THE 
 
 ■ 
 
 Appreciation of Money : 
 
 DEBTS, INDUSTRY, 
 
 AND 
 
 NATIONAL WEALTH. 
 
 EMBRACING THE SUBSTANCE OF A DISCOURSE DELIVERED AT XENIA, OHIO, WITH 
 ADDITIONS, TOGETHER WITH ESSAYS ON FINANCIAL QUESTIONS 
 WRITTEN AT VARIOUS TIMES. 
 
 By a. j 
 
 WARNER. 
 
 
 “An alteration in the value of the monetary unit, comes in such an impenetra¬ 
 ble disguise, that probably few minds are even prepared to entertain the idea of 
 
 such an alteration having occurred.” „ __ 
 
 & Edwin Hii.l. 
 
 PHILADELPHIA: 
 
 HENRY CAREY BAIRD & CO., 
 
 INDUSTRIAL PUBLISHERS, BOOKSELLERS AND IMPORTERS, 
 
 810 WALNUT STREET. 
 
 1877. 
 
1 
 
*0 YUOTaytctt^O 
 
 DEDICATED TO THE 
 
 i 
 
 n 
 
 (V> 
 
 PRODUCERS AND BUSINESS MEN 
 
 OF THE UNITED STATES, 
 
 WHOSE PROSPERITY IS THE PROSPERITY 
 OF THEIR COUNTRY. 
 
 f 24800 
 
ERRATA. 
 
 Page 14, 24th line from top leave out a before the word money. 
 Page 26, omit his in line 13. 
 
 Page 27, 25th line from top, for that read what. 
 
 Page 33. In fourth line of foot note for imported read exported. 
 Page 40, line 23, after the word century insert the words, as years 
 like the present and . . . 
 
 Page 44, line 19, for Huskinson read Huskisson. 
 
 Page 47, line 26, for him ■ read me. 
 
 Page 48, line 12, for stamps read stamp. 
 
 Page 52, line 26, after the word name read nomisma. 
 
 Page 58, line 26, for suppose read if. 
 
 Page 76, line 6, after suppose insert instead of such a policy. 
 
 Page 77, line 4, transpose possibly to beginning of line y 
 Page 78, line 13, for by it prices regulated , read to it prices adjusted. 
 
PREFACE. 
 
 Of the arguments and criticisms that follow, all but the first 
 were written and published at various times as the questions 
 to which they relate came under discussion through the pub¬ 
 lic press. The first appears for the first time. 
 
 Some of the articles which are now republished have been 
 abridged, others have been slightly added to, but all are, 
 substantially, as originally published, and they are here re¬ 
 printed for the reason that the questions discussed continue 
 to be important issues in the financial policy of the country. 
 
 Marietta , Ohio , Nov. 20, i 8 yy. 
 

 
 
 t 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE 
 
 APPRECIATION OF MONEY. 
 
 ITS EFFECT ON 
 
 .DEBTS, INDUSTRY AND NATIONAL WEALTH. 
 
 Macaulay, in treating of the times of William III., when a 
 new coinage was being made, said : “ Events which furnish the 
 best themes for pathetic or indignant eloquence are not always 
 those which most affect the happiness of the great body of the 
 people. The misgovernment of Charles and James, gross as it 
 had been, had not prevented the common business of life from 
 going steadily and prosperously on. While the honor and 
 independence of the State were sold to a foreign power, while 
 chartered rights were invaded, while fundamental laws were 
 violated, hundreds of thousands of quiet, honest and indus¬ 
 trious families labored and traded, ate their meals and lay down 
 to rest in comfort and security. * * * But when the 
 
 great instrument of exchange became thoroughly deranged, 
 all trade, all industry, were smitten as with a palsy.” 
 
 To produce and to exchange products for consumption con- 
 stitute the chief employment of man in all civilized countries, 
 and when trade is unfettered industry gathers abundance, 
 wealth is created and wants are supplied. On the contrary, 
 when production is retarded or the ways of exchange clogged, 
 from whatever cause, then confusion arises, labor is idle, trade 
 declines, values change, property gathers in few hands, and 
 want increases in the midst of abundance. Such is the present 
 condition of affairs In this country, as well as over a large part 
 of the commercial world. 
 
 Whence comes this stagnation of trade, prolonged beyond 
 
 ( 7 ) 
 
8 
 
 THE APPRECIATION OF MONEY. 
 
 any other commercial depression; this continued lowering of 
 prices, with attendant losses and bankruptcies? What the 
 cause of the increase of idleness, poverty and wretchedness in 
 the very fields of abundance? “It is over-production,” says 
 one; “too much wealth has been created!” “No, it is under¬ 
 consumption,” says another. “ It is neither,” says a third. 
 “ It is over-consumption. It is consuming more than is pro¬ 
 duced.” 
 
 David A. Wells, writing for the North American Review , 
 seeing the apparent surplus of commodities in every market 
 and the constant fall in prices, becomes alarmed and warns us 
 that unless new wants can be invented the race itself, over¬ 
 burdened with abundance, is in danger of going down under 
 its bounteous load. 
 
 Another economist, on the other side of the Atlantic, Profes¬ 
 sor Bonamy Price, through the Contemporary Reviezv, survey¬ 
 ing the same field, tells us it is over-consumption since 1873 
 that is impoverishing the world. He tells us we are eating up 
 and wearing out more than we are producing, and leaves the 
 impression upon us that we are fast approaching the condition 
 of the savage. 
 
 Thus these two economists, who exert a wide influence on 
 both sides of the Atlantic, have given to the world their solution 
 of the hard times. Both see the same Sphinx rising anew to 
 devour the people, but neither has guessed the riddle! A 
 pertinent reply to the one would be “Liberate the powers of 
 consumption,” and to the other, “ Liberate the powers of pro¬ 
 duction.” Consumption is limited by production, and produc- 
 . tion by consumption. The two are correlated conditions. 
 
 The measure of every one’s power of demand is what he 
 has to offer in exchange for the thin 0 s he wishes to possess. 
 The power to possess and to consume by the millions, whose 
 only capital is their skill and labor, is limited to the product 
 of that skill and labor, and hence when employment is re¬ 
 stricted or denied to labor trade is restricted and consump¬ 
 tion limited in the same proportion. 
 
 If production is lessened by a thousand millions, as it is this 
 very year, and more, by the forced idleness of labor, then trade 
 is cut short by a thousand millions, and consumption, in the 
 
THE APPRECIATION OF MONEY. 
 
 9 
 
 economic sense, is reduced in that proportion. It is an old 
 maxim that goods in market constitute a market for goods. 
 
 But for four years the ding-dong of over-production has 
 rung from the stump in every political campaign, and the doc¬ 
 trine that abundance leads to poverty has burdened the polit¬ 
 ical press throughout the land. And even Secretary Sherman 
 calls up the specter again in his Mansfield speech. 
 
 If this theory were true, then the savage condition ought to 
 be the happy state of mankind. For the savage is never bur¬ 
 dened with the calamity of over-production; and to be rid 
 entirely of our over-production would put us just where the 
 savage is, without an arrow to begin to-morrow’s hunt. 
 
 I wonder it has never occurred to these political orators to 
 suggest as a quick remedy for the evils of over-production the 
 destruction of the surplus, that we might at once be relieved 
 of the over-burden and prosper again. But, although this false 
 notion has been taught by men in high places, and has exerted 
 a most deleterious influence over legislation and our national 
 policy, it is too absurd for anything but ridicule. 
 
 Disproportionate production there may be and always is: 
 that is, an undue proportion of certain things to other things. 
 But such inequalities every day correct themselves when left 
 to free competition. But to claim an over-production in gen¬ 
 eral of things which constitute the possessions and the wealth 
 of individuals, and go to make up the sum total of national 
 wealth, is not lunacy, it is “a mild form” of idiocy, and may 
 be left to die out as a better intelligence succeeds to the igno¬ 
 rance that has made the acceptance of such notions possible. 
 
 THE REAL CAUSE OF THE HARD TIMES. 
 
 Let us then proceed to trace the real cause of the stagnation 
 in business, the decline in production, in the wages of labor, 
 and the value of property, which is filling the country with 
 needless bankruptcies, and increasing daily the distress that 
 already overburdens the land. 
 
 Adam Smith likened money to a highway and to the wheels 
 of a carriage, and Hume and Mill to oil that removes friction 
 and makes easy the ways of commerce. Suppose for a 
 moment it were proposed to block up the highways of traffic. 
 
10 
 
 THE APPRECIATION OF MONEY. 
 
 stop the locomotive, take the trains from the railways, and 
 ships from the seas—shut off the steam and reef the sails— 
 would anybody wonder then that commerce halted, that want 
 and abundance should appear side by side ? What these visi¬ 
 ble highways are to commerce, the ships, the railways, the 
 steam, the sails, that and all of that, money is to the invisible- 
 operations of business, production, trade, exchange, consump¬ 
 tion ; and the one can no more be taken away, or tampered 
 with by legislation with impunity than the other. No one 
 would think of improving commerce with fewer and smaller 
 ships, fewer and poorer highways, or with a motive power less 
 constant and effective than steam. Nor can you expect to 
 improve or sustain trade and production by taking away its 
 life-blood, the medium by which it is maintained and carried 
 on. 
 
 EFFECT OF AN INCREASING VOLUME OF MONEY. 
 
 The quarter of a century from 1848 to 1873 has been 
 pointed out by economists as being the period of greatest 
 activity in the production and distribution of wealth of any 
 period in the whole history of the world. During these 
 twenty-five years about thirty-six per cent, was added to the 
 stock of precious metals in the hands of man; and during 
 these same years the trade and commerce of all civilized and 
 commercial nations increased at a rate never known before— 
 the commerce of the United States and Great Britain being 
 t increased by from 300 to 400 per cent, and national wealth in 
 a corresponding degree.* 
 
 During this same period, too, credit became expanded, and 
 new credit devices were invented to extend the machinery of 
 circulation, facilitate exchanges and lessen the use of the pre¬ 
 cious metals in commercial transactions. And, notwithstand¬ 
 ing; the fact that several of the most destructive wars of modern 
 times occurred during this period, still the accumulation of 
 
 * <£ If an addition of 40 per cent, to the existing stock of money, from 1848 to 
 1873 — i. e., in years—has so materially (four fold) advanced progress in com¬ 
 merce , if all contracts now rest on the basis of prices thereby established , what will 
 be the consequences, if that stock of money becomes reduced in the manner the 
 change in the systems of valuation must bring about ?”—Ernest Seyd, Fall in 
 the Price of Silver. 
 
THE APPRECIATION OF MONEY. 
 
 I 
 
 industrial products and the increase of national wealth were 
 never before so great, and never before were as many millions 
 of the human family provided with so many conveniences and 
 comforts of life as during this same fourth part of a century. 
 During this period, too, public indebtedness in various coun¬ 
 tries became enormously and perhaps dangerously increased, 
 until, according to Mr. Dudley Baxter, it has swollen to the 
 inconceivable sum of over $20,000,000,000, nearly three-fifths, 
 of which has been added since 1850. The aggregate public 
 indebtedness of the United States, according to the same au¬ 
 thority, is about one-fifth of the whole sum. 
 
 Now, mark the steps that have been taken and the changes 
 wrought in the monetary affairs of the world since 1873. And 
 to understand the full force of their effect upon this country it 
 is necessary to take into view somewhat more than the bounda¬ 
 ries of our own horizon. Trade is more or less international. 
 The precious metals are money for all countries. In 1873, 
 not to go further back, the money of the world, which consti¬ 
 tuted the measure of these debts, and which determined the prices 
 of commodities and property, consisted first, of the total quan¬ 
 tity of gold and silver in existence, available for money,—and 
 every ounce of both metals, under the right of free coinage, 
 may be considered as ultimately available, and therefore 
 potentially money. And this right of free coinage then existed 
 in nearly all the great commercial nations, except England, 
 which extended the right to gold only, but as more than a bal¬ 
 ance to this is the almost exclusive use of silver as money in 
 the East. 
 
 Supplementing this metallic money of the various nations • 
 were other kinds of money. In the United States, we had 
 issued $400,000,000 of inconvertible legal-tender paper money. 
 Austria, Italy, Russia, and other states had also issued large 
 sums of inconvertible paper. 
 
 And I submit as a proposition that can not be successfully 
 controverted, that to the extent these sums of Government 
 paper money displaced coin, to that extent they were as much 
 additions to the total volume of money, and, therefore, as 
 much affected prices, as though so much gold and silver 
 had been created by the arts of alchemy, or had fallen 
 
12 
 
 THE APPRECIATION OF MONEY. 
 
 from the moon and been absorbed into circulation with the 
 pre-existing metal.* 
 
 If, then, we reduce the paper money of the different coun¬ 
 tries to its coin value, and add it to the metallic money in 
 use, we will have in the total volume, as it were, the scale, 
 which, in 1873-4, measured the debts of the world, and to 
 which prices were adjusted. 
 
 Taking as authority Mr. Ernest Seyd, there were in the 
 world in 1874 about seven thousand millions of the precious 
 metals in the form of money, and three thousand millions of 
 legal-tender and other paper money—reduced to coin value— 
 or a total of ten thousand millions, about 38 per cent, of 
 which was gold. 
 
 Now, with this picture in mind, trade and production in an 
 active state, public debts aggregating twenty thousand mil¬ 
 lions, with a volume of money of ten thousand millions, on 
 which this vast accumulation of debts was based, and to 
 which credit prices and business were adjusted, then consider 
 the next step. 
 
 DEMONETIZATION OF SILVER. 
 
 A conference, in the interest of creditor-nations which as¬ 
 sembled at Paris during the Exposition of 1867, to consider the 
 question of an international coinage, recommended the demon¬ 
 etization of silver, and the adoption by the various nations of 
 the single gold standard. A Royal Commission was appointed 
 in England in the following year, to report upon the recom¬ 
 mendation of the Paris Conference. This Commission ap¬ 
 proved unanimously the recommendation of the Conference 
 on the demonetization of silver and the adoption of the single 
 standard. 
 
 In January, 1868, following the recommendation of the Paris 
 Conference, the Hon. John Sherman, then Senator from Ohio, 
 introduced a bill in the Senate of the United States, propos- 
 
 * Every emission of a paper currency in any country drives out a portion of its 
 coin, and augments the total amount of the currency of the world, in the same 
 manner that an additional quantity of gold and silver from the mines would do 
 it; and hence an emission of paper money anywhere must augment the currency 
 everywhere, after time has been afforded for the distribution.” Raguet, Cur¬ 
 rency and Banking. 
 
THE APPRECIATION OF MONEY. 
 
 3 
 
 ing the demonetization of silver. To the present Secretary of 
 the Treasury, therefore, let it be noted as we pass, belongs the 
 unenviable distinction of initiating this great fraud upon the 
 people of the United States.* 
 
 In 1871, Germany, intoxicated with the victory of Sedan and 
 the capitulation of Paris, and enriched by her indemnity of 
 $1,000,000,000, hastily took up the question of the standards, 
 and stopped coining silver and began the coinage of gold. 
 
 In 1873 silver was demonetized, and the gold standard 
 adopted throughout the Empire, when Germany at once 
 entered the market as the vendor of her discarded silver coins 
 and the purchaser of gold to take their place.f 
 
 Thus, as a creditor-nation, Germany casts away silver, and 
 by demanding gold to take its place, cheapens the one and 
 increases the value of the other, and then demands of her 
 debtors that obligations to her shall be discharged according 
 to the increased standard she herself has caused to be set up! 
 
 In 1874, Holland and the States comprising the Latin Union 
 —France, Belgium, Switzerland, Italy and Greece—restricted 
 the coinage of silver. 
 
 While these operations were going on in Europe, emissariesj 
 were sent to the United States to whisper in the ears of our 
 statesman (?) (whether they did more than whisper seems left 
 to conjecture)§ “that gold was the money of the wealthy and 
 the great. Rich nations had gold money. Abandon silver 
 and get rid of paper; take gold only for your money and be 
 rich too.” And the ears of our statesmen (God save the 
 
 * See Senate Bill No. 217. 
 
 -j-‘‘The true cause of the depreciation in the value of silver, is its demonetiza¬ 
 tion by law, and that only Evidence of Ernest Seyd before the Commission 
 on the Depreciation of Silver. 
 
 J The Banker's Magazine for August, 1873, contains this important item: “In 
 1872, silver being demonetized in France, Germany, England and Holland, a 
 capital of one hundred thousand pounds ($500,000) was raised, and Ernest Seyd, 
 of London, was sent to this country with this fund as the agent of the foreign 
 bond-holders and capitalists, to effect the same object, which was successful. ” 
 
 $Mr. Hooper made the following admission in his speech in the House, on 
 the 19th of April, 1872 : ‘‘Mr. Ernest Seyd, of London, a distinguished writer, 
 who has given great attention to the subject of mints and coinage, after examin¬ 
 ing the first draft of the bill, furnished many valuable suggestions which have 
 been incorporated in this bill." 
 
H 
 
 THE APPRECIATION OF MONEY. 
 
 mark !) were inclined. Ignorance made the way easy for the 
 most gigantic fraud that ever disgraced the legislation of any 
 country. Surreptitiously, by the adoption of the Revised Stat¬ 
 utes, the deed was accomplished. 
 
 Not a hundred men in America, not one-tenth of the mem¬ 
 bers of Congress, seemed to know what had been done. 
 
 By this act the United States not only herself abandoned 
 silver, but became committed to a policy looking to the de¬ 
 monetization of this metal throughout the world. For if sil¬ 
 ver is demonetized in Europe and the United States, it must 
 be, sooner or later, for reasons which I cannot follow out here, 
 in India and all the East. The proposition, then, contemplates 
 nothing less than the demonetization of more metal than the 
 Continent of America has yielded from the date of its discov¬ 
 ery to the present time, and the limitation of the metallic money 
 of the world to a less quantity than existed before a colony 
 was planted in America! 
 
 What must be the effect of this reduction in the metallic 
 money on prices, on debts, on civilization? What must be the 
 effect on the value of gold ? Is it not plainly setting up a new 
 standard to be applied to all pre-existing debts—a standard, 
 too, that will itself increase as silver demonetization extends ? 
 And is it not a forced violation of the faith of all contracts 
 made on the basis of both gold and silver as a money? But 
 suppose the demonetization of silver extends only to Europe 
 and the United States. 
 
 The proportion of silver to gold in use as money in Europe 
 is very nearly three of silver to five of gold, two-thirds of the 
 silver being full tender money. Suppose only this two-thirds 
 is demonetized—that would be one-fourth of the entire quan¬ 
 tity of metallic money—what would be the effect of the demon¬ 
 etization of one-fourth on the value of the remaining three- 
 fourths ? According to most writers the three fourths would 
 have the same value the full volume had, or, in other words, 
 the value of the money left would be increased twenty-five per 
 cent. But I think it can be shown that value often increases 
 in a much higher ratio than inversely as the quantity is les¬ 
 sened.* And money being the commodity into which all 
 
 * See Article, Relation of Volume to Value. 
 
THE APPRECIATION OF MONEY. 
 
 15 
 
 other things must, on demand, be converted in the discharge of 
 all obligations, a suspicion even of scarcity operates to exces¬ 
 sively increase its value. But whether the operation of laws 
 now in force in relation to silver, if carried out, increases the 
 value of the standard by a hundred, or fifty, or only twenty- 
 five per cent., the fact remains that to the extent the standard 
 is thereby raised, to that extent the relations of property, debt 
 and money are changed, the evil effects of which are beyond 
 calculation. 
 
 Disraeli is one of the few statesmen who at the outset seemed 
 to comprehend the danger threatened. In his speech at Glas¬ 
 gow, in 1873, he said: “When the various States of Europe 
 suddenly determined to have a gold standard, and took steps 
 to carry it into effect, it was quite evident we must prepare 
 ourselves for great convulsions in the money market, not oc¬ 
 casioned by speculation or any old cause, which has been 
 alleged, but to a new cause with which we are not sufficiently 
 acquainted, and the consequences of which are very embar¬ 
 rassing.” 
 
 THE RESUMPTION ACT. 
 
 Following next in the same line of legislation came the Re¬ 
 sumption Act, passed on the 14th of January, 1875, pledging 
 the country to redemption in gold and the cancellation of green¬ 
 backs in 1879. That I may give the real intent and purpose 
 of this act, I quote the following from the official report of 
 Mr. Bristow, Secretary of the Treasury, and which, in sub¬ 
 stance was repeated by his successor, and has been accepted 
 by the Republican press generally, as expressing the true pur¬ 
 pose of the government. 
 
 Mr. Bristow says: “ The faith of the Government now 
 stands pledged to resumption on and after January 1, 1879, 
 and to the final redemption and removal from the currency of 
 the country of the legal-tender notes as fast as they shall be 
 presented for redemption, according to the provisions of the 
 Act of January 14, 1875.” 
 
 Thus, as the law now stands, not only is silver demonetized 
 in the United States, except for fractional currency, but the 
 Government stands pledged to get rid of greenbacks and 
 
i6 
 
 THE APPRECIATION OF MONEY. 
 
 restrict full tender money to gold alone. That is, having re¬ 
 stricted the means of resumption to gold, we then pledge our¬ 
 selves to redeem in that metal, and when redeemed, to “ re¬ 
 move from the currency of the country” our greenback 
 money ! 
 
 Now let us trace the effect of this double-headed silver and 
 greenback legislation, first upon prices and the relation of 
 property to debts, and then upon production and trade. 
 
 THE EFFECT UPON THE RELATION OF DEBTS AND PROPERTY. 
 
 If w r e accept the estimate that there are in the world, say 
 10,000 tons, or about $5,000,000,000 of gold, in the various 
 forms of coin, bullion, ornaments, etc., that may be drawn upon 
 for money, and an amount equal in value, or sixteen times as 
 much by weight, of silver, or 160,000 tons, also available for use 
 as money, then the money basis of values in this country be¬ 
 fore the legislation of 1873-5 was such proportion of this total 
 mass of the precious metals as we might acquire, supplemented 
 by the volume of our legal-tender paper, which at that time 
 was about $385,000,000. To this available volume of legal- 
 tender money business and prices were adjusted. Upon it as a 
 basis credit rested. All public and private indebtedness was 
 equitably dischargeable in it. Such part as was specifically 
 payable in coin was payable, nevertheless, according to a scale 
 of values determined by this full volume. 
 
