What an absurdity it is for the Government to put its stamp on one thing in order to make it redeemable in another thing imprinted with the same stamp, but which nobody wants except for the purpose of getting a third thing that could have been got just as well without the intervention of the second. As well might he who, wanting water, is given a silver cup wherewith to get it, but on going to the spring is forbidden to drink until he exchanges his silver cup for a gold one.
The real reason why it is insisted that all other things than gold shall be exchangeable into gold is that gold is getting dearer by reason of decreasing supply and increasing populations. The necessity for convertibility into gold implies that, in ordinary times, a range of prices higher than the gold range will prevail, and when, by reason perhaps of increased activity of business, redemption comes to be demanded prices are at once precipitated to those of the gold standard and below, to the great advantage of the creditor classes, who, as owners of bonds, may be considered in the language of the stock exchange "long" on money, and to the equally great injury of the producing class, who, being in debt, may be considered as having sold money "short."
The supreme consideration is that the money of a country shall be so regulated as that prices may not fall from any cause inhering in the money system. The value of money—in other words, the sacrifice necessary to obtain it—should be no greater at one time than at another. In order to effect that object of prime consequence, to maintain the value of money unchanging, there should be no hesitancy whatever in changing the material of which it is made.
Nobody who has reflected on the subject for a moment doubts that what gave "value" or exchangeable power to the greenback was not the promise made on its face, without date, to pay a dollar, but the inscription on its back which declared it a legal tender for all dues and demands, public and private, except duties on imports. It was a misfortune to mankind that the words "promise to pay" were printed on it, because by it millions were led to believe that the "value" or exchangeable power resided in the promise instead of in the legal-tender power conferred upon it.
There is no object in redeeming in gold, except to maintain gold prices, that is to say, the range of prices prevailing in gold-using countries, and as those prices are constantly trending downward, any country that insists on maintaining the gold standard must accept the consequences in a corresponding fall of prices. The advocates of the gold standard, in effect, maintain that no matter to what extreme prices may fall, we must be content—we must bow in humble submission to the inevitable, since, in their view, it is more necessary to maintain the sacredness of the gold standard than to establish justice, promote prosperity, or to maintain equity in all time transactions.
It is in no way necessary, on account of any intrinsic or inherent quality of gold, that should have that particular metal, and that alone, for money.
It is boasted that gold is a universal measure. Why is it universal? Why is gold accepted in every country of the world? Not because the gold is wanted for any quality inherent in the metal, but because it is an order for property in gold-using countries, such as England, France, and Germany, whose trade is largely a foreign trade. At whatever rate gold will exchange in England, it will exchange in all countries having trade relations with England, because it is an order for goods in a country with which they are dealing. Will not the money of this country equally, and for like reasons, whether gold or silver, have acceptability in every country with which the United States have trade relations? Not for any quality inherent in the metal, but because it is an order for property in the United States. Will it not be willingly accepted by those who wish to buy in this country?
POSSIBLE EFFECT OF REDEMPTION IN BULLION.
In order to see the effect of the redemption of these Treasury notes in bullion, we have but to look at the possibilities of the situation. Suppose there were in the Treasury $300,000,000 worth of that bullion, which, by the taking up, little by little, and month by month, of the amount not used in the arts, would be taken by the Treasury at or about par. Then, suppose that for any reason, such as fear of approaching panic or otherwise, $100,000,000 of the Treasury notes were suddenly presented for redemption, and canceled, and the bullion as suddenly put on the market, what would it be worth? What would gold bullion be worth if it had not the privilege of coinage, and if $100,000,000 of it, deprived of the money use, was suddenly put on the market? Can there be a doubt that the abrupt output of so large a quantity would have the effect of immediately and enormously depreciating its value? In the case under consideration, the result would be that the silver remaining in the Treasury would not bring one-fourth the sum necessary to redeem the outstanding Treasury notes, so that not only would a heavy loss result to the Government, but, by reason of the sudden and serious contraction of the money volume, an infinitely greater loss would result to all the people.
But if it be deemed a remote contingency that any extraordinary amount would in that manner be suddenly taken from the Treasury, there is another danger which can not be put aside as improbable, but which, on the contrary, is to be looked for with almost absolute certainty, and to my mind, constitutes an irremovable and insurmountable objection to any system of bullion redemption.