Currency devaluation

“ They say
that the flood of importations has deprived currency of its occupation. There is more specie in the United States than at any former period, but it is not currency because it is unemployed. The importation of foreign goods was never so great as when our embarrassments were produced. The importer's ledger ought to settle the question. In cases of bankruptcy foreign creditors appear. We have only the miserable and ruinous circulation of a currency for remittance to foreign nations. They hold the coin and we hear it jingle. The excess of exports over imports is the rate of profit. ”

“ A permanent increase of currency can only be effected by employment for it in exchanging or transferring property, but its increase for one or the other object, produces very different consequences to a nation. When currency is increased by a demand for it to facilitate exchanges, it indicates national prosperity; but when it is increased for the purpose of transferring property, it is an infallible proof of fraud and oppression. ”

“ It is only thus that a general rise of prices can be a source of benefit to producers and dealers; by diminishing the pressure of their fixed burthens. And this might be accounted an advantage, if integrity and good faith were of no importance to the world, and to industry and commerce in particular. Not many, however, have been found to say that the currency ought to be depreciated on the simple ground of its being desirable to rob the national creditor and private creditors of a part of what is in their bond. ”

“ A disordered currency is one of the greatest political evils. It undermines the virtues necessary for the support of the social system and encourages propensities destructive of its happiness; it wars against industry, frugality, and economy, and it fosters the evil spirits of extravagance and speculation. ”

“ These are the only sensible and legitimate ways of controlling and lowering the price of Gold: not the contracting our currency, distressing our merchants, increasing our taxes, and withdrawing those means of credit and accommodation by which we have gained our power and superiority in the commercial world.
No one can be more aware than the writer of the evils which spring from over trading, which often results from too great facility in acquiring credit and currency: but it is an evil which has a tendency to cure itself. ”

“ If, however, a government refrains from regulation and allows matters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be concealed no longer.
The effect on foreign trade of price-regulation and profiteer-hunting as cures for inflation is even worse. Whatever may be the case at home, the currency must soon reach its real level abroad, with the result that prices inside and outside the country lose their normal adjustment. ”

“ Nobody wants to have French assignats issued amongst us, or to have every insolvent who chooses to call himself a banker authorised to issue currency ad libitum, and substantially usurp the Queen's prerogative by coining worthless paper into doubtful money. But as little can the nation go on longer with our circulation based exclusively on gold coin, and liable to be contracted as that coin is drawn out of the country; thereby doubling the evil, by first inducing speculation when specie is plentiful, and then withdrawing the currency when it becomes scarce. ”

“ A depreciation of money is not an accumulation of national wealth, and therefore a nation may both abound in currency, and also become poor and wretched. This is, invariably, effected by the system for increasing currency, combined with regulations by which its occupation of exchanging property is contracted, and that of transferring it, is extended. The supreme law of commerce governs currencies both local and universal. ”

“ The approach to a specie basis is very gratifying, but the fact can not be denied that the instability of the value of our currency is prejudicial to our prosperity, and tends to keep up prices, to the detriment of trade. The evils of a depreciated and fluctuating currency are so great that now, when the premium on gold has fallen so much, it would seem that the time has arrived when by wise and prudent legislation Congress should look to a policy which would place our currency at par with gold at no distant day. ”

“ The effects of the depreciation of the paper currency in the United States are thus described by Mr. Wells: “It renders it impossible to sell abroad the products which have cost too much at home, and invites from other countries the products of a cheaper labor paid for in a sounder currency. It exaggerates imports, while destroying our ability to pay in kind.” ”

“ This would be a real depreciation of our currency, raising the prices of all other commodities in the same proportion as it increased that of gold bullion. The owner of money would in this case suffer an injury equal to what a proprietor of corn would suffer, were a law to be passed prohibiting him from selling his corn for more than half its market value. The law against the exportation of the coin has this tendency, but is so easily evaded, that gold in bullion has always been nearly of the same value as gold in coin. ”

“ If depreciated paper is to be continued as the permanent currency of the country, and all our coin is to become a mere article of traffic and speculation to the enhancement in price of all that is indispensable to the comfort of the people, it would be wise economy to abolish our mints, thus saving the nation the care and expense incident to such establishments, and let our precious metals be exported in bullion. ”

“ There still remains to be considered the effect of depreciated currency on our trade with other nations. By raising prices at home higher than they are abroad, imports are largely increased beyond the exports; our coin must go abroad; or, what is far worse for us, our bonds, which have also suffered depreciation, and are purchased by foreigners at seventy cents on the dollar. ”

“ It is therefore foolish to blame the Secretary of State for betraying the interests of India and at the same time to permit him to coin rupees, the very means by which he is able to betray. If a gold currency is wanted, and it is wanted because the rupee is a bad standard of value, then what is necessary is not to put a limit on the drawings of the Secretary of State or the opening of a gold Mint, but a short enactment stopping the coinage of rupees. Then only gold—made legal tender, at a suitable ratio with the rupee—will become a part of Indian currency. ”

“ Again, sir, a depreciated and fluctuating currency is a premium and bounty to the broker and money changer. Under his manipulation our paper standard of value goes up and down, and he gambles and speculates, with all the advantages in his favor. Good people look on and think that it is gold that is going up and down; that their money is a dollar still, and trade and traffic in that belief. ”