 And this is an important point to keep in view. It makes 
 a very great difference whether the coin in which a debt 
 is made specifically payable constitutes the whole or but a 
 given part of the total volume of money. As it makes a great 
 difference, even with payments made specifically in gold, 
 whether that is the only money , or whether silver and paper 
 are money also for ordinary purposes—whether the 160,000 
 tons of gathered silver may be drawn upon, too, for money, or 
 only the 10,000 tons of the one metal for all purposes. 
 
 Having created, first, a vast war debt, and piled up other 
 public debts, National, State and Municipal, to an aggregate 
 of $4,000,000,000, with probably as much more of corporate 
 indebtedness, and with private indebtedness proportionally ex¬ 
 tended—the whole aggregating one-third, if not nearer one-half, 
 
THE APPRECIATION OF MONEi". 
 
 17 
 
 of the present value of all the property of the country—and all 
 made on the basis of this full volume of gold, silver and green¬ 
 backs—and with credit, business and prices based upon and 
 adjusted to the same scale of valuation; then, for no reason 
 that has ever been pretended , but like a nation of simpletons, or as 
 if possessed of an insane purpose to wrong ourselves , we demone¬ 
 tized silver, except for token coinage, (though the largest pro¬ 
 ducers of silver in the world) and thus barred ourselves from 
 the use, as money, either in our domestic trade or as a means of 
 payment for any part of our vast indebtedness, of a metal which, 
 from earliest times, and among all commercial nations, has been 
 a medium of exchange and measure of value in all transactions. 
 And next, having limited the means of redemption to the one metal 
 — gold—we pledge ourselves to redeem and cancel our greenback 
 money as fast as presented after fanuary, 18 jq, leaving only 
 gold for full tender money after the greenbacks have been de¬ 
 stroyed, and paying no regard to the effect on the value of 
 gold itself to thus extend its use over countries before using 
 silver or paper for money 
 
 The United States enters the market to buy gold to substi¬ 
 tute for greenbacks ; Germany to buy gold to take the place 
 of her cast-off silver; other countries, for like reasons, also 
 compete for the same metal at the same time. Twenty per 
 cent, at least of all the gold in circulation in Europe is thus 
 advertised for to take the place of other kinds of money now 
 in use, which is more than is contained in all the great hoards 
 of the world. 
 
 Will a hundred per cent, more than cover the rise in the 
 value of money that has already taken place under this double¬ 
 headed legislation? That is, have not prices, on the average, 
 fallen fifty per cent.? 
 
 And it must be remembered that the substitution of gold for 
 silver and paper money in European countries has but just be¬ 
 gun,* and that we have only fairly begun the work of destroying 
 
 * Even in Germany the gold valuation is not yet complete; more gold is 
 wanted, and silver remains to be sold. The Scandinavian States have made but 
 little progress in selling silver and obtaining gold. The United States have 
 no power to hold gold before they resume specie payments. Holland and 
 
i8 
 
 THE APPRECIATION OF MONEY. 
 
 greenbacks. I think it could be shown that before the legis¬ 
 lation now in force could be carried out,* the increase in 
 the value of money, as compared with its value in 1874, 
 after the effects of the panic had mostly passed away, 
 must be nearer 200 than 100 per cent., or a decline in prices, 
 on the average, for a time at least, to one-third the scale in 
 1874. No small part of the property of the country has 
 already fallen to that level, and notably tools and machinery 
 designed for reproduction. 
 
 And if silver-demonetization should extend to India and 
 other parts of the East the change must be greater even than 
 that. 
 
 But debts have not decreased; dollars have grown larger, 
 but it takes no fewer of them to cancel an obligation. The 
 standard that measures debts has been enormously increased , 
 but the means of paying have been decreased. And who can 
 say this is not the direct consequeuce of monetary legislation ? 
 
 Yes, by legislation and by legislation alone, the relation of 
 debt, money and commodities has been changed till $4,000,- 
 000,000 of public debt, to say nothing of corporate and private 
 debts, as compared with that with which it must be paid, 
 property, commodities, labor, has been made equal to $8,000,- 
 000,000, and is to be, if these acts of Congress are allowed to 
 run their course, still further increased as a burden upon the 
 country. 
 
 And what does public debt mean? It means that Govern¬ 
 ment guarantees that the people shall pay to the creditor a 
 
 the Latin Union have been added to the gold-valuing list ‘‘in abeyance,” 
 the steps taken so far justifying this. Involved in the facts of the whole 
 case is the consideration : Are these States compelled to follow the course 
 of Germany ? It will be found that (unless silver is remonetized) they must do 
 so for the sake of self-preservation .—Evidence of Ernest Seyd before the Par¬ 
 liamentary Commission on Depreciation of Silver , 1876. 
 
 *“ It is obvious that if effect should be given to the policy of substituting gold 
 for silver, wherever it is feasible, and giving gold for the sake of its advantages 
 in international commerce, the preference, even among populations whose habits 
 and customs are in favor of silver, and thus displacing silver from the position 
 (which it has always occupied) of doing the work of the currency over at least 
 as large an area as gold, no possible limits could be assigned to the further fall in 
 its value, which would inevitably take place .”—Parliamentary Repo?'t on Depre¬ 
 ciation of Silver, 1876. 
 
THE APPRECIATION OF MONEY. 
 
 *9 
 
 given sum, either as interest or principal. The fund from 
 which it must be paid is the annual produce of the country. It 
 is quite common for those who have little property to flatter 
 themselves that the tax to discharge public indebtedness does 
 not fall on them. But this is a mistaken notion. A moiety of 
 the product of every day’s laber is required and taken. The 
 public debt, like the cost of maintaining Government, is a 
 pledge not only of present property, but of the future labors of 
 every producer and the future profits of capital. It is a mort¬ 
 gage, workmen, upon your good right hands ; and you will 
 have to work it out, be it more or be it less. If the annual 
 interest on the aggregate public indebtedness in 1874 was 
 $250,000,000, and public expenses $500,000,000 more, and the 
 value of the total annual products—that is, the total earnings 
 of labor and capital, were $5,000,000,000—which is about the 
 estimate of Mr. D. A. Wells for 1870—then $750,000,000 must 
 be deducted from this sum as a tax for interest and public ex¬ 
 penses, leaving the balance, $4,250,000,000, as the wages of 
 labor and the profits of capital. Now, if by a change in the 
 relation of money and commodities, the money value of our 
 annual products has been reduced, on the average, 50 per cent., 
 then the products that were valued at $5,000,000,000 in 1870, 
 if now on hand, would be worth, measured in the money of 
 to-day, but $2,500,000,000, and at that rate must go to pay 
 debts and taxes. For the same number of dollars for debts, 
 interest and taxes, are required as before. Take then $750,- 
 000,000 for interest and public expenses from this sum, and 
 there would remain but $1,750,000,000 for wages and profits, 
 or but $3,500,000,000 if counted in the money of 1870, instead 
 of $4,250,000,000. 
 
 Take another illustration. Suppose the $750,000,000 col¬ 
 lected as taxes in 1873-4 to have been paid all by the sale of 
 cotton; and to show better the change between gold and cot¬ 
 ton, we will take the average Liverpool price of that year, for 
 the highest grade, which was about ioj{d. per pound, or 
 say 21 cents, New York. It would have taken then, in 1873-4, 
 about eight millions of bales* to pay the taxes collected from 
 
 *Average weight of tales 450 pounds. 
 
20 
 
 THE APPRECIATION OF MONEY. 
 
 the people in that year, or twice the whole cotton crop, if all 
 taxes had been paid with this commodity. But at the price 
 of cotton now ruling it would take fourteen millions of bales; 
 or full 75 per cent. more. If we compare, in the same way, 
 pig iron, we will find that while in 1873-4 it would have taken 
 but twenty-eight millions of tons to pay $750,000,000, it would 
 take this year about forty-eight millions, or over 70 per cent, 
 more. And if we include machinery real estate and other pro¬ 
 perty with annual products, and take the average of every¬ 
 thing held for debt and taxes, we will find that not far from a 
 hundred per cent, more is required this year than in 1873 or 
 1874. 
 
 Indeed, at the very time when General Garfield was de¬ 
 nouncing in the House the proposition to restore silver to our 
 coinage, and make it available for the payment of debts and 
 taxes, as dishonorable and dishonest—at the time when its de¬ 
 preciation as compared with gold was greatest—it wpuld have 
 taken on the average about 55 per cent, more of the property 
 and annual products of Ohio to buy silver with to pay debts 
 and taxes than it would have taken in 1870, when the Funding 
 Act was passed ! But this is not all, nor the worst consequence 
 of this vicious monetary legislation. The quantity of things 
 produced has been greatly lessened, so that the burden falls not 
 only on products reduced in price , but on a diminished quantity. 
 Was this legislation, then, to demonetize silver, destroy green¬ 
 backs and double the value of the money standard, a blunder 
 or a crime? It is certainly the most gigantic fraud ever per¬ 
 petrated upon any people, and is as unjustifiable as spoliation 
 or open confiscation. 
 
 It is a forced violation of the faith of contracts reaching to 
 thousands of millions of dollars, based upon a volume of money 
 consisting of both of the precious metals and greenbacks. The 
 obligations of every debt, of every contract, of every engage¬ 
 ment, are impaired by the change decreed and now being made 
 in the value of money under the form of law. The enterprise 
 of industry, the ventures of commerce, the profits of trade, the 
 wages of labor, the relation of capital to production, are all 
 subverted and deranged by it. 
 
 Such a change in the value of money, if made directly, 
 
THE APPRECIATIONOF MONEY. 
 
 21 
 
 would be tolerated by no people,* but when made indirectly 
 it is none the more justifiable or the less pernicious. No tax¬ 
 ation is so dangerous as that which is made in the dark. 
 
 The plea that money was depreciated when greenbacks were 
 issued is often set up as a sufficient reason for contraction and 
 the appreciation of money fifteen years afterward as a kind of 
 offset. But no wrongs are righted by such means; but new 
 wrongs are needlessly inflicted, f Such justice would be much 
 like that meted out by a man who, having robbed his neighbor 
 on his right, and feeling as though he had been doing wrong, 
 turns and robs his neighbor on his left, and then says: “ Now 
 I am justified; I have served them both alike.” 
 
 On this point, however, it can hardly have escaped the obser¬ 
 vation of casual observers even, that, while the public press, 
 and especially the Eastern press, has teemed with denunciation 
 against the suggestion of measures that might have the effect 
 of depreciating money, it has been commendatory, or silent, 
 respecting measures calculated to enormously increase the 
 value of money and credits. 
 
 It would be a real satisfaction to meet with an occasional 
 expression of impartial honesty on this point from the New 
 York press. Or must we continually be reminded that Horace 
 Greeley no longer edits the Tribune; that the elder Bennett 
 has gone, and that Raymond has ceased to direct the editorial 
 pen of the Times? Above all, for one, I should like to have 
 the venerable editor of the New York Post frankly admit that 
 to alter the value of money so as to rob the debtor is no more 
 
 * “ Directly to alter the terms of the contracts between individuals, would be 
 too barefaced and tyrannical an interference with the rights of property to be 
 tolerated. Those, therefore, who endeavor to enrich one part of society at the 
 expense of another, find it necessary to act with caution and reserve. Instead of 
 changing the stipulations in contracts, they have resorted to the ingenious device 
 of changing the standard by which these stipulations are adjusted. They have 
 not said, in so many words, that ten or twenty per cent, should be added to, or 
 deducted from, the debts and obligations of society, but they have, nevertheless, 
 effected this by making a proportional change in the value of money.”—“ Metal¬ 
 lic and Paper Money and Banks.” J. R. McCulloch. 
 
 j- “ Invariability of value is the great desideratum in a currency. To elevate 
 the standard after it has been for a considerable period depressed, is not a meas¬ 
 ure of justice, but of new injustice. It vitiates and falsifies the provisions in one 
 set of contracts, that those in another set may be properly adjusted.”— Ibid. 
 
22 
 
 THE APPRECIATION OF MONEY. 
 
 justifiable than to alter it so that the creditor is swindled. “Ye 
 shall do no unrighteousness in judgment, in mete-yard, in 
 weight or in measure.” 
 
 Unsophisticated people in the West have, innocently, it 
 would seem, supposed the injunction in the Decalogue: “Thou 
 shalt not steal,” was meant as well for the man of millions as 
 for him that has nothing. The Eastern interpretation of this 
 commandment would seem to be, however, that the alteration 
 in the value of money, whereby the debtor pays less value than 
 he owes, is perfidious cheating , but the alteration of the value 
 of money whereby the creditor shall receive the value of two 
 dollars where but one is owed him, that is stre7igthening the 
 public credit: “O, Liberty, what crimes are not done in thy 
 name!” O, public credit, what stealing is carried on in thy 
 name! 
 
 We have three times changed the stipulation respecting 
 Government bonds, and each time in the interest of the creditor, 
 and each time without any consideration to the payors. Orig¬ 
 inally the principal of the bonds was payable in lawful money 
 —the same money that was paid for the bonds. But our 
 creditors asked us to make both principal and interest payable 
 in coin. It was natural enough that this should be asked , for 
 the simple reason that coin was worth more than legal tender 
 paper. They said it would “ strengthen the public credit,” 
 and we granted the request. This was steal No. I, and 
 amounted to some five or six hundred millions. 
 
 The people, or our statesmen for us, were so very kind in 
 their response to the first demand, and so easily persuaded, 
 that it was not long till the second request was made. The 
 public credit needed more “strengthening.” “The United 
 States,” they flatteringly said, “is a great nation, with bound¬ 
 less resources,and it can’t be mean!” It should have “honest 
 money.” Creditor-nations had studied out how debts owed 
 them might be doubled without seeming to cheat at all. “Do 
 away with silver, extend the use of gold, and thus double 
 its value,” and the thing is accomplished. We demonetized 
 silver, and a second time the stipulation in the bond, so it is 
 now interpreted, at least, was changed in the interest of the 
 
THE APPRECIATION OF MONEY. 
 
 23 
 
 creditor and without consideration to the people, who must 
 pay it. This was steal No. 2. But for just how much we can 
 not tell till we know how far silver demonetization will be car¬ 
 ried. It may be three or four hundred millions, and it may 
 be several times that. 
 
 The third demand was that we should stop using paper 
 money ourselves, and buy gold to take its place. There was 
 gold enough in the world, we were told, if we would only pay 
 for it, and three hundred millions of gold bought by us and as 
 much more by other nations, to substitute for paper, would 
 raise the value of gold as compared with the commodities that 
 must be given for it, or that must go to pay debts, to a degree 
 that would be very satisfactory to those who derive the benefit 
 of the increase. Any step that will increase the standard that 
 measures debts is always gratifying to credit-holders. Against 
 this demand, however, honest protests were made. Neverthe¬ 
 less, it was claimed that it would further “strengthen the pub¬ 
 lic credit.” “ Let the bloody shirt wave,” said campaign orators, 
 and it waved, and again the demands of the creditors were 
 conceded, and again the public was swindled. 
 
 EFFECT OF RESUMPTION ON BUSINESS. 
 
 But wrong as has been the effect of the appreciation of 
 money on debtors and tax-payers, it is insignificant in reality as 
 compared with its effect upon the business interests of the coun¬ 
 try. It is here , hidden by many complications , that the deadliest 
 poison lies. 
 
 The promise, on the one hand, that greenback notes shall 
 be raised to the level of gold, while the purchasing power of 
 the gold itself goes on increasing apace with the demonetiza¬ 
 tion of silver and the withdrawal of greenbacks, and on the 
 other hand, the threat that all property, all commodities, houses, 
 lands, goods, everything but money and funds that must neces¬ 
 sarily share the enhancement of money, shall correspondingly 
 decrease in value, have made it necessary to withdraw money 
 from production , and hoard it in idle heaps. 
 
 As money rises in value or purchasing power, other things, 
 as compared with money, must fall; if one side of the balance 
 goes up the other must go down. 
 
24 
 
 THE APPRECIATION OF MONEY. 
 
 As the direct consequence then of acts of Congress now in 
 force, capital, in the form of money is made to increase, not by 
 use, but, as it were, to grow in value or purchasing power, 
 while capital in other forms, property and commodities, as 
 surely and perforce of the same laws decline. 
 
 A mechanic, who four years ago invested a thousand dollars, 
 the savings, perhaps, of half a life of industry and economy, in 
 a home worth then two thousand dollars, on which future pay¬ 
 ments were to be made, finds, when foreclosure takes place, as 
 it is most certain to do in these times (as thousands, to their 
 grief, are finding out), that in an hour savings, home, shelter, 
 all are gone. On the other hand, a thousand dollars buried in 
 the earth by a miser at the same time the laborer’s investment 
 in a home was made, and now dug up, will buy two such 
 homes as that which industrious hands have lost! 
 
 It is he who has hid his talent in the earth that, in the new 
 Republican kingdom in which the golden calf is elevated to 
 supreme worship, gains the reward and receives the plaudit, 
 “ Well done, thou good and faithful servant, who knoweth how 
 to appropriate as thine own the blood and sweat of others.” 
 
 So a hundred, a thousand, or a million dollars that have 
 been locked up for the past three or four years in the vaults of 
 a bank, will to-day purchase, on an average, twice as much of 
 property and commodities as when it was consigned to the 
 vault. A hundred per cent, gain for idle money in three 
 years ! Did ever money gain so fast from use ? Any wonder, 
 then, why money accumulates in money centers, and is plenty 
 at two per cent, on good securities ? 
 
 Reverse this operation, and suppose money, instead of lying 
 idle in bank vaults safely gathering increase, had been invested 
 in mills, factories, work-shops, machinery, or been used in car¬ 
 rying on our industries—employing labor, producing commo¬ 
 dities, creating wealth—what would have been the result ? 
 Capital in this form—capital designed for reproduction—has 
 declined in value much more than fifty per cent, since the pas¬ 
 sage of the Resumption Act; goods, commodities, produced 
 and not consumed, have also undergone heavy decline, and all 
 capital so invested or so employed, has suffered loss, involving 
 thousands in bankruptcy and ruin. 
 
THE APPRECIATION OF MONEY. 
 
 25 
 
 And right here, in the relations of 
 
 LABOR AND CAPITAL, 
 
 this pernicious monetary legislation has its greatest, its most 
 terrible significance. When Adam Smith wrote his great 
 work, on the “ Wealth of Nations,” there was not a power- 
 loom nor a steam-engine in succesful operation in Great 
 Britain. Nails were still made by individuals working on their 
 own account in separate smith-shops. Cloth was woven in 
 hand looms in private homes; tools, implements, arms and 
 armor, were made in the same manner. Then each laborer, 
 to a large extent, exchanged his own productions for the pro¬ 
 ducts of other labor, and in a great measure it was done by 
 barter. 
 
 Now, production is chiefly carried on by machinery gath¬ 
 ered in great establishments—capital in heaps and labor in 
 masses. Everything is done by machinery, from the finest 
 fabric, light as the gossamer film, to the massive bars of iron 
 and steel rolled and twisted by the most powerful engines— 
 from the smallest toy to the steel gun of a hundred tons—all 
 are produced by the aid of machinery, and without machinery, 
 worked by the power of steam or water, production must 
 cease. 
 
 Four times the present population of England, working as 
 they worked in the days of Adam Smith, could not spin the 
 yarn and weave the cloth now spun and woven by machinery 
 unknown to the Father of Political Economy. 
 
 And the significant fact in all this is that this machinery 
 is as much an essential part of the laborer of to-day , as are the 
 fingers of his hands. The boy who tends a nail machine, when 
 that stops, cannot go to a shop of his own and go to making 
 nails in the old way, nor can the weaver go and weave cloth 
 they have not learned such trades. 
 
 Hence, if a thousand millions of capital in the country in 
 the form of tools and machinery, gathered, as is now the case,, 
 in these vast workshops, are forced into suspension, the hands 
 of tzvo or three millions of laborers are tied, and the aggregate of 
 things that go to supply the necessities and comforts of life, 
 and make up the sum total of national wealth, are cut short by 
 
26 
 
 THE APPRECIATION OF MONEY. 
 
 the loss of what they would produce. Thus it is that legisla¬ 
 tion which operates to raise the value of money, attacks the 
 very vital forces of society, lessens production, stops the crea¬ 
 tion of wealth, thwarts enterprise, leaves energy profitless, 
 forces labor into idleness, cuts off trade, and stagnates and 
 demoralizes the whole social organism. 
 
 The world owes no one a living, in the sense in which this 
 phrase is generally used; but has any class a right, has any 
 Government a moral right, I ask in all sincerity, to impose 
 conditions upon society that make it impossible for the laborer 
 to use his capital , which is his skill and labor , when upon its 
 use his very existence depends, and very likely the existence 
 of his wife and children? 
 
 The demoralization that follows enforced idleness, is an evil 
 that can not long be neglected. The criminal class are bred 
 from the idle class, and the loss to the nation from this source 
 —from the loss of labor and failure of self-maintenance—be¬ 
 sides other burdens which such a class impose upon society, 
 are becoming a matter of serious apprehension. All employers 
 know well that when a man forsakes labor as a means of liv¬ 
 ing, and learns to gain subsistence, however meagre, without 
 work, that he loses self-respect, is degraded, becomes worthless 
 as a laborer, and a drag upon society. What then is to be 
 done with the increasing army of tramps ? 
 
 Remove first the causes that have made such an army pos¬ 
 sible. Stop its increase. Restore to industry as many as 
 can be reclaimed. Scout the absurd notion that is gaining 
 acceptance that a “pauper class ” has already become a neces¬ 
 sity in this country. 
 
 A country occupying the fairest and richest side of the globe, 
 stretching through a whole temperate zone, with soil and cli¬ 
 mate adapted to every product; a country capable of sustain¬ 
 ing in comfort ten times the present population, with a neces¬ 
 sary idle pauper class as large as the whole population when 
 the independence of the nation was won a hundred years ago ! 
 For shame ! Over-production , and a tenth of the people at the 
 level of starvation ! 
 
 If, on an island separate from the rest of the world, there 
 was a society of a thousand people producing abundantly, 
 
THE APPRECIATION OF MONEY. 
 
