PAPERS ON FINANCE AND COMMERCE.
PAPERS ON FINANCE AND COMMERCE.
PAPERS ON FINANCE AND COMMERCE.
PAPERS ON FINANCE AND COMMERCE.
The advantages of a currency which, instead of possessing the capacity of redeemability, is at all times convertible into something thatis itself productive, cannot fail to be appreciated by all who have given any attention to the science of money. Theories regarding this branch of social science have been about as destructive to the proper development and understanding of the science as religious theories have been to that of a proper appreciation of the functions and the benefits of religion. The last have at all times stood in the path of progress. So, too, have the first. And for this reason are we to-day almost at the mercy of those who are possessed of the accumulated wealth of the world, which in combination would be a power sufficient to control all government in its interests, and thus it would be enabled to bring the world again under a despotism to which that of past despotism would hold no comparison.
In such a money system too much circulating medium could never be uttered, for the moment a surplus quantity over the demands of legitimate business was in circulation, that moment it would begin to be converted into the four per cent. bonds; so that if there were two thousand millions uttered, it would always be worth just four per cent.; and if there were but five hundred millions uttered, it would never be worth any more than four per cent. Thus it is plainly to be seen that the government would always be necessitated to provide just as near the amount of circulating medium demanded as it would be possible to arrive at,and no more; for on any such surplus it would, as a matter of course, be obliged to pay the interest provided, which thus becomes the absolute measure of value that money requires to make it substantial, and which is required to deprive it of that capacity for producing great commercial inflations, which, in the financial history of this country, develop and burst about every second decade, and which produce not only the complete destruction of all purely speculative enterprises, but also the most wide-spread and fearful demoralization in all legitimate business.
Under such a money system, speculation, with all its accompanying demoralization, would rapidly depart from all classes of society. It is a notorious, yet unappreciated fact, that speculative enterprises lie at the foundation of all financial disorder, for which, if a remedy can be provided, the very considerable talent and time which is now devoted to it would be turned into channels of general usefulness and productiveness. Production is the foundation of all wealth, and, consequently, to increase wealth, production must be increased. Speculation is that spirit which constantly saps the vitality of wealth, and, therefore, society has no greater nor more debasing enemy than speculation.
It may be objected to by some that speculation leads to national development; that in many of the wild railroad, emigration, city and other schemes, that have been projected and carried through under its stimulus, the welfare of the country has been subserved. To this ingenious objection it may be answered that, under a sound financial system, these enterprises would have been undertaken everywhere when the demands of the country warranted them, and because there was a demand for them, instead of for the pure purposes of individual or corporate speculation. One of the best results that would flow from this change of incentive would be, that no “Bubbles” could be palmed off on the unwary by “flash” advertising, which would burst at some future time, to the destruction of some deluded victims of unscrupulous financiers.
It is one of the most fatal of commercial errors to suppose that large general prices are an evidence of prosperity. On the contrary, it is true that when the prices affixed to any kind of property are larger than its real capacity for production, it is an expansion which must at some time collapse, to the detriment of the holder. Thus, whenever property is valued at such a price that it cannot be used to pay a certain per cent. income, its value is expanded, and though this expansion may continue under the pressure of a so-called prosperity, and become general, even country-wide, if the general productive capacity of the country cannot sustain this increased value, collapse must as surely come as results follow causes. Even in this demonstration it is conclusively shown that the productive capacity of the country is therealmeasure of value, and that,finally, no matter how irrelevant the process of wealth and prices may have been to it,it is the power which ultimately measures all values.
This appears to us such a plain proposition that it seems almost superfluous to present further arguments to prove the desirability of at once proceeding to make the productive capacity of the country the basis of value upon which to issue a currency to meet the legitimate demands of the people for the purposes of exchange. The attention of all who realize the unstableness of our present system, and the desirableness of providing against the tremendous fluctuations it is capable of, is called to the necessity of uniting to bring this matter prominently before thenext Congress, with the view of having it thus brought prominently before thecountry, and of having it thoroughly analyzed and understood. When analyzed and comprehended, the ideaof agold basiswill forever depart from all progressive minds, and the impetus the new money system will thereby receive will never be checked until its science is developed into general national practice.
New York, Oct. 27, 1870.
New York, Oct. 27, 1870.
New York, Oct. 27, 1870.
New York, Oct. 27, 1870.