Gold currency

“ The currency being suddenly increased by one-half, all prices will rise, and among the rest, the prices of all things made of gold and silver. An ounce of manufactured gold will become more valuable than an ounce of gold coin, by more than that customary difference which compensates for the value of the workmanship; and it will be profitable to melt the coin for the purpose of being manufactured, until as much has been taken from the currency by the subtraction of gold, as had been added to it by the issue of paper. ”

“ I said, assuming that the people have confidence in the Government, issuing an irredeemable currency, that currency will not necessarily depreciate or stand at a discount as to gold, as long as it simply supersedes and does not exceed in volume the gold and silver, and the bank currency based upon gold and silver, which would suffice to transact the business of that country; but, the condition of confidence remaining the same, the irredeemable currency will depreciate, will be at a discount as to gold, as soon as its volume exceeds that quantity. ”

“ Even if our prices remain as they are and do not increase, gold will eventually leave the country if it continue to increase in value as it has been increasing during the past fifteen years. We have been enabled to maintain the gold standard here for the past twelve years notwithstanding a considerable addition of money other than gold to our currency, but we have been able to do so only because other countries have been using an equal or greater amount of money other than gold. ”

“ Such indestructibility, and facility of being tested, are united in gold; its intrinsic value is great, and its imaginary value greater; so that, partly through indolence, partly through necessity and want of organization, most nations have agreed to take gold for the only basis of their currencies;—with this grave disadvantage, that its portability enabling the metal to become an active part of the medium of exchange, the stream of the currency itself becomes opaque with gold—half currency and half commodity, in unison of functions which partly neutralize, partly enhance, each other's force. ”

“ Hungary, Russia, Italy, Sweden, or Holland, while most of these countries have a gold currency and an official Bank Rate, in none of them is gold the principal medium of exchange, and in none of them is the bank rate their only habitual support against an outward drain of gold. ”

“ While other countries, who have, with few exceptions, found the expense of a gold medium of exchange prohibitively heavy, have nevertheless envied those who could afford it, and have adapted their laws, even when they could not afford to adapt their practice, to a currency of gold. ”

“ It coaxes gold to the mint, keeps it there, and does away permanently with bond issues. It provides for the retirement of the greenbacks, supplies their place with currency equally sound but less hazardous, and insures the absolute parity of every dollar in circulation with every other, and with gold. In fine, as every true principle must, and as only a true principle can, it answers every condition of the problem to which it applies, and commends itself as the best, if not the only, way out of our financial embarrassments. ”

“ For obvious reason of convenience and of economy the greater part of the Indian circulation must continue in any case to consist of rupees. It is vain to suppose that the advantages of a true gold currency can be obtained by the compromise of somewhat increasing the gold element. If the Government dissipates some part of its sterling resources over the country - and any proposal for a greater infusion of gold into the currency amounts to this - it must plainly stand in a weaker position to meet a crisis than if they are concentrated in its own chests. ”

“ However high this nominal premium may be, it has no tendency to send gold out of the country, for the purpose of drawing a bill against it and profiting by the premium; because the gold so sent must be procured, not from the banks and at par, as in the case of a convertible currency, but in the market at an advance of price equal to the premium. ”

“ With proper limitation enforced by absolute convertibility into gold coin which may be freely melted or exported, it has been proved by theory and experience that small holdings of gold are perfectly sufficient to meet all internal and international demands. There is really more chance of a great demand from individuals than from the banks. It is conceivable that the people of some of the countries which have reduced their paper currency to a laughing stock may refuse all paper and insist on having gold coins. ”

“ The authorities of the Austo-Hungarian Bank now keep all the gold they can in their central reserves, and they are no likely to make another attempt to dissipate it. The same kind of thing occurred in Russia. After establishing with difficulty a gold standard, they began with the theory, and have since abandoned it, that a gold currency was the natural corollary. Other examples could be given. A gold standard is the rules now in all parts of the world; but a gold currency is the exception. ”

“ As the result of deliberation of the Privy Council, assisted by the Commissioners of Trade and officers of the Mint, who all attributed the export to the higher price of gold abroad, it was determined to raise the price of the gold coins to or near the value which they had on the Continent at the moment. Accordingly, by proclamation of the 26th August 1661, the value of the gold unite was raised from 22s. to 23s. 6d., and other gold coins in proportion, the silver currency being left unaltered. ”

“ But the idea that by banishing the precious metals from our money system we can cut loose from the money system of the world, and avoid all comparison of the value of our paper money with gold, is amusingly absurd. We are a commercial nation and have large dealings with the world abroad. Our imports and exports go into the hundreds of millions. They will go into the thousands. Our exports especially are increasing beyond all anticipation. All we sell and all we buy abroad is paid and settled for on the gold basis. ”

“ The general conclusion reached was that a "rise of the market price of gold above its mint price will take place," if the local currency of any particular country, "being no longer convertible into gold, should at any time be issued to excess. That excess cannot be exported to other countries, and, not being convertible into specie, it is not necessarily returned upon those who issued it; it remains in the channel of circulation, and is gradually absorbed by increasing the prices of all commodities. ”