 27 
 
 trading, and living in comfort, and some candidate for office, 
 like Judge West, should rise among them and persuade them 
 that if they produced less, their market would be better , and if, 
 accordingly, the next year they reduced, by each one working 
 only one tenth as much, their production to one-tenth their 
 former amount, with the expectation that with only one-tenth 
 as much produced the demand would be ten times as great; 
 what would they be likely to find out? Each one would have 
 one-tenth as much to put into the common pile, and each 
 could take one-tenth as much out, and no more, No “ Bureau 
 of Industry” could make more out of it. They might legis¬ 
 late that, notwithstanding their production was but one tenth 
 as much as formerly, nevertheless, each should be paid as 
 much as before; but if one-tenth should get as much 
 as before, nine-tenths would necessarily go without anything. 
 If one takes more, some one else must take less. On the con¬ 
 trary, suppose the next year, with this lesson before them, 
 they go to work with renewed energy, or suppose each one, 
 by some magic art—some new invention—increases his power 
 to produce ten-fold beyond what it had ever been be¬ 
 fore, and ten times more is produced than ever before: 
 what would be the result? Why, each one has ten times a 
 much to put into the common heap, and each ten times as 
 much to take out. That one-tenth, or even nine-tenths of so¬ 
 ciety can produce of everything that the whole can or will 
 consume, until every one has everything he desires, is impos¬ 
 sible. And the innate laziness of man can always be trusted 
 to stop producing when he has enough, without artificial 
 hinderances!* 
 
 *“It is clear, therefore, that an universally increased facility of production 
 can never be the cause of a permanent overloading of the market. Suppose that 
 the amount of capital and industry, engaged in every different employment in 
 this country, is adjusted according to the effectual demand, and that they are all 
 yielding the same net profit; if the productive powers of labor were universally 
 increased, the commodities produced would all preserve the same relation to 
 each other. Double or triple the quantity of one commodity would be given for 
 double or triple the quantity of every other commodity. There would be a gen¬ 
 eral augmentation of the wealth of the society; but there would be no excess of 
 commodities in the market; the increased equivalents on the one side being pre¬ 
 cisely balanced by the increased equivalents on the other. But if, while one class 
 
28 
 
 THE APPRECIATION OF MONEY. 
 
 So we may legislate increased pay for labor, and increased 
 profits to capital till doomsday, and it will do no good unless 
 we increase the fund out of which labor is paid, and capital de¬ 
 rives its profits. 
 
 If the gross annual earnings of the nation, that is, the aggre¬ 
 gate value of every thing produced, is but $3,000,000,000 after 
 interest on the public debt and the cost of maintaining the 
 Government have been deducted, that is all there is for the 
 wages of labor and the profits of capital, and to attempt to make 
 more of it by legislation is like the liberal-minded boy who 
 divided his apple into eight parts that he might give two pieces 
 to each of his four companions instead of one. 
 
 If we attempt to go beyond this we encroach upon previous 
 accumulations, and reduce national wealth as well as the very 
 capital that administers to production. 
 
 Security to capital, protection to labor, with money that no 
 government shall change by its fiat—that is all labor wants and 
 that is all capital has a right to ask. But just as long as idle 
 money increases in value and money required to move the 
 wheels of industry is subjected to loss, just so long must ma¬ 
 chinery rust and idleness fill the land; and if the present legis¬ 
 lation continues in force there will be, there must be, more idle 
 money next year than this, more idle machinery, more idle 
 men, as prices must go lower and labor be paid less. 
 
 Secretary Sherman concludes, that because money is unem¬ 
 ployed, there is too much of it, and that more contraction would 
 better our condition. And the press everywhere triumphantly 
 points to the large accumulation in banks and in the Treasury 
 as proof conclusive that money is over-abundant, and should 
 be got rid of. But is any other explanation of the accumula¬ 
 tion of money in idle hoards needed, than the fact that it is 
 profitable to hoard it and unprofitable to employ it ? 
 
 As certainly as an unlimited issue of greenbacks would raise 
 
 of producers were industrious, another class chose to be idle, there would un¬ 
 doubtedly be a temporary excess. It is clear, however, that this excess arises 
 entirely from the deficient production of the idle class.” 
 
 Again: “ It is the incapacity of furnishing equivalents for the products they 
 wish to obtain, that involves so many in want and wretchedness.”—J. R. Mc¬ 
 Culloch’s Political Economy. 
 
THE APPRECIATION OF MONEY. 
 
 2 9 
 
 prices and send money into circulation, so certianly does con¬ 
 traction lower prices and withdraw money from circulation. 
 And at this point contraction has a double effect; for money 
 withdrawn from use, while it so remains, is the same as money 
 not in existence. Hence the real contraction is, in effect, far 
 greater than the actual diminution of volume would indicate. 
 Money hoarded, by lessening the quantity of money in actual 
 use, reacts to still further depress prices. This principle is well 
 settled in political economy. 
 
 On this point of the accumulation of money in banks, to 
 show how history repeats itself, I will quote a few sentences 
 from Thomas Attwood, one of the most vigorous writers 
 on the question of resumption in England : “But, while masses 
 of lenders are thus forced into the markets of interest,* the 
 usual number of borrowers in those markets is decreased by 
 the very same contraction of the currency which increases the 
 number of lenders. For when the prices of property are so 
 reduced that they cease to be what is called ‘ remunerating,’ 
 when they cease to be sufficient to cover the reward of indus¬ 
 try, after paying the taxes and fixed charges which the law and 
 the habits of society, and a paper system of twenty-five years 
 duration have imposed, then all prudent and safe borrowers are 
 alarmed at such a state of things, and none are found in the 
 markets of interest, but some few who borrow with one hand 
 in order to pay debts with the other. 
 
 “ It is thus that the contraction of the currency determines 
 it in masses into the markets of interest at the same time that 
 it draws it up from the use of industry, and debilitates and ex¬ 
 hausts the vital functions upon which the existence of the com¬ 
 munity depends. 
 
 “ The very scarcity of money is thus brought to exhibit an 
 apparent redundancy.” 
 
 We may then deduce these two laws: 
 
 1. To appreciate money is to provide for its withdrawal from 
 circulation. 
 
 *The rate of interest is always lowest when money is rising in value and prop¬ 
 erty falling, for the reason that it is then hazardous to employ money, and both 
 safe and profitable to hoard it, and borrowers are unwilling to incur extra risks 
 and lenders require greater security. 
 
30 
 
 THE APPRECIATION OF MONEY. 
 
 2. Absolute barter is preferable to a medium of exchange that 
 is undergoing co?istant appreciation. 
 
 The key, then, to the explanation of the troubles and disor¬ 
 ders of the times is not over-consumption nor over-production, 
 nor want of consumption; it is the constant appreciation of the 
 value of money. This is the fountain of evil, the Upas tree 
 under which nothing thrives. 
 
 The wit of man has never devised an engine of wrong so 
 powerful, so covert, so all-pervading, so mischievous, so en¬ 
 snaring, AS A MONEY THAT IS UNDERGOING APPRECIATION IN 
 value. It overturns all established relations between property 
 and debt, violates the faith of contracts, and sweeps as with a 
 besom the garners of the poor for the benefit of the rich; it 
 stifles industries, stops the growth of national wealth, demor¬ 
 alizes and degrades labor, generates a pauper class, and fills a 
 country with want and misery. It is the one contrivance that 
 “fertilizes the rich man’s field with the sweat of the poor 
 man’s brow.” 
 
 “Credit,” said Daniel Webster, “is the vital air of modern 
 commerce. It has done more a thousand times to enrich na¬ 
 tions than all the mines of the world.” “ Credit,” says Macleod 
 “ has raised Scotland from the lowest state of barbarism up to 
 her present proud position in 150 years. Its solid results 
 have been her far-famed agriculture, the manufactories of Glas¬ 
 gow and Paisley, the unrivaled steamships of the Clyde, great 
 public works of all sorts, roads, bridges, and poor young men 
 converted into princely merchants.” 
 
 Enterprise in this country, as in every other growing and 
 prosperous land, is largely sustained by credit. Homes are 
 acquired, farms bought, improvements made, works carried 
 on, in a large measure, with the use of credit. A change of 
 fifty or a hundred per cent, in the value of money, and wreck 
 and ruin cover the land. Is nobody responsible? Has legis¬ 
 lation that demonetizes silver and decrees the destruction of 
 legal tender paper money nothing to do with it? Secretary 
 Sherman may ridicule the idea that the Government, or that 
 the Republican party, has anything to do with the distress that 
 burdens the country, but the truth nevertheless stands— it is 
 

 THE APPRECIATION OF MONEY. 3 1 
 
 THE DIRECT AND NECESSARY CONSEQUENCE OF THE ACTS OF 
 CONGRESS PASSED SINCE THE BEGINNING OF 1873. 
 
 As certainly as the filth and noisome atmosphere of London 
 bred the plague in the seventeenth century, so certainly does 
 the monetary legislation now in force produce the industrial 
 blight that hangs over this country. By one and the same 
 law value is added to the hoard of the miser, idle in his idle 
 hands, and taken from the tools of production in the hands of 
 labor; profits secured to idle hoards and denied to capital ap¬ 
 plied to production, denied to enterprise, denied to industry 
 That, and that alone, has diminished the powers of production, 
 and by narrowing the fields of labor has cut down the powers 
 of consumption. That, and that alone, has deadened the fires 
 in forge and furnace, and shut up our mines of coal and iron. 
 That, and that alone, has closed our workshops and left the 
 hammer and chisel to rust beside the anvil and lathe. That, 
 and that alone, has gathered money in idle heaps in money 
 markets, and consigned hundreds of millions of capital in the 
 most desirable form possible—tools and machinery for produc¬ 
 tion—to dilapidation and waste. That, and that alone, has 
 clogged the avenues of trade, and piled up abundance before 
 the haggard eyes of want, left empty trains on railways and 
 unladen ships upon the sea. That, and that alone, has forced 
 into idleness and driven to beggary, within the very fields of 
 earth’s bounteous harvest, multitudes whose labor, if employ¬ 
 ment were not made impossible, would many times pay the 
 annual interest on our national debt. And that, and that 
 alone, will sink the country in hopeless bankruptcy and end in 
 the disgrace of repudiation! Then creditor and creditor-na¬ 
 tions may learn, when it is too late, that it is not their interest 
 even, to drive the debtor to utter ruin. 
 
 Now what good has been gained, or what good is hoped 
 for? what offset to come for the wrongs and losses the country 
 has already sustained, and is destined still to undergo by such a 
 monetary policy? 
 
 A few common-place reasons are kept on hand by resump- 
 tionists in support of their policy, and in explanation of the 
 times,and handed about as though they were all-sufficient, and 
 ought to silence every doubter. 
 
32 
 
 THE APPRECIATION OF MONEY. 
 
 REFUNDING THE DEBT. 
 
 We are told the* rate of interest has been reduced on govern¬ 
 ment bonds! Nevertheless, if at the same time bonds are 
 changed from “coin” bonds to “gold” bonds, the transaction 
 may prove a loss rather than a gain. And I ask in all sincerity 
 why coin bonds can not be exchanged for new coin bonds with 
 as muclrsaving of interest as to change them for gold bonds ? 
 Will not they who have silver lend it at as low a rate as they 
 who have gold ? Interest for the use of greenbacks, to be re¬ 
 paid in greenbacks, is just as low as for gold to be repaid in 
 gold. Is it different with silver ? 
 
 The truth is, the country has been grossly deceived in this 
 matter of the funding of the public debt, and the sooner that 
 kind of metamorphosis is ended the better. 
 
 THE PUBLIC CREDIT HAS BEEN STRENGTHENED, 
 
 But does it count for nothing that private credit is destroyed : 
 that the commercial standing and influence of our people has 
 been lowered throughout the world? Is it possible that public 
 credit has demanded the change of the public debt, first from 
 a currency debt to a coin debt, then from a coin debt to a gold 
 debt?* Suppose an individual makes a loan in lawful money, 
 and to “strengthen” his credit, changes the obligation to coin, 
 then to gold. Would it not be said of him “a fool and his 
 money are soon parted ?” 
 
 Nor has honesty, plighted faith, or credit required of us, as 
 a nation, the concessions that have been made. On the other 
 hand, our business sagacity has been more than called in 
 question on this account. 
 
 A people prosperous in their trade, and with private credit 
 secure, will not lack public credit. But show me a coun¬ 
 try where private credit is wanting; where wealth is in few 
 hands and industries stagnant, and I will show you a Turkey, 
 a Spain, a Mexico, without faith or credit. 
 
 * Mr. Sherman did not entertain such views when he said in his place in the 
 Senate : “If the bondholder refuses to take the same kind of money with which 
 he bought the bonds, he is an extortioner and repudiator. * * * I say 
 
 that equity and justice are amply satisfied if we redeem these bonds at the end 
 of five years in the same kind of money, of the same intrinsic value it bore at the 
 time they were issued.” 
 
THE APPRECIATION OF MONEY. 
 
 33 
 
 The lack of confidence that will come first to shake public 
 credit will come, not because more than zvas promised is not 
 paid, but from distrust of ability to pay as promised. 
 
 Nbr has the “ strengthened” public credit so much to do 
 with the rate of interest as the great abundance of idle capital, 
 which comes from depressed business. The rate of interest 
 in the principal money markets of the world, much of the time 
 for the past two years, has been from one to three per cent. 
 
 BALANCE OF TRADE. 
 
 A favorable balance of trade is a desirable condition of 
 things. But to suppose, as most people seem to, that the one 
 hundred and sixty-six millions in our favor on last year’s trade, 
 as indicated by the books of the custom-houses, means one 
 hundred and sixty-six millions of a balance paid us in gold, 
 and that our country can go on indefinitely gathering gold in 
 that way is a pure delusion. We sell goods by buying goods, 
 and if we stop buying, our sales will diminish.* Balances to 
 be paid in the precious metals do not long set in one direction. 
 Moreover, an export trade may be gained by the loss of home 
 trade and home production, far more important. It is what a 
 country produces quite as much as what it exports that gives 
 prosperity and determines wealth. 
 
 An old pamphleteer has said “ That nation is comparatively 
 wealthiest that has the greatest number of free people enjoy¬ 
 ing the greatest amount of the conveniences and comforts of 
 life.” Beside, there is nothing more deceptive than this bal¬ 
 ance of trade doctrine. Suppose a sugar merchant in Cuba 
 ships to Baltimore 500 barrels of sugar, worth in Cuba $20 a 
 barrel, or $10,000, and it is so entered in our customs books. 
 But in Baltimore the merchant sells the sugar for $24 a barrel, 
 or $12,000, and with the money buys 2,000 barrels of flour at 
 $6 a barrel. This he exports to Cuba, and it is entered in the 
 customs books as $12,000. Now there is a balance in our 
 
 * The exportation of gold from any country to pay for goods bought in excess 
 of goods sold, by increasing commodities at the same time that gold decreases, 
 operates to depress prices in that country, and thereby to check importations. 
 But goods imported to other countries to pay debts held there, do not, of course, 
 have the same effect. 
 
34 
 
 THE APPRECIATION OF MONEY. 
 
 favor of $ 2 , 000 . But suppose Mr. Secretary calls for this bal¬ 
 ance. It is against Cuba, and in our favor. We should have 
 it. The merchant who made the transaction is hunted up. 
 “Why,” he says, “I have paid for the flour; I owe nothing.” 
 How much of this $166,000,000 of a balance are thus made up 
 in profits or losses or absorbed in the carrying trade, the Sec¬ 
 retary of the Treasury has no means of telling from customs 
 accounts. But it is pretty safe to say that three-fifths of it is 
 made up in that way. 
 
 But one thing we do know, and that is, that we have over a 
 hundred millions due abroad in gold as interest, which stands 
 on the ledgers of the world as a balance against ifs, each year 
 to be overcome in our trade, or we must export gold to make 
 it up; and, as Disraeli has aptly expressed it, “a debt due at 
 home is like an irritating flea-bite, but when due abroad, it is 
 an open bleeding wound.” 
 
 DEPRECIATED MONEY. 
 
 Another fallacy taught is that our “ depreciated ” money 
 cheats every one who takes it, and by keeping up prices 
 retards production and interferes with our export trade. 
 
 Suppose the volume of paper money were increased tenfold, 
 and the purchasing power of a paper dollar reduced to 10 per 
 cent, of its present value, would that change the relation 
 between an ounce of gold or silver and the quantity of any 
 thing either would exchange for ? 
 
 If an ounce of gold will buy twenty bushels of wheat, would 
 it not buy twenty bushels then all the same ? It would make 
 no more difference than it would with the quantity of a piece 
 of cloth whether it was measured with a yard-stick or a foot- 
 rule.* Money that depreciates in the hands of the holder is a tax, 
 as Jefferson said; but to say as Mr. Sherman does, that our 
 paper money robs the possessor, is to teach falsely. Nor is it 
 true that a money depreciated, or that is undergoing depreci¬ 
 ation, retards production or lessens business. Hume says : 
 
 *The case is different with a credit currency convertible into gold. Then an 
 increase of volume carries gold along, until adverse exchanges take the exporta¬ 
 ble part—the gold—away, when contractions of the paper, with falling prices 
 set in, ending generally in panic and suspension. 
 
THE APPRECIATION OF MONEY. 
 
 35 
 
 “A nation whose money decreases, is actually at that time 
 weaker and more miserable than another nation which pos¬ 
 sesses no more money, but is on the increasing hand.” 
 
 It is true, enough, that money undergoing appreciation 
 cheats, but not the holder ; it cheats the one who hasn’t it, and, 
 unfortunately, that, as has been shown, is likely to be the pro¬ 
 ducer and laborer. 
 
 “must come to hard pan.” 
 
 They tell us that in 1861 we left a given level, and to that 
 level we must return, and, returning, we will find it just where 
 we left it—and that is “hard pan.” This is absurd, and is 
 based on the idea that gold maintains everywhere, and at all 
 times a dead sea-level, or, as Mr. Sherman said in his Mans¬ 
 field speech two years ago, “fixed as the sun.” According to 
 this notion, silver may be demonetized, all other kinds of 
 money be given up, but still the value of gold will not change. 
 
 That old level we left in 1861 does not exist now, and will 
 never be found again. The “rock bottom” that we hear so much 
 talked about, and are trying to reach, is a will-o’-the-wisp that 
 moves as we approach it. The demonetization of silver alone 
 has sunk that old bottom fathoms out of sight. And as the 
 work of substituting gold for silver and for paper in this and 
 European countries goes on, it will sink nations in bankruptcy 
 with it. 
 
 THE PANIC OF 1873. 
 
 When the vast structure of credit which had contributed so 
 largely to the inflation of the times, fell in the crash of 1873, 
 and when, more than ever before, the volume of stable money 
 needed to be kept full, we reversed the process approved by 
 experience and enlightened statesmanship,* and began, by the 
 most wholesale measures of demonetization and resumption, to 
 cut down the volume of lawful money, and to take away the 
 last foundation of credit. Having done this we still attribute 
 the bankruptcies and the continual shrinkage in everything (but 
 debts and taxes) to the panic! It would be as rational for one 
 
 *See Patterson’s “Economy of Capital,” “How Panics are Stopped,” pages 
 99-105 ; also, McLeod’s “ Theory and Practice of Banking,” Vol. ii., chapters 
 9 and 10. 
 
3^ 
 
 THE APPRECIATION OF MONEY. 
 
 to remove the foundations of his house and then attribute its 
 fall to the excessive weight of the building. 
 
 The panic itself was more a consequence than a cause, and 
 any necessary effect flowing from it had mainly passed away 
 when resumption measures were begun in January, 1875. The 
 times are due, not to the panic, but to the monetary policy in¬ 
 augurated before, and renewed and enforced by adverse legis¬ 
 lation since the beginning of 1873. 
 
 CONFIDENCE. 
 
 Another fallacy which comes up on every occasion, and is 
 offered by shallow reasoners as a sufficient explanation of the 
 times, is “want of confidence.” But, pray, how can there be 
 confidence? Confidence is the child of success. But when 
 property and commodities are constantly declining, how is 
 success in ordinary fields of production and in ordinary chan¬ 
 nels of trade to be expected? A ship may sail some points 
 toward the wind, but never hard against it. Confidence will 
 come when business prosperity comes, not before. 
 
 TIMES GETTING BETTER. 
 
 This is what we have been told for four years, and always 
 with double assurances just before elections. If you will 
 look over a file of New York papers'you will find in nearly every 
 number since the passage of the Resumption Act accumulative 
 evidence that business was reviving. 
 
 Our most bountiful harvest undoubtedly will ameliorate the 
 hard conditions, and help to ward off disasters that must 
 otherwise come upon many. But it is but a ripple that moves 
 a little the surface-water against the underflow that is carrying, 
 and must continue to carry us down just as long as the appre¬ 
 ciation of money goes on, whether it be two years or ten. 
 Permanent improvement in production and business, with 
 abiding confidence, is impossible while contraction of money 
 goes on. 
 
 PREMIUM ON GOLD, AND RESUMPTION. 
 
 But the gold advocates point to the low premium on gold 
 now rating in New York, and say “ it is but a step more; hold 
 
THE APPRECIATION OF MONEY. 
 
 37 
 
 firmly and we shall soon be there.”* And they assume that 
 when once the premium on gold in New York disappears, re¬ 
 sumption is attained and the struggle is over. But suppose 
 there were no premium at all, would gold pour in to displace 
 greenbacks ? Two bodies of water may stand on a level, but 
 the one will not run over into the other till their levels are 
 changed. So two currencies may be at par with each other, 
 but to take up one with the other is a different problem. If 
 there were no premium on gold to-day its use could not be 
 extended to take the place of greenbacks, and to become the 
 only full tender money of 45,000,000 of people, without raising 
 its value, as compared with other things, by from ten to twenty 
 per cent., by that act alone. 
 
 The premium on gold in England was but four per cent, 
 when resumption measures were begun, and had varied from 
 6 % to y per cent, between 1816 and 1819, when the resump¬ 
 tion act was passed. Nevertheles, prices fell from forty-five 
 to fifty per cent, before paper and gold were brought to a level. 
 Nor did England propose the extinction of her paper 
 money,as contemplated in our resumption act. Attwood says: 
 “The reduction of bank notes was one-fourth or one-fifth, and 
 the fall in prices has approached to nearly one-half.” 
 
 Probably we do not have, on the average, five years in a 
 century so favorable for our export trade and foreign ex¬ 
 changes as this present year. With the most abundant har¬ 
 vest ever known, there exists a great war in Europe. These 
 influences may, for a time, reduce the premium on gold to the 
 smallest fraction. Will that be the end ? 
 