“ Continued fluctuations in the value of gold, as compared with the national currency, has a most damaging effect upon the increase and development of the country, in keeping up prices of all articles necessary in everyday life. It fosters a spirit of gambling, prejudicial alike to national morals and the national finances. If the question can be met as to how to get a fixed value to our currency, that value constantly and uniformly approaching par with specie, a very desirable object will be gained. ”

“ To hold what we have and to appreciate our currency to that standard is the problem deserving of the most serious consideration of Congress.
The experience of the present panic has proven that the currency of the country, based, as it is, upon the credit of the country, is the best that has ever been devised. Usually in times of such trials currency has become worthless, or so much depreciated in value as to inflate the values of all the necessaries of life as compared with the currency. Everyone holding it has been anxious to dispose of it on any terms. ”

“ Such being the state of affairs—a great mass of new credit and currency based on securities—it is clear that our currency has been deprived for the time being of that direct relation with its gold basis that used in former time to regulate its volume according to world prices and our international trade position. As the Committee says, "It is not possible to judge to what extent legal tender currency may in fact be depreciated in terms of bullion. But it is practically certain that there has been some depreciation, and to this extent therefore the gold standard has ceased to be effective." ”

“ The fact that those countries whose fiduciary issues have sunk to an apparently ruinous level are on that very account able to export their merchandise with profit, taking payments in comparatively valuable currencies and paying their way at home in depreciated paper, is illuminated by the lesson of the territories with currency maintained at a high exchange rate by gold backing, which are unable to find buyers of their products because no outsider can afford to pay the exaggerated rates of exchange. ”

“ In the first place, the common notion that the draining of gold out of the country is intrinsically, and in all cases, an evil, is nothing but a political superstition—a superstition in part descended from the antique fallacy that money is the only wealth, and in part from the maxims of an artificial, law-produced state of things, under which the exportation of gold really was a sign of a corrupted currency: we mean, during the suspension of cash-payments. ”

“ In fact already at least one bitter book has appeared in England against contraction, alleging that a conspiracy is now being plotted by the creditor class to destroy the war currency and produce contraction.
The abuse most common in currency history has been inflation in the interest of the debtor class, and especially of the Government exchequer. The proposed scheme would not only be free of this danger but, when once in operation, would be a strong safeguard against the whole idea of inflationistic legislation. There is always with us a latent danger of inflation ”

“ It records the most gigantic attempt ever made in the history of the world by a government to create an inconvertible paper currency, and to maintain its circulation at various levels of value. It also records what is perhaps the greatest of all governmental efforts—with the possible exception of Diocletian's—to enact and enforce a legal limit of commodity prices. Every fetter that could hinder the will or thwart the wisdom of democracy had been shattered, and in consequence every device and expedient that untrammelled power and unrepressed optimism could conceive were brought to bear. ”

“ It has all the bad qualities that its enemies charged in the original bill and none of its benefits. It now creates money and by its very terms declares it a depreciated currency. It makes two classes of money—one for the banks and brokers, and another for the people. It discriminates between the rights of different classes of creditors, allowing the rich capitalists to demand gold, and compelling the ordinary lender of money on individual security to receive notes which the government had purposely discredited.... ”

“ If regulated by the price of Bullion, as inconvertible Currency might be safe, but not Expedient. In order that the value of the currency may be secure from being altered by design, and may be as little as possible liable to fluctuation from accident, the articles least liable of all known commodities to vary in their value, the precious metals, have been made in all civilized countries the standard of value for the circulating medium; and no paper currency ought to exist of which the value can not be made to conform to theirs. ”

“ And now I hear that they have begun to make money by debasing the old silver shoe coinage, which, though it is sold by weight, used to have a certain standard of purity, and they have issued cash which have no intrinsic value at all, and that do not represent the fraction of a coin having any intrinsic value. The result of this currency "Rake's Progress" has been to produce what corruption always does produce—widespread poverty. Everybody cheats. ”

“ The national power to create money is appropriated to enrich bondholders; a vast public debt payable in legal tender currency has been funded into gold-bearing bonds, thereby adding millions to the burdens of the people.
Silver, which has been accepted as coin since the dawn of history, has been demonetized to add to the purchasing power of gold by decreasing the value of all forms of property as well as human labor, and the supply of currency is purposely abridged to fatten usurers and bankrupt enterprise and slave industry. ”

“ They are all agreed that the system which professes to rectify an inevitable drain of gold, by crippling the trade of the country, and forcing down the value of its property, is nothing short of absolute infatuation, and that, considered by itself, it admits of no intelligible defence. It would be well, therefore, if an effort were made, in the first instance, to get rid of the odious and absurd restrictions, or at least to substitute for the present miserable driblet, a much larger amount of paper currency, which may be based upon government securities. ”

“ That such a depreciation is possible cannot be denied even by those who maintain that rupees are issued only in response to trade demand, otherwise why should they be so very anxious for an increase of the gold reserves of the country. But the danger to the rupee currency does not merely arise from the possibility of indiscretion on the part of the Government. ”