Currency

“ Thus, then, the real working power or worth of the currency is founded on the entire sum of the relative estimates formed by the population of its possessions; a change in this estimate in any direction (and therefore every change in the national character) , instantly alters the value of money, in its second great function of commanding labour. But we must always carefully and sternly distinguish between this worth of currency, dependent on the conceived or appreciated value of what it represents, and the worth of it, dependent on the existence of what it represents. ”

“ A currency is in its most perfect state when it consists wholly of paper money, but of paper money of an equal value with the gold which it professes to represent. The use of paper instead of gold substitutes the cheapest in place of the most expensive medium, and enables the country, without loss to any individual, to exchange all the gold which it before used for this purpose, for raw materials, utensils, and food, by the use of which both its wealth and its enjoyments are increased. ”

“ Currency is a word much more comprehensive than the word money, as it may include bank bills and even bills of exchange as well as coins of gold and silver, but the word money, as employed in the grant of power under consideration, means the coins of gold and silver, fabricated and stamped as required by law, which, by virtue of their intrinsic value, as universally acknowledged, and their official origin, become the medium of exchange and the standard by which all other values are expressed and discharged. ”

“ True or perfect currency flows freely, like a pure stream; it becomes sluggish or stagnant in proportion to the quantity of less transferable matter which mixes with it, adding to its bulk, but diminishing its purity. [Articles of commercial value, on which bills are drawn, increase the currency indefinitely; and substances of intrinsic value, if stamped or signed without restriction so as to become acknowledgments of debt, increase it indefinitely also.] ”

“ The sense of honor of a nation is the source of its credit, and its credit is one of its best paying investments.
The second prerequisite of a revival of business and prosperity I stated to be a sound currency, a currency of real and stable value. Let me put to any thinking man in this assembly, be he farmer, or laborer, or tradesman, or merchant, or banker, or manufacturer, a plain, simple question, and ask for a candid answer. ”

“ If this reasoning is plainly unanswerable, when we are thinking of a measure or rule, for the amount of a currency, we must turn our thoughts to the income of a country in its most extended sense,—and as we must admit that currency ought to be augmented proportionably with income, whatever be the amount of debts and taxes and levies, we must also admit that a greater currency is necessary now than in 1809 or 1810, or in any other year, if our income on the whole is greater. ”

“ Now, observe, all these sources of variation in the power of the currency exist, wholly irrespective of the influences of vice, indolence, and improvidence. We have hitherto supposed, throughout the analysis, every professing labourer to labour honestly, heartily, and in harmony with his fellows. We have now to bring farther into the calculation the effects of relative industry, honour, and forethought; and thus to follow out the bearings of our second inquiry: Who are the holders of the Store and Currency, and in what proportions? ”

“ Now I have shown that an irredeemable currency, producing by its fluctuations high prices for what the farmer has to buy, and low prices for what he has to sell, turns the scale in every case against him. ”

“ Character of currency in the Middle Ages.—One of the serious obstacles to the development of commerce was the character of the currency in the various countries of Europe. Assuming that the reader appreciates the importance of money as facilitating the operations of exchange, and knows the qualities of good money, we may confine ourselves to pointing out some of the characteristic faults of medieval currency.
(1) Merchants could not rely upon the government to maintain the standard of value. ”

“ Each, therefore, serves equally to supply means of speculation to the merchant. So far, moreover, as bills and notes constitute what is called the circulating medium, or paper currency of the country, and prevent the use of guineas, the fictitious and the real bill are upon an equality; and if the price of commodities be raised in proportion to the quantity of paper currency, the one contributes to that rise exactly in the same manner as the other. ”

“ Nevertheless, as an instrumentality for transferring commodities used for money, and avoiding the loss and waste unavoidable in handling and transporting such commodities, the currency thus devised was a great invention, and being always represented by, or, as we may express it, covered with, the commodity—gold—which, of all things, fluctuates least in value, it perfectly answered the purpose of money, without actually being so. ”

“ How shall we get a currency? Throughout the history we have seen them struggling with the question: How shall we get enough money to do our business with? They have believed that somebody must provide a currency, that there would not be any, or would not be enough, if banks did not provide it. They have also believed that there was some great economy possible in the use of paper for money. ”

“ At certain times there are greater and less demands for money, which, under our present practices, make a dollar, to-day, worth four per cent. per annum interest, and to-morrow increase it to ten per cent. It must be remembered that we are now speaking of an irredeemable currency, the representative of the wealth of the nation: that the government representing the nation has uttered it, in behalf of the people, upon the soundest and, in reality, the only sure basis of value any money can have—the productive power and capacity of the nation. ”

“ This the proposed currency will be by right of use,—a right inherent in a national currency, and respected as long as the government respects itself, that is, as long as the people govern wisely.
A dollar, value-currency, will always buy a dollar's worth of gold, but it may not always buy the quantity of gold contained in the gold dollar. ”

“ Arbitrary control and issues of currency affect the production of wealth, by acting on the hopes and fears of men, and are, under certain circumstances, wise. But the issue of additional currency to meet the exigencies of immediate expense, is merely one of the disguised forms of borrowing or taxing. ”

