limitations of supply, the 
 sources of mechanical power, the distances and difficulties 
 to be overcome in transportation, the various services 
 needed in all the many incident enterprises and opera- 
 tions, all go to make up the never changing conditions in 
 which no life worth the living can be lived without the 
 constant exchange of commodities of substance or of serv- 
 ice : without, in some wise, each man serving and 
 being served by the man whose need he can serve and 
 who can serve his need in return, though they dwell no 
 matter how far apart. 
 
 The prime fact and the whole moral law of trade is 
 this : it is the voluntary exchange of commodities indi- 
 vidually owned, in their respective measures adjusted to 
 an equal value, an equal service, an equal satisfaction. 
 Mutual and equal benefit makes the agreeing mind. No 
 one purposely, in the way of business, gives his property 
 for nothing or for less than its recognized exchangeable 
 value in other property. Equal service for service, equal 
 property for property, equal value for value, is the motive, 
 the end, and the ethical imperative of every legitimate 
 exchange. This fact, this law, must be kept in constant 
 view in the discussion of any item, form, or system of 
 currency ; for it is the first test of its quality, and con- 
 formity thereto is the only breath of its life. 
 
 The methods of commerce are conditioned by one of 
 its most obvious facts : that only to a very limited degree 
 do the demand for and the supply of exchangeable com- 
 modities meet in point of locality and time. The direct 
 exchange of properties between original owners forms 
 but a small part of the great body of commercial trans- 
 actions. These are handled by the storekeeper and car- 
 rier ; their services are two of the indispensable factors of 
 commerce. 
 
 Out of this same difficulty and necessary infrequency 
 
of direct exchange grew the use of a third indispensable 
 factor : the use of some commodity in such relative 
 demand, of such constant exchangeable value, so easily- 
 measured, divided, handled, kept, and carried about, as to 
 serve as a third term or quantity into which all other com- 
 modities could be readily and safely exchanged while 
 awaiting their final owner and consumer. This third 
 term is primary currency : money : the commodity by 
 which, as a medium or middle term, all other commodi- 
 ties are indirectly exchanged : the consequent standard in 
 the terms of which their relative values are stated. 
 
 The legal relations of money and its credit representa- 
 tives have always followed far behind its self -originated 
 and self-determined commercial relations. Legislation 
 respecting money has addressed itself to that which the 
 uses of trade had already established as such. It has been 
 useful only in so far as it has frankly recognized the true 
 nature and function of " the money of the merchant," 
 and protected them against fraud. It has wrought mis- 
 chief whenever it has exceeded this limit of action. 
 
 Two facts have unfailingly appeared in the natural 
 selection and successive changes of primary currency or 
 money : it has been the article in widest and most instant 
 demand for the moment within the area of its use, so lim- 
 ited in production as to give it very high relative value, 
 yet in quantity sufficient to make its use practicable ; and 
 it has given place whenever it has come into competition 
 with any article possessing all the necessary qualities in 
 a distinctly superior degree. As the area of trade widens 
 the local use necessarily conforms to the more universal. 
 The superior becomes universal, because it alone is 
 economical in use. When nations using different cur- 
 rencies come into commercial touch, and their peoples 
 are buying from and selling to each other, the superior 
 currency will be the one in terms of which all their sev- 
 eral commodities will be rated and measured, though the 
 inferior currencies be still used as local media of ex- 
 
qhange. If the currency of a is better than the currencies 
 of c and d, the merchants of a will sell at valuations 
 expressed, in the terms of their own currency and for its 
 equivalents, and the currencies of c and d will be corre- 
 spondingly discounted, and the merchants of c and d will 
 sell to their home customers at prices fixed in their local 
 currencies to cover the discount : in reality at prices fixed 
 by the value of the currency of a, though not locally 
 expressed in its terms. The best money of the interna- 
 tional markets, the money which is subject to discount in 
 none of them and to the least expense in use in all of 
 them, will be the one measure of the values of all their 
 commodities, no matter in how many inferior kinds of 
 discounted money the equalized prices are locally paid 
 by consumers. 
 
 Let us summarize the characteristics of an ideal pri- 
 mary currency, or money: it must be a commodity, a 
 thing of actual use and value, else other commodities will 
 not and should not exchange for it ; it must be in such 
 universal and instant demand that all other commodities 
 will readily exchange for it ; it must be as nearly as possi- 
 ble indestructible and physically unchangeable ; it must 
 be easily divisible into convenient quantities ; it must be 
 producible in such sufficient quantity and at such cost that 
 its pieces will not be so small as to be inconvenient or 
 unsafe in use ; it must not be producible in such large 
 quantity and at such low cost that the size of its pieces, 
 conformed to the moral law of trade, make it inconvenient 
 of handling, bulky, heavy, and costly of transportation ;. 
 and it must have in the highest attainable degree stability 
 of value ; and all these qualities it must possess in such 
 degree and balance that its service as money costs less 
 than that of any other commodity. In a word, the best 
 money is that which, at the moment, is in every aspect of 
 its use safest, most convenient, m©st economical, and of 
 the widest use without discount anywhere in the range of 
 its use. 
 
8 
 
 There can be no question that, at the present time, 
 gold possesses these characteristics far beyond any other 
 commodity that has ever been used as money. Nor is 
 there at present known any other metal or commodity of 
 any sort so falling within the necessary conditions as to 
 even suggest its substitution for gold. 
 
 The very high proportion of value to bulk which 
 makes gold incomparably economical in use, and there- 
 fore, the cheapest money, makes it undesirable in any 
 fractions of the unit of our coinage. For such fractional 
 pieces a cheaper commodity, requiring a larger bulk for 
 equal value, is a necessity to the uses of retail trade. For 
 such subsidiary money silver at present serves the best 
 purpose. 
 
 As with all other commodities, either of two events 
 may possibly occur to affect the exchangeable value of 
 the one used as money, so changing the prices of all 
 others rated in its terms, independently of the other and 
 frequent causes of such change : the first, that which has 
 happened in recent years in so marked a degree in the 
 case of silver : such a cheapening in the cost of its pro- 
 duction, and such an increase in both its actual and poten- 
 tial supply relatively to the demand, that its exchangeable 
 value should suffer heavy shrinkage, shown in the nomi- 
 nal marking up of prices of other commodities ; silver, 
 for example, being worth to-day only about 46 per cent, 
 of its value when its actual commercial ratio to gold was 
 16 to one, and its supply being now capable of rapid and 
 indefinite expansion under any stimulus of demand. 
 
 The other contingency is such an increase in cost of 
 production, or of demand in excess of supply, as to enhance 
 exchangeable value, shown in a nominal marking down 
 of prices of other commodities. 
 
 Neither contingency seems at present to threaten gold. 
 From our present knowledge of its possible supply and of 
 the conditions of its production, it is certain to be much 
 less affected by the first contingency than any other 
 
commodity of possible use as money ; while the world-wide 
 and growing exchange of mercantile credits and the 
 clearing house operations of the banks greatly relieve its 
 use as currency. The bank credits of the whole world, 
 representing the productions and manufactures of its dif- 
 ferent countries in the course of shipment or storage for 
 their exchange, offset against each other by checks and 
 drafts drawn upon each, mainly effect the wholesale 
 exchanges of commodities in a direct manner ; and a 
 money currency serves this class of exchanges only in set- 
 tling its balances and in paying for the services incident 
 to it ; and this tends to check an increase of demand for 
 its greater supply. 
 