 According to official statements for September there were 
 in round numbers $359,000,000 of greenbacks and $317,000,000 
 of national bank notes in circulation or on deposit. At the 
 same time there were $106,000,000 in gold in the treasury. Of 
 this sum $38,000,000 are held against gold certificates. Part 
 of the remainder is due as interest on bonds called in, and 
 part belongs to other funds, leaving a sum not specified as 
 
 * At the date of the passage of the “Resumption Act,” the premium on gold 
 was It h as varied between 17 and 2^ since the Resumption Act was 
 
 passed. 
 
38 
 
 THE APPRECIATION OF MONEY. 
 
 really applicable to purposes of redemption. It would be a 
 satisfaction to know just how large this sum is from month to 
 month. But if we assume it to be fifty millions*, the elements 
 in the problem would then be : $50,000,000 of gold applicable 
 to purposes of redemption, $359,000,000 of greenbacks to be 
 redeemed, and $317,000,000 of national bank notes to be 
 maintained at a level of convertibility, with fifteen months 
 left in which to prepare for final resumption. 
 
 Greenbacks and bank notes must be cut down, on the one 
 hand, and more gold bought and stored up on the other. The 
 greenback volume is to be reduced to $300,000,000 before 
 January, ’79. No one denies the necessity of this step if re¬ 
 sumption is to take place then. The volume of National 
 Bank Currency will also be reduced. Suppose that falls also to 
 $300,000,000; the note currency will then stand $600,000,000. 
 
 On the other hand, how much more gold must be stored up 
 to make resumption practicable with $600,000,000 of paper 
 afloat ? 
 
 The country is full of financiers repeating the story of the 
 Frenchman, that if he can have his money then he don’t want 
 it. But experience teaches differently. 
 
 First, then, how much gold must National Banks have be¬ 
 fore they can safely resume specie payments with $300,000,000 
 of notes out? Scarcely less than $100,000,000. They have, 
 perhaps $25,000,000. They must then procure $75,000,000 
 more. How will they procure it ? By presenting green¬ 
 backs at the Treasury; either this or retire their circula¬ 
 tion. If $75,000,000, of greenbacks are thus taken to the 
 Treasury for gold by National Banks, and the gold obtained 
 therefor, placed in their vaults, the currency is contracted by 
 this amount, since the greenbacks so paid must be canceled.f 
 
 * The Secretary, in reply to a. resolution of the House of Representatives, 
 makes this sum in November, $57,436,071. 
 
 •j- Secretary Sherman, in his recent Mansfield speech, professes to be opposed to 
 the withdrawal of the greenback currency. But on his theory that greenback 
 notes are mere debts, that on and after January, 1879, are to be redeemed—paid 
 _why, that is the end of them ; and, according to his interpretation of the decis¬ 
 ion of the Supreme Court, greenbacks de novo cannot be issued. And this was 
 his view in 1868, when he said in the Senate : “ Notes that have been taken in 
 and cancelled can not be reissued. I know of no law under which a United 
 
THE APPRECIATION OF MONEY. 
 
 39 
 
 Second, they who have duties to pay, if not allowed to pay 
 in greenbacks, will present greenbacks at one door of the 
 Treasury for gold to be paid in at the other. What amount 
 of gold will be demanded in this way for duties in a year? 
 Less than $50,000,000? Probably more rather than less. 
 So much more contraction then, and so much more gold to be 
 provided beforehand. 
 
 Third, they who travel abroad require gold, and they will get 
 it by presenting notes at some bank or greenbacks at the Treas¬ 
 ury. Finally, many people who hold greenbacks will prefer 
 gold. They will demand it, if for no other reason, then for the 
 very good one, that, as greenbacks presented at the Treasury 
 are canceled, and thereby the volume of money reduced, the 
 value of money, as compared with other things, will continue 
 to rise, and, therefore, money will still be the most profitable 
 thing to hold, and no other money would be as safe to hoard 
 as gold. 
 
 And whoever expects to see redemption, with the removal of 
 greenbacks from our currency, accomplished on the mere 
 showing of a pile of gold, will find himself, I think, mistaken if 
 the experiment is ever tried. 
 
 The Government must provide, then, to answer the demands 
 
 of National Banks, say. $75,000,000 
 
 For duties on imports (or for interest on bonds if 
 
 greenbacks are received for duties). 50,000,000 
 
 For general redemption. 75,000,000 
 
 Total, * * $200,000,000 
 
 or $150,000,000 more than it now possesses applicable to these 
 purposes. Or suppose its entire deposit of gold maybe counted 
 on, and only $100,000,000 more is needed. 
 
 There is $100,000,000 of gold to be bought, to be hoarded up 
 before January 1st, 1879,* and $75,000,000 of paper money to 
 
 States note once cancelled can be reissued or anything put in its place.” (See 
 Congressional Globe.') 
 
 *The Secretary of the Treasury seemed to think if he could sell 4 per cent, 
 bonds to be paid for in matured 6 per cent, bonds now payable, that he could sell 
 them as well for gold although he should hoard the gold. He has found the two 
 operations very different. Four per cent, bonds that would doubtless have re¬ 
 mained at par of exchange for six per cent bonds called in, fell below par of 
 gold as soon as the gold began to be taken from circulation to be hoarded. 
 
40 
 
 THE APPRECIATION OF MONEY. 
 
 be destroyed ! Will these operations have no effect on prices or 
 business ? The gold yet required, even on the lowest estimate, 
 is more than half as much as is held by all the banks of Eng¬ 
 land, Ireland and Scotland. 
 
 With no premium on gold, then, can we buy this amount 
 without affecting the gold markets of the world ? But a few 
 years ago the direct transfer of only $15,500,000 on Alabama 
 claims would not be allowed; nevertheless, people seem to 
 expect a stream of gold to pour in upon the country as soon 
 as the premium falls to zero. 
 
 Another element, too, in the problem, is how fast and how 
 eagerly will other countries—Italy, Austria, Spain, Russia— 
 bid for gold, not only to take the place of silver, but to substi¬ 
 tute for their inconvertible paper, or, as we say, resume specie 
 payment. 
 
 But passing this crisis and taking it for granted that resump¬ 
 tion will be actually accomplished in 1879, can it be. main¬ 
 tained ? 
 
 The year 1879, or the next year, may see the conditions now 
 existing reversed, and instead of seventy-five millions of bushels 
 of wheat above an average crop, fifty millions belozv an average ; 
 and instead of a war, peace in Europe, with good harvests. As 
 many such years visit this country in a century, one is as likely 
 to come in ’79 or ’80 as any other time. 
 
 If there are in 1879 $600,000,000 of paper in circulation, 
 based upon, say $200,000,000 of gold, and maintained for a time 
 by means of this volume of gold at a level of convertibility, and 
 an unfavorable balance of trade, or a less favorable balance 
 than exists now, should make it necessary to export gold for 
 even a part of the hundred millions of interest due abroad, 
 what consequences would follow? 
 
 If $50,000,000 of gold are exported to pay interest, then 
 $150,000,000 of the paper must be withdrawn in order to 
 secure the same relation of coin to paper and maintain con¬ 
 vertibility. Fifty millions of gold exported and a contraction 
 in the currency of two hundred millions! Even with no debt 
 abroad, under a mixed currency, and with the paper part ex¬ 
 tended to no more than three times the coin, in unprospcrous 
 
THE APPRECIATION OF MONEY. 
 
 41 
 
 years, producing adverse exchanges, the coin has gone abroad, 
 periodically involving sudden contraction, panic and bank¬ 
 ruptcy. With our greenback currency we are fortified in large 
 measure against such exigencies. 
 
 If the scale that gauges transactions and measures the prop¬ 
 erty of the country is thus changed from seven hundred and 
 fifty millions of units to six hundred, or tO ( five hundred, or 
 possibly to four hundred millions, what undertaking, what 
 company in whose operations credit enters at all, can endure 
 the revolution that must take place? Savings banks, insur¬ 
 ance companies and like establishments, are the great debtor 
 institutions of the country. They must invest their funds in 
 order to pay interest and live. If such investments have been 
 made on securities ordinarily counted the best—real estate, 
 improvement funds and the like—what becomes of them when 
 the new scale is applied? What railway company can long 
 bear the burden of debts in such manner increased, when, by 
 the same operation, business is diminished by lessened produc¬ 
 tion ? 
 
 But what other country would think of maintaining even 
 $400,000,000 of paper on $200,000,000 of coin ? Heretofore 
 government bonds, railway and other securities have gone 
 abroad to support exchanges. That is, we have been borrow¬ 
 ing money with which to pay interest. In future, we must 
 pay with our products or with the precious metals. Only mad¬ 
 ness—madness compounded of dishonesty and ignorance,— 
 could impel the nation forward to this gulf of our own digging. 
 
 RESUMPTION VS. CONVERTIBILITY. 
 
 Are we never then, it may be asked, to have our greenback 
 money brought to a level, or made exchangeable with, or con¬ 
 vertible into, coin? O, yes; but convertibility is a very differ¬ 
 ent thing from the destruction of one money and the substitu¬ 
 tion of another. Resumption, if by that is meant to bring all 
 the money of the country to a common level, so that one kind 
 is convertible at the option of the holder into another, is most 
 desirable. But this word is not ordinarily used in this sense. 
 
 When a bank, which has notes outstanding payable on pre¬ 
 sentation, and which circulate solely on the faith that com can 
 
42 
 
 THE APPRECIATION OF MONEY. 
 
 be had for them on demand , has been obliged to stop payment, 
 and then begins to take up its notes again, it is said to have 
 resumed specie payments. 
 
 But, Government is not a bank, and greenbacks are a good 
 deal more than bank notes that circulate on private credit, and 
 the Resumption Act ought rather to be called the Redemption 
 Act , because, under it, on the theory that greenbacks are due 
 bills, when redeemed they are paid and that is the end of them. 
 
 Our money status in the beginning of 1873, was this : Green¬ 
 backs constituted the entire volume of the legal-tender money 
 of the nation, in actual circulation, except in parts of the Pacific 
 slope. But with it existed the right of the people to acquire 
 any portion of the precious metals in existence, either from 
 the common stock in the hands of man, or from the mines, 
 that might be wanted, and by having the stamp of the Gov¬ 
 ernment certifying its weight and fineness put upon it, send it 
 out as money. This right existed precisely the same as though, 
 instead of greenbacks, we were using coin and required more 
 coin. 
 
 And, had this status been left undisturbed, greenbacks, 
 months ago, would probably have been interconvertible with 
 coin, and we would have been at a specie level. In fact, it 
 may pretty safely be presumed that the level of convertibility 
 between greenbacks and coin of both metals has been actually 
 passed. 
 
 But by the silver acts of. 1873-4, the people were barred 
 from the ancient and constitutional right of appropriating 
 silver to use as money, and limited to gold alone, which, being 
 thus enhanced by the preeminence given to it of being sole 
 money, has so risen in value that all former relations have 
 been changed, and the acquirement of gold for purposes of 
 money is made impossible, except at a sacrifice that would be 
 ruinous to the country. 
 
 The act thus debarring our right to the use of silver for 
 money, and thus changing the metallic standard, I repeat, is 
 the most stupendous fraud ever perpetrated upon a people, and 
 more responsible for it than any other man is the present Sec¬ 
 retary of the Treasury, then Senator from Ohio. 
 
THE APPRECIATION OF MONEY. 
 
 43 
 
 Shades of Hamilton and Gallatin! what statesmen have 
 risen in these times to occupy your worthy seats ! 
 
 Restore the constitutional right of the people to appropriate 
 silver to its ancient use as money,* and make greenbacks of 
 equal tender with coin, as Bank of England notes are, and we 
 will very soon be at a specie level. 
 
 Treat the present greenback money as if it were so much 
 coin— coinize it. Keep the fires of the Treasury away from 
 it, and if more money is wanted, let it be acquired from the 
 existing stock of precious metals, or be dug from the mines— 
 that is, let the people convert it into coin as they have need to. 
 Let greenbacks be received for all dues and paid out again 
 the same as coin. Then if fifty millions of coin has to be 
 sent abroad, we will still have our greenback money undi¬ 
 minished. 
 
 And whenever the use of greenbacks as compared with the 
 quantity of this money , is as great as the use of gold and silver as 
 compared with the quantity of these metals , greenbacks and coin 
 are on a level and interconvertible. f This is the law of con¬ 
 vertibility, and whatever causes tend to equalize the use of 
 paper and coin, tend to secure equality of value and convert¬ 
 ibility. 
 
 Then dollar by dollar, if coin were preferred for special use 
 to paper, the one would take the place of the other, and dollar 
 by dollar coin could be changed again for paper, and this 
 everlasting appreciation in the value of money and fall in prices 
 would cease ; business, confident of success, would start up, 
 and the conditions of confidence being restored, confidence 
 would come back; stability in prices would give to industry a 
 
 *The fear is often expressed that the remonetization of silver will drive gold 
 out of the country. In the first place there is no gold in circulation to drive 
 out; and next, it is of much more importance that both metals be money, than 
 that both circulate in the same country. When both metals are alike money it 
 is the total quantity of both in the world that governs prices, and except for their 
 convenience, it does not matter whether both circulate in every country, or one 
 metal in one country and the other in another—both make up the total volume 
 of money. From 1822 to 1833, gold was at a premium of from 3 to 6 per cent., 
 and silver, at that time, constituted the actual metallic currency of the United 
 States. 
 
 f It is in accordance with this law that greenbacks are now rated above silver. 
 
44 
 
 THE APPRECIATION OF MONEY. 
 
 sure footing, and bring back life to the nation. But, says the 
 public creditor, that would be inflation. It would be inflation 
 in the same sense, and in no other, that it woidd be, if having a 
 currency of coin, more coin, in the course of trade , should be 
 acquired. 
 
 Should the government, however, buy with credit, that is 
 with its bonds, silver, and pay it out in addition to our paper 
 money, there might be temporarily the effect of inflation. But 
 government should have nothing to do with buying silver; 
 and left to natural laws, there would be neither inflation nor 
 contraction. 
 
 England, after a desperate struggle, and after a quarter of a 
 century of suspension of specie payments, restored convertibil¬ 
 ity to Bank of England notes, but she never sought to get 
 rid of the notes themselves, but on the contrary made them 
 legal tender; while we, forgetting all the lessons of the past, 
 suppose we can destroy utterly the money now in the coun¬ 
 try, and with all ease, buy gold to take its place. 
 
 The warning of Mr. Huskinson has been lost on us: “If,” 
 said he in Parliament, “we are unable to rescue many of the 
 victims from the ruin which depreciation guaranteed by law 
 has brought on them, at least let it be a warning never to be 
 forgotten, against any future tampering with the standard 
 value of the currency.” 
 
 In his speech in Parliament supporting his bill of 1844, Sir 
 Robert Peel alluded to the Resumption Act of 1819, intro¬ 
 duced by himself, in these significant words, “ I am free to say 
 that the Houses might, at that time, have taken into consider¬ 
 ation the consequences arising out of the alteratio 7 i of the value 
 of money, but they did not do it.* 
 
 Mr. Matthias Attwood, in Parliament, stigmatized the act “as 
 a measure effecting more extensive wrongs, fraud, and iniquity 
 
 *Mr. Doubleday, in commenting on this remarkable passage, asks, “But 
 why, Sir Robert Peel, why did they not do it ? They did not do it, because 
 they, understanding nothing themselves of the question, and pinning their faith 
 upon the sleeves of two or three oracles not more infallible than themselves, were 
 told by yourself, and more especially by the late Mr. Ricardo, that the whole 
 difference involved was only a matter of four per cent.” 
 
THE APPRECIATION OF MONEY. 45 
 
 than any measure that has ever been before imposed by its 
 government on any people. 
 
 “Our hand was placed upon a spring, one of the most pow¬ 
 erful of all those that move in the complicated machinery of 
 civilized society, but we were ignorant of its potency of char- 
 a cter ^ ^ ^ ^ ^ ^ ^ 
 
 “ These measures are laws by which we have enacted that an 
 augmentation should be made to every debt which one man 
 owes to another, and to that which the nation owes to the 
 public creditor. For every £60 that we find owing, we have 
 enacted by law that ^"ioo shall be paid.” 
 
 SILVER REGULATED IN VALUE BY COINAGE. 
 
 The present Secretary of the Treasury, while Chairman of 
 the Senate Finance Committee, proposed to restore the “ old 
 silver dollar,” to be coined in limited amount and to be legal 
 tender to the amount of $20. And in their Cleveland plat- 
 . form the Republicans of Ohio, propose to have gold and silver 
 as money, “except where otherwise specially provided by law” 
 (which probably means interest on bonds), “with coinage and 
 valuation so regulated that our people shall not be placed at a 
 disadvantage in our trade with foreign nations.” Now, what 
 that really means I defy the one who drew it to tell 
 
 But if it means anything it means that the value of silver as 
 money shall be determined by the quantity coined , which is 
 substantially Mr. Sherman’s proposition in the Senate. Mr- 
 Sherman himself came all the way to Ohio to explain to the 
 people what the government proposed to do, but on the vital 
 question of restoring silver he deigned not a word. The 
 silence is ominous. 
 
 From the earliest use of gold and silver for money till these 
 recent acts of modern creditor-nations, aped by the United 
 States, the metal silver, all there was in the world, was poten¬ 
 tially money; an ounce uncoined was worth as much as an 
 ounce coined. Like gold, its value as money was its value for 
 any other use, and its value for any other use was its value 
 as money, and that value was governed, like that of everything 
 else, by quantity and use. 
 
 Nature, as it were, issued it, and as long as this principle was 
 
46 
 
 THE APPRECIATION OF MONEY. 
 
 left undisturbed, the value of the precious metals as money 
 was beyond the reach of legislators and governments. 
 
 But if this principle, as expounded by Locke and Newton, is 
 abandoned, and silver is to have one value as money and 
 another as a commodity, what is the gain of making money of 
 silver ? Why not use bronze or gutta-percha ? Can not the 
 number of pieces be limited, and the value regulated, in the one 
 case as well as in the other ? But we are told that the silver 
 of which the pieces of money are to be made has value other 
 than its use as money. Granted, but so have iron, copper, 
 bronze and paper; the difference is only in degree, and never¬ 
 theless, if the principle that all silver has the right to be money 
 is abandoned, there is no way left of regulating the value of 
 silver coins but by limiting the number of pieces, which can 
 as well be done if made of paper as if made of silver. You 
 have only silver greenbacks in the end, not convertible into 
 gold. The Secretary of the Treasury, or the Director of the 
 Mint, or some one else, must sit upon the safety-valve, and tell 
 the people when the pressure is up and when it is down—when 
 more money is needed and when there is too much ! 
 
 The whole proposition amounts to this, and nothing more. 
 If silver, without free coinage, is put out to take the place of 
 paper, and made a limited tender, its value must be regulated 
 precisely in the same way that paper money is regulated, and 
 the result will be a money made from a costly commodity 
 instead of a cheap and convenient one, and with no gain what¬ 
 ever as money . There is no ground of advantage for metallic 
 money over paper money, unless it is left absolutely to self¬ 
 regulation ; and it is amazing that a proposition of such a nature 
 should emanate from a Finance Minister, and be adopted as a 
 governing principle in the platform of a party which has, as 
 General Garfield boasts it has, “put its best thoughts in its 
 platform,” two hundred years after Locke’s letters to Lord 
 Somers on the value of money. 
 
 A proposition to regulate the value of silver “so our people 
 shall not be placed at a disadvantage in our trade with foreign 
 nations,” would have sounded queer enough to old John Locke, 
 who says that “ money differs from uncoined silver only in this, 
 
THE APPRECIATION OF MONEY. 
 
 47 
 
 that the quantity of silver in each piece of money is ascer¬ 
 tained by the stamp it bears, which is set there to be a public 
 voucher for its weight and fineness; 5 ’ and it must sound queer 
 to every student of political economy. How is the govern¬ 
 ment’s certificate of the weight and fineness of a piece of silver 
 going to disturb trade so disastrously as to place us at a disad¬ 
 vantage with other nations ? 
 
 Won’t an ounce of silver still be equal to an ounce of silver? 
 Is the shape the piece is in, when it costs nothing to give it the 
 shape of coin, going to change its value ? This is absurd. To 
 the extent that remonetization extends the use of silver, to 
 that extent it tends to increase its value the world over; but 
 coining it, when free coinage exists, does not alter its relation 
 to trade. 
 
 Mr. Garfield seems to have been impressed for a long time 
 with some weighty notion that silver is a very dangerous 
 thing to permit people to trade in. He seems to view it much 
 as our Teutonic friends across the water do the potato-bug! 
 
 As an illustration of the understanding that seemed to pre¬ 
 vail during the last session of Congress, and prevails even now 
 on the question of free coinage, I quote from Gen. Garfield’s 
 recent debate with Mr. Pendleton : “ When silver had dropped 
 from 102 cents on the dollar down to 71 cents; when a man 
 in our coinage, which had been adopted, could have taken 
 $71,000 of silver metal to the mint and had it coined into 
 $100,000,” and added, “that it did not seem to him to be 
 quite the thing that a bullion-holder or a producer of silver 
 should be allowed to make $30,000 clear on every $100,000,” 
 and to emphasize his position, he went on: “I was opposed 
 to that and am still opposed to such an adjustment, allowing 
 such a thing to be done.” 
 
 When the right exists, for everybody who has silver metal to 
 have it stamped at the mint, will anybody give more for it after 
 coinage than before? If a given quantity of silver will exchange 
 for a given weight of gold, say for 284 Troy pounds, or $71,000 
 will any one then give 400 pounds of gold, or $100,000, for 
 the same zveight of silver coined, when he could take the silver 
 to the mint himself, if he desired, and get it made into coins ? 
 
THE APPRECIATION OF MONEY. 
 
 48 
 
 Imagine an English bullion dealer who would give but $71,000 
 worth of gold for a given weight of silver metal, rushing forth 
 to give $100,000 after it had been put through our mint! 
 
 Or if a pound of silver uncoined would exchange for fifteen 
 bushels of wheat, would it exchange for any more in the form 
 of coins, when (with free coinage) the one exchanging wheat 
 for silver could take the silver to the mint and have it coined 
 for himself! 
 
 According to General Garfield:— 
 
 $71,000 worth of silver (measured in gold) 
 
 + the government stamp - - =$100,000 in gold. 
 
