A Speech on the Principles of Finance

by Victoria C. Woodhull

Many people think and speak as if gold would be of no use to this country if it were to come into disuse as money; that we should entirely lose it as wealth; the very reverse is really true, since we should have just the same quantity of gold that we now have, to be used for the same purposes for which it is now required, to wit: to export to other countries in exchange for imports.

Suppose our imports to amount to a thousand millions dollars per annum, and that we export cotton, corn and pork to that amount, what use would we have for gold except to loan other countries, and could we not loan it as gold, taking their representatives of value for it equally as well as though it were coined into money, having the seal and stamp of the government? It is well known that we do not export gold to Europe as so many American dollars, but as so much gold, by weight of a certain degree of fineness, the stamp of the government attesting to that degree.

Again: Suppose that we had no cotton, corn or pork to give in exchange for our imports, and that we produced a thousand millions dollars’ worth of gold per annum, should we not be equally well conditioned to trade with Europe?

It is seen that the real character and qualities of gold are the same as are those of any other product of labor, which we can exchange direct, for other products of labor which we want more than we do the gold. If at any time the balance of trade is against us, and we have no cotton, corn, pork, gold or anything else to make it good, we must then make it good by our representatives of value—our bonds—to be converted when we shall have these products. This process has been actually going on ever since we began to export bonds, either national, state, county, city, railroad or bonds of other incorporated companies.

Now, is it not perfectly evident that we have not only produced by labor what we have exported, which we have been pleased to denominate merchandise, but also that we have produced all the gold that has been exported; and in this connection is it not just as much an article of merchandise as is either cotton or corn? Gold cannot at one and the same time be both money and merchandise. If gold is money, so also is wheat, cotton and corn money, since they perform the same services and possess the same qualities as merchandise that gold does.

To be perfectly clear in our conclusions, money must be resolved into its uses and entirely divested of all its fictitious and irrelevant relations. The fact that money is that thing which is made use of to exchange real values must be the initial starting-point, of which sight must never be lost until it is definitely settled what will best perform this service. Anything which can be made use of for any other purpose whatever, is not the best thing to be made use of as money; because the demand for such a thing for such other purposes destroys its positive value as money by causing fluctuations in its exchanging power.

It is a grave financial error for this country to endeavor to return to gold as money. All the practices under the gold standard have been positive and ample refutations of the arbitrary value accorded to gold. A dollar in gold can only exchange a dollar in value in any other substance; and the practice of issuing a greater amount of bank notes than the bank has gold dollars to redeem them by, is a legalized system to rob the people; since it is evident that a bank having three hundred thousand dollars in notes in circulation, and only one hundred thousand dollars in gold in its vaults, can redeem but one-third of its circulation if it be all presented at once for redemption. All the other securities of a bank, such as its discounts, personal property and real estate, may become of no value, or may be placed out of reach of the holders of its circulation, so that the only real security for its circulation is what it may have in gold in its vaults. Beside, what right has a bank to receive legal interest on three times the amount of its real security? Is not this a most transparent method of swindling the people? Hence I assert that the use of gold as money always results disastrously to the producers of wealth, and always beneficially to those who are permitted to absorb all their productions.

Another unanswerable reason why gold cannot answer the requirements of money is found in the degrees of value which belong to different products of labor, and which are universally determined by the sacrifice required to produce them. That is to say, all other things being equal, the relative value of products is determined by the time and labor required to produce them. The increase in the value of manufactured material is in exact proportion to the time required and wealth consumed in their manufacture. The value of gold is determined in precisely the same manner; and it is simply foolishness to assert that the value of gold never changes, or that it has the same purchasing power at all times.

Suppose there should be immense fields of gold suddenly developed all over the country, so that it would become as common and plentiful as iron or coal, would it not decrease in value in comparison with other products? That is to say, would an ounce of gold then possess as great a proportionate value to other products as it now does? No one will pretend it. Then gold is just as much the subject of fluctuation as is any other product of labor, and for just the same reasons—demand and supply—which are the great arbitrators of values in all parts of the world.

Everybody knows that for a certain quantity of gold a certain quantity of cotton may be obtained, and for a certain quantity of corn, a horse. The fact that the horse is obtainable by the corn does not convert the corn into money, neither does gold any more than the corn become money because the cotton is obtained thereby. The gold for the time is equal in value to the cotton, and so is the corn to the horse. Now, what is required of money is this: Suppose the gold, cotton, corn and the horse to be of equal value, a person possessing an amount of money representing the value of either of the four can, at his discretion, purchase whichever he may choose; since the money would equally represent the gold, cotton, corn and the horse. Anything that may be used for money that will not do the same thing for any variety of the products of labor, values being equal, is not money in any sense of that term.