"Gold is an instrumentality or device to facilitate exchanges."
That sounds well, but I do not believe it. Gold and silver are commodities. They are the products of labor. They are not instrumentalities; they are not devices to facilitate exchanges; they are the things exchanged for something else; and other things are exchanged for them. The only device about it to facilitate exchanges is the coining of these metals. Whenever the Government or any government certifies that in a certain piece of gold or silver there are a certain number of grains of a certain fineness, then he who gives it knows that he is not giving too much, and he who receives, that he is receiving enough, so that I will change the definition to this:
The coining of the precious metals is a device to facilitate exchanges.
The precious metals themselves are property; they are merchandise; they are commodities, and whenever one commodity is exchanged for another it is barter, and gold is the last refinement of barter.
The second definition is:
"Gold is the measure of value."
We are told by those who believe in fiat money that gold is a measure of value just the same as a half bushel or a yardstick.
I deny that gold is a measure of value. The yardstick is not a measure of value; it is simply a measure of quantity. It measures cloth worth fifty dollars a yard precisely as it does calico worth four cents. It is, therefore, not a measure of value, but of quantities. The same with the half bushel. The half bushel measures wheat precisely the same, whether that wheat is worth three dollars or one dollar. It simply measures quantity; not quality, or value. The yardstick, the half bushel, and the coining of money are all devices to facilitate exchanges. The yardstick assures the man who sells that he has not sold too much; it assures the man who buys that he has received enough; and in that way it facilitates exchanges. The coining of money facilitates exchange, for the reason that were it not coined, each man who did any business would have to carry a pair of scales and be a chemist.
It matters not whether the yardstick or half bushel are of gold, silver, or wood, for the reason that the yardstick and half bushel are not the things bought. We buy not them, but the things they measure.
If gold and silver are not the measure of value, what is? I answer—intelligent labor. Gold gets its value from labor. Of course, I cannot account for the fact that mankind have a certain fancy for gold or for diamonds, neither can I account for the fact that we like certain things better than others to eat. These are simply facts in nature, and they are facts, whether they can be explained or not. The dollar in gold represents, on the average, the labor that it took to dig and mint it, together with all the time of the men who looked for it without finding it. That dollar in gold, on the average, will buy the product of the same amount of labor in any other direction.