A Speech on the Principles of Finance

by Victoria C. Woodhull

Can money be measured so that the same fixedness shall attach to it that attaches to everything else with which we have to do? Money itself has always been considered a measure of value; and it is this false stoppage and foundationless position that has made possible all financial discords, irregularities and inconsistencies. Does it appear to be a strange proposition that money should be measured? Why should not a dollar be just as absolute as a dollar as a pound is as a pound; or as a foot is as a foot; or as a gallon is as a gallon? A cord of wood contains one hundred and twenty-eight solid feet, or eight cord feet. It must always be eight feet in length, four feet in height and four feet in width, or some other multiples of one hundred and twenty-eight. A cord can never be any more, never any less than just that measurement. And the same rule holds of everything else with which we have to do; with quantity, time, space and motion. All these have fixed and unvarying modes of measurement. But money, the lever by which all these are moved, has been left to fluctuate as it would—to be moved by every different influence, so that in many instances what should have brought contentment, peace and continuous prosperity, has bequeathed the direct reverse.

It does not concern us that there are more yards of cloth at one time than another, provided that yard-sticks are all of the same length. But what would concern us would be this: That if with increase of the quantity of cloth the length of the yard-sticks should increase proportionately; or with the decrease of the quantity of flour the pound should decrease in like proportion therewith. Now this is just what has always been true of money; its real value increases and decreases, just in proportion as those things which it professes to measure have increased or decreased in quantity. Instead of these things being exchanged or converted into something measured by as fixed a standard as they are, the attempt is made to measure them by something which constantly increases and decreases in representative capacity. In other words, a dollar is not at all times one and the same thing. Sometimes it is but seventy–five cents, and sometimes a dollar and a half. That to say that seventy–five cents at one time possess the same representative power that a dollar and a half does at another time, which is in substance to say that money has no measure.

Now what is desirable and indispensable is to give money a fixed measurement, which shall be just as absolute in its measure of the value of money as the pound is in its measure of weight, or as the yard-stick is in its measure of distance. There never is any more cloth, though there be a thousand more yard-sticks. Nor is a yard-stick ever any longer or shorter, if the quantity to be measured is increased or decreased a thousand-fold. Now just to such a fixedness must money be reduced before it will subserve its best purposes and uses, and the only way this can be done is by that method which will also remove the only possible objection there can be brought against such a national currency as is proposed. This objection is that by over-issues of currency its value would or might be depreciated.

Let it be supposed that the country’s extremest need to meet the demands of the greatest amount of trade is a billion dollars currency. At certain times there are greater and less demands for money, which, under our present practices, make a dollar, to-day, worth four per cent. per annum interest, and to-morrow increase it to ten per cent. It must be remembered that we are now speaking of an irredeemable currency, the representative of the wealth of the nation: that the government representing the nation has uttered it, in behalf of the people, upon the soundest and, in reality, the only sure basis of value any money can have—the productive power and capacity of the nation.

An over-issue is the only thing to be guarded against. The government must be prohibited by some absolute law from resorting to the process so well known in railroad management as the “watering process.” And this is to be accomplished in the following manner: This currency—this money—must be made convertible into a national bond, bearing such a rate of interest while in the hands of the people as shall be determined upon as “the true measure of value”—say three or four per cent.—which experience would necessarily determine as the true point of balance; and the bond also convertible into currency at the option of the holder.

In other words, the people should demand that the Government issue one thousand million dollars in bonds, bearing three per cent. interest, payable in currency, and that it issue one thousand million dollars of circulating medium or money to be loaned to whomsoever deposits the bonds as collateral; all loans to be made at three per cent. per annum; to be for six months, with two renewals of three months each, one-half payable on each renewal. The principle underlying the time being that all credits should be settled with each year’s products.

The operation of such a system can be very easily traced. Whenever there should be so much currency in circulation that it would be worth less than four per cent., the surplus would at once be invested in the four per cent. interest-bearing national bond; and when business should revive and the demand for money to transact it should make money worth more than four per cent., then bonds would be converted into currency again until the equilibrium should be re-established. And whenever the demand should be such that all the money would be converted, and money still be worth more than four per cent., then the government should issue enough to produce the equilibrium.

Thus it is seen that the four per cent. or the three per cent. interest-bearing national bond becomes the fixed measure of value for money. It would always be worth just that amount—never any more; never any less. The gallon measure always gives just the same quantity of molasses. The yard-stick always gives just the same quantity of cloth. The pound weight always gives just the same quantity of sugar. So, too, would this measure of money always give just the same amount of real wealth, or its representative, every day, week, month or year, whether applied to wealth in business, to bonds, or to money at interest. An oscillation would be perpetually maintained; first, conversion of currency into bonds; next, conversion of bonds into currency; and whenever the supply of currency should be deficient, then the issue of more by the government to meet it. Thus there would be a people’s money regulated to financial equilibrium, which is the ultima thule of convenience for exchanging the products of industry.

It may be remarked, parenthetically, here, that even three per cent. per annum interest is altogether too greatly in favor of capital. A careful calculation of interests and general increase of the nation’s wealth discovers that less than a two per cent. interest is required to make the capitalist and the laborer stand upon an equality. Had I the time I would be glad to present you some figures to show to what condition we are tending. I will simply remark, however, if capital continue to receive the present rates of interest for the next thirty-five years, at the end of that time it will have absorbed all the wealth of the country. That is to say, that interest compounded at the rate of 6 per cent. upon the present Banking Capital will amount to a sum larger than the present aggregate of wealth together with the same rate of increase which has governed it during the past, added thereto. Is not this a sufficiently alarming fact to cause people to stop and consider the despotism into which they are rapidly merging?

Everybody who knows anything about the relations of money to the people must prefer such a money as we have indicated to any other kind. It is really the greenback system extended to all uses for which money is required, and to which is given a fixed measure of value. All people at present interested in national banks and high interest-paying bonds are constitutionally opposed to such a change in our money system. This, however, should not deter its introduction and use. The people’s welfare is what should be consulted, and made the test of all propositions that are to become theirs to practice. National banks and all banks of issue, with their drain upon the people to make their immense profits, must be done away, and banks simply as depositories for the accommodation of the people, alone exist.