 In exchanges effected by the use of money itself as the 
 currency, the transaction is at once complete. Property 
 of a certain, determinate value has been exchanged for 
 other property of equal and equally certain and determi- 
 nate value. A property of specific use and limited demand 
 has been ratably exchanged for a property of general use 
 and unlimited demand, itself therefore exchangeable at 
 will for any other. The ends of commerce have been 
 accomplished and its moral imperatives obeyed. 
 
 But there are multitudes of exchanges which are for 
 longer or shorter periods incomplete. Property of a cer- 
 tain value has passed from the hand of the seller to that 
 of the buyer, or of an intermediary, with only the promise 
 of the buyer to deliver at some future time and place the 
 equally valuable property which is to complete the ex- 
 change. If that promise is for the delivery of an article 
 of limited and special use, it may have no interest for the 
 rest of the world. But if it is for the delivery of a prop- 
 erty used as money, and the promise is uttered by a per- 
 son of known probity and of sufficient resources readily 
 convertible into money, it may, among those whose knowl- 
 edge gives them confidence, pass current in place of the 
 money until its maturity. To the extent it circulates in 
 trade that promise is credit currency, no matter who utters 
 
10 
 
 it, -whetlier it were George Smith in Milwaukee, or the 
 Bank of England in London. 
 
 And this transaction embodies all the fundamentals of 
 a true credit currency : the promise of a sum of money, 
 uttered by a person, natural or corporate, fully believed to 
 hold the money or other convertible property properly 
 secured to its prompt redemption at the time and place 
 specified, and so made acceptable to those who wish to 
 avoid the present custody of the money itself and yet be 
 secure of it for future use. 
 
 In passing, let us note the essential identity of borrow- 
 ing and buying on credit. Buying on credit is the purchase 
 of some commodity other than money for which the 
 buyer agrees to pay money: borrowing is the purchase 
 of money to-day for which the buyer agrees to pay 
 money to-morrow. 
 
 One of the false definitions of money put forth to our 
 generation is that it is anything which a debtor can com- 
 pel a creditor to receive in discharge of the debt : hence, 
 whatever a legal tender statute compels the creditor to 
 receive is, by pure force of law, money. 
 
 The obligation of a debt is the promise, express or 
 implied, to deliver to the creditor property of a certain 
 amount or value in exchange for a commodity already 
 had of the creditor by the debtor. As yet our legal tender 
 acts have ventured only to the extent of enabling the 
 debtor to compel his creditor to receive some one else's 
 promise of the property instead of being himself compelled 
 to deliver it in fulfilment of his own promise. 
 
 There are certain limiting things respecting a credit 
 currency which, by our legislative treatment of it for a 
 generation, have been much obscured. A promise to pay 
 money is not money, no matter who utters it nor in what 
 capacity, nor under what compulsion it may be' received. 
 It entitles its holder to receive the money it promises ; it 
 is a title deed to undelivered money. But, speaking in 
 the terms of our own currencies, a dollar is not a 
 
II 
 
 fiction, nor an idea, nor a symbol, but an actual thing, 
 25.8 grains of gold; a definite, measured, certified quan- 
 tity of a most convenient commodity of well known 
 and instant value in all markets, for whicb one is there- 
 fore willing to give its value in any other property he 
 may desire to sell. That dollar is money. The prom- 
 ise of it is not a dollar nor is it money. So long as the 
 actual dollar is believed to be really or potentially behind 
 the promise, it may serve as currency, but as a credit 
 currency, worthless without the dollar or the convertible 
 property that will bring the dollar to solve it. It is for 
 the actual dollar promised and for its value, and not for 
 the paper promise of it, that men part with a dollar's 
 worth of other property. Only a credit currency which 
 has behind it the actual property adequate to its redemp- 
 tion, of such character as to be readily convertible into the 
 money it promises, so held as to allow that conversion at 
 the necessary moment, can fulfil the uses and the morali- 
 ties of trade. Its maturity must infallibly witness the 
 true completion, however remote in time or place, of the 
 exchange of commodities which was begun when the seller 
 parted with his property on the faith of a promise of other 
 property. 
 
 Who, then, can rightfully and properly issue a credit 
 currency ? That is, who can issue a paper currency which 
 is not only an evidence of debt, but which, in whatever 
 volume, can be made also certainly to represent adequate 
 property in possession for its payment and to be an evi- 
 dence and guarantee of that indispensable condition? 
 And this question must be answered in both positive and 
 negative terms. But there can be but one answer : those 
 and those only who have the effective and perfectly 
 secured control of the property which the credit represents 
 and by which it is to be redeemed. A paper currency 
 emitted by any one else would be simply an evidence of 
 debt and not of property held for its solvency : a debit 
 currency and not a credit currency. 
 
 Dealing with the currency conditions of to-day, we can 
 
12 
 
 say, on the negative aspect, that government cannot issue 
 a true credit currency. Government is not in trade. It 
 does not own ; it can only borrow. It does not produce, 
 make, buy, or sell, in a commercial sense, any of those 
 properties, the exchange of which makes trade with all its 
 industries, and which are produced, owned, and traded in 
 by its citizens alone, and which are the foundations of 
 their credit and the solvent of their debts. Its promise to 
 pay rests for redemption on none of these things. It is a 
 pure debit. It has no resource but its power of taxing its 
 citizens, and that is not trade nor property. It can redeem 
 its promise only by the money it gets by taxation. And 
 when it has laid and collected its tax and therewith re- 
 deemed its promise which was uttered and which circulates 
 as currency, it has thereby extinguished the currency, and 
 can supply it again only by again going in debt, and so 
 endlessly repeating the round of debt and of taxation for 
 its ineffectual redemption. Such a currency possesses no 
 feature of commercial legitimacy; and, erected into a 
 system, possesses no element of legitimate permanency. 
 A commercially legitimate and completely effective 
 credit currency must be so based that it can be organized 
 into a system as permanent as the trade it serves. It 
 must be so based and organized as to serve always and 
 everywhere within its circuit, at the moment needed and 
 at least cost. To these ends it must be born of the trade 
 it serves as life blood ; it must rest upon the commercial 
 credits of the country, which embody its vast exchange- 
 able wealth in its ceaseless flow through the channels of 
 trade. It must have those credits so perfectly secured to 
 its redemption that nowhere and at no time shall a 
 shadow of doubt arise as to its perfect solvency. Its 
 redemption must be so organized that when the trans 
 actions which furnished the credit and called for the use 
 of the credit currency have been completed, the currency 
 will go at once to be redeemed instead of gravitating to 
 financial centers to be speculatively employed as does an 
 
13 
 
 idle irredeemable currency always. Born of and based 
 on tlie transactions which call for its use, it would be 
 issued when needed, in the amounts needed, stay out as 
 long as needed, and go home when its work was done : 
 a naturally originated, perfectly based, perfectly secured, 
 perfectly flexible, perfectly responsive credit currency. 
 
