The basis, however, of the value is in the productions of the soil of a country; it matters not how much value may be added by the art of man to what nature furnishes. This would find no scope for action did the earth not first yield the fruits of her bosom to the hand of the artist. The finest cloth, the most delicate silks and laces, the most costly jewels, even the light that robs night of its darkness, are all primarily the products of the earth. Without this yielding of the earth there would be nothing. This giving up of the earth to the demands, efforts and desires of man, is the process by which he acquires all his wealth. Even the gold that has so long been called money the earth has yielded, and still yields. When this is considered in its true light, we come to a realization that gold is no more money, absolutely, than any other of the different products of the earth, but with them all it forms the real value standard. Gold is relatively valuable for the general uses it can be made to subserve; so, too, and only so, are all other products. Any other metal might just as well have been selected out of which to coin money as gold. It no longer answers the purpose it has been used for so long. It is not “radical” enough to suit “the times.” It is one of the landmarks of conservatism, reminding us that once it required at least six months to communicate with, and receive an answer from, London, whereas we now know the 5 o’clock P. M. closing prices of stocks in London at 1 o’clock of the same day.
Such annihilation of time and space is entirely ahead of, and above, the era of gold, which must yield its sway to something more elastic, and consequently possible of better adaptation to the constantly varying requirements of the peoples. The world having been so long held in financial bondage to gold, is now approaching a period wherein it will rid itself of the yoke. A very few people in the world rule it. What of the thrones of Europe without the Rothschilds? and what of them if not for gold? The vast debts of those countries alone render crowns longer endurable. Just a little more intelligence among the common people—just a few more newspapers and readers, and the work is done; those who play king, and they who are the real kings, will fall together. Kings rule the people, but money rules kings. This is beginning to be realized, and the realization is not satisfactory to those who produce wealth; they do not care to live under the tyranny of a god they themselves have fashioned. But after gold, what?
New York, Sept 7, 1870.
PAPERS ON FINANCE AND COMMERCE.
NO. IV.
If gold, as a medium of exchange, is behind the requirements of the times—and that it is has been pretty fully demonstrated—some reform should be instituted to supply the failure; some reform—not merely to meet the exigencies of present time and circumstances—which should be inaugurated as a permanent change.
Our government, during the last war, was obliged to resort to what was considered then by nearly all people, and is still considered by many people, as very extreme measures, in order to furnish the material by which the war might be carried on. Without the greenbacks we never could have succeeded as we did. To the person who conceived this project we are as greatly indebted as to our generals, who successfully prosecuted the war upon the means furnished through his financial foresight. This was one means of resorting to the credit of the country. If the credit of the country was sufficiently good to furnish it with the means to carry on such an exhaustive war as ours was, it surely should be good for any peaceful time.
For our part, we cannot see the propriety of returning to specie payment; and there is one insuperable objection to it. Gold cannot furnish the circulating medium for the world, and credit must be resorted to; and the necessity of having two kinds of circulation involves difficulties which the mercantile world would be glad to have forever done with.
Why should people be obliged to use one kind of circulating medium to purchase another kind with, and then use this second kind to pay his debts to another party, who will sell it again to obtain what the first person used to purchase it? This is the logic of specie payments. If it is argued that the actual transfer of the gold is not necessary, we would then ask why is specie payment desirable at all? The facts regarding this question are that people have become wedded to the idea that gold is the only possible thing that can be made money, while all their practice has been that it is the least entitled to the name of money of anything they have ever used as such.
As has been said, the real standard value of a country is its capacity to produce, and it is this production that requires to be moved, exchanged, bartered or sold. The use of something to represent this, for which it can stand responsible in general terms, is what is required of money. That kind of money which will best meet all these requirements is the best money. That kind of money which has elasticity, that will be plenty when business is active, and that can be readily put to other use for profit when business is less demanding, is the kind the prosperity of a country demands. With a money of this kind, all financial crises would be impossible. It is the possibility of making a stringent market that unsettles financial matters and causes financial destruction. And it is because we have not a financial system of our own that it is possible for exigencies in other countries to unsettle values here. To-day, the price of our securities in London determines the price of gold here. In view of the possible complications in which Europe is liable to be involved any time, and which she must within a very few years be involved in, it becomes a matter of considerable moment, whether our finances are to be governed and guided by the condition of things there, when these things shall come.