Dollar (currency)

“ 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. ”

“ In contrast to their disdain for this foreign currency the boys cherish to a degree that is half funny, half pathetic, any specimens of “real money” that they are lucky enough to possess.
“Say, I had an American dollar bill in my hand the other day,—I felt just as if the old flag was waving over me!” And another lad; “Saw a U. S. Dollar bill today. Oh boy! but it looked a mile long to me!”
If anyone displays an American greenback at the counter a little riot is sure to ensue. All the boys nearby crowd about, feast their eyes on it, touch it, pat it, kiss it even. ”

“ If the cheaper coin is forced into circulation, it will, if coined without limit, soon become the sole standard of value, and thus defeat the desired object, which is a currency of both gold and silver which shall be of equivalent value, dollar for dollar, with the universally recognized money of the world. ”

“ One is for an inconvertible currency to be issued (by purchase of consols) whenever a sovereign is worth in commodities more than par and retired (by sale of consols) whenever it is worth less. The other is for a convertible currency, each £ note being redeemable at any time in as much as is then worth (in commodities) half the unit together with as much silver as is worth the other half. ”

“ “But I reckon it's only half the truth, for truth's like a dollar-piece, it's got two sides, and both are wanted to make it good currency. ”

“ It will be clear to any one who follows the reasoning and explanations in this book, [3] that the only money theory assumed is that common to all theories, and accepted universally; namely, that a large quantity of gold will buy more goods than a small quantity—a pound, than an ounce, for instance—and that an increase of the gold in a dollar will, somehow, increase the dollar's purchasing power. ”

“ Two commodities like gold and silver make a better standard than one and many make a better standard than two. The dollar standard should be worth a specified bill of goods such as one board foot of lumber, fifteen pounds of coal, half a pound of sugar, half an ounce of butter, a quarter of an ounce of leather, a quarter of a pound of steel, etc. Such an aggregate of goods, selected on the basis of their relative importance in trade, may be called a goods-dollar or a market-basket dollar. ”

“ So far we have treated only of Coin-Money in its two forms, substantive and subsidiary. The latter may now be dismissed as of little consequence in itself, and as already elucidated fully: the latter is the only Money that stands in its own right as a commodity, and the only Money that can give birth to the Denominations of Value, such as sovereigns, dollars, marks, and francs. What is a Dollar? A dollar is 254⁄5 grains of a metal compound coined, of which nine parts are pure gold and one part a hardening alloy. ”

“ Under such conditions all parts of the circulating medium tend to expand or contract in unison and a change in weight of the basic gold dollar carries with it a control of the whole mechanism of exchange, cash, and credit. ”

“ Instead of great price convulsions, such as we find throughout history, the index number would run close to par, say, 101, 1001⁄2, 101, 100, 102, 1011⁄2, 100, 98, 99, 99, 991⁄2, 100, etc., seldom getting off the line more than one or two per cent.
The process of correcting the dollar has just been likened to steering an automobile. ”

“ Practically and commercially speaking, a dollar is not necessarily a specific thing, made of silver, or gold, or any other single metal, or substance. It is only such a quantum of market value as exists in a given piece of silver or gold. And it is the same quantum of value, whether it exist in gold, silver, houses, lands, cattle, horses, wool, cotton, wheat, iron, coal, or any other commodity that men desire for use, and buy and sell in the market. ”

“ The real culprit being the dollar, the real remedy is to fix the purchasing power of the dollar. Our dollar is now simply a fixed weight of gold—a unit of weight, masquerading as a unit of value. A twentieth of an ounce of gold [1] is no more truly a unit of value or general purchasing power than is a pound of sugar or a dozen eggs. It is almost as absurd to define a unit of value, or general purchasing power, in terms of weight, as to define a unit of length in terms of weight, to define a yardstick as, let us say, any stick which weighs an ounce. ”

“ And so, as long as the index number persists in staying even a little above par, the dollar will continue to be loaded at each adjustment period, until, if necessary, it weighs an ounce—or a ton, for that matter. ”

“ They have no bank or post-office where you have a legal right to get a dollar for ten 10-cent pieces, and the result therefore of recklessly coining the base 10-cent pieces has been not only to depreciate it with regard to the dollar, but to make it an uncertain value, so that you must go to the money exchangers almost every morning and ask for the rate of exchange between the dollar and the small silver pieces. ”

“ 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. ”

“ This is a dollar—a unit of money—part of the great instrumentality created by society to effect the multitudinous exchanges of property and services among men. The amount of its command is constant, because the increase in the volume of money is regulated by the sovereign authority of the nation, with strict regard to the increase of population and demand—hence the value of this unit remains unchanging through time. ”

“ What is needed is to stabilize or standardize the dollar just as we have already standardized the yardstick, the pound weight, the bushel basket, the pint cup, the horsepower, the volt, and, indeed, all the units of commerce except the dollar. ”

“ Provision, it must be conceded, is not there made, in express terms, that the money unit of the United States shall be one dollar, as in the ordinance passed during the confederation, but the act under consideration assumes throughout that the coin called dollar is the coin employed for that purpose, as is obvious from the fact that the words dollars and units are treated as synonymous, and that all the gold coins previously described in the same section are measured by that word as the acknowledged money unit of the constitution. ”