 Such a credit currency can be had without difiiculty. 
 Every requisite is abundantly at hand and every needed 
 safeguard is perfectly known to us. The assets of our 
 banks represent the bulk of the commercial wealth and 
 the commercial credit of the country; these create the 
 banks for their uses ; and these are the natural and only 
 true basis of a credit currency. That credit currency the 
 banks should therefore issue ; that currency, properly 
 proportioned to their several resources, should be inde- 
 feasibly secured by a first lien on their assets, made re- 
 deemable in gold only, on demand at their own counters or 
 at their agencies, with convenient redemption offsets be- 
 tween the banks themselves, with a redemption security 
 fund maintained by all to cover contingent losses through 
 insufficiency of assets of insolvent banks, for which experi- 
 ence shows a relatively very small sum would suffice. The 
 whole system must be under strict governmental super- 
 vision and control and comprise only banks acting under 
 Federal charters. These are the lines on which alone* 
 can be built a true credit currency, politically as well as 
 commercially safe, automatic and instantaneous in opera- 
 tion, always adequate and never excessive, and perma- 
 nent as trade itself. 
 
 These then are the characteristics of what would 
 be under existing commercial conditions, that natural, 
 legitimate, sotmd, and enduring currency system, to the 
 protection and effectual operation of which all legislation 
 should be directed and confined : It would be a currency 
 system including, first, as its legally recognized money 
 factor, the free coinage of only the best money metal : 
 the best being that which is of most universal acceptance 
 
14 
 
 and does its work at least cost. That best money metal 
 is indisputably gold, and it is indisputably the world's 
 standard for measuring all other values ; there is no other : 
 the legally recognized use of all other money metals to 
 be, as their actual use is, as merely subsidiary currency. 
 It would include as its credit factor, not an arbitrary debit 
 currency redeemable only by and extinguished by taxa- 
 tion, and created and renewable only by the government 
 going always and again in debt, but a credit currency, 
 founded on the whole commercial wealth of the country, 
 many thousand fold greater than the product of any 
 endurable tax, and created, sustained, always being 
 redeemed and always being opportunely renewed by that 
 wealth in its ceaseless flow of exchange and replacement, 
 with that wealth absolutely secured to its certain redemp- 
 tion in the money factor : gold. 
 
Money and Currency 
 
 An ADDRESS 
 
 Delivered before The Working- 
 man's Club of the City of Hart- 
 ford, by Jacob L. Greene 
 December 17, 1901 
 
 Synopsis 
 
 Money was bom of trade 
 
 Moral law of trade 
 
 How money grew out of trade 
 
 The two functions of money 
 
 Necessary characteristics of money 
 
 What is a cheap money 
 
 Coinage laws and ratios 
 
 Change in actual ratios 
 
 Sixteen to one 
 
 Legal tender 
 
 Legal tender paper 
 
 Credit currency 
 
 Paper currency not money 
 
 True and false credit currency 
 
 The source of proper paper currency 
 
 Summary 
 
Money and Currency 
 
 One of the great difficulties in ordinary discussion 
 and debate upon money and currency lies in the fact 
 that at the outset most men take it for granted that 
 the subject is too vast, too mysterious in its founda- 
 tion principles, and too intricate in its complexities, 
 to be understood by men of ordinary intelligence, or 
 by any having anything less than highly specialized 
 training. 
 
 And one of the prime reasons for this common 
 distrust of one's ability to think out for himself the 
 money and currency questions lies in the fact that 
 nearly all discussion and debate do not begin at the 
 beginning. It is usually taken for granted by writers 
 and speakers that every reader or auditor has clearly 
 and firmly in mind the essential facts and first princi- 
 ples of money, and keeps them constantly in view. 
 Discussion, therefore, starts off on some matter of 
 detail, upon some special feature or circumstance, 
 and works backward or forward, up or down from 
 that special item, through the maze of other details 
 
by which it is surrounded, often in an apparently 
 inextricable tangle of cause and effect. 
 
 In trying to study money for a few moments, I 
 venture to suggest that we begin at the beginning, at 
 the root of things ; and by considering its origin, its 
 intrinsic character, the function it serves, and its or- 
 derly development, see if we cannot substitute sim- 
 plicity for complexity, order for confusion, and clear, 
 indisputable definition for misunderstanding and gen- 
 eral haziness. 
 
 What is money ? The first requisite to a proper 
 definition of it is a knowledge of its origin, the neces- 
 sity of which it was born, the use it served, the man- 
 ner of its service, the principles which determined 
 the selection of its material, the development of that 
 service, and the changes which that development has 
 caused. 
 
 IN WHAT MONEY ORIGINATED 
 
 The primary peaceful intercourse among men is 
 that of trade. The emergence from savagery is 
 marked by the multiplication of human needs and 
 desires ; and this soon reaches a point where the in- 
 dividual cannot most advantageously supply all these 
 for himself ; he finds it advantageous to confine his 
 labor to one thing, or but a few things, producing of 
 these more than he needs, and exchanging his surplus 
 product for his other necessaries. Every competent 
 man in the world can do or make something that some 
 
one else needs ; every man in the world needs some- 
 thing which he cannot advantageously do or make for 
 himself. That responsive interplay of abilities and 
 wants, of demand by one and supply by another, makes 
 commerce. Each man who can do well something for 
 others needs for himself something that only others 
 can well do, who alike need again what he can do for 
 them. And so our life together in this world becomes 
 one vast perpetual round of the absolutely necessary 
 exchange of services. The service which each can 
 render is his property, be it tangible or intangible. 
 The commerce, the business of the world, is the ex- 
 change of these properties, whatever their form or 
 nature. He who has property a and needs property 
 b, exchanges with him who has property b and needs 
 property a. 
 
 THE PRIME MORAL FACTOR IN TRADE 
 
 And let us mark right here the prime fact and the 
 whole moral law of trade : He who has a piece of 
 property, or is capable of a service of any sort, parts 
 with it only for another piece of property, or some 
 other service, of at least equal value to him. He 
 does not intentionally and in the way of business give 
 something for nothing or for a less value than he has 
 given. Service for equal service, equal property for 
 equal property, equal value for equal value, is the 
 purpose, the ground method, the fundamental condi- 
 tion of legitimate trade, the only law by which it can 
 exist. 
 
HOW MONEY GREW OUT OF TRADE 
 
 History shows what all our experience daily 
 demonstrates, that as the wants of men grew in num- 
 ber and refinement, and men had to depend more 
 and more upon what others produced or made, the 
 supply of those wants was often not at hand when 
 wanted. The demand and the supply did not 
 always meet in point either of time or of locality. 
 The carrier of needed goods to the distant place of 
 demand, and the storekeeper who held them against 
 the varying time of demand, both came necessarily 
 into being. Commerce began to organize. Every 
 buyer must be also a seller, either of property or 
 service, else he has nothing to buy with. But the 
 carriage of bulky goods which the buyer might have 
 to sell was often costly and inconvenient, while that 
 of his perishable goods was perhaps impossible. 
 Perhaps what the buyer had to give in exchange 
 was not wanted where his needed purchases must 
 come from. In a multitude of ways the need came 
 for some form of property, readily acceptable at any 
 place of payment and which could be transported 
 thither with least waste, least cost of carriage and 
 storage, and least danger of injury, change, or de- 
 struction. And every people, everywhere, who ever 
 had a commerce, came by common use and consent 
 to employ for payment to those at a distance, or 
 to those who did not want the particular commodity 
 
possessing in the highest degree of the time these 
 prime quaHties : the widest acceptability, the least 
 destructibility, the least bulk in proportion to value, 
 the greatest ease and cheapness of carriage and 
 storage, and the least danger of fluctuation in value. 
 Different kinds of property have been so used by dif- 
 ferent peoples, and by the same peoples in different 
 ages, as their wants have changed, whether through 
 necessity or taste, and as new articles of property 
 have come into use possessing these qualities in a 
 higher degree, and making them, therefore, more 
 convenient and effective as mediums of exchange. 
 