“ The substitute for all kinds of bank notes as the money for the people should be a purely people’s money—a national currency whose basis of value would be the accumulated wealth of the country, and also its capacity for regularly increasing such wealth. Is there any reliance to be placed in a currency issued by an individual or a number of individuals through an incorporated bank, based upon his or their wealth, which is at all times liable to pass into the hands of other individuals? ”

“ Currency, however fabricated, regulates value; and value, if left free, regulates currency, when it is used to facilitate exchanges; but when it is used to transfer property without compensation, it becomes an instrument in the hands of legislation, for fostering local and personal avarice. ”

“ The grounds, upon which the general power to coin money, and regulate the value of foreign and domestic coin, is granted to the national government, cannot require much illustration in order to vindicate it. The object of the power is to produce uniformity of value throughout the Union, and thus to preclude us from the embarrassments of a perpetually fluctuating and variable currency. Money is the universal medium or common standard, by a comparison with which the value of all merchandise may be ascertained, or, it is a sign, which represents the respective values of all commodities. ”

“ But, in my judgment, the first step toward accomplishing this object is to secure a currency of fixed, stable value; a currency good wherever civilization reigns; one which, if it becomes superabundant with one people, will find a market with some other; a currency which has as its basis the labor necessary to produce it, which will give to it its value. Gold and silver are now the recognized medium of exchange the civilized world over, and to this we should return with the least practicable delay. ”

“ If the currency system of England had been of silver alone, a single enactment lessening the content of the unit coin, or crying up its denomination, would have stopped any outflow caused by under-valuation as compared with foreign money value. ”

“ The first and most obvious method of attaining the object is to issue a paper currency which shall be redeemable, not in gold dollars of fixed weight, but in such quantities of gold and silver bullion as shall suffice to make the required purchases. ”

“ One or two things I will say, and first, I believe that every person who thoughtfully considers the question will agree with me upon a proposition which is at the base of all my consideration of the currency question, namely, that any dollar, paper or coin, that is issued by the United States must be made and kept in its commercial uses as good as any other dollar. ”

“ Under this head, we shall have to examine the laws of currency and exchange; of which I will note here the first principles.
Money has been inaccurately spoken of as merely a means of exchange. But it is far more than this. It is a documentary expression of legal claim. It is not wealth, but a documentary claim to wealth, being the sign of the relative quantities of it, or of the labour producing it, to which, at a given time, persons, or societies, are entitled. ”

“ Any increase of the currency, therefore, by means of paper representing other property than the coins—but having an equal value with the coins—is an absolute bona fide increase of the currency to that extent ”

“ If the gold currency were represented by bills of different denominations, e. g. five pound, one pound and ten shilling bills, then the quantity of these different tokens of value would be determined not only by the quantity of gold necessary for circulation as a whole, but also by that required in the sphere of circulation of each kind of bills. ”

“ The contraction of the currency is secured by selling foreign bills of exchange and locking up the currency received therefor, while the expansion of the currency is secured by releasing this currency to circulation, or, if necessary, by coining more currency. ”

“ It may be asked, moreover, if the currency is the cause of our suffering here, how is it that a similar condition of business affairs exists in England, where the currency has remained unchanged? There is no doubt in the world that an inflated currency does have a hot-house effect upon trade and production, and, as with all forced things, a corresponding reaction follows ”

“ So enormous did the evil grow, and so pervasive were its effects, that it absorbed all attention to the exclusion of everything else. What fixity of value between the different units of its currency is to the internal transactions of a country, a par of exchange is to its external transactions. A par of exchange between any two countries expresses the relative exchange values of their respective currencies in terms of each other. ”

“ It is not disputed that the value, the purchasing power of an irredeemable paper currency is affected by the quantity in circulation, and that other circumstances, such as the confidence of the people and solvency of the Government, remaining the same, an appreciable expansion of the currency will result in its depreciation, and vice versa. ”

“ In fact, it is evident that the method of maintaining par by selling exchange on other countries, and by exchanging currency directly for some commodity, such as gold, are at bottom much the same thing. ”

“ It is a fact very well known to every one who has given the least study to this subject that the amount of currency actually handled in the transactions of business is exceedingly small in proportion to the values passing from hand to hand in the shape of mercantile and banking paper, bills, checks, &c. ”

“ The second cause, that is to say, the relation the quantity of currency bears to the actual requirements of the business of the country, will operate as soon as the quantity of currency in circulation is in excess of the actual requirements of business, and that effect will grow more extensive as the volume of currency is increased. ”

“ The currency.—The last essential in perfect freedom of exchange is a satisfactory means of transferring completely and quickly all property right in any article of trade. Exchange of commodity for commodity or service for service is possible to a very limited extent, since the man who wants my horse may have nothing which I want in return, or if he has, the values may be unequal, and one or the other must remain in debt, which means that one of the articles belongs in part to both. ”

“ To make the currency do the usual office of money more effectually and fully, is legitimate regulation of the currency. To make it do the special office of theatre tickets or railroad tickets is superadding to its quality as currency, as money, or its equivalent, another and foreign quality. ”