Were gold demonetized and deprived of its money function, and its demand confined solely to that arising from its adaptability for various other purposes, the present stock of that metal on hand and in use as money would, according to the estimates of the director of the mint, supply the art demand for more than seventy-five years to come. But, assuming that the estimate of the Director of the Mint is too low, and that my own is nearer the truth, there is at least fifty years' supply on hand. Were there fifty or seventy-five years' supply of any other commodity on hand in the market, what would be the commercial value of that commodity? What would be the value of copper, of brass, or of iron, if there were fifty or seventy-five years' supply of either of those metals in the market for disposal at one time? Nobody can pretend that any commodity of which there is an available supply on hand equivalent to the whole demand for fifty or seventy-five years can have any but the most trifling value.
Contrary, therefore, to the generally received conviction that the commodity demand is the dominating force in fixing the value of gold I maintain and insist that the commodity demand, if entering into the account at all, is insignificant. It is the supremely important money-demand, as correlated to the supply, that fixes the value of all money of every description whatsoever.
The demand for gold as a commodity is limited and fluctuating, but when that metal is invested by law with the higher function of money, and thus constituted a common denominator of all values, that limited and fluctuating demand is changed to an unlimited and constant one, which fixes its value for other and inferior uses. If the commodity-demand for gold were, as many believe it to be, essential to its acceptance as money, it would be a great misfortune to society. The happiness and prosperity of the world, if not wholly dependent upon, are largely influenced by, steadiness in the value of money, and this can not exist without steadiness in its volume. Whatever demand exists for gold as a commodity can only affect the volume of money injuriously—that is to say, by decreasing it. The admonition of history is that a deficiency in the money-supply is more probable, and infinitely more to be feared than an excess, and this deficiency is, in great measure, caused by the insidious and constant encroachment, upon the precious metals, of demands for them for other than the money use. When we contrast the magnitude of the world's interests and equities, which rest on steadiness in the value of money, with the comparative unimportance of the uses of the metals as commodities, it becomes apparent that the subjection of the value of money to disturbance from the demands for gilded signs, looking-glasses, bangles and breast-pins, is an evil for which society is but poorly compensated by the benefits derived from such uses.
Whatever other quality gold may posses than as the bearer of the money function is inconsistent with the healthful and proper exercise of the task assigned it as such. Whenever any portion of the metal is used for any other purpose than money it destroys the money and thus changes the value of every unit of money in circulation, for, at already stated—other things remaining unchanged—the value of each dollar depends on the number of dollars that are out. Without forewarning, and with out knowledge on the part of the people, large amounts of the money volume, on which so infinite a number of equities rest, and on the basis of which all debts and time contracts have been entered into, are, as it were, surreptitiously abstracted and appropriated to other and always inferior uses, for by far the highest and noblest use of any material upon which the money function has been conferred, is the money use. No other use can possibly be so high or so noble as that of maintaining all equities undisturbed.
It seems unworthy a highly developed civilization which, as to all subjects other than money, regulates its affairs by the application of intelligence, and bases its policies upon exact data, scientifically ascertained and correctly applied, to depend for its money system upon the accidents, make-shifts, and expedients to which primitive society, by reason of the limitation of its powers and the undeveloped condition of the human mind and hand, was compelled to resort. If the quantitative theory of money be correct—if the money standard be, as I insist it is, a steady and duly proportioned numerical relation existing between the units of population and units of money—it is the duty of society and government to see that as far as practicable that principle is put into operation.
The history of the production of the precious metals from the remotest ages demonstrates that under the automatic system of money this can only be effected by the unrestricted coinage of, and conferring the full legal-tender function on, both metals.
THE PROPOSITION THAT THE GOVERNMENT SHOULD LEND MONEY ON THE SECURITY OF REAL ESTATE.
If a change in the whole number of money units in circulation relatively to population and business do not affect the value of each unit, then no objection can be found to the proposition recently presented in the Senate by the distinguished Senator from California, which created some surprise among Senators. The resolution of that Senator contemplates a loan by the Government to holders of real estate based upon the security of the property; and the issue of a large amount of Treasury notes for that purpose. Certainly, if a dollar, in order to perform properly the money function, must have in it or back of it a dollar's worth of material, there can be no safer security found than that suggested by the Senator from California, namely, the arable land of the United States.
It is the most absolutely secure of all securities; it can neither run away nor be stolen, it can not be burnt up, lost, or destroyed.
Arable land is, in and of itself, capable of supplying all basic wants, and must be always in demand, while gold, so far as concerns any use to which it is, or can be applied, might be dispensed with altogether, with scarcely any inconvenience to society.