 MONEY THE MEANS OF EXCHANGING OTHER PROPERTIES 
 
 And so grew up that third term in commerce, that 
 property which was so desirable as to be acceptable 
 as a ready substitute for every other property, and 
 for which any other property would be readily fur- 
 nished, by which the man having property a, which 
 was bulky or perishable or not wanted elsewhere, 
 and wanting property b, which was a long way off, or 
 in the possession of some one who did not want his 
 a, sold his a on the spot for the substitute c, which 
 was acceptable to everybody, and small and easy and 
 cheap of carriage, and sent it to be exchanged for b. 
 This third term, this universally acceptable substitute 
 property for which all others would readily exchange, 
 and by which they could, therefore, have their values 
 determined and exchanged without bringing them 
 
together at one spot, was money : the money of the 
 merchant, the thing which alone could change limited 
 barter into extended modern commerce ; the thing 
 which could be more safely and easily carried than 
 any other to any spot where there was property 
 wanted in any market. And mark this : the money 
 was always property ; it was some actual substance, 
 of universal service and of universal desire as prop- 
 erty. It was never a myth nor a symbol. It was 
 not a nothing for which men parted with their some- 
 things. It was commercially valuable, something 
 men used and wanted, whether it were cattle, or 
 sheep, or hides, or cowries, or shingles, paid out by 
 count, or pieces of iron, brass, bronze, copper, silver, 
 or gold, paid out by weight. It was something which 
 at the time had most universal use as property, there- 
 fore most universal value, and the most stable value 
 of the time. It had to be property in order to buy 
 other property. The better property it was the 
 better it served its purpose, the better it bought 
 other property. 
 
 MONEY THE MEASURE OF THE VALUE OF THINGS EX- 
 CHANGED BY ITS USE 
 
 Another fact appeared in the use of these moneys 
 as a means of exchange : the values of the articles 
 exchanged by each being exchanged first for the 
 article used as money, necessarily came to be stated 
 in the terms of that money. Every exchangeable 
 
article came to be rated or priced in the one article 
 used as money, for which it could always and every- 
 where be exchanged without waiting for the final 
 consumer. 
 
 THE TWO FUNCTIONS OF MONEY ' 
 
 And thus we get these two great functions of 
 money : it is, primarily, a medium of exchange of 
 other articles than itself, by their mutual exchange 
 for itself, and, incidentally, but necessarily, it is a 
 standard or measure of the relative values or prices 
 of all properties exchangeable by its intervention. 
 
 There are several incidents of the use of money 
 which need careful notice. 
 
 Two facts have unfailingly appeared in the natural 
 selection and successive changes of primary currency 
 or money : it has been the article in widest and most 
 instant demand for the time being within the area of 
 its use, so limited in production as to give it very 
 high relative value, yet in quantity sufficient to make 
 its use practicable ; and it has given place whenever 
 it has come into competition with any article possess- 
 ing all the necessary qualities in a distinctly superior 
 degree. As the area of trade widens the local use 
 necessarily conforms to the more universal. The 
 superior becomes universal, because it alone is eco- 
 nomical in use. When nations using different cur- 
 rencies come into commercial touch, and their peoples 
 are buying from and selling to each other, the superior 
 
s 
 
 currency will be the one in terms of which all their sev- 
 eral commodities will be rated and measured, though 
 the inferior currencies be still used in their several 
 countries as local media of exchange. If the currency 
 of a is better than the currencies of c and d, the mer- 
 chants of a will buy and sell at valuations expressed 
 in the terms of their own better currency and for its 
 equivalents, and the poorer currencies of c and d W\\\ 
 be correspondingly discounted, and the merchants of 
 c and d will deal with their home customers at prices 
 fixed in their local currencies high enough to cover 
 the discount : in reality at prices fixed by the value 
 of the currency of a, plus the discount. The best 
 money of the international markets, the money 
 which is subject to discount in none of them and to 
 the least expense in use in all of them, will be the 
 one measure of the values of all their commodities, 
 no matter in how many inferior kinds of discounted 
 money the equalized prices are locally paid by con- 
 sumers. 
 
 Much has been said of the desirability of cheap 
 money for the working man, for the common people, 
 as if the large users of money wanted dear money. 
 
 WHAT IS A CHEAP MONEY 
 
 The cheapest money is that which does its work at 
 least cost ; which is the same thing as saying, with 
 widest and readiest acceptance, with greatest con- 
 venience, and which purchases the greatest quantity 
 
of other property in proportion to its own quantity 
 or bulk. Dear money is that which costs the users 
 the most to use, in wear, tear, transportation, and 
 fluctuation in value, and buys least in proportion 
 to its bulk. And it is not the commodity which 
 is most abundant, of which the greatest bulk can 
 be produced at least cost, and of which, therefore, 
 a great bulk must be used to buy anything else of 
 value, that makes a cheap money by doing its work 
 cheaply — exactly the contrary. It is not a question 
 of the low cost of a given bulk of the article ; not a 
 question of a cheap material, but of the cheapness 
 and efficiency of its service ; of the relative cost for 
 wear, tear, handling, changes in value, and safe keep- 
 ing, at which it does its work. Otherwise the iron 
 Spartan currency would be a cheaper and, therefore, 
 better money than either gold or silver. A very large 
 bulk of iron can be produced for ten dollars. But 
 that ten dollars' worth of iron would make a very 
 costly, inconvenient, and ineffective piece of money 
 to use. 
 
 THE LEGAL CONVENTIONS RESPECTING MONEY 
 
 In the use of money as the universal instrument 
 of commerce, certain convenient conventions have 
 arisen, which have been given the force of law, the 
 precise nature of which needs to be very clearly de- 
 fined and firmly held in mind. 
 
lO 
 ORIGIN AND USE OF COINAGE LAWS 
 
 Whenever a money has been a kind of property 
 which exists in natural units, like cowries, arrow 
 heads, sheep, or other like sort, the conventional unit 
 of exchange has been the natural unit by which the 
 count of quantity would be made. But when the ex- 
 tension of the field of trade and the changed wants of 
 men have brought about such refinements in the qual- 
 ity, bulk, durability, and convenience of the instru- 
 ment of exchange that the precious metals were more 
 acceptable for the purpose, and therefore replaced 
 the more primitive moneys, some conventional unit 
 of quantity and some universally satisfactory mode 
 of its ascertainment and certification had to be found; 
 and out of this necessity grew the various denomina- 
 tions of monej', which are merely statements or meas- 
 ures of the quantity of the property contained in such 
 units ; and hence grew also the coinage laws by which 
 the convenient denominations already in use by mer- 
 chants are recognized and the quality and quantity 
 of the actual property in them is officially ascer- 
 tained and certified for the convenience and safety 
 of those who would exchange their property there- 
 for. This does away with the inconvenient and 
 perhaps inaccurate weighing scales and chemical tests 
 of the ancient merchant, and allows actual quantity 
 to be accurately ascertained by mere count of unworn 
 pieces of officially certified weight and fineness. 
 