 Therefore, the value of the stamps on 
 
 $71,000 worth of silver metal - = $29,000. 
 
 By parity of reasoning:— 
 
 $1,000 worth of paper + the government stamp =$100,000. 
 Value of the stamp on paper = 99,000. 
 
 How foolish it is for our government to take silver to put its 
 stamp on, when the stamp counts for so much more on paper! 
 
 With free coinage, the government has nothing to do with 
 the purchasing power of the metal silver, or the metal gold, 
 either before or after coinage. It names 23.22 grains of gold, 
 and 371^ g ra i ns of silver, when stamped as prescribed by law, 
 a dollar , but what either will buy no government can prescribe. 
 Nor can any one government alone prescribe the ratio at 
 which the two metals will circulate together—not if it should 
 appoint a commission to regulate it at 3 o’clock every afternoon. 
 If by remonetizing silver its use is thereby extended, its value 
 throughout the world, as before stated, would be increased. But 
 that the mere stamping of silver at the mints (with free coinage 
 existing) will change its value, is such an absurdity that one 
 can only wonder that such a notion could prevail at all. 
 
 The case is, of course, changed if the government is going 
 into the market to buy silver to make money of, and then, by 
 limiting the coinage, regulate its value as money. 
 
 The proposition that the government shall buy metal, as it 
 buys paper pulp, and make money out of it, letting the 
 people have what the Secretary of the Treasury may think 
 best, or what some banker in Wall street or Lombard street 
 may advise, is the knave’s device to blarney demagogue states- 
 
THE APPRECIATION OF MONEY. 49 
 
 men and deceive the people, but is too absurd to gain general 
 acceptance.* 
 
 Equally absurd is General Garfield’s high-sounding nonsense 
 about flooding the country with silver on top of all other money. 
 He says: “You ask for the largest possible issue of silver coin; 
 not for the purpose of resumption; not to take up any paper 
 that they want to redeem if presented, but to pour out upon 
 the country a limitless volume of silver coin on top of all the 
 paper in circulation.” 
 
 Suppose we were using $360,000,000 of coins now in this 
 country instead of greenbacks, and the people; in the course 
 of trade, should acquire more silver; or should dig it from the 
 mines and take it to the mints to be coined; would that not be 
 “flooding the country” with more money,just as much as it 
 would to restore silver metal to its monetary power now ? There 
 would be no more inflation in the one case than in the other; 
 in fact, no inflation at all; but simply the establishment of the 
 natural level between our currency and the currency of the 
 world. 
 
 The question of the ratio between silver and gold is a matter 
 to be determined by treaty with other nations. It is only 
 necessary for a preponderance of nations to adopt a common 
 ratio between silver and gold to keep always the two metals 
 of the same relative value.f 
 
 GREENBACKS-SHALL THEY BE RETAINED OR DESTROYED ? 
 
 This is a vital question. Upon it hang the gravest conse¬ 
 quences. 
 
 If greenbacks are mere debt that can be paid as other debts 
 are, without disturbing prices and business, it were foolish to 
 contend against their payment and cancellation; but if they 
 
 *The idea that the producer, or bullion dealer, if allowed to take silver to the 
 mint and have it coined, will make the difference between the gold value of his 
 silver before it is coined and its par value as money when coined, or that gov¬ 
 ernment by buying the bullion on its own account can make profit in any other 
 sense than when it issues legal tender paper, is so absurd that one can only stand 
 amazed that members of Congress, Cabinet Ministers, and “ grave Senators,” 
 should be deluded by it, as indicated by discussions now going on. 
 
 f “Between England with gold valuation, France with gold and silver valua¬ 
 tion, Germany with silver valuation; both metals were upheld for the purposes 
 of legal tender money .”—Report on Depreciation of Silver , 1876. 
 
50 
 
 THE APPRECIATION OF MONEY. 
 
 are money, having the full force and effect of , coin, then they 
 must be dealt with as coin would be, or the direst conse¬ 
 quences must follow. Are greenbacks, then, money or not? 
 
 Any opinion or conclusion on this point at variance with 
 the settled principles of monetary science can not long stand. 
 It is on these principles, then, that we must rest our conclu¬ 
 sions. 
 
 We must take no position, advance no theories, to which we 
 cannot invite the investigation of science, and defy the criti¬ 
 cisms of our opponents. 
 
 The theory upon which the whole financial legislation since 
 1867 has been based, is that greenbacks are mere certificates 
 of indebtedness, or “ due bills,” as Senator Morton called them, 
 which from the faith of the people in the Government that they 
 would be paid, passed as currency. Secretary Sherman in his 
 recent speech at Mansfield, consistent with this theory, most 
 broadly asserts that all holders of greenback notes are right¬ 
 fully entitled to interest on them as bills unpaid. He says : 
 “ What right have we as a nation, or has any bank or any in¬ 
 dividual, to force into circulation as money its note, upon which 
 it pays no interest? Why ought not any one who issues a 
 promise to pay on demand be made to pay it on demand, or 
 pay interest on it?” That is, it is not enough that greenbacks 
 have been appreciated in value a hundred per cent., the holder 
 should have interest besides ! 
 
 This is at once the most astounding and, at the same time, 
 the most contracted view I have ever seen expressed. But, 
 nevertheless, inconsistent as it is, it lies at the root of all our 
 monetary legislation, and has already cost the nation more in 
 loss of production than the war debt, and the people more 
 in misery, if possible, than the war itself. 
 
 Musgrave well says: “The teachers of no science have so 
 much human misery to answer for, or have assisted at so much 
 fraud, as the doctors of political economy.”* And especially is 
 
 * See the article on Resumption in the North American Review for November 
 and December, by David A. Wells, as an illustration both of this maxim and of 
 the narrow straits into which logic may be forced in defence of an erroneous 
 principle. Greenbacks are not mere debt; they are money, and the possessor of 
 them derives the same use and benefit from them that he would from coin, and 
 
THE APPRECIATION OF MONEY. 5 I 
 
 this true when these doctors, like Mr. Sherman, officially guide 
 the action of Government. 
 
 Suppose the United States owed $360,000,000, for which its 
 certificates of indebtedness, or “due bills,” were out, but that 
 these evidences ofMebtwere outside and wholly independent of 
 the money of the country. The payment of so much debt in 
 that case, like the payment of bonds, would be a question of so 
 much revenue to be derived from taxation in some form. Its 
 payment would not change the level of prices, because it would 
 not change the relation of money to other things, nor the rela¬ 
 tion of debt to property. 
 
 But the payment and cancellation of greenback notes is a 
 very different thing. That is taking up the currency 
 itself, and we must take it up in part, at least, without the 
 substitution of anything in its place; and in the end with only 
 a partial, not a full, substitution of other money. The effect is 
 utterly to subvert the relation of money, debt and property, 
 and to inflict measureless and irremedial wrongs upon society. 
 And while this transition is going on, as already shown, in¬ 
 dustry is paralyzed, and the people are impoverished. This is 
 the greatest evil, and before we have gone much farther we 
 may learn, it is hoped, as Berkeley said, that “ not gold but 
 industry causeth a country to flourish.” 
 
 But in fact, according to well established principles of 
 economic science, greenbacks are as absolutely money as if 
 made of metal, and their value is governed by precisely the 
 same laws that govern the value of metallic money, namely: 
 the quantity on the one hand , and use or employment on the 
 other , and they determine prices the same as coin.* 
 
 in this use he has full compensation, and is in nothing the loser, unless by in¬ 
 creased issues they are depreciated in value. In fact, according to Mr. .Wells’ 
 reasoning, the holder of fractional silver is all the time entitled to interest on his 
 “ depreciated money.” 
 
 *“It may, indeed, be doubted, whether, since the new system of Bank of Eng¬ 
 land payments has been fully established, gold has in truth continued to be our 
 measure of value; and whether we have any other standard of prices than that 
 circulating medium, issued primarily by the Bank of England and in a secondary 
 manner by the country banks, the variations of which in relative value may be 
 as indefinite as the possible excess of that circulating medium .”—Billiton Re¬ 
 port, 1810. 
 
52 
 
 THE APPRECIATION OF MONEY. 
 
 The recognition of this principle dates bach to the rise of 
 the science of political economy. Indeed, it was understood 
 before political economy, as a science, had recognition. 
 
 Almost a hundred years before the appearance of Adam 
 Smith’s “ Wealth of Nations,” John Locke,''with great clear¬ 
 ness and precision, announced the principle upon which the 
 value of all money rests: “Gold and silver, procuring what we 
 want, or desire, only by their quantity, it is evident that the 
 intrinsic value of silver and gold, used in commerce, is nothing 
 but their quantity. * * * * * 
 
 “Supposing in any island separate from the commerce of the 
 rest of mankind; if gold and silver or whatever else (so it be 
 lasting) be their money, if they have but a certain quantity of 
 it, and can get no more, that will be a steady, standing measure 
 of the value of all other things. * ■ * * * 
 
 “ Money, while the same quantity of it is passing up and down 
 the kingdom in trade, is really a standing measure of the falling 
 and rising value of other things, in reference to one another; 
 and the alteration of price is truly in them only. But if you 
 increase, or lessen the quantity of money current in traffic, in 
 any place, then the alteration of value is in the money.” 
 
 And a dozen times in his essay on the value of money he 
 says intrinsic value in money is nothing but its quantity. 
 
 In fact, Aristotle laid down substantially the same law in 
 his ethics. “ Money,” he says, “ is as it were the substitute for 
 demands, and hence it has the name v 6 [u 6 fia y because it is not 
 so by nature but by law, and because it is in our power to 
 change it and render it useless.” * * * “ Money, as a 
 
 measure, by making things commensurable, equalizes them.” 
 
 Mr. Macleod, perhaps the ablest of living writers, applies 
 this principle directly to inconvertible government paper. He 
 says: “ It (inconvertible paper) becomes in all respects equiva¬ 
 lent to a new standard, just as much as gold or silver, and its 
 value will be affected by the same principles as these two, viz.: 
 by the sole question of the quantity of it in circulation com¬ 
 pared to the operations it represents.” 
 
 Mr. J. R. McCulloch, long recognized as one of the ablest 
 expounders of political economy, says: “Until very recently it 
 
THE APPRECIATION OF MONEY. 
 
 53 
 
 was universally supposed that the ability to convert paper into 
 gold at the pleasure of the holder was necessary to sustain its 
 value. But it is plain, as well from the principles already 
 stated as from experience, that the mere limitation of the quan¬ 
 tity of paper made legal tender is quite sufficient to preserve 
 its value on a par with the value of gold, or to raise it higher. 
 * * * Notes not legal tender and payable on demand, or 
 
 at some stipulated period, are not paper money, though they 
 serve the same purposes during the time they continue to cir¬ 
 culate. The value of such notes is wholly derived from the 
 confidence placed in the ability of the issuers to retire them 
 when presented for payment, or when they become due. 
 Whenever, therefore this confidence ceases, their circulation 
 necessarily ceases also. But no such circumstances affect 
 paper money—meaning by paper money, paper made legal 
 tender, and not legally convertible into gold or anything else, 
 at the option of the holders, or at any given period. No part 
 whatever of the value of such paper money is derived from 
 confidence. It circulates because it is made legal tender, and 
 because the use of a circulating medium is indispensable, and 
 its value, supposing the demand to be constant, is in all cases 
 inversely as the quantity in circulation.” 
 
 James Mill says: ‘‘If the obligation of keeping up the value 
 of the paper to that of gold were suspended * * * a 
 
 sufficient security against any considerable alteration of the 
 value of the currency will be found * * * in keeping the 
 
 quantity of it the same.” 
 
 Mr. McLaren, in his “ History of the Discussions on the 
 Question of Currency in England,” says : “ Let us, then, sup¬ 
 pose that at a time when we possessed our fair share of the 
 gold of the world, government paper was issued until all the 
 gold left the country, and the market price of that metal began 
 to exceed its mint price, and that the issue was carefully and 
 honestly limited to this amount. This paper would, according 
 to all authority, supply the place of the gold, and no change 
 would be made in prices or in the distribution of property by 
 the substitution.” 
 
 And Bishop Berkeley, in his Querist, asks, “ Whether the 
 
54 
 
 THE APPRECIATION OF MONEY. 
 
 denominations (and quantity) being retained, although the 
 bullion were gone, things might not, nevertheless, be rated, 
 bought and sold, industry promoted and a circulation of com¬ 
 merce maintained?” 
 
 Cernuschi defines money as : “A value created by law to be 
 a scale of valuation and a valid tender for payments.” 
 
 Gallatin says: “ It has been contended by distinguished 
 writers, * * * that an irredeemable paper currency, not 
 
 exceeding in its nominal amount that in value which is actually 
 wanted, might be altogether substituted for gold and silver, 
 provided that government should always regulate the issues so 
 as never to exceed or fall short of that amount.” And again: 
 “ If in a country which wants and does possess a metallic cur¬ 
 rency of seventy millions of dollars, a paper currency to the 
 same amount should be substituted, the seventy millions in 
 gold and silver, being no longer wanted for that purpose, will 
 be exported, and the returns may be converted into a produc¬ 
 tive capital, and add an equal amount to the wealth of the 
 country.” 
 
 Mr. Fullarton, in his able work on “ The Regulation of Cur¬ 
 rencies,” says : “ Inconvertible Government notes, though value¬ 
 less in themselves, acquire a value in exchange, as has been 
 shown from the conditions annexed to their emission, and by 
 reason of that value, are received in exchange for commodi¬ 
 ties precisely on the same principle as coin. These two 
 descriptions of circulation, therefore, fall naturally under a 
 common head ; and the phrase ‘ money’ may by a fair analogy 
 be applied equally to the one as to the other.” 
 
 J. B. Say, too, the old recognized French authority, said of 
 Bank of England notes, during the suspension of specie pay¬ 
 ments : “ It must not be imagined that the paper money of that 
 country derives its value from the promise of payment in 
 specie which it purports to convey.” 
 
 Mr. Ricardo lays down the same principle. He says: “It 
 is on this principle that paper money circulates. * * * 
 
 Though it has no intrinsic value, yet by limiting its quantity its 
 value in exchange is as great as an equal denomination of 
 coin. * * * On these principles it will be seen that it is 
 
THE APPRECIATION OF MONEY. 
 
 55 
 
 not necessary that paper money should be payable in specie to 
 secure its value; it is only necessary that its quantity should 
 be regulated according to the value of the metal declared to be 
 the standard.” And again : “A paper circulation differs in its 
 effects in no respect from a metallic currency.” 
 
 In fact, this principle, as contained in the Bullion Report of 
 1810, and expounded by Ricardo, Thornton, Lord Overstone, 
 Torrens, Mushet, and others, was accepted by Sir Robert Peel 
 as sufficient ground for the measures brought forward by him. 
 On the other side, Attwood, Alison, Wilson, Graham and 
 others, as fully admitted this principle while opposing the 
 measures of the government. And in all the long and able 
 discussion^ in England as to the principle that should regulate 
 the currencies, there is absolute agreement on the point that 
 government issues of paper , made legal tender and in general 
 circidation as money , in all essential qualities , are money P But 
 it seems to be the fate of this country to repeat all the errors, 
 without profiting by any of the teaching, or the experience of 
 other nations. 
 
 And they who now so glibly talk of greenback money as 
 “ worthless rags” exhibit at once the shallowness of their own 
 understanding of the principles upon which money and the 
 value of money rest. 
 
 Nor is greenback currency a “ substitute” for money. Where 
 is the money for which it is substituted ? We might as well 
 say the Russian soldiers fighting in Bulgaria are substitutes for 
 the men raising wheat in Minnesota. Nor do greenbacks 
 merely “represent” money. Where is the money they repre¬ 
 sent ? Is there anywhere a pile of 360 millions of the 
 precious metals that our greenbacks represent? Nowhere; 
 all the other money in existence, paper or metallic, is doing 
 its own work in the various fields where it is employed 
 Equally absurd is the abstraction that greenbacks do not 
 pay debts, but only transfer them ! Have all the thousands 
 of millions of obligations that have been discharged in 
 
 * “ The reduction of paper would produce all those effects which arise from the 
 reduction in the amount of money in any country .”—Alexander Baring's evi¬ 
 dence before the Secret Committee of 1819. 
 
56 
 
 THE APPRECIATION OF MONEY. 
 
 these last seventeen years only been transferred? What a 
 reckoning then there must be some day ! If we shall go on as 
 much longer with greenback money, as it may be hoped we 
 will, we shall have the spectacle of a whole generation of people 
 carrying on unlimited commerce and trade, all without money! 
 
 When the United States Treasurer issues his certificate cer¬ 
 tifying that the holder has deposited a given sum in gold which 
 is held in the Treasury against the certificate, such certificate 
 truly represents gold, and is, in fact, a title to it, the same as a 
 receipt for grain stored in an elevator. Notes of the Bank of 
 Amsterdam were such certificates, and there was always as 
 much coin or bullion in the bank as there were notes out. But 
 to say that greenbacks, or the inconvertible paper money of 
 Italy or Russia* are not money, but “ represent ” money, is to 
 set up a fiction absurd on its face. They are not metallic 
 money, nor do they represent any metallic money. They are 
 paper money. Nor does any one receiving greenbacks in all 
 the daily exchanges that go on, accept them because of any 
 promise to pay gold, or expecting gold for them. 
 
 And hence, Mr. Secretary, the holder of a greenback dollar 
 is not entitled to interest on it. Nor is he entitled to gold , nor 
 the value of gold. He did not give gold nor the value of gold 
 for it. Every one is entitled to value equal to that he parted 
 with when he received a greenback, and that is the full measure 
 of all he is entitled to receive from society. As a piece of 
 money it is evidence to him, just the same as coin would be, 
 that he, or some one for him, has rendered society certain ser¬ 
 vices, and is entitled to equivalent services in some form in re¬ 
 turn. The faith they rest upon is faith in the duration of the 
 government that has issued them and made them money ; 
 faith that their use as money will continue and not be lessened 
 nor their value impaired by any uncertain increase in quantity. 
 
 This is the true function of money as given by Aristotle, 
 who says : “With a view to future exchange, if we have at pre¬ 
 sent no need of it, money is, as it were, our surety that when 
 
 *In Russia, in Austria, in Italy, in Turkey, Greece, Brazil and other South 
 American countries, as well as in the United States, while nominally gold or 
 silver, or both are standard, the valuation is, in fact, at this time, paper; and in 
 England alone is the gold standard fully effective. 
 
THE APPRECIATION OF MONEY. 
 
 5 7 
 
 we are in need we shall be able to make it; for it is necessary 
 that a man who brings money shall be able to get what he re- 
 quires;” and this doctrine is confirmed by the most illustrious 
 names that have ever thought or written on the subject. 
 
 If, however, the piece of money is coin, and the quantity 
 there may be of it is not limited by government, then its value 
 is determined by the total quantity in existence, and regulates 
 itself; and right here is the danger of adopting paper money. 
 Its quantity may be so easily increased or diminished, and its 
 value thereby changed. 
 
 But when governments interfere with the free coinage of the 
 precious metals for money, they as directly change their value 
 as if they were paper, and consequently the acts of our own and 
 European governments in demonetizing silver just as directly 
 increase the value of metallic money as they would if paper 
 were in use in its stead, and the destruction of half of it had 
 been decreed. 
 
 I enter into no discussion of the wisdom of the original 
 issue of legal-tender paper money. That does not affect the 
 question at issue now. There is certainly no argument that 
 would have been valid against their issue then that is not 
 equally valid against the destruction of greenbacks fifteen 
 years after they have become the only full tender money of 
 the country. 
 
 No, it is not as mere certificates of indebtedness or “notes 
 of hand,” although they bear the form of debt, that the green¬ 
 back currency must be dealt with. As a mere debt the last 
 note could have been paid years ago without the least disturb¬ 
 ance to business. They are something more than debt. 
 
 GREENBACKS HAVE BEEN MONETIZED. 
 
 They constitute a volume of 360,000,000 of units of money 
 and the measure of value for forty-five millions of people in all 
 their daily transactions. And as money, their value is gov¬ 
 erned, in relation to commodities and the exchanges they are 
 used to effect, by the same laws that govern the value of 
 metallic money. 
 
 Hence, any forced contraction of volume is a direct and 
 arbitrary alteration of value, that affects every debt and every 
 
58 
 
 THE APPRECIATION OF MONEY. 
 
 existing transaction, as well as all property, and the prices of 
 all commodities. 
 
 EFFECT OF DESTROYING GREENBACKS. 
 
 And consequently the destruction of this volume of money must 
 have the same effect on prices, and produce the same consequences 
 to business, as would the destruction of as muchjrold, or gold and 
 silver—if they were our money—as greenbacks supply the place of 
 That is, if instead of greenbacks, we had in circulation, say $joo,~ 
 000,000 of gold, then the annihilation of that gold, with the view 
 of buying new gold from other countries to take its place, woidd 
 be a work no more difficult to accomplish, and would have no 
 different effect upon prices and business. 
 
 What would the people, if using coin instead of greenbacks, 
 think of a proposition to annihilate it and buy from other 
 countries coin of another color to take its place? Germany 
 has been trying this very process of changing an established 
 money for a dearer money of a brighter color, and after five 
 years of trial, during which time, by loss of industry and de¬ 
 rangement of trade, she has more than wasted the value of an 
 indemnity greater in amount than all the gold California has 
 produced, and calculated to impoverish and permanently 
 cripple subdued France. The experiment has proved practi¬ 
 cally a failure, and her economists acknowledge the mistake; 
 while France, having maintained a currency of steady value, 
 is to-day less clogged, and moves with easier feet than any 
 other nation in Europe. 
 
 Now, suppose Germany, instead of melting down her old 
 coins into bullion and selling them as a commodity, had built 
 a furnace, and, as fast as presented, to be exchanged for gold, 
 had put them in it and reduced them to vapor, or had sunk 
 them in the North Sea, she would then be doing just what we 
 have undertaken to do, and nothing more. 
 
 Under the Resumption Act, we have already destroyed 
 about six per cent, of the volume of greenbacks in existence 
 when the Act passed. Can we suffer the destruction of the 
 other ninety-four per cent, with impunity ? If the threat to 
 destroy and the destruction of a few millions have produced 
 the results we have seen, what will the full accomplishment 
 
THE APPRECIATION OF MONEY. 
 
