Pin money

“ So are not the people at such times embarrassed with a paper money fluctuating with their confidence in the government, and saddled with a worthless paper money if the government goes down, and does the use of silver and gold as money ever prevent this condition from arising?"
GEN'L JOHN C. BLACK. "The use of redemption money, replied Coin, "does not prevent the conditions you describe. Paper money always takes its place at such times. The people, however, are not injured by it. ”

“ Wages and prices, rising together, call perpetually for more money, or at least more tokens and symbols, more paper credit in the form of checks and deposits, with a value that is no longer based on the rock-bottom of redemption into hard coin, but that floats upon the mere atmosphere of expectation. ”

“ The fact is, I don't mind tellin' you I've a deal on, an' I've undertaken t' put up this money in cash—to-night."
The banker ruminated for a few minutes. Experience had told him that with a certain class of men money in bills was more valuable than money in a cheque or draft. The very bulk of the currency seemed to impress them. He had seen an old-timer refuse a twelve-hundred-dollar marked cheque for his property, and yet surrender greedily at the sight of a thousand one-dollar bills piled on a table before him. ”

“ The Sources of Currency Supply.—It is, then, clear that the larger part of the circulating medium of society is not money; that not all of the money that there is is bullion money; and that not even all of the bullion money need be ultimate money—redemption money of the highest rank. The sources of currency in society are various—some of it bullion, with a cost of production limit upon its supply, some of it government paper, substantially free of cost, some of it banking credit with certain peculiar and appropriate costs attending its issue. ”

“ Each purchaser is informed that he will receive a liberal rebate, and the money pours in upon the man in the buggy in a continuous stream. As soon as he has obtained all that he thinks possible to be gathered in from the crowd before him, he puts the money in his pocket, whips up his horse, and drives away, leaving the bewildered spectators to mourn the credulity which induced them to part with their ready cash. ”

“ 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. ”

“ When, however, new money, composed of some substance of supposed intrinsic value (as of gold) , is brought into the market, or when new notes are issued which are supposed to be deserving of credit, the desire to obtain money will, under certain circumstances, stimulate industry; an additional quantity of wealth is immediately produced, and if this be in proportion to the new claims advanced, the value of the existing currency is undepreciated. ”

“ For small trading and at home, metal money answers well. But there is great trouble and risk in sending coin hundreds of miles to pay for goods bought at a distance. An easily carried substitute for gold and silver is the bank-note, a promise to pay so much, issued by the treasury or some banker, and passing as money from hand to hand. ”

“ A constant but unperceived rise in the value of the dollar with which those payments must be made, baffles all plans, thwarts all calculation, and destroys all equities between debtor and creditor. If we can not intelligently regulate our money volume so as to maintain unchanging the value of the money unit, if we can not preserve our people from the blighting effects which an increase in the measuring power of the money unit entails upon all industry, to what purpose is our boasted civilization? ”

“ From these facts, and from the principles of their constitution, which is to melt down property into money, it follows, that when the credit of such money is well established, the coin, which is the money of the world, will be employed in trading with the world, and the paper, which is the money of the society, will be employed in trading with the society. ”

“ In times when the uses of a paper currency and of public stocks were not understood or not practised, and communities had not begun to resort to a paper symbol or nominal representative of money, capable of being fabricated at will, the adulteration of coin, instead of it, was, it is well known, the frequent expedient of public necessity or public cupidity to obtain relief from some pressing pecuniary embarrassment. ”

“ You are destroying your greenbacks for all purposes of money and currency! You are throwing them into the bottom of the Pacific Ocean.” And he sagely proceeds to stow his away in an old stocking or an earthen pot under the bed, for circulation; for, if he lends his money to anybody, or pays it out in a business transaction, the man who gets it, if it is a considerable quantity, will forthwith deposit it in a bank, and even if paid out in small sums, it will eventually get there. ”

“ There is no way in which a general and permanent rise of prices, or in other words, depreciation of money, can benefit anybody, except at the expense of somebody else. The substitution of paper for metallic currency is a national gain: any further increase of paper beyond this is but a form of robbery. ”

“ Little did bridegroom or bride foresee how these coins, after more than a hundred years, would come forth from their hiding-place to be put to the Lord's uses. Few people have ever calculated how much is lost to every good cause by the simple withdrawal of money from circulation. Those four crown pieces had they been carefully invested, so as to double in value, by compound interest, every ten years, would have increased to one thousand pounds during the years they had lain idle! ”

“ A roar of laughter greeted his surmise.
“What d’you suppose the bank’s for,” asked Carnac, “if not to store up money?”
“Whips and whips of money,” observed Sweet William, the stem of his lighted pipe between his teeth. “You go with a legitimate cheque for, say, £550, and you’d get it cashed all right.”
“Certainly”; replied Garstang, “in notes. And that’s where we’d fall in. Every number is known, and so soon as we tried to cash the dirty paper, we’d get lagged. Even if we passed ’em at pubs, we’d be traced. What we want is gold—nothing but gold. ”

“ Banks may indeed complain, that men of property are sometimes sending their money out of the country, at a time when it is already drained of its coin; that this raises exchange, and hurts the trading interest.
Exchange must rise, no doubt, in proportion as the grand balance is great, and difficult to be paid: But where does the blame lie? Who ought to provide the coin, or the bills for paying this grand balance? Have we not shewn that it is the bank alone who ought to provide coin for the ready answering of their notes? ”