II 
 
 COINAGE DOES NOT AFFECT VALUE OF MONEY: — ONLY 
 
 CERTIFIES IT 
 
 It ought to be a mere truism to say that coinage 
 does not and cannot affect value ; that it simply cer- 
 tifies the quality and quantity of a certain piece of 
 metallic property, for the information and convenience 
 of that world of trade whose use and mutual agree- 
 ment alone establishes the function and the value of 
 the property so certified. Coinage does not turn 
 copper into silver nor silver into gold, nor does it 
 make two grains out of one, nor affect in the least 
 degree the rate of their exchange for each other in 
 the open market. It measures and certifies their 
 several quantities for the purposes of such exchange. 
 The rate at which they exchange for each other is de- 
 termined in the market. It is the actual market 
 value of the actual material in each that enables it 
 to buy other property ; and it buys only in propor- 
 tion to that value. Our own history is a remark- 
 able demonstration in point. 
 
 COINAGE RATIOS 
 
 When what is known as the i6 to i coinage ratio 
 between gold and silver was adopted by Congress, in 
 1837, an ounce of gold was worth in actual trade 
 about sixteen ounces of silver, and an ounce of 
 silver was worth about $1.30. Their market ratio 
 was therefore adopted as the coinage ratio, so that, 
 as for any given weight of pure gold a man could 
 
12 
 
 buy sixteen times as much pure silver, so for any 
 quantity of gold in a coin its holder should be certain 
 to receive sixteen times as much silver in silver coins 
 of the same aggregate nominal value. At this ratio 
 of 1 6 to I, in order that the 412^ grains of silver, 
 9-10 fine, in a dollar should be equal in real value to 
 the 25 8-10 grains of gold in a dollar, an ounce of 
 silver had to be worth $1.2929. Unfortunately, for 
 many years silver was worth a trifle more than this ; 
 so that silver was worth more in bars than in dollars, 
 and only about 8,000,000 of them were ever coined, 
 and these, being worth more in bars than they were 
 as dollar coins, went out of circulation back into the 
 melting pot. Consequently, in 1873, while silver was 
 still so high that no one owning it could afford to 
 have it made into dollars, and with no cause then in 
 sight to make it go lower and thus bring it into use 
 on a par with gold, the silver dollar was stricken 
 from the coinage list. This was the famous " crime 
 of 1873." 
 
 Soon afterward came the wonderful ' new and 
 abundant discoveries of silver ores, and new methods 
 of their treatment, and the increased facilities of 
 transportation, by which the supply was suddenly and 
 enormously increased and the cost of its production 
 and distribution enormously diminished. Conse- 
 quently, and most unexpectedly, in 1876 men woke 
 up to the fact that an ounce of silver was worth only 
 $1.15, and a silver dollar was therefore worth only S8 
 
13 
 
 cents : It took eighteen ounces of silver to buy an 
 ounce of gold.* 
 
 Those were depressed times : men were much in 
 debt, times were hard, we were slowly recovering 
 from the currency depreciation and inflation of the 
 war and the great speculation that had followed it. 
 Many^ caught at the idea that it would be a great 
 boon if they could pay their debts with eighty-eight- 
 cent dollars ; silver mine owners caught at the idea 
 that it would be a great thing for them if they could 
 take only 88 cents' worth of silver to the mint and 
 have it stamped as a dollar, if they could then com- 
 pel men to take it at loo cents. Twelve per cent, 
 on every dollar, in addition to the profit of produc- 
 ing the silver, was tempting ; and the cutting down 
 of obligations that much was also tempting to 
 debtors. Hence arose the cry for the free and 
 unlimited coinage of silver, with unlimited legal 
 tender, at the old ratio of sixteen to one, although 
 the actual market ratio had changed to eighteen to 
 one ; so that a man who had or could buy silver 
 at 88 cents, and which as silver could buy only 88 
 cents' worth of anything, could, by having it stamped 
 
 * The real value of a silver dollar at the varying prices of silver is 
 found as follows : There are 4S0 grains pure silver in an ounce Troy ; 
 there are 371.25 grains in a silver dollar ; that is, the silver dollar is 
 ■^Vrf^ °f ^^ ounce ; it is therefore worth ^j"5§^ of the price of an 
 ounce ; that is, multiply the price of an ounce by 371.25 and divide 
 by 480 and we have the value of the dollar at that price per ounce. 
 E. g., $1.15 X 371.25= 42693-75 -r 480 = $0.88+. 
 
14 
 
 at the mint and by force of a legal tender act, com- 
 pel the creditor to take it as loo cents. 
 
 For a time the clamor confused men's minds, and 
 enough politicians yielded to it so that in 1878 the 
 Bland-Allison Act was passed, compelling the govern- 
 ment to buy and coin at least $2,000,000 worth of 
 silver a month. This sent the price of silver up from 
 $1.15 an ounce to $1.20, and made a silver dollar 
 worth 93 cents. But the new mines and processes 
 turned it out faster and faster, and in 1879 the price 
 dropped to $1.12 and the dollar to 87 cents, about 
 which point it fluctuated until 1885, when silver 
 dropped again and its dollar was worth 84 cents ; in 
 1886, silver went to $1.03 and the dollar to 79 
 cents ; in 1887, it went to $0.98 and the dollar to 75 
 cents; in 1888, the price went to $0.95 and the 
 dollar to 73 cents ; in 1889, the dollar was worth 72 
 cents. 
 
 Silver was now worth only $0.93; it took 22 1-8 
 ounces instead of 16 to buy an ounce of gold. Great 
 alarm had attended this steady decline in the value 
 of this money metal, and all clear and unprejudiced 
 thinkers saw clearly the coming end, — the complete 
 upset of our entire, currency system and its transfer 
 from a gold basis to that of constantly depreciating 
 silver. But their fears of the voters of the debtor 
 class and the arguments of the owners and pro- 
 ducers of silver were potent to make our legis- 
 lators in Congress believe that a hair of the same 
 
dog would cure the bite, and that the way to make 
 silver dollars worth a dollar was for the govern- 
 ment to make silver scarce by buying it up more 
 freely and stacking it away. So, in 1890, the Sher- 
 man Act compelled the purchase of 4,500,000 ounces 
 of fine silver per month, and the price jumped up to 
 $0.97, and the value of a silver dollar to 74 cents 
 and a fraction; and, early in 1891, the price went 
 still higher to $1.09 per ounce, and the value of a 
 silver dollar to 84 cents, but falling materially during 
 the year. In 1892, the price of the bullion dropped 
 back to $0.95 and the value of the silver dollar to 
 72 cents and a fraction. In 1893, the average price 
 went down to $0.84 and the value of the silver 
 dollar to 65 cents. The actual ratio between gold 
 and silver was now 25^ to i ; that is, it took over 
 25^ ounces of silver to buy an ounce of gold. 
 