“ However great may be the disturbing effect of some other cause on the scale of prices, that effect can always be neutralized by a suitable change in the weight of the gold dollar, provided, of course, that all other dollars are kept redeemable in gold dollars. ”

“ My own opinion is, that either the dollar must be absolutely defined—it must be the world over so many grains of pure gold, or so many grains of pure silver—or we must have other denominations for our money, as for instance, ounces, or parts of ounces, and the time will come, in my judgment, when there will be a money of the world, the same everywhere; because each coin will contain upon its face the certificate of a government that it contains such a weight—so many grains or so many ounces—of a certain metal. ”

“ Thus, the Bureau of the Mint, which would regulate the weight of the dollar, would do so merely by buying and selling gold at specific prices fixed for it by the Computing Bureau ; and it would have to buy or sell at the pleasure of the public. It would have no more choice than does a broker who is ordered to buy or sell at specified prices. ”

“ In 1787 the dollar was introduced as the unit in the United States, and it has remained as the standard of value either in silver or gold in that country. For the history of the various changes in the weights and value of the coin see Numismatics. The Spanish piece-of-eight was also the ancestor of the Mexican dollar, the Newfoundland dollar, the British dollar circulating in Hong Kong and the Straits Settlements, and the dollar of the South American republics, although many of them are now dollars only in name. ”

“ As we are now shaking off the inconveniences of a depreciating medium, the present moment seems to be that, in which a general currency can best be established, so as that in a few months, the same names of money will mean the same things in the several parts of the United States. ”

“ For the benefit of those readers who are not familiar with the American coinage, it is only necessary to say that a dollar is a hundred cents and a dime ten cents. A puzzle of this kind should rarely cause any difficulty if attacked in a proper manner. ”

“ Thus by the universal competition to get it the value of the dollar is made to depend upon the number of dollars that are out. This is a principle that lies at the very foundation of the science of money. The law, stated broadly, is that the value of each unit of money in any country at any given time depends on the whole number of units in circulation in that country. The larger the number of units out, population remaining the same, the less must be the value of each unit; the smaller the number of units out, population remaining the same, the greater the value of each. ”

“ A fairly nimble dollar had to be set down so many times in so many places, as it went from hand to hand, that we calculate in about five years it must have cost itself in ink, paper, pens, and clerk hire, let alone fret and worry. ”

“ And this composite goods-dollar is not altogether a joke. I am going to suggest its adoption—indirectly, at least!
4. The Gold Standard Not to Be Abandoned
Some literal-minded reader is now eager to point out how inconvenient, not to say grotesque, such a market-basket dollar would be if it were in circulation or were used for export or import! With its 15 lb. of coal, it is far too heavy to carry; with its wood and hay, it is far too bulky; its half egg would spoil; while to divide a pair of shoes into two hundred parts would annihilate their value. ”

“ A Visit of Santa Claus
Many people, after being forced to admit that an abundance or scarcity of money does, in some way, raise or lower the prices of other things, still remain somewhat mystified because they cannot trace the intermediate process by which money operates on the price of a given article. "How," they ask, "does the import of gold (or the issue of paper money or the creation of bank deposits) really affect the price my grocer charges me for butter? ”

“ Suppose one of these men gets from the mint a thousand gold dollars while, for pocket money, $50 is sufficient; he is almost sure to get speedily rid of at least $950 by spending it for enjoyables, investing it in durables, or depositing it in the bank. In any case he and the hundreds of others in the same situation tend to raise prices in the community where they are expending their money, or where they and others draw checks on the banks in which it is deposited. ”

“ Even if our shifting dollar were guiltless of most of the offenses charged, even if the high cost of living had no relation to the dollar, there would still be excellent reasons for standardizing it—on the same general principle on which we have standardized all other units. ”

“ Under the most favorable state of trade between the east and west an exchange of one per cent. was demanded from drafts and bills of exchange. With a national currency, uniform and equal throughout the country, this cost for exchange would not exist or would be greatly reduced. I called attention to the then increasing volume of local currency in the United States. When the United States had issued $250,000,000 of notes, the banks had largely increased their circulation. ”

“ With our present unstable dollar, the just intent of such agreements is constantly being balked by a change in prices. Gradually such corrections of the dollar will break down the popular superstition that "a dollar is a dollar"; for every time we correct the dollar we convict it of needing correction. Ultimately the correction will surely be applied not, as at present, as a patch on the dollar from the outside, but by incorporating it in the dollar itself. ”

“ The 23.22 grains in a gold dollar may be exchanged sometimes for more, sometimes for less, of other commodities. When it is exchanged for less, its value has fallen relatively to all other commodities, and, even if the name dollar remains the same, its value has fallen. One must then offer more dollars than before for the same commodities. That is, when money falls in value, prices rise; when money rises in value, prices fall. ”

“ In reality there is no such thing as an inflation of prices, relatively to gold. There is such a thing as a depreciated paper currency. ”

“ Wall Street had been doing business with pieces of paper; and now someone asked for a dollar, and it was discovered that the dollar had been mislaid. ”