“ The most difficult problems of finance were as simple to him as the alphabet and his mind cut through all perplexities and obstructions straight to the truth. Had he possessed a few less red corpuscles in his blood—been a plain, downright financier, I am certain that he would have grown beyond the narrow environment of the Pacific Coast and become one of the world’s money125 kings. But he had an odd supplement to the cold-blooded faculty of making money, a sort of richly Oriental imagination that looked far beyond the mere acquisition of a pile of cash. ”

“ Then the boys slide out, and as soon as out in a dark corner, they begin to enquire to see if a stake can be raised among them, finding none, one or two being confidential clerks, go to the store, bank or other place of business, and borrow fifteen or twenty dollars, having no doubt of their ability to win a few hundred dollars in a little while, and then replace the borrowed money without it ever being known. ”

“ The thief whose first excursion into a wayfarer's pocket is rewarded with the equivalent of days and nights of honest labor will surely be convinced thereafter of the superiority of theft over toil as a means of money-getting. Invariably the manufacturer of "made dollars," after his first coup, forsakes forever after the cold arithmetic of commerce for the rule of guess, dream, hope, and "I will," which constitutes the mathematics of high finance. ”

“ Neither, by destroying money, do I mean burning notes, or throwing gold away. If I burn a five-pound note, or throw five sovereigns into the sea, I hurt no one but myself; nay, I benefit others, for everybody with a pound in his pocket is richer by the withdrawal of my competition in the market. But what I want you to make your readers discover is how the true money is made that will get them houses and dinners; and on the other hand how money is truly lost, or so diminished in value that all they can get in a year will not buy them comfortable houses, nor satisfactory dinners. ”

“ We could imagine that in an epidemic fit of the passion of gambling, all dealers, instead of giving only their accustomed orders to the manufacturers or growers of their commodity, commenced buying up all of it which they could procure, as far as their capital and credit would go. All prices would rise enormously, even if there were no increase of money, and no paper credit, but a mere extension of purchases on book credits. ”

“ Whatever the apparent purpose of contraction, and however specious the arguments advanced in its justification, the real object has always been to increase the purchasing power of money. In all countries, and throughout all time, it is the cupidity of the creditor classes and annuitants, and their desire to increase the value of the money unit that has brought about a shrinkage in the money volume. ”

“ Pinney should claim that this answer amounts to nothing because issue is valueless without circulation, I shall then remind him of my previous statement that the circulation of an abundance of cheap and sound money benefits those who use it no less than those who issue it, and tends to raise the laborer's wages to a level with his product,—a point which he carefully avoids in his last article, because he knows that he cannot dispute it, having frequently maintained the same thing himself. ”

“ But I am willing to admit that the present abundance of money in the loan market is of a precarious nature. As an irredeemable and redundant currency always begets speculation and gambling, it will do so again in spite of the check that was put upon it by the recent crisis. ”

“ I therefore dismiss such wild theories, and speak only to those who are willing to assume, as an axiom, that gold and silver, or coined money, have been proven by all human experience to be the best possible standards of value, and that paper money is simply a promise to pay such coined money, and should be made and kept equal to coined money, by being convertible on demand. ”

“ Hence it is that loans on call are preferred, and a higher rate of interest is demanded by lenders to cover the gambling risk, under the influence exercised by an irredeemable currency, which, by its fluctuations, renders the value of the money invested in a loan insecure. ”

“ The capitalist who lends out money must take that contingency into consideration. He has to run what I have already called the gambling risk. Now, suppose the Senator from Indiana had $100,000 to lend out. If he were asked to lend it out, say on three months, he would have to consider whether at the time when the loan will be returned to him his $100,000 will be worth as much as it was when he lent it out. The currency being inflated and depreciation being the consequence, he will ask himself whether the paper dollar, which is, say, at 10 per cent. discount to-day, will not be at 16 per cent. ”

“ 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. ”

“ CHAPTER XXV THE MINT, THE BANK, AND THE POST-OFFICE
Has it ever occurred to you that money must be made somewhere? We do not find it ready made in the earth or growing on trees; and if you think a little, that could not be, for every country has its own money with its own King's or President's head on the coins. Here in England we have the King's head on one side and various designs on the other, which are different according to the coins they adorn. It would be rather nice if money did grow on bushes. Supposing we could have a row of them in the garden. ”

“ Thus, whatever expedient you may resort to, gold will be and remain the standard of value as to the fiat dollar. Your fiat dollar will be brought up before that tribunal to have judgment pronounced as to its worth, and the idea that by introducing here a paper-money system of your own you can withdraw from the rules that govern the commerce of the world, and change the real standard of value in your business transactions, will appear as one of the most absurd and childish conceptions the human brain has ever been guilty of. ”

“ When we hear our greenback or fiat-money apostle talk about the great things their schemes are to accomplish, we might almost receive the impression that a new issue of paper currency meant this: That some government officials would go round the country with big bags of money, putting some of it into everybody's pocket. Intelligent men need scarcely be told that this is not the way it would work. ”