 FAILURE TO MAINTAIN PRICE OF SILVER 
 
 Then it was seen, after fifteen years' trial, that 
 government purchases were helpless to affect the 
 price of silver, except disastrously by overstimulating 
 its production ; and, after a struggle still fresh in all 
 minds, while every legitimate business interest in the 
 country trembled for fear of a change of monetary 
 standard, the Sherman Act was repealed ; and the 
 price of silver has dropped to the neighborhood of 
 $0.55 an ounce, and the "dollar of the fathers," 
 
i6 
 
 which, in the time of the " fathers," was worth from 
 one hundred and one to one hundred and five cents, 
 and which consequently was worth too much to use 
 as a hundred-cent dollar, and which, therefore, they 
 never did use, is now worth only forty-two cents, and 
 lies unused, on account of its clumsy bulk and 
 weight, and is represented in actual circulation mainly 
 by certificates payable nominally only in its coinage, 
 being practically redeemable in gold at par. The 
 present ratio between gold and silver is 37.6 to i ; it 
 takes 37.6 ounces of silver, instead of 16, to buy one 
 of gold. 
 
 SIXTEEN TO ONE ANALYZED 
 
 We have seen two political campaigns in the last 
 five years fought out on the issue of a free coinage of 
 silver at the 16 to i ratio of 1837. Let us analyze it. 
 
 The free coinage of silver at 16 to i means that 
 anyone shall be at liberty to buy silver at whatever 
 price he can — he would have to pay only 55 cents an 
 ounce for it now — take it to the mint, have it coined 
 into dollars containing only as many grains of silver 
 as when it was worth $1.2929 an ounce, and when it 
 took only 16 ounces of it to buy an ounce of gold, 
 and that, no matter how low the price of silver may 
 go or how little the silver in a dollar would buy as 
 silver, the dollar so coined shall be considered a dol- 
 lar just as truly and for all purposes just as much of 
 a dollar as when the silver in it would buy just as 
 
17 
 
 much uncoined as after it was coined, and when the 
 uncoined silver in a silver dollar would buy the gold 
 in a gold dollar. 
 
 REDUCTIO AD ABSURDUM 
 
 An ounce of gold, 480 grains pure, is worth $20.67. 
 It will buy any goods of that value anywhere in the 
 world, whether it be coined or uncoined ; and out of 
 our own country it will go by weight and not by our 
 coinage stamp. The 23.22 grains of pure gold in a 
 dollar are therefore worth 100 cents, coined or un- 
 coined. 
 
 When the ratio of 16 to i was established in 1837, 
 an ounce of pure silver, 480 grains, was worth $1.2929, 
 coined or uncoined. The 371.25 grains of pure sil- 
 ver in the silver dollar, coined or uncoined, were 
 worth 100 cents, and would buy the 23.22 grains of 
 gold in the gold dollar. Now, the ratio of uncoined 
 silver to uncoined gold is 37.6 to i; the ounce of pure 
 silver is worth only 55 cents, and the 371.25 grains in 
 the silver dollar are worth only 42 cents, and will buy 
 only 95^ grains of pure gold. 
 
 Yet there are those who afifirm that it only requires 
 an act of Congress, or at most an agreement between 
 the governments of different countries, to make 42 
 cents' worth of silver, which, uncoined, cannot buy 
 more than 42 cents' worth of anything, equal in pur- 
 chasing power to 100 cents' worth of gold, by merely 
 coining it and calling it a dollar : to make that which 
 
i8 
 
 can buy only gj^. grains of gold able to buy as much 
 of any other commodity as 23.22 grains of gold. 
 
 On that theory, the market ratio between gold and 
 silver doesn't signify. All you have to do to make a 
 cheap metal buy as much as a dear metal is to stamp 
 it into coins of the same name. If the law stamps it 
 a dollar, it will buy 100 cents' worth, even if it is 
 worth only 42 : the 42 cents' worth of silver, which, 
 uncoined, will buy only 42 cents' worth of gold or of 
 anything else, by coining will buy as much as 100 
 cents' worth of gold, which will buy as much uncoined 
 as coined. 
 
 If the relative purchasing power of metal moneys 
 be merely a question of coinage at a ratio fixed by 
 law, or by agreement between governments, instead 
 of agreement in the world of trade, then there is no 
 earthly reason for discriminating against silver in 
 favor of gold to the extent even of 16 to i. If law 
 and a stamp can make 42 cents' worth of uncoined 
 silver worth as much as 100 cents' worth of gold, 
 coined or uncoined, they can do more ; they can, by 
 coining it, make an ounce of uncoined silver which 
 sells for only 55 cents worth as much as an ounce of 
 gold which sells anywhere in the world for $20.67. 
 There is no reason for stopping at 16 to i, or paying 
 any attention to the fact that the market ratio is now 
 37.6 to I, and likely to be 40 to i. If it is law that 
 of its own power makes ratios it can make them 
 whatever it pleases. The law and the stamp are as 
 
19 
 
 powerful to make the ratio i to i as i6 to i, when 
 the actual ratio is 37.6 to i. If they can take 371.25 
 grains of silver that sell for only 42 cents, and, by 
 coinage, make them worth 100 cents, they can do the 
 same trick for any less number of grains ; there is 
 then no reason why the silver dollar should not be at 
 the ratio of i for i and contain no more grains of 
 metal than a gold dollar, 23.22. To be sure, the 
 23.22 grains of silver could be bought for 2.6 cents, 
 and would, uncoined, buy only 2.6 cents' worth of 
 anything else; but the law and the stamp could 
 make 2.6 cents worth 100 cents just as easily and 
 just as truly as they can make 42 cents worth 100. 
 And law is just as powerful to do for pewter as for 
 anything else. 
 
 No : it is the estimates of free men, of buyer and 
 seller in the market, that fix and change values ; not 
 the mandates of monarchs or legislatures. And it 
 was not the law which in 1837 made the ratio of 16 
 to I between gold and silver : that was the ratio at 
 which they exchanged for each other in bars or by 
 weight in the open market. The statute simply 
 recognized that fact and made the intrinsic value of 
 its coins of the two metals correspond therewith. An 
 equally honest law to-day would recognize the fact 
 that the two metals to-day exchange for each other 
 in the ratio of 37.6 to i, and to give a silver dollar 
 equal intrinsic value with a gold dollar, would put 
 into it 877.50 grains of pure silver instead of the 
 
20 
 
 371-25 which was all that was necessary when they 
 exchanged for each other at 16 to i. To be worth 
 as much to-day as it was at 16 to i in 1837, a silver 
 dollar needs to be 2.36 times as big. 
 
 ORIGIN AND USE OF LEGAL TENDER LAWS 
 
 The first legal tender laws were made to compel 
 the people to receive debased and light-weight or 
 clipped coins at their nominal value : the value actu- 
 ally attaching in the commercial and industrial world 
 to coins of the same name, of full weight and pure 
 metal. But no law ever made a coin pass in trade 
 for more than its real worth. A debtor could be com- 
 pelled to receive it at its face in discharge of his debt ; 
 but not the man who had anything to sell. He 
 marked up his price to cover the depreciation in the 
 coin. 
 
 To facilitate the settlements of contracts, and dis- 
 putes arising from them, the adjustment of damages 
 and penalties, and the avoidance of litigation, legal 
 tender laws are still in use, by which a creditor is 
 compelled to receive some specified kind of property 
 in satisfaction of his claim and to discharge his debtor 
 therefrom. And as all other property is valued in 
 the terms of that property used as money, and as 
 consequently all contracts referring to value sound 
 in money, therefore the form of property used as 
 money is by far the most convenient, certainly ascer- 
 tainable, and reasonable sort to be used for such 
 
21 
 
 a tender. And to this fact all enlightened legislation 
 conforms. 
 