 59 
 
 do? How will it be when we come to the last million? Gentle¬ 
 men, the night that must come before this end is reached has 
 not yet cast upon us its shadow ! 
 
 But, say the Republican financiers, we propose to move slowly 
 in this manner. We don’t propose to gather up in a night the 
 whole of the greenback money: we propose to take away a 
 little at a time, so as not to disturb prices ! Indeed! it is the 
 changing from the higher to the lower level that works the 
 mischief to production and business, and if made slowly the 
 agony is only prolonged.* If we could descend suddenly 
 from one plane of prices to another and stand at once on the 
 new level, debtors might be ruined, but production could go 
 on. But, while making that descent, with rising money and 
 falling prices, production, beyond immediate consumption, for 
 reasons already explained, can not go on. The accumulation 
 of wealth, therefore, ceases, and a nation in that condition gets 
 poorer instead of richer. 
 
 History fully verifies this. Better far, then, if you could 
 gather every greenback in a single night; if you could only 
 substitute, dollar for dollar, the new money in its place, then 
 business to-morrow would go on as to-day. 
 
 Is it to be supposed that, taking away a million to-day and 
 a million to-morrow, and so on, will have a different effect 
 oh prices on the tenth day from taking ten millions on that 
 day ? As well, might you propose to pour Lake Erie into 
 Lake Huron without changing their levels, by doing it gradu¬ 
 ally ! Water will run from a higher to a lower level, but to 
 force a body of water from a lower to a higher level takes 
 work. A cheaper money will easily displace the dearer. 
 Gresham’s law is as true now as when first announced; but to 
 substitute a volume less in amount, and therefore of greater unit 
 value , for a larger volume of less unit value , that, though often 
 tried, has never yet been accomplished. Revolutions have 
 grown out of it; monarchs have lost their thrones by under¬ 
 taking it. The trade of countries has been ruined ; the foun- 
 
 *“ The consequences of a contraction or expansion of the amount of money in 
 a country seem more felt during the progress of such contraction and expansion 
 
 than from any positive amount of money at any one given period.”_ Alexander 
 
 Baring's Evidence before the Secret Committee of 1819. 
 
6o 
 
 THE APPRECIATION OF MONEY. 
 
 dations of society broken up, the people impoverished and de¬ 
 graded, but it never yet has been carried out. 
 
 It was undertaken by Queen Elizabeth, and the Poor Laws 
 of England are its fruits. It was undertaken again by William 
 III. and the institution of paper money was the result. Charles 
 V., Philip le Bel, Louis XIV., and hosts of rulers of less power 
 and influence have tried it, and the history of every such period 
 is a history of revolution and civil commotions, of people im¬ 
 poverished, trade cut off, laborers idle, with want and wretch¬ 
 edness everywhere abounding. 
 
 And if it were possible to substitute gold for greenbacks—if 
 the terrible sacrifices we are making would give us gold in the 
 end—and a gold dollar were put in the place of every green¬ 
 back dollar, would the country be any the richer for that, so 
 long as the gold was used simply as currency ? No more than 
 a merchant who takes part of his capital to buy a gold yard¬ 
 stick instead of using a wooden one, thereby increases his cap¬ 
 ital. He may convert his gold yardstick into capital, and so 
 may a country that has a gold currency, but while used as cur¬ 
 rency it is no more capital than a like quantity of paper money.* 
 
 Hamilton says: “ Gold and silver where they are em¬ 
 
 ployed merely as the instruments of exchange, have been not 
 improperly denominated dead stockand Mr. Mill: “It is 
 evident that whatsoever part of the national property goes to 
 provide the medium of exchange is wholly inoperative with 
 regard to production.” 
 
 No, greenbacks are money, and, being money, like gold and 
 silver, they are precious. Cernuschi has well said gold and 
 silver are not money because they are precious, but precious 
 because they are money; and hence any act of Government 
 that lessens the use of silver by taking away its use as money 
 lessens its value, and any act that increases the use of gold— 
 the quantity necessarily remaining substantially unchanged— 
 
 * “ Metallic money, whilst acting as coin, is identical with paper money, in 
 respect of being destitute of intrinsic value; with this single difference, that 
 when it is desired to reproduce that intrinsic value, the sovereign can be instantly 
 turned into bullion.” * * * “ Still, whilst circulating, both make no use of 
 
 intrinsic value; and this is the great point to grasp firmly .”—North British 
 Review Nov., 1861. 
 
THE APPRECIATION OF MONEY. 
 
 61 
 
 increases its value. The same law applies to greenbacks. 
 Lessen the quantity and you increase their value. 
 
 With a true understanding then of their rights, the demand 
 of the whole people should be, “No more alteration in the 
 
 VALUE OF MONEY BY LEGISLATION. RESTORE SILVER AND SAVE 
 THE GREENBACKS ; A JUST BALANCE FOR THE DEBTOR, AND A JUST 
 WEIGHT FOR THE CREDITOR, SECURITY TO PROPERTY AND PRO¬ 
 TECTION TO LABOR.” 
 
 The defence of these principles is the defence of the rights 
 of property, and the rights of labor. 
 
62 
 
 THE APPRECIATION OF MONEY. 
 
 I.—THE THEORY OF OVER-PRODUCTION. 
 
 No doctrine so pernicious was ever taught as the doctrine 
 that the present low prices and stagnation in trade and pro¬ 
 duction are due to an over-production in the prosperous years 
 preceding 1873. 
 
 The “ mercantile theory” of the last century was not half so 
 detrimental to the trade and commerce of the nations which 
 accepted it, as has been the false and absurd doctrine of over¬ 
 production proclaimed in reports from high places, and given 
 out so persistently through almost the entire press of the 
 country, and repeated everywhere from the stump in the polit¬ 
 ical campaigns of the last three years. 
 
 Men, in almost the same breath, talk about over-production 
 and at the same time nothing to buy money with. So persist¬ 
 ently and with such assurance has this doctrine been taught 
 that at this time, out of a hundred men one meets, ninety-nine 
 accept it as true, and apparently think the only proper thing to 
 do is to stop production till the “surplus” is worked off. 
 
 Nothing is more hurtful than such false theories of economy 
 when believed and acted upon by the whole people. The same 
 doctrine was put forward in England from 1816 to 1821, in ex¬ 
 planation of the financial distress attending the resumption of 
 specie payments by the Bank of England, and was for a time 
 as universally accepted to be true there, as it has been here, 
 since 1873. 
 
 The utter absurdity of the theory, however, was early pointed 
 out by the able political economists which this period of 
 English distress brought out. And the strangest of all things 
 is that this country has profited by nothing that England then 
 experienced, but on the contrary has been repeating all her 
 mistakes, as though there was no school to learn in but the 
 dear one of experience. 
 
 Among the first to point out the error and the absurdity of 
 the over-production theory was Mr. James Mill, one of the 
 clearest thinkers and most concise writers that have ever dealt 
 
THE APPRECIATION OF MONEY. 
 
 63 
 
 with questions of political economy, who says: “A commodity 
 which is the instrument of demand is always at the same time 
 a commodity added to the stock of supply. Of two men who 
 perform an exchange, the one does not come with only a 
 supply, the other with only a demand; each of them comes 
 with both a demand and a supply. The supply which one 
 brings is the instrument of his demand, and his demand and 
 supply are, of course, exactly equal to one another. But if the 
 demand and supply of every individual are always equal to one 
 another, the demand and supply of all the individuals in the 
 nation, taken aggregatively, must be equal. Whatever, there¬ 
 fore, be the amount of the annual produce, it never can exceed 
 the annual demand.” Instead of over-production in the aggre¬ 
 gate being possible, supply and demand, on the whole, are and 
 must necessarily be equal. 
 
 Professor Nicholson, late of Trinity College, Oxford, puts 
 the same thing in this form: 
 
 “ What is demand?” and answers: “ Demand is the offering 
 a commodity which we have in exchange for one which we 
 want!” 
 
 “What is supply?” “ Supply is the commodity itself which 
 we offer in exchange.” 
 
 “ Can demand, as we define it, exist without supply, or sup¬ 
 ply without demand ?” 
 
 “ Certainly not, for we must furnish a supply of some sort 
 or other in order to offer it for the commodity which we 
 want.” 
 
 And John Stuart Mill says: “A want of market for one ar¬ 
 ticle may arise from excessive production of that article; but 
 when commodities in general become unsalable, it is from a 
 very different cause ; there can not be excessive production o 
 commodities in general.” 
 
 And again: “The argument against the possibility of general 
 over-production is quite conclusive, so far as it applies to the 
 doctrine that a country may accumulate capital too fast; that 
 produce in general may, by increasing faster than the demand 
 for it, reduce all producers to distress. This proposition, 
 strange to say, was almost a received doctrine so late as thirty 
 
64 
 
 THE APPRECIATION OF MONEY. 
 
 years ago; and the merit of those who have exploded it is 
 much greater than might be inferred from the extreme ob¬ 
 viousness of its absurdity when it is stated in its native sim¬ 
 plicity. 
 
 “ It is true that if all the wants of all the inhabitants of a 
 country were fully satisfied, no further capital could find useful 
 employment; but in that case, none would be accumulated. 
 So long as there remain any persons not possessed, we do not 
 say of subsistence, but of the most refined luxuries, and who 
 would work to possess them, there is employment for capital; 
 and if the commodities which these persons want are not pro¬ 
 duced and placed at their disposal, it can only be because 
 capital does not exist, disposable for the purpose of employing, 
 if not any other laborers, those very laborers themselves, in 
 producing the articles for their own consumption. Nothing 
 can be more chimerical than the fear that the accumulation of 
 capital should produce poverty and not wealth, or that it will' 
 ever take place too fast for its own end. Nothing is more true 
 than that it is produce which constitutes the market for pro¬ 
 duce, and that every increase of production, if distributed 
 without miscalculation among all kinds of produce in the pro¬ 
 portion which private interest would dictate, creates, or rather 
 constitutes, its own demand.” 
 
 And again: ‘What a country wants to make it richer, is 
 never consumption, but production. Where there is the latter, 
 we may be sure there is no want of the former.” 
 
 Of course, there may be such a multiplication of any given 
 commodity that it will not sell, or exchange for other things, 
 at rates that will be remunerative to the producer of the given 
 commodity; such an accumulation of particular commodities 
 as to raise them above the general level of supplies is continu¬ 
 ally taking place. 
 
 But if production is subjected to no influence but the natural 
 conditions of trade, all such excesses are self-regulating; and 
 this may take place either by a decrease in the particular pro¬ 
 duct, or in a general increase of other products. 
 
 But this does not affect the question of a general over-pro¬ 
 duction. That is equivalent to saying a country is too rich. 
 
THE APPRECIATION OF MONEY. 
 
 65 
 
 For of what does the wealth of a nation consist but of all those 
 things that have been produced, and which the assessor, when 
 he comes round, enumerates as constituting the wealth of each 
 and every property-holder? 
 
 It is not over-production that has brought upon us the dis¬ 
 tress everywhere experienced. It is the derangement of the 
 medium by means of which the exchange of commodities is 
 effected that stops production and makes the accumulation of 
 wealth impossible. It is a constant increase in the value of 
 money. 
 
 It is impossible to carry on production in any country while 
 the money, or medium of exchange, of that country is being 
 appreciated in value by legislation. 
 
 And of all schemes of robbery none is so dangerous, be¬ 
 cause none is so subtle, as a change in the value of money. 
 
 It was in the name of liberty that all liberty was overthrown 
 in France in the last century, and it is in the name of honesty 
 and honor that the most outrageous wrongs are being perpe¬ 
 trated in this country by the changes made in the value of 
 money while in use among the people, as the common measure 
 in the exchange of commodities and the payment of debts. 
 
 There was no period of 365 days from the beginning of the 
 war to the end, during which the national debt increased, day by 
 day, and month by month, as fast as the burden of that debt has 
 been made to increase upon the shoulders of those who must 
 bear it, during the two years last past. We pay our debts 
 with what we produce, and any increase in the value of the 
 standard that measures the commodities we pay with, is 
 equivalent to an increase in the debt itself. Shall we vote 
 ourselves fools, then, and by our own acts elevate the standard 
 that measures the products we pay with ? Certainly equity 
 makes no such demand. Already we must produce almost 
 twice as much cotton, wool, iron, steel, and commodities 
 generally, to pay the same interest on the debts of the country, 
 as was required three years ago. How much farther shall we 
 pursue this phantom? Away with the delusion that the evils 
 the country is suffering are the result of too great industry! 
 
 The sooner we repudiate the shallow philosophy of “ over- 
 
66 
 
 THE APPRECIATION OF MONEY. 
 
 production” and believe and work on the principle that the 
 more we produce and have the better we can live and the 
 easier we can pay what we owe, the sooner our prosperity will 
 begin again ; and to the extent the Resumption Act, or the act 
 demonetizing silver are hindrances to production, they are hin¬ 
 drances to the payment of the debts of the country, and the 
 return of prosperity. 
 
 Just as absurd is the idea that it was the extravagance of the 
 laboring classes during prosperous periods that has produced 
 all the mischief. 
 
 It is always foolish for any one to consume all he earns as 
 he goes along. But one who labors ten hours a day, six days 
 in a week, and spends it all, not only contributes more to the 
 common whole, but leaves more, than one who economizes to 
 the limit of bare necessities, and works but half as much. 
 Even though neither saves for himself, the profits that remain 
 to others on what each produces and consumes, are twice as 
 much in the one case as in the other. But according to the 
 ideas of most people, as one hears them expressed nowadays 
 the economy that buys nothing and of course produces noth¬ 
 ing, is that which will enrich the individual and add wealth to 
 the nation. The kind of economy, however, that saves and 
 adds to re-production is the kind that conduces most to 
 national wealth; but that does not come of idleness and non- 
 production. 
 
 Equally errroneous is the reasoning that the “ floating” cap¬ 
 ital of the country became metamorphosed into “fixed” capital 
 in the process of railroad building. One would almost be led 
 to suppose from what has been claimed in this connection, that 
 notes, bills, drafts, bonds and stocks had been transformed into 
 ties and iron, or had gone to make up embankments, and had 
 thus become “sunk” capital. The truth, however, is that while 
 money and capital changed hands in the building of railroads, 
 as in any other work, they did not, in the sense claimed, neces¬ 
 sarily become “ fixed.” Railroads are the product of labor, 
 from ore in the hills, coal in the mines, timber in the forests, 
 the embankments, the masonry, the bridges; everything is the 
 result of labor, to support which the consumption of food and 
 
THE APPRECIATION OF MONEY. 
 
 67 
 
 clothing was required; but the money expended for these 
 things was not destroyed. It was gathered into other hands, 
 but not lost. 
 
 The railroads are the resultant of the food, clothing and 
 other things consumed, as much as the cocoon is the product 
 of the silk-worm that feeds upon the mulberry. To those 
 who furnished the capital, that is, to the investors in shares or 
 bonds of railways, to the extent they have proved unprofitable, 
 of course, they are losses, and to that extent the result to those 
 who thus expended their capital, is the same as though they 
 had expended the same amount in supporting' laborers in idle¬ 
 ness, or had supported labor to build a pyramid or delve in 
 a mine that yielded no return. 
 
 But suppose we had now on hand the material and supplies 
 consumed in the construction of our railroads instead of hav¬ 
 ing the roads, would the country be richer ? Or in the pro¬ 
 duction of what could the same things have been more profit¬ 
 ably consumed ? 
 
 Moreover, floating capital may be, and often is increased by 
 the building of railroads. This is true in the case of the Cin¬ 
 cinnati Southern Road, where in lieu of the food, clothing and 
 other materials consumed in the construction of the road, the 
 bonds of the city of Cincinnati have been issued. These 
 bonds, although a debt of the city, are as much “ floating ” 
 capital to the holders, as Government bonds or British consols 
 would be. The same is true of all roads whose stock or bonds 
 yield profits, or enter the market. Hence, neither of the 
 causes assigned, nor all of them, account for the state of affairs 
 at present existing in this and other countries. 
 
 The one cause that accounts for all is the rise in the value of 
 money decreed by legislation since the beginning of 1873. 
 
 II. RELATION OF VOLUME TO VALUE OF MONEY. 
 
 Having at any time a stated volume of money to which 
 prices are adjusted, it becomes of great importance to ascer¬ 
 tain the effect of a given diminution of volume upon the value 
 of the part remaining. 
 
 And this is a question of the utmost importance at this mo- 
 
68 
 
 THE APPRECIATION OF MONEY. 
 
 ment, in view both of the contraction of the volume of paper 
 money in this country and the demonetization of silver. But 
 while statistics are abundant enough to prove that, in every 
 country, the expansion or contraction of the volume of money 
 is invariably attended with a rise or fall in prices, yet no one, 
 so far as known to the writer, has undertaken to show what 
 ratio (if there be any certain ratio) exists between a diminutio 7 i 
 of volume and rise in value of money, and between an increase 
 of volume and the decrease in value. The modifying causes 
 are so many and so complicated that, perhaps, no data have 
 been collected sufficient for establishing any definite propor¬ 
 tion. Nevertheless, there must exist some ratio, and that ratio 
 must be subject to economic laws, and ought to be subject to 
 approximate calculation. 
 
 The four conditions which affect the value of any commodity 
 or any economic quantity are: Decrease in quantity, increase 
 in demand ; decrease in demand, increase in quantity; and 
 most writers, when treating of these relations as they pertain 
 to money, have assumed that a decrease in quantity would be 
 followed only by an equal increase in value, and vice versa . 
 
 Fichte says : “ The amount of money current in a state rep¬ 
 resents all that is purchasable on the surface of the state. If 
 the quantity of purchasable articles increases while the 
 quantity of money remains the same, the value of the money 
 increases in the same ratio; if the quantity of money in¬ 
 creases, while the quantity of purchasable articles remains the 
 same, the value of money decreases in the same ratio.” 
 
 Hume says: “It is not difficult to perceive that it is the 
 total quantity of the money in circulation, in any country, 
 which determines what portion of that quantity shall exchange 
 for a certain portion of the goods or commodities of that 
 country. 
 
 “ It is the proportion between the circulating money and the 
 commodities in the market which determines the price.” 
 
 John Locke says: “Silver is the measure of commerce by 
 its quantity, which is the measure also of its intrinsic value.” 
 
 Mr. James Mill, in his admirable treatise on political econ¬ 
 omy, says: “ And again, in whatever degree, therefore, the 
 
THE APPRECIATION OF MONEY. 
 
 69 
 
 quality of money is increased or diminished, other things re¬ 
 maining the same, in that same proportion, the value of the 
 whole, and of every part, is reciprocally diminished or in¬ 
 creased.” 
 
 Cernuschi states the same proposition thus : “ The purchas¬ 
 ing power of money is in direct proportion to the volume of 
 money existing.” 
 
 Ricardo, on this principle, reasoned that prices in England, 
 under the effect of their Resumption Act, would fall only by a 
 per cent, equal to the difference between gold and paper—at 
 most, four or five per cent. But the facts show that prices gen¬ 
 erally fell from forty-five to fifty per cent, before gold and paper 
 were brought to a level; and in fact, experience the world over, 
 shows that this reasoning does not take cognizance of all the 
 elements that come in to affect demand, and to vary the rela¬ 
 tions between quantity and value, as regards both commodities 
 and money. 
 
 While, undoubtedly, as long as conditions are at rest , a 
 given relation between the quantity of money and goods or 
 commodities determines price, nevertheless, it does not fol¬ 
 low that when this relation is varied, either by a change in the 
 quantity of commodities, or in the quantity of money, that 
 price varies in the same ratio. 
 
 Such calculations leave out of view the influence of credit 
 and credit expedients which perform the function of currency, 
 and often exceed many times the volume of actual money. 
 With a stable volume of money and other conditions at rest 
 this influence may be considered as also comparatively stable. 
 But with a volume of money that varies without a correspond¬ 
 ing variation in transactions, credit rises and falls much more 
 rapidly than money varies. And especially is this true when 
 money grows scarce by contraction of volume, and prices are 
 falling. Then credit is restricted to the narrowest limits and 
 is often utterly overthrown in panic. 
 
 Also, any cause that operates to affect demand, affects prices, 
 and these causes are often of a psychological nature, especially 
 when money is the subject of special anxiety. 
 
 Perhaps the most potent cause of all of the disproportion be- 
 
70 
 
 THE APPRECIATION OF MONEY. 
 
 tween a change of volume and value is the activity of exchanges. 
 Indeed, quantity of commodities never alone determines price. 
 It is quantity multiplied by activity of exchanges that creates 
 intensity of demand. The quantity of goods remaining the 
 same, a sudden increase from any cause in the activity of ex¬ 
 changes would have the same effect on prices as a decrease in 
 the quantity of goods. 
 
 If a volume of money could be made to vary, by self-adjust¬ 
 ment, with population, accumulated wealth and activity of 
 exchanges, a stable and nearly perfect measure of value would 
 be obtained. Prices of commodities would then vary only 
 with supply and demand, and there could be no general rise 
 or fall of prices such as takes place when the measure itself— 
 money—varies; for price is determined by supply and de^ 
 mand, with relation to a given volume of money. 
 
 Probably, however, no two commodities would show the 
 same variations in relation of quantity to price. The intensity 
 of demand for articles of prime necessity, as the quantity 
 diminishes, is much greater than for other things; and money 
 being endowed with that pre-eminence which requires that all 
 other things must be converted into it in daily bargains of 
 purchase and sale, as well as for the extinguishment of debts 
 and the performance of contracts, the suspicion even of a 
 scarcity often suddenly and excessively raises its value. 
 
 The power of money in this respect has greatly changed 
 since the time of William the Norman, when, in England, all 
 products were converted into money at established prices, and 
 when taxes could be paid either in money or in goods at fixed 
 rates. If it was easier for the farmer to deliver to the tax- 
 gatherer an ox, or “ bread for a hundred men,” than to pay a 
 shilling, he could do so; otherwise, he might pay the shilling. 
 And to a large extent, even down to the early part of the 
 present century, in Poland and other parts of Europe, the 
 same system has been in force. 
 
 But now, when ninety-nine per cent, of all transactions are 
 for money, the case is very different. A fresh demand for 
 even a small part of the currency in any country is suddenly 
 felt in the dearness of money, indicated by a fall in prices. On 
 
THE APPRECIATION OF MONEY. 
 