“ The committee are of opinion that the value of American gold compared with silver ought to be somewhat higher than by law at present established. On inquiry they find that gold coins, both foreign and of the United States, have in a great measure disappeared, and from the best calculation that can be made there is reason to apprehend they will be wholly banished from circulation, and it ought not to be a matter of surprise, under our present regulations, that this should be the case.... There have been coined at the Mint of the United States 6 millions of dollars in gold. ”

“ On this principle, if every dollar's worth of vendible property in the United States could be represented by a paper currency; and if the property could all be delivered on demand, in redemption of the paper, such a currency would not inflate the prices of property at all, relatively to gold. Gold would still stand at its true and natural value as a metal, or at its value in the markets of the world. And all the property represented by the paper, would simply be measured by the gold, and would stand at its true and natural value, relatively to the gold. ”

“ At this cheap price the public will buy gold bullion of the government and surrender currency in return. Therefore the currency will be contracted and general prices will fall until no more gold is called for, or until there is declared a new official gold price. Should the next official gold price be set above the market price, the government would become a buyer of gold and would thus reissue some of the currency previously called in, or if need be, issue new currency. ”

“ The Gold-Exchange Standard arises out of the discovery that, so long as gold is available for payments of international indebtedness at an approximately constant rate in terms of the national currency, it is a matter of comparative indifference whether it actually forms the national currency. ”

“ The reader may find it difficult to believe that with gold at a hundred and twenty-five for one, or 12,400 per cent. premium; when every day made the hopelessness of the struggle more apparent; when our last man was in the field; when the resources of the country were visibly at an end, there were financial theorists who honestly believed that by a mere trick of legislation the currency could be brought back to par. I heard some of these people explain their plan during a two days' stay in Richmond. Gold, they said, is an inconvenient currency always, and nobody wants it, except as a basis. ”

“ At every marriage, and at every birth, get a new piece of gold or silver if you will, but with noble workmanship on it, done for all time, and put it among your treasures; that is one of the chief things which gold was made for, and made incorruptible for. When we know a little more of political economy, we shall find that none but partially savage nations need, imperatively, gold for their currency ”

“ It is interesting to note that during the recent crisis, when gold and currency were at a premium, bankers could sell the imported gold at a premium, and this constituted an additional and very large profit; gold importers could therefore pay higher prices than ordinarily for exchange bought to cover the importations, and the stress of competition so drove up the rate of exchange that gold was being imported at a profit, though exchange rates stood at what, under ordinary circumstances, would have been the gold export point. ”

“ If really the amount of currency were so insufficient as to impede the necessary transactions of the business of the country, is it not certain that the gold in the country, which is now hiding itself, would have been driven out of its hiding-places to fill the vacuum occasioned by the insufficiency? ”

“ Because the greenback was the first step toward a real money that the country ever took, which left gold entirely out of the question, the impression still remains with the people that a return must be made to a gold basis; never stopping to observe how vastly superior the wealth basis is to what the gold basis would be.
Bank note currency, or a currency issued by an individual or by a class of individuals, always carries along with itself the idea and need of redeemability. ”

“ It is doubtful whether so clumsy a contrivance as metallic currencies, of intrinsic values corresponding with their titles, can survive at all; but of course everything will be computed in terms of some currency or other—perhaps of an obsolete currency. We are apt to think that the steady value of gold can be counted upon to remain a constant factor of economics. But only a very small part of the real business of the world is even now transacted with actual gold. ”

“ I call to witness the vast sums that have been coined in England since the free coinage was set up. What is become of it all? Nobody believes it to be in the nation, and it cannot well be all transported, the penalties for so doing being so great. The case is plain—the melting-pot devours it all; and I know no intelligent man who doubts but the new money goes this way. Silver and gold, like other commodities, have their ebbings and flowings; upon the arrival of quantities from Spain, the Mint commonly gives the best price, i.e. coined silver for uncoined silver, weight for weight. ”

“ World prices in fact have not increased nearly as rapidly as the flow of gold into monetary uses since 1897, not to mention the enormous development of deposit currency. The Director of the Mint estimates each year the amount of the world's new gold used in the industrial arts. Computations I have made based upon these figures show a tendency for a decreasing percentage of the annual production to be used in the arts, although there is considerable irregularity. ”

“ Must think of the folly of the United States, when they were a debtor nation, in adopting a gold standard. They knew nothing about currency matters; they did not know it was going to increase their debt enormously.”
Paulus (Roman jurist, third century) : “Money circulates with a power which is derived, not from the substance, but from the quantity.”
Blackstone (vol. I., page 2761) : “As the quantity of precious metals increases they will sink in value and become less precious. If any accident were to diminish the quantity of gold and silver they would proportionately rise.” ”

“ What do you conceive to be the advantage of an inconvertible note of that kind over a convertible note payable to bearer on demand?—It would prevent a drain of bullion, when it is required for foreign trade; and it would give us, what is so very essential, a domestic currency which is not influenced by any foreign transactions whatever. If France or America wants a quantity of gold, it ought not to interfere with our domestic currency. Our merchants and all our trade surely should not suffer because America wants gold. ”

“ The indirect effect on prices, due to the rupee's being silver, is similar to the effect of the use of any medium of exchange, such as cheques or notes, which economises the use of gold. If the use of gold is economised in any country, gold throughout the world is less valuable - gold prices, that is to say, are higher. ”