 LEGAL TENDER LAWS DO NOT AFFECT VALUE 
 
 In these days, when not only there are not 
 wanting those who question all the fundamental 
 verities, but those also who found political parties on 
 their denial, it is proper to again remind you that 
 legal tender laws do not affect value. They simply 
 provide a kind of property which, being tendered by a 
 debtor in a quantity equal to his judicially ascertained 
 debt, relieves him of any further liability. If they 
 declare that an ounce of copper shall discharge a 
 debt due for an ounce of gold, they do not make the 
 ounce of copper worth an ounce of gold : they 
 simply rob the creditor of an ounce of gold. Each 
 respective ounce will exchange for precisely the same 
 quantity of other goods as before. 
 
 One of the false definitions of money put forth to 
 our generation is that it is anything which a debtor 
 can compel a creditor to receive in discharge of the 
 debt ; hence, whatever a legal tender statute compels 
 the creditor to receive is, by pure force of law, 
 money. 
 
 Money is not a thing invented by law, nor as a 
 legal tender to pay debts with, but it was and is a 
 property adopted in use to buy other property, and 
 must therefore be treated in every respect as prop- 
 erty itself. Its legal tender debt paying function is 
 
22 
 
 a purely artificial, conventional, and merely con- 
 venient incident of its original and perpetual use, 
 and comes late in its history. And when any form 
 of it has by depreciation lost in any degree its power 
 to purchase other property, the law cannot compel 
 its acceptance in the payment of debts except as it 
 robs one man for the benefit of another, by enabling 
 him to render back less property than he received. 
 The best money needs no legal tender law behind 
 it to make it go. Every man is glad to get it be- 
 cause with it he can buy the most of every thing he 
 needs. That is why men hoard gold when depre- 
 ciated currency comes into use. 
 
 LEGAL TENDER PAPER 
 
 And let us here observe that if the moral law of 
 all commerce and the object of commercial methods 
 be the honest, veritable exchange of one property for 
 another property, a legal tender law which contra- 
 venes that prime and eternal fact is itself immoral 
 and destructive of honest dealing among men. Such 
 an immoral law is that which makes a paper currency 
 a legal tender. If I have had from you a dollar, 
 whether 25.8 grains of gold or a dollar's worth of some 
 other property, and have promised at a given time and 
 place to give you therefor another dollar, and at that 
 time and place I produce, not the dollar I have prom- 
 ised, but some one else's promise of a dollar at some 
 other time and place, I am not fulfilling my contract ; 
 
H 
 
 I am not delivering the property for which you gave 
 me your property, and the expectation of receiving 
 which was the consideration for which you parted 
 with your property to me before getting mine. And 
 if now the law comes in and says you shall accept 
 from me, not the dollar promised, but some one 
 else's promise of a dollar, and that I am thenceforth 
 free of my obligation, then the law simply compels 
 you to submit to my immorality, to my breach of con- 
 tract. No law can make that right. It makes no 
 difference whose the new promise is. It is only 
 some one else's promise and not the dollar which I 
 promised. I have simply compelled you by law to 
 take a new debtor in my place. 
 
 THE SOUND MONEY METAL CURRENCY 
 
 We can now summarize the characteristics of an 
 ideal primary currency, or money : it must be a com- 
 modity, a thing of actual use and value, else other 
 commodities will not and should not exchange for it ; 
 it must be in such universal and instant demand that all 
 other commodities everywhere will readily exchange 
 for it; it must be as nearly as possible indestructible and 
 physically unchangeable ; it must be easily divisible 
 into convenient quantities ; it must be producible in 
 such sufficient quantity and at such cost that its 
 pieces will not be so small as to be inconvenient or 
 unsafe in use ; it must not be producible in such large 
 quantity and at such low cost that the size of its 
 
24 
 
 pieces, conformed to the moral law of trade, make it 
 inconvenient of handling, bulky, heavy, and costly of 
 transportation ; and it must have in the highest 
 attainable degree stability of value ; and all these 
 qualities it must possess in such degree and balance 
 that its service as money costs less than that of any 
 other commodity. In a word, the best money is that 
 which, at the moment, is in every aspect of its use 
 safest, most convenient, most economical, and of the 
 widest use without discount anywhere in the range 
 of its use. 
 
 There can be no question that, at the present time, 
 gold possesses these characteristics far beyond any 
 other commodity that has ever been used as money. 
 Nor is there at present known any other metal or 
 commodity of any sort so falling within the necessary 
 conditions as to even suggest its substitution for gold. 
 
 The very high proportion of value to bulk which 
 makes gold incomparably economical in use, and 
 therefore the cheapest money, makes it undesirable 
 in any fractions of the unit of our coinage. For such 
 fractional pieces a cheaper commodity, requiring a 
 larger bulk for equal value, is a necessity to the uses 
 of retail trade. For such subsidiary money silver at 
 present serves the best purpose. 
 
 CREDIT CURRENCY 
 
 A great outgrowth of commerce which creates the 
 second branch of our subject is that of commercial 
 
25 
 
 credit among men, on which is founded what is 
 called a "credit currency :" that is, the current use in 
 trade of the formal evidences of that credit, expressed 
 in terms of money for definite amounts, and which, if 
 sufficiently entitled to confidence, circulate in place 
 and in the name of money itself. 
 
 In exchanges effected by the use of money itself as 
 the currency, the transaction is at once complete. 
 Property of a certain, determinate value has been 
 exchanged for other property of equal and equally 
 certain and determinate value. A property of specific 
 use and limited demand has been ratably exchanged 
 for a property of general use and unlimited demand, 
 itself therefore exchangeable at will for any other. 
 The purpose of commerce has been accomplished and 
 its moral imperatives obeyed. 
 
 But there are multitudes of exchanges which are 
 for longer or shorter periods incomplete. Property 
 of a certain value has passed from the hand of the 
 seller to that of the buyer, or of an intermediary, 
 with only the promise of the buyer to deliver at some 
 future time and place the equally valuable property 
 which is to complete the exchange. If that promise 
 is for the delivery of an article of limited and special 
 use, it may have no interest for the rest of the world. 
 But if it is for the delivery of a property used as 
 money, and the promise is uttered by a person of 
 known probity and of sufficient resources readily 
 convertible into money, it may, among those whose 
 
26 
 
 knowledge gives them confidence, pass current in 
 place of the money until its maturity. To the extent 
 it circulates in trade that promise is credit currency, 
 no matter who utters it, whether it were George 
 Smith in Milwaukee, or the Bank of England in 
 London. 
 
 And this transaction embodies all the fundamen- 
 tals of a true credit currency : the promise of a sum 
 of money, uttered by a person, natural or corporate, 
 fully believed to hold the money or other convertible 
 property properly secured to its prompt redemption 
 at the time and place specified, and so made accepta- 
 ble to those who do not now need to use, or who wish 
 to avoid the present custody of the money itself and 
 yet be secure of it for future use. 
 