 7 1 
 
 the other hand, any considerable increase in the quantity of 
 the currency is immediately followed by a rise in prices, de¬ 
 noting a decline in the value of money. It makes a very great 
 difference, however, especially in the case of a diminishing 
 volume, whether the diminution be sudden or slow. If sudden 
 and soon ended, although debtors may be ruined, prices be¬ 
 come adjusted to the new volume, and productions and ex¬ 
 changes, according to the new scale, go on; but if slow, and 
 prices go on declining, investments become unprofitable, 
 money then gains in purchasing power by hoarding instead of 
 gaining by use; exchanges are retarded, business is clogged, 
 debts press heavier and heavier and compel the sacrifice of 
 property, credit declines in an accelerated ratio, and thus a 
 multitude of causes co-operate to force prices down. 
 
 On the other hand, a gradual increase in quantity is gener¬ 
 ally absorbed by increased production and the greater activity 
 in business which is sure to attend any indication of a rise in 
 prices. Hence, the vast increase in the precious metals since 
 the gold discoveries in California and Australia has not been 
 followed by the rise in prices that was predicted by Chevalier 
 and others. But production, trade and commerce have mean¬ 
 time increased among the European countries, and in America 
 from 150 to 300 per cent.; while probably but about thirty 
 six per cent, has been added to the stock of the precious 
 metals. And, in general, an increase in the volume of money 
 is followed by less violent change of prices than a decrease of 
 volume. And this is measurably true of other things. 
 
 Lauderdale quotes approvingly Gregory King’s calculations, 
 made before the repeal of the Corn Laws, that a defect in a 
 harvest in England of one-tenth below the average increased 
 the value of the remaining nine-tenths thirty per cent.; a defect 
 of two-tenths, eighty per cent.; and a defect of one-half in¬ 
 creased the value of the yield 450 per cent. Sir John Dal- 
 rymple, from various statistics, estimated that, on the average, 
 a diminution of one-third in any marketable commodity in¬ 
 creased its value a hundred per cent. But commodities vary 
 so much in this respect that, perhaps, such generalizations are 
 not very reliable. 
 
72 
 
 THE APPRECIATION OF MONEY. 
 
 But, if these estimates be even approximately correct as to 
 commodities which to a greater or less extent may be dis¬ 
 pensed with, what must be the effect on the value of that 
 commodity into which all others must be converted before 
 obligations can be discharged ? 
 
 The first effect of a diminution in the volume of money as 
 shown, is the falling off in the uses of credit expedients which 
 ordinarily, and especially with rising prices, so largely supply 
 the place, and perform the functions, of money. This again 
 is followed by a rapidly-increased intensity in the demand for 
 money. Take any period of panics, or take the period of re¬ 
 sumption in England, from 1819 to 1821. The decrease in 
 Bank of England notes and the notes of private banks was 
 about 23 per cent, between 1818 and 1821, but the rise in the 
 value of bank notes was about 90 per cent., as indicated by 
 a fall in prices of 45 to 50 per cent. 
 
 In this country since January 1, 1875, the direct decrease in 
 the volume of the currency has been but about eight per cent., 
 while prices have declined, on the average, nearly fifty per 
 cent., which means that money has risen in value 100 per 
 cent. This change of values applies to gold prices as well as 
 currency prices—the difference being merely the variation in 
 the premium on gold. The reasons for this immense fall in 
 prices under so small a contraction of the currency lie, in part, 
 outside of the questions under consideration, and partly in the 
 demonetization of silver and the consequent increase in the 
 value of gold. 
 
 We had at the beginning of 1874 a given quantity of com¬ 
 modities, with credit and prices adjusted, under a given activ¬ 
 ity of business, or rapidity of exchanges, to a given volume of 
 money, consisting entirely of paper. To the extent this 
 paper money had displaced and taken the place of metallic 
 money, to that extent it was as much an addition to the total 
 volume of the money of the world as though so much gold 
 and silver had been added, and the same laws governing the 
 change of values that follows an increase or decrease in me¬ 
 tallic money, must hold good with any other money. In case, 
 however, of purely credit money the value and circulation of 
 
THE APPRECIATION OF MONEY. 
 
 73 
 
 which depend altogether upon the accredited ability of the 
 issuers to redeem it, quite other elements enter into the prob¬ 
 lem. These elements were present and greatly affected the 
 value of greenback notes in 1863-4, but are scarcely present 
 at all now. 
 
 Apply, then, this principle to the value of metallic -money, 
 and at once the effect of the demonetization of silver becomes 
 apparent. According to Ernest Seyd, the proportion of silver 
 to gold in use as money in European countries, taken together 
 is very nearly as 3 to 5 (3 of silver to 5 of gold), two-thirds of 
 the silver being full legal-tender money, and one-third being 
 used as subsidiary coin. In Asiatic countries, on the other 
 hand, silver largely preponderates. Suppose then, the two- 
 thirds of the silver in use as full tender money in Europe to be 
 demonetized ; that would be equal to one-fourth part of the 
 total volume of metallic money circulating in Europe. 
 
 If the result of this diminution of quantity by one-fourth be 
 to increase the value of the remaining three-fourths in the 
 ratio given for commodities or paper money, the effect must be 
 to raise the value of metallic money in Europe and America, 
 from this cause alone , nearly, if not quite, one hundred per 
 cent., or, which is the same thing, depress prices fifty per cent.; 
 and a decline of prices of fifty per cent., is equivalent to doub¬ 
 ling all debts contracted with prices adjusted to the full volume. 
 
 It is too astounding to believe that legislators could bring 
 such consequences upon a country, and yet this conclusion is 
 sustained by abundant facts and the evidence of experience, 
 and is, it is believed, substantially true ! But go a step further. 
 The demonetization of silver in Europe and the United States, 
 if carried out as begun, would be followed by such a diminu¬ 
 tion in value, that in time demonetization must extend to India 
 and other parts of the Eastern world. And if silver constitutes 
 one-half the full tender money of the world, then its demone¬ 
 tization, other things remaining the same, would lessen the 
 total volume of metallic money by one-half, which must much 
 more than quadruple, for a time at least, the value of the re¬ 
 maining half! What a prospect for debtor-nations ! What 
 a prospect for the United States, the nation of all others most 
 burdened with debts! 
 
74 
 
 THE APPRECIATION OF MONEY. 
 
 The effect of such an increase in the value of money, to go 
 on through a term of years, on productive industries and trade, 
 can be imagined from the effect already experienced through 
 the rise in the value of money that has taken place since the 
 beginning of 1875. 
 
 Alison suggested that the English Restriction Act of 1844 
 be styled “An act for the more effectual transferring of panics 
 from agriculture to commerce, and for perpetuating commer¬ 
 cial catastrophes in Great Britain.” With how much more 
 propriety our Resumption and Silver Acts, standing together 
 in the relation they do, might be styled, “Acts to provide 
 for the general confiscation of property, to stop production, 
 make trade unprofitable, and prevent the employment of labor.” 
 April 6, 1877. 
 
 III. INTERNATIONAL FINANCIAL PROBLEMS. 
 
 I. Leaving out Spain, Turkey, and a number of smaller 
 States, the four great nations, Russia, Austria, Italy and the 
 United States are indebted, according to Ernest Seyd, to five 
 other nations, namely: England, Germany, France, Belgium 
 
 and Holland, in sums as follows: 
 
 The United States (including states, counties, &c.).$2,250,000,000 
 
 Austria. 1,730,000,000 
 
 Russia. 1,375,000,000 
 
 Italy. 1,255,000,000 
 
 Total. $6,610,000,000 
 
 These sums are in addition to the indebtedness of these coun¬ 
 tries held by their own citizens respectively. 
 
 These same nations are all now using, as money, incovertible 
 paper, made legal tender. Russia, Austria and Italy have out 
 a total of $1,500,000,000, and the United States, including 
 National bank notes, say $650,000,000; making an aggregate 
 
 $2,150,000,000 of inconvertible paper money. 
 
 Influences have been, and still are at work in these several 
 debtor-countries, the same as in the United States, to bring 
 about the demonetization of silver and the adoption of the 
 single gold standard. 
 
 To enable the four nations named to even bring their incon¬ 
 vertible paper money to par with gold—to say nothing of 
 
THE APPRECIATION OF MONEY. 
 
 75 
 
 redemption, or the substitution of gold for paper—will require, 
 according to the authority quoted above, at least $750,000,000 
 more gold than these countries now possess. That is, to enable 
 them, not to redeem their paper money, but merely to give 
 convertibility to it, they must buy $750,000,000 of gold from 
 the common stock of the world, or about twenty per cent, of the 
 entire volume in use as money. This $750,000,000 would, in 
 that event,be extended over new areas, while, at the same time, 
 present requirements for gold in countries now using a gold cur¬ 
 rency would not be lessened. It is plain enough to see what the 
 effect of this new demand will be on the value of gold. Stated 
 more concisely, the United States, Russia, Austria and Italy, as 
 debtor-nations, owe to four or five other nations, besides what 
 they ow r e respectively to their own people, $6,610,000,000. The 
 same countries are using inconvertible paper money to the ex¬ 
 tent of about $2,150,000,000. They are supposed, however, to 
 want “honest money” and to be in favor of the single gold 
 standard, and also—if all are like the United States, and there 
 can hardly be any difference as to their obligations—to be in 
 favor of paying their debts according to a standard of honor 
 that is measured by the dearest possible money. 
 
 It is supposed, therefore, that these four nations desire : 
 
 1. To adopt the single gold standard and pay their debts in 
 gold, or according to that standard. 
 
 2. To buy from the common stock of gold now in use as 
 money, at least $750,000,000, or twenty per cent, of the whole 
 stock, in order to bring their paper to par with gold, and render 
 it convertible. 
 
 3. It is proposed, furthermore, to demonetize silver in all 
 these countries except for token coins, and thus to displace 
 both silver and legal tender paper with gold, thereby extending 
 the use, and with it the demand for this metal, so that by all 
 ways possible, the coin left to measure debts, shall be raised to 
 the utmost limit. Of, course, while this is going on, all other 
 things—commodities, products, property of every description 
 —as measured by the increased standard will be correspond¬ 
 ingly reduced in price. Production, with falling prices, is 
 checked, and hence, instead of increasing its wealth, a nation, 
 
76 
 
 THE APPRECIATION OF MONEY. 
 
 under such a state of things, is compelled to draw on previous 
 accumulations to meet its obligations. Now, how far can 
 these four nations pursue (its accomplishment by all at the 
 same time is impossible) this object, without bankrupting the 
 whole of them ? 
 
 Suppose the nations now using legal-tender paper should 
 continue its use, cease their demand for it, and restore and 
 retain silver as money equally with gold, would not gold fall ? 
 And do not present prices prove that there is room for gold to 
 fall ten per cent, or more before passing the level of average ante- 
 war prices ? 
 
 Octdber, 18 j6. 
 
 IV. SILVER GREENBACKS. 
 
 Senator Sherman’s proposition to coin silver dollars to take 
 the place of greenback notes, and to be a legal tender only to 
 the extent that greenbacks are a legal-tender, is a proposition, 
 in effect, to make greenback notes of silver instead of paper, 
 and nothing more. 
 
 If silver is no longer to be money equally with gold, and as 
 full a legal-tender in national and international commerce, 
 then to make dollars of it for use as subsidary coin, or for limited 
 tender, no more brings us into unison with the money of the 
 world than if such dollars were made of copper or bronze. To 
 be sure our dollars would be made of a commodity, but of a 
 commodity no longer having money value as a metal, and 
 hence as compared with gold might be of one value to-day 
 and another to-morrow. Not one single advantage will such 
 silver dollars possess over greenbacks while used merely as 
 money. They can be melted down and sold for what the 
 metal may be worth for use in the arts, as our bronze or nickel 
 pieces may be now, but as money they would afford no 
 advantage. 
 
 The proposition, therefore, to buy silver with bonds to make 
 limited tender dollars of, to substitute for greenback dollars, is 
 a proposition to augment the interest-bearing debt to that 
 amount for no real gain whatever. The dollars made of silver 
 would not, to be sure, carry any promise with them to pay 
 something else, but they would be subject to variations in 
 
THE APPRECIATION OF MONEY. 
 
 77 
 
 value as much as greenbacks, and possibly more, as we have 
 seen to be the case within the last year. If the demonetiza¬ 
 tion of silver should become general, then this metal 
 would, possibly, fall—perhaps not to the level of copper, but 
 not much above it. In that case the regulation of the value 
 of silver dollars could be made only in the way the value of 
 greenback dollars is governed now, namely, by limiting the 
 quantity. In the one case the regulation is through the print¬ 
 ing press, and in the other it would be through the coining 
 press. There would be no natural limitation in the one case 
 more than in the other. 
 
 There is no middle ground between mono-metalism and 
 bi-metalism. Either silver must be made money for all pur¬ 
 poses equally with gold, or its value is no more certain than 
 greenbacks, but is left subject to the same conditions that 
 govern legal -tender paper issues, namely : the quantity printed 
 or coined, as the case may be, as compared with employment 
 or use as money. 
 
 Let the people not be deluded then, into the belief that the 
 substitution of silver for greenbacks is restoring the former 
 status of money. It is far from it. Indeed, it is no approach 
 to it. Nothing but the free coinage of silver with unlimited 
 tender, the same as gold, in the old ratio (or better still, in a 
 ratio to be agreed upon by an international commission), 
 will afford needed relief and meet the ends of justice. 
 
 When our vast debt was being created fifteen years ago, 
 and when the bulk of the $4,000,000,000 of National, State and 
 municipal debts was being piled up, prices were adjusted to a 
 volume of money consisting : 
 
 1. Of the total quantity of gold in the world in use as money, 
 say $3,500,000,000. 
 
 2. The total quantity of silver in use as money, say $3,500,- 
 000,000. 
 
 3. The coin value of the total quantity of legal tender paper 
 money issues. This volume reached in various countries in 
 1874 over $2,500,000,000, and to the extent this legal-tender 
 paper money took the place of gold and silver, to that extent 
 it was an addition to the total volume of money. 
 
7 « 
 
 THE APPRECIATION OF MONEY. 
 
 4. The total quantity of convertible paper money in use— 
 which to the extent it took the place of coin or added to the 
 volume of money in actual use, acted on prices—say $1,000,- 
 000,000, making a grand total equal to a volume of $10,000,- 
 000,000 of metallic money as the currency of the world in 
 
 1873-4- 
 
 But, besides this vast volume of money, a still vaster struc¬ 
 ture of credit rose out of it, consisting of the many credit ex¬ 
 pedients, which, in times of active production, rising prices 
 and successful trade, came into use. Metallic money, legal 
 tender paper money, convertible bank notes and credit ex¬ 
 pedients, all operate to expand prices, and by this vast volume 
 values were regulated and by it prices regulated. 
 
 Sir Anthony Musgrave, in a late number of the Contempor¬ 
 ary, says truly: “Money being in fact, as so clearly shown by 
 Mr. Bonamy Price, an article of exchange, everything which 
 serves in the place of true money, becomes an article of ex¬ 
 change also; and thus, for instance, the enormous issue of 
 inconvertible paper currency in the United States has helped 
 to lower everywhere the value of money relatively to other 
 commodities; and not a clerk in London, with three hundred 
 a year, but has suffered in his circumstances from the flood of 
 American greenbacks, which displaced the precious metals in 
 America, and sent them abroad to swell the amount of the ex¬ 
 changeable commodity (money) in other places. 
 
 “ None of us gets as much in exchange for a sovereign as if 
 the issue of American legal tender notes had not taken place/’ 
 
 Now it is proposed to reverse all this. The credit structure 
 in a large measure has already fallen, and as confidence lessens, 
 with falling prices and consequent unprofitable production and 
 unsuccessful enterprise, must continue to grow less as long as 
 money itself rises in value. This is the most important law of 
 economics. 
 
 Next, legal-tender paper money is to be got rid of and silver 
 restricted to subsidiary coinage and limited tender, and gold 
 alone to be left to serve the general purpose of money, and be¬ 
 come the standard by which the vast pile of debts created since 
 1861 is to be paid! That is, instead of a volume consisting 
 
THE APPRECIATION OF MONEY. 
 
 79 
 
 of gold and silver and legal-tender paper money, and converti¬ 
 ble bank notes, existing when debts were created, we are to 
 have only the gold part of this whole volume, with silver for 
 subsidiary coins, and such bank notes as may be maintained 
 at the point of convertibility into gold. 
 
 In harmony with this policy is the bill introduced by Senator 
 Sherman to issue $100,000,000 in bonds to take up $100,000,- 
 000 in greenbacks at the rate of $25,000,000 a year. But why 
 the tail should be thus hacked off by inches, instead of being sev¬ 
 ered at once, is difficult to see; for the absurdest of all propo¬ 
 sitions is to slowly raise the value of money and slowly de¬ 
 press everything else. Such a policy is to production and 
 business what slow poison is to the human system. 
 
 Put Senator Sherman at the head of the Treasury to carry 
 out this policy of sweeping away legal-tender paper money 
 with bonds, and with bonds buy gold to take its place, and 
 the place of silver, as real money, and make gold alone the 
 standard by which all debts are to be paid, and we may as well 
 close the doors of our workshops and factories, producing 
 hereafter only as we must consume, and hang out the sign, 
 “A Country for Sale.”* 
 
 February , 1877. 
 
 V. SILVER AS MONEY, AND MONEY MADE OF 
 
 SILVER. 
 
 The difference between silver declared to be money, and 
 money made out of silver, does not seem to have been clearly 
 comprehended in the monetary legislation of the past two years. 
 Until recently silver metal has been potentially money, all 
 there was of it in the world, one part equally with another. 
 Not all of it has been in the form of coin, but with free coinage 
 every ounce of silver in existence was entitled to be stamped 
 as coin; and, whether so stamped or not, every ounce of pure 
 silver had the value of coin, whatever form it might be in. 
 The yearly product of the mines, too, possessed the same 
 value as that already in the form of coin; for all that was 
 
 * Unfortunately the country has passed under the affliction, and is suffering 
 the consequences foreseen and feared at the beginning of this year. 
 
8o 
 
 THE APPRECIATION OF MONEY. 
 
 necessary was to get the government certificate of weight and 
 fineness stamped upon it, and it was money. A given number 
 of grains constituted a unit of value; but the number of units, 
 and consequently the purchasing power of each unit, was de¬ 
 termined by the total quantity of silver. Legislation simply 
 fixed the quantity of metal in a unit and fractional part of a 
 unit, as a dollar, a dime, a franc, and left the quantity of metal 
 or number of units there might be—and consequently the value 
 of each—to natural laws. This is the science of metallic 
 money, when left to self-regulation whether it be silver or gold. 
 
 Hence, when legislators declare what metal or substance 
 shall be money, and there stop, they do not undertake to 
 “regulate” its value in exchange, either directly or by regulat¬ 
 ing the quantity or the number of valuating units there may 
 be. The case, however, is very different when legislators 
 declare that a given amount of money shall be made but of sil¬ 
 ver, or, in other words, that a given part of the silver in the 
 world shall be money and the rest not. Then the numerical 
 quantity of units and their valuating or purchasing power, 
 instead of being left to natural laws, are determined directly 
 by the quantity of money so made. That is, the value is con¬ 
 trolled as directly by legislation as though anything else were 
 used to make the money of. 
 
 When money, as in the case of our greenback currency, is 
 made of paper, its value is determined by volume, or the quan¬ 
 tity printed; when made out of silver, if coinage is restricted, 
 by the quantity coined. Legislation, in both cases, determines 
 directly the quantity that shall be made—printed or coined— 
 from time to time, and thereby, as directly , controls the value. 
 One year more notes may be printed, and the next year a part 
 destroyed, as we are now doing; or one year more coins may 
 be struck, and the next fewer, or part melted down. In that 
 case an ounce of silver metal and an ounce of silver coin no 
 longer necessarily possess the same value—and they do not 
 now—any more than a legal-tender note and the paper it is 
 made of. In short, in the one case the metal silver is set apart 
 and declared to be money, and there left. In the other case a 
 rather costly commodity is chosen to make money out of, and 
 
THE APPRECIATION OF MONEY. 
 
 8l 
 
 how much shall be made, how much of this commodity shall 
 be used up in making money, the legislator, from time to time, 
 or the mint master, or some one else, determines. Hence it is 
 plain that when the principle that all silver is money—money 
 the same as gold, in some declared ratio—is departed from, 
 there is nothing gained in making money out of silver. It 
 might as well be made of bronze—better be of paper—a much 
 cheaper commodity. It is but “inconvertible currency,” as 
 compared with gold, in either case. 
 
 Again, as it does not matter what size the notes are that are 
 made legal-tender money, so if money is made of silver metal, 
 without declaring all silver to be money, it would not matter 
 how much or how little metal was put in the coin, any more 
 than it does with our nickel pieces. The commodity value of 
 a five-cent nickel piece is about seven-eighths of a cent. It 
 would make no difference with their money value if the quan¬ 
 tity of nickel was reduced one-half, provided the number of 
 pieces were not increased. It is the numerical quantity, or 
 number of units, in all cases as compared with use as money, 
 that determines the value. 
 
 This country is now feeling the terrible consequences of the 
 arbitrary alteration of the value of money, and before we are 
 through with the experiment, it is hoped that the all-import¬ 
 ant lesson will be learned, that to alter the value of money is 
 to alter the faith of contracts. A change in the length of the 
 yardstick, or he pound weight, or the bushel measure, with¬ 
 out provisions for the adjustment of contracts accordingly, 
 would not be tolerated anywhere. But a change in the value 
 of money alters at once all units, whether of length, of weight, 
 or volume. 
 
 There is no middle ground; either silver must be money as 
 absolutely as gold, or it is unwise to make use of the metal 
 for money at all. Paper is cheaper and more convenient, and 
 would possess equal value as money, if limited in the same 
 way. The commodity or intrinsic value of neither would 
 determine at all its money value. 
 
82 
 
 THE APPRECIATION OF MONEY. 
 
 VI. RESUMPTION AND REDEMPTION. 
 
 Comparison is often made between resumption of coin pay¬ 
 ments by banks, after periods of suspension, and redemption 
 of greenback notes by Government; but, in fact, the two oper¬ 
 ations are widely different. Bank notes never altogether drive, 
 coin out of circulation, but supplement it and circulate with it 
 They affect prices only to the extent they constitute addi¬ 
 tions to the volume of currency. They are forms of credit, 
 promises to pay on demand so much coin, and their circulation 
 in place of coin depends solely upon the accredited ability of 
 the bank to give coin for them. 
 
