I say then that the value of gold and silver, especially of the part that is made into money, although perhaps it has not yet been calculated accurately, is no longer arbitrary; I add that it is no longer susceptible of depreciation, like other values, although it may vary continually nevertheless. All the logic and erudition that has been expended to prove, by the example of gold and silver, that value is essentially indeterminable, is a mass of paralogisms, arising from a false idea of the question, ab ignorantia elenchi.
Philip I., King of France, mixed with the livre tournois of Charlemagne one-third alloy, imagining that, since he held the monopoly of the power of coining money, he could do what every merchant does who holds the monopoly of a product. What was, in fact, this adulteration of money, for which Philip and his successors are so severely blamed? A very sound argument from the standpoint of commercial routine, but wholly false in the view of economic science,—namely, that, supply and demand being the regulators of value, we may, either by causing an artificial scarcity or by monopolizing the manufacture, raise the estimation, and consequently the value, of things, and that this is as true of gold and silver as of wheat, wine, oil, tobacco. Nevertheless, Philip's fraud was no sooner suspected than his money was reduced to its true value, and he lost himself all that he had expected to gain from his subjects. The same thing happened after all similar attempts. What was the reason of this disappointment?
Because, say the economists, the quantity of gold and silver in reality being neither diminished nor increased by the false coinage, the proportion of these metals to other merchandise was not changed, and consequently it was not in the power of the sovereign to make that which was worth but two worth four. For the same reason, if, instead of debasing the coin, it had been in the king's power to double its mass, the exchangeable value of gold and silver would have decreased one-half immediately, always on account of this proportionality and equilibrium. The adulteration of the coin was, then, on the part of the king, a forced loan, or rather, a bankruptcy, a swindle.
Marvelous! the economists explain very clearly, when they choose, the theory of the measure of value; that they may do so, it is necessary only to start them on the subject of money. Why, then, do they not see that money is the written law of commerce, the type of exchange, the first link in that long chain of creations all of which, as merchandise, must receive the sanction of society, and become, if not in fact, at least in right, acceptable as money in settlement of all kinds of transactions?
"Money," M. Augier very truly says, "can serve, either as a means of authenticating contracts already made, or as a good medium of exchange, only so far as its value approaches the ideal of permanence; for in all cases it exchanges or buys only the value which it possesses."[8]
[8] "History of Public Credit."
Let us turn this eminently judicious observation into a general formula.
Labor becomes a guarantee of well-being and equality only so far as the product of each individual is in proportion with the mass; for in all cases it exchanges or buys a value equal only to its own.
Is it not strange that the defence of speculative and fraudulent commerce is undertaken boldly, while at the same time the attempt of a royal counterfeiter, who, after all, did but apply to gold and silver the fundamental principle of political economy, the arbitrary instability of values, is frowned down? If the administration should presume to give twelve ounces of tobacco for a pound,[9] the economists would cry robbery; but, if the same administration, using its privilege, should increase the price a few cents a pound, they would regard it as dear, but would discover no violation of principles. What an imbroglio is political economy!
[9] In France, the sale of tobacco is a government monopoly.— Translator.