 PAPER CURRENCY IS NOT MONEY 
 
 There are certain limiting things respecting a 
 credit currency which, by our legislative treatment of 
 it for a generation, have been much obscured. A 
 promise to pay money is not money, no matter who 
 utters it nor in what capacity, nor under what com- 
 pulsion men may be made to receive it. It entitles its 
 holder to receive the money it promises ; it is a title 
 deed to undelivered money. But, speaking in the 
 terms of our own currencies, a dollar is not a fiction, 
 nor an idea, nor a symbol, but an actual thing, 25.8 
 grains of gold ; a definite, measured,, certified quantity 
 of a most convenient commodity of well known and 
 
27 
 
 instant value in all markets, for which one is therefore 
 willing to give its value in any other property he may 
 desire to sell. That dollar is money. The promise 
 of it is not a dollar nor is it money. So long as the 
 actual dollar is believed to be really or potentially 
 behind the promise, it may serve as currency, but as 
 a credit currency, worthless without the dollar or the 
 convertible property that will bring the dollar to solve 
 it. It is for the actual dollar promised and for its 
 value, and not for the paper promise of it, that men 
 part with a dollar's worth of other property. Unless 
 the dollar is there, in gold or other equal property, 
 the paper promise is not even a symbol : there is 
 nothing for it to be a symbol of. Only a credit cur- 
 rency which has behind it the actual property ad- 
 equate to its redemption, of such character as to be 
 readily convertible into the money it promises, so 
 held as to allow that conversion at the necessary 
 moment, can fulfill the uses and the moralities of 
 trade. Its maturity must infallibly witness the true 
 completion, however remote in time or place, of the 
 exchange of commodities which was begun when the 
 seller parted with his property on the faith of a prom- 
 ise by the buyer of other property in its place. 
 
 WHO CAN MAKE A TRUE CREDIT CURRENCY 
 
 Who, then, can rightfully and properly issue a 
 credit currency ? That is, who can issue a paper 
 currency which is not only an evidence of debt, but 
 
2S 
 
 which, in whatever volume, can be made also certainly 
 to represent adequate property in possession for its 
 payment and to be an evidence and guarantee of that 
 indispensable condition ? And this question must be 
 answered in both positive and negative terms. But 
 there can be but one answer : those and those only 
 who have the effective and perfectly secured control 
 of the property which the credit represents and by 
 which it is to be redeemed. A paper currency emitted 
 by any one else would be simply an evidence of debt 
 and not of property held for its solvency : a debit 
 currency and not a credit currency. 
 
 Dealing with the currency conditions of to-day, we 
 can say on the negative aspect, that government can- 
 not issue a true credit currency. Government is not 
 in trade. It does not own ; it can only borrow. It 
 does not produce, make, buy, or sell, in a commercial 
 sense, any of those properties the exchange of which 
 makes trade with all its industries, and which are 
 produced, owned, and traded in by its citizens alone, 
 and which are the foundations of their credit and the 
 solvent of their debts. Its promise to pay rests for 
 redemption on none of these things. It is a pure 
 debit. It has no resource but its power of taxing its 
 citizens, and that is not trade nor property. It can 
 redeem its promise only by the money it gets by tax- 
 ation. And when it has laid and collected its tax and 
 therewith redeemed its promise which was uttered 
 and which circulates as currency, it has thereby ex- 
 
29 
 
 tinguished the currency, and can supply it again only 
 by again going in debt, and so endlessly repeating 
 the round of debt and of taxation for its ineffectual 
 redemption. Such a currency possesses no feature 
 of commercial legitimacy ; and, erected into a system, 
 possesses no element of legitimate permanency. 
 
 A commercially legitimate and completely effective 
 credit currency must be so based that it can be or- 
 ganized into a system as permanent as the trade it 
 serves. It must be so based and organized as to 
 serve always and everywhere within its circuit, at the 
 moment needed and at least cost. To these ends 
 it must be born of the trade it serves as life blood ; 
 it must rest upon the commercial credits of the coun- 
 try, which embody its vast exchangeable wealth in its 
 ceaseless flow through the channels of trade. It must 
 have those credits so perfectly secured to its redemp- 
 tion that nowhere and at no time shall a shadow of 
 doubt arise as to its perfect solvency. Its redemption 
 must be so organized than when the transactions 
 which furnished the credit and called for the use of 
 the credit currency have been completed, the currency 
 will go at once to be redeemed instead of gravitating 
 to financial centers to be speculatively employed, as 
 does an idle, irredeemable currency always. Born of 
 and based on the transactions which call for its use, 
 it would be issued when needed, in the amounts 
 needed, stay out as long as needed, and go home 
 when its work was done : a naturally originated, 
 
30 
 
 perfectly based, perfectly secured, perfectly flexible, 
 perfectly responsive credit currency. 
 
 Such a credit currency can be had without difficulty. 
 Every requisite is abundantly at hand, and every 
 needed safeguard is perfectly known to us. The 
 assets of our banks represent the bulk of the com- 
 mercial wealth and the commercial credit of the 
 country ; these create the banks for their uses ; and 
 these are the natural and only true basis of a credit 
 currency. That credit currency the banks should 
 therefore issue ; that currency, properly proportioned 
 to their several resources, should be indefeasibly se- 
 cured by a first lien on their assets, made redeemable 
 in gold only, on demand at their own counters or at 
 their agencies, with convenient redemption offsets 
 between the banks themselves, with a redemption 
 security fund maintained by all to cover contingent 
 losses through insufficiency of assets of insolvent 
 banks, for which experience shows a relatively very 
 small sum would suffice. The whole system must be 
 under strict governmental supervision and control 
 and comprise only banks acting under federal char- 
 ters. These are the lines on which alone can be built 
 a true credit currency, politically as well as commer- 
 cially safe, automatic and instantaneous in operation, 
 always adequate and never excessive, and permanent 
 as trade itself. 
 
SUMMARY 
 
 In summing up, we may say : Currency is anything 
 which, by the common usage of trade and as a matter 
 of course, passes in the commercial world at some 
 agreed rate of exchange for all purchasable commodi- 
 ties. It has two essential forms, money currency and 
 credit currency: money and the promise of money; 
 the money part must be some form of actual property 
 of universal desire, because men part with property 
 only for property ; the credit part must promise the 
 money and have behind it the property which will 
 completely and satisfactorily solve the promise accord- 
 ing to its precise terms : that is, furnish the property 
 promised. 
 
 And these are the characteristics of what would be 
 under existing commercial conditions that natural, 
 legitimate, sound, and enduring currency system to 
 the protection and effectual operation of which all 
 legislation should be directed and confined : It would 
 be a currency system including, first, as its legally 
 recognized money factor, the free coinage of only the 
 best money metal : the best being that which is of 
 most universal acceptance and does its work at least 
 cost. That best money metal is indisputably gold, 
 and it is indisputably the world's standard for meas- 
 uring all other values ; there is no other : the legally 
 recognized use of all other money metals to be, as 
 their actual use is, as merely subsidiary currency. It 
 would include as its credit factor, not an arbitrary 
 debit currency redeemable only by and extinguished 
 
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 oy taxation, and created and renewable only by the 
 government going always and again in debt, but a 
 credit currency, founded on the whole commercial 
 wealth of the country, many thousandfold greater 
 than the product of any endurable tax, and created, 
 sustained, always being redeemed and always being 
 opportunely renewed by that wealth in its ceaseless 
 flow of exchange and replacement, with that wealth 
 absolutely secured to its certain redemption in the 
 money factor : gold.