 Resumption in such cases means nothing more than restor¬ 
 ing convertibility; the notes remaining in circulation to the 
 extent people are willing to accept them, or prefer them for 
 their greater convenience to coin. 
 
 The case is very different with United States legal-tender 
 notes. Ostensibly they are promises to pay coin, but their 
 circulation depends upon quite other conditions than those 
 upon which the circulation of bank notes depends. Grant that 
 bank notes would never be paid in coin, and their value would 
 sink to zero. Grant that greenbacks will never be redeemed 
 with coin, but that they shall, nevertheless, always be legal- 
 tender as now, and that the volume shall not be increased , and 
 their value would not be lessened. This statement may appear 
 strange to those accustomed to consider them the same as 
 bank notes. Nevertheless, as a question of economic science, 
 it is true. 
 
 The exchangeable value of greenback notes to-day in no 
 wise depends upon the formal promise to pay. Their value de¬ 
 pends wholly upon volume on the one hand, and their employ¬ 
 ment as money on the other. If there were any danger 
 that their use as money, through the failure of the Government 
 itself, or otherwise, would be lessened, then their value would 
 decline. On the other hand, the volume remaining the same, 
 if their use or employment were extended, as, for instance, by 
 an increase in the business of the country, or by making them 
 receivable for duties, then their value would be increased; and 
 
THE APPRECIATION OF MONEY. 
 
 83 
 
 this would take place independently of any promise to pay. 
 In other words, greenbacks are, in all respects, money, and 
 their value is governed by the same laws governing metallic 
 money. 
 
 The issuance of greenbacks in the first instance was the sub¬ 
 stitution of paper for metallic money. Mr. Gallatin said : “ If 
 in a country which wants and does possess a metallic currency 
 of seventy millions of dollars, a paper currency to the same 
 amount should be substituted, the seventy millions in gold and 
 silver, being no longer wanted for that purpose, will be ex¬ 
 ported, and the returns may be converted into a productive 
 capital, and add an equal amount to the wealth of the country.” 
 
 But by issuing paper in greater volume than the coin it 
 displaced, its value was reduced below that of coin. The 
 question, too, of the stability of the Government on account of 
 the war then waging, affected, for a time, the value of green¬ 
 backs, and helped to raise the premium on gold. If the Gov¬ 
 ernment should fail, as did the Confederacy, then the use of 
 greenbacks as money could not be maintained, and their ex¬ 
 changeable value would sink to zero, as did Confederate 
 money. 
 
 The real inflation, however, was in the issue of National 
 Bank notes, and not in greenbacks, which, in fact, never ex¬ 
 ceeded the money volume they displaced; and so long as the 
 volume of legal-tender paper is kept within the limits that 
 would naturally be indicated by a currency consisting of coin 
 only, it would stand at a coin level, and be convertible with it 
 —provided always no other kind of paper money were allowed. 
 
 March , 1877. 
 
 VII. LOW PRICES IN RELATION TO EXPORTS. 
 
 The theory that a condition of low prices is necessary to 
 large exports and a prosperous condition of trade needs to be 
 takenwith considerable allowance. 
 
 It is very true that in order to be able to export any com¬ 
 modity, the price of that commodity must be as low, at least, 
 carriage included, as the cost of producing the same com¬ 
 modity in any other country. But this is the limit of advan- 
 
8 4 
 
 THE APPRECIATION OF MONEY. 
 
 tage. And if a commodity cannot be produced and sold at a 
 profit as low as it can be produced in any other market, it can 
 not be long exported. 
 
 But it is plainly to the interest of the country exporting any 
 produce to have it go out at a price as nearly as possible up 
 to the level of the cost of producing the same commodity in the 
 country to which it is exported. And, of course any derange¬ 
 ment in the currency, or anything else that tends to depress 
 prices of commodities exported, below the mark that registers 
 them cheaper than in other markets, works a direct loss to the 
 country exporting them. 
 
 This is now the case in this country with many leading 
 commodities. When cotton is exported to pay debts due 
 abroad as interest on bonds, for instance, at ten cents, instead 
 of fifteen, it takes one-third more cotton to pay the same debt 
 
 We have been sending out millions of gallons of petroleum 
 —almost exclusively an American product—at a price that 
 has not paid a dollar a day for the labor employed to produce 
 and prepare it, and nothing at all for the product, which, aside 
 from the employment of labor upon it, that is, so far as the 
 crude product is concerned—might as well have been found in 
 Germany as in the United States, for all the benefit we derive 
 from it. 
 
 Of course, abundance or scarcity of a commodity has its 
 effect, but to the extent that the price of anything has been de¬ 
 pressed below the level that marks it cheaper in this country 
 than in any other, by the arbitrary alteration in the value of 
 money, or other financial derangement, to that extent it has 
 been at a loss to the country. And such losses in the past 
 three years might probably be reckoned by scores of millions. 
 
 The theory that the lower the prices the more in value we 
 will export, is fallacious and injurious. 
 
 VIII. DEPRECIATION NO JUSTIFICATION FOR 
 APPRECIATION. 
 
 The idea seems very generally to prevail that because our 
 money was depreciated during the war, whereby creditors 
 were wronged, that we are bound now to appreciate it, and 
 
THE APPRECIATION OF MONEY. 
 
 85 
 
 thus restore the former status of things. And perhaps this 
 was expected during the period of legal tender issues. But 
 the least inspection of this view discloses its impracticability. 
 
 Without raising the question, at this period, of the wisdom 
 of the extensive issues of currency during the war, the 
 only justication of it made at the time, or since, was the 
 necessities of war: and if the wisdom of this action be con¬ 
 ceded, I presume few would deny the justification. Certainly, 
 when taking the person and compelling service in the army at 
 such rate of pay and in the kind of money the government 
 might prescribe, was justifiable, the taking of property in such 
 equitable manner as the Government might also prescribe, 
 would be likewise justifiable. For is not life more than meat; 
 the body more than raiment ? 
 
 But the mistake lies in supposing thht by appreciating the 
 currency now we are righting a wrong done then. Instead of 
 that it is a new act of injustice—a new wrong through and 
 through. It does not touch at any point the wrong—if wrong 
 was done—of depreciating the value of money fifteen years 
 ago. No plea of necessity can now be raised. 
 
 What justification then, when the country is overwhelmed 
 with debt, in a large degree caused by the war, is there for 
 appreciating the value of money by legislation ? Every arbi¬ 
 trary increase in the value of money works a robbery of 
 debtors, as much as the depreciation does of creditors; but 
 while political economists and moralists can not find language 
 too strong for their denunciation of attempts to depreciate 
 money, they are silent as to the wrong done to debtors by 
 appreciating it. 
 
 IX. THE PANIC AND ITS LESSONS* 
 
 If we assume the total currency of the country to be $750,- 
 000,000, and $150,000,000 to be kept practically out of circu¬ 
 lation—being held as a reserve in banks or hoarded—we have 
 $600,000,000 ordinarily in circulation. 
 
 But this $600,000,000 really constitutes but a smaller part 
 of all the instruments of credit which perform the functions of 
 
 * This article was first published in September, 1873. 
 
86 
 
 THE APPRECIATION OF MONEY. 
 
 a circulating medium in the general exchange of commodities. 
 Bills of exchange, drafts, checks, bank credits, etc., make up 
 by far the larger part of the circulation, by means of which the 
 exchange of commodities is effected and commerce carried on. 
 
 These instruments of credit, as they are called, are evidences 
 of debt, the same as bank notes, but differ from them in being 
 created and canceled daily; and instead of being of general 
 credit, like bank notes, they are confined to limited channels, 
 and depend upon the reputed ability and integrity of the indi¬ 
 viduals or houses making them, and upon the character of the 
 transactions out of which they grow; but they are no less a part 
 of the circulating medium than bank notes, and, in fact, perform 
 much the larger part of the work accomplished by a circulating 
 medium in the exchange of commodities. Without them the 
 vast machinery of commerce could not be kept moving, and, 
 while they perform this function, such instruments of credit 
 are capital just as much, and in the same sense, as bank notes 
 
 This fact is fully recognized by the ablest writers on politi¬ 
 cal economy, and has been recently discussed with great 
 ability by H. Dunning Macleod: “ Instruments of credit of all 
 sorts immensely exceed in quantity the money in the country, 
 on the lowest calculation, tenfold. Credit is in itself a mer¬ 
 chandise, and the subject of a gigantic commerce.” 
 
 But if we suppose the average credits made up of all the 
 forms known to commerce, used in effecting exchanges, liqui¬ 
 dating debts, etc., in the United States, other than bank notes 
 and greenbacks, to be but twice the volume of money currency, 
 or say $1,200,000,000, we would have $1,800,000,000 as the 
 total of all the means of circulation employed in trade. 
 
 Now, the $1,200,000,000 being based upon individual credit 
 —that is, the reputed wealth or ability of individuals, corpora¬ 
 tions, or banking houses—in times like these, is, to a large 
 extent, swept away. They are creations of the will, and de¬ 
 pend upon confidence, and when this is gone the whole sys¬ 
 tem tumbles; only the staunchest stand. 
 
 We may safely say then that of the $600,000,000 of money 
 currency, one-third of it, or $200,000,000, are withdrawn and 
 locked up; and of the $1,200,000,000 of the commercial instru- 
 
THE APPRECIATION OF MONEY. 
 
 8; 
 
 merits of circulation, two-thirds, at least, are temporarily de¬ 
 stroyed, or made for the time being non-available. Hence the 
 sudden blockade in commerce, and the embarrassment and 
 general stagnation of trade. 
 
 But, fortunately, these instruments of circulation are rapidly 
 restored, when confidence is restored, and with the dropping out 
 of unsound makers, the system becomes purified and placed on 
 a sounder basis. Macleod says: “ All commercial crises arise 
 out of the excessive creation of that species of property called 
 credit.” But in a panic crisis it is not the excess of credit alone 
 that suffers, but all credit. 
 
 Then how are panics that not only break down unsound 
 credit, but overturn all credit and bring general ruin, to be 
 prevented ? 
 
 They occur as well when currency is on a specie basis as 
 when it is not. They occur when the credit structure has 
 grown too large for its basis of solid capital, and when it is 
 known that some portion is more or less unsound. But panics 
 do not discriminate. They overturn the sound with the un¬ 
 sound. How can they be prevented? Perhaps in no way 
 entirely. But it is plain that with our present system of in¬ 
 flexible currency—the same volume for all periods and all con¬ 
 ditions of business—that a panic works contraction to an enor¬ 
 mous extent. This sudden contraction cannot fail to work 
 immense loss to legitimate trade and capital, as it is doing 
 now. But with the volume of currency unchangeable, there 
 is no relief but by such devices as have been resorted to in 
 the last ten days. 
 
 No one can doubt that had it been possible at the outset of 
 of the panic to obtain currency on government securities to 
 replace that drawn out by terrified depositors, the panic would 
 have saved, at least, the really sound institutions. Could the 
 Union Trust Company have exchanged its millions of gold 
 bonds for greenbacks on Friday, it would not have been com¬ 
 pelled to close its doors on Saturday. The contraction method 
 adopted to save banks has already proved disastrous in Eng¬ 
 land, while in ’47, ’57 and ’66, when the government author¬ 
 ized the Bank of England to issue its notes in excess of the 
 statutory limits, the panic was immediately allayed. 
 
88 
 
 THE APPRECIATION OF MONEY. 
 
 Macleod says of the panic of 1866: “The announcement 
 of the suspension of the Bank charter act produced the best 
 effects. The next morning the Bank raised its rates to ten per 
 cent., and everything was calmed down, and though conse¬ 
 quently to this some other stoppages took place, yet the knowl¬ 
 edge that the Bank had power to make advances on good se¬ 
 curities abated the panic. On the 18th of May, the Chancel¬ 
 lor of the Exchequer stated that the bank had advanced £\2,~ 
 225,000 (over $60,000,000) in five days.” A flexible national 
 currency that can be increased or decreased in volume under 
 proper regulations and upon solid securities, seems to be the 
 remedy which experience offers. By flexibility is not meant 
 an elastic cord in the hands of one man to “move the corps.” 
 It would be as rational to place in the hands of a man in the 
 third story of a building the control of the safety valve of a 
 boiler in the cellar, with instructions to raise and lower the 
 valve as he thought necessary., 
 
 A self-adjusting elastic currency, not a system that shall foster 
 undue credit or support what is unsound, but one that will save 
 from the ruin of mad panics, legitimate commerce, and credit, 
 its great instrument, is urgently demanded. 
 
 X. LEGISLATION AND THE REVIVAL OF 
 TRADE. 
 
 It is said that business men are opposed to legislative inter¬ 
 ference with money. As a general proposition this is doubt¬ 
 less true; at least, it ought to be true. 
 
 But that business men and business interests are opposed to 
 undoing the legislation by which business is now tied up, is 
 probably not true; at least, it should not be. It would be little 
 consolation to a man bound with cords to be told to rest easy, 
 because they would in time rot off. It was said of slavery, let 
 it alone, the evil will cure itself; but its dying throes well-nigh 
 sundered the nation. When a state of prolonged prostration 
 of the industrial life of a country follows as the direct and 
 necessary consequence of bad monetary legislation, the contin¬ 
 uance of that legislation will not prove a remedy, and if the 
 proper remedy be not applied, then there need not be surprise 
 if relief be gained through convulsive throes ! 
 
THE APPRECIATION OF MONEY. 
 
 89 
 
 The question, then, is shall the monetary legislation of this 
 country, which pledges us to the demonetization of silver and 
 the redemption of greenbacks in gold, and their cancellation, 
 continue in force, or shall it be repealed? It has been shown 
 that to increase the volume of money by paper issues, made 
 legal-tender, has the same effect upon prices that the reduction 
 of the weight of metal in coins would have. 
 
 No people in the world, advanced enough to have commerce 
 and make contracts, would submit first to a reduction of the 
 value of coins by making them smaller, and having created 
 obligations and adjusted prices to such a scale, then to a resto¬ 
 ration of their former value by taking two coins to make one.* 
 Philip le Bel, Edward III., Henry VIII., and Louis XIV., all 
 tried it. They could reduce the value of coins and force 
 their subjects to take debased and depreciated coins in pay¬ 
 ment of debts due from the sovereign, but no effort to raise 
 the standard , without adjustment, of contracts, has ever been 
 successfully carried out. Trade has been fettered, production 
 checked, poverty, distress and famine brought on the people, 
 by the attempt, but the object sought was never attained. 
 Even Queen Elizabeth, so much praised for her effort, failed, 
 as shown by James Taylor, to restore the coinage depreciated 
 
 *“ The bullion contained in coins of the same denomination, has sometimes, 
 though rarely, been increased, and creditors enriched at "the expense of their 
 debtors. This method of swindling is said to have been first practised in the 
 worst times of the Roman Empire. The citizens being bound to pay into the 
 imperial treasury a certain number of pieces of gold, or aurei , Heliogabalus, 
 whose cunning appears to have been nowise inferior to his proverbial profligacy, 
 increased the weight of gold in the aureus; and thus obtained, by an underhand 
 trick, an addition to his means of dissipation, which he might not have been able 
 to obtain by fair and open proceeding.”—“ Metallic and Paper Money and 
 Banks.” —J. R. McCulloch. “ Directly to alter the terms of contracts between 
 individuals, would be too barefaced and tyrannical an interference with the 
 rights of property to be tolerated. Those, therefore, who endeavor to enrich one 
 part of society at the expense of another, find it necessary to act with caution and 
 reserve. Instead of changing the stipulations in contracts, they have resorted to 
 the ingenious device of changing the standard by which these stipulations are 
 adjusted. They have not said in so many words that ten or twenty per cent, 
 should be added to, or deducted from, the debts and obligations of society, but 
 they have, nevertheless, effected this by making a proportional change in the value 
 of money.”— Ibid. 
 
9 o 
 
 THE APPRECIATION OF MONEY. 
 
 by her father and brother; but her bad efforts entailed the 
 Poor Laws* on her kingdom. True, England in 1821 
 restored convertibility to Bank of England notes, but even in 
 doing this the Government inflicted upon the people suffering 
 and misery greater than she had suffered from all her long 
 wars. The history of that period should be a warning to 
 every country, and to every age. Her resumption measures 
 were based upon erroneous principles, says Sir James Graham. 
 
 “ Mr. Peel relied implicitly on the wrong datum of three per 
 cent, being the full extent of the depreciation as indicated by 
 the price of bullion; a price which he and his colleagues had, 
 by their own measures, artifically reduced; and having first 
 deceived himself, he succeeded in misleading the legislature; 
 for, by the use of examples which were not applicable, and by 
 the oversight of the most important considerations, he carried 
 the restoration of the ancient standard of value, without any 
 adjustment of contracts made in a debased currency, or pro¬ 
 vision for the increased incumbrance of all debts, taxes and 
 annuities.” 
 
 And again the same writer says : “ Whether we regard pri¬ 
 vate debts or public burthens, the effects of the measure of 1819 
 have been to enact that for every less sum owing a greater 
 shall be paid ; prices falling, but pecuniary engagements remain¬ 
 ing undiminished, the farmer has no profit, the landlord no 
 rent, the manufacturer no customer, the laborer no employ¬ 
 ment, a revolution of property and a derangement of the whole 
 frame of society must necessarily ensue.” 
 
 We have repeated yill England’s mistakes and invented others 
 besides. England could not have resumed specie payments 
 when she did if the rest of Europe at that time had undertaken 
 to demonetize silver and limit their metallic money to gold. 
 At that time England had only gold, Germany had only silver, 
 and thus the two metals combined made up the total money 
 
 *“The want of employment at adequate wages would be the natural conse¬ 
 quence of an increased value of money then, in like manner as the same cause 
 produces the same effect now ; and this, together with the loss of subsistence 
 previously derived from religious houses, probably caused the poor laws, which 
 Elizabeth established, to become imperatively necessary.” 
 
THE APPRECIATION OF MONEY. 
 
 9 1 
 
 of the two countries. The case would have been very different 
 if England had been compelled to divide her gold with coun¬ 
 tries which till that time had used silver. Again, England 
 undertook only to resttme cash payments; that is, to restore 
 converibility to Bank of England notes ; the notes, to the 
 extent they were wanted, remaining in circulation. 
 
 We think we can do more. We propose to substitute gold 
 for our greenbacks in 1879, and at the same time join in the 
 plan—more properly plot—to demonetize silver. We do not 
 propose merely, to restore the old standard. We propose to raise 
 that standard fifty per cent, or more , and pay our debts accord¬ 
 ingly. Who so morally blind as to deny that having depreciated 
 our money by large issues of paper, and having contracted 
 enormous debts, gauged to the extended volume, then to un¬ 
 dertake, not only to restore the scale of values that formerly 
 existed, but by the demonetization of one of the precious 
 metals, to raise a much higher standard, and require all debts to 
 be discharged according to that standard , is a national crime, 
 without palliation, and of a magnitude perfectly appalling! 
 At one stroke the faith of contracts involving thousands of 
 millions of dollars is violated, and the integrity and honor of 
 the people involved in acts that compass their ruin. 
 
 If, as Sir Henry Maine says, civilization rests upon the in¬ 
 tegrity of contracts, what a responsibility has been assumed by 
 legislators who have brought this crisis upon the country ! 
 
 If such a change in the relative value of money and property 
 must come, the disaster to the country would be less if it could 
 be sudden and then over , prices being the sooner adjusted to 
 the higher scale. Fewer debtors, e\/en, would probably be 
 ruined by a sudden change than by a slow process, which 
 strangles industries and thwarts business.* Hence, two con¬ 
 siderations are involved in the problem: First, the moral one 
 of a change in thewalue of money; and, second, the economic 
 question of the effect of such a change while it is going on. 
 
 * It is not, in my opinion, of great importance what amount of money may 
 exist in any country; but that (he question of whether it is on the increase or de¬ 
 crease is one of great importance to every branch of its industry ?”—Alexander 
 Baring's evidence before the Secret Committee of 1819. 
 
92 
 
 THE APPRECIATION OF MONEY. 
 
 Every producer knows the result of attempting to carry on 
 production on a declining market. 
 
 Does the interest of business then demand that there shall 
 be no interference to repeal such legislation ? Do business 
 men demand that the present monetary laws be let alone? 
 
 Let those laws continue in force till the demonetization of 
 silver and the cremation of greenbacks have been carried to the 
 full extent contemplated by existing statutes, and not 5,000 
 miles of railroad in the Unite# States can earn and pay div¬ 
 idends and interest on the capital represented. . 
 
 At one and the same time, and by force of the same mone¬ 
 tary legislation, the value of their represented capital is 
 doubled, and the volume of business greatly reduced. 
 
 How can savings banks pay their deposits when the dollars 
 they are liable for have been doubled by force of legislation, 
 and the securities they hold—whether real estate mortgages 
 or stocks, other than Government bonds, which participate in 
 the rise of money—have, on the other hand, depreciated half? 
 
 No, it cannot be true that business, or business men are de¬ 
 manding that the present legislation be permitted to stand. On 
 the contrary, all interests, except those of the secured creditor, 
 demand immediate repeal. Without its repeal a permanent re¬ 
 vival of business is impossible. The producer must know, the 
 purchaser must know, the contractor must know when they 
 make engagements, whether the dollars they bargain to pay 
 are to be the sarrte as when the contract was made, or whether 
 they are to be changed in size or value meantime by the opera¬ 
 tion of law. 
 
 A general European war may increase the demand for bread- 
 stuffs and war material. But great wars hurt the world. They 
 destroy capital and impoverish the nations participating in 
 them, and in the long run, even of a few years, the aggregate of 
 commodities they are able to take and will take from us will 
 be less than if no war had taken place. In any event a foreign 
 war can not cure the evil of bad monetary legislation at home. 
 The only cure for that is the repeal of the laws, and that all 
 interests demand. 
 
 A change in public sentiment on this subject is rapidly tak- 
 
THE APPRECIATION OF MONEY. 
 
 93 
 
 ing place. It is spreading from the West to the East, and de¬ 
 manding rights for the debtor as well as justice to the creditor. 
 The demand is just; the principle on which it rests is sound, 
 and in accord with economic laws, and that leader and that 
 party that oppose it will be overthrown. Let both take warn¬ 
 ing. 
 
 May, 1877. 
 
 THE END.