To guard the people against all apprehension of such a result ever being possible, there should be a measure placed upon this currency that will at all times make it just as absolute in its measure of value as the pound is in its measure of weight, or as inches are in their measure of distances. Though this is comparatively a new proposition, and one that but very few minds think a possibility, it nevertheless is just as possible and just as essential—and more so—as all other absolute and arbitrary standards are, that have been invented to give regularity and stability in their respective spheres of use.
This currency—this money—should be made convertible into a United States Bond, which should bear such a rate of interest—say four per cent.—as experience has or should demonstrate to be the true point of balance; and the bond should also be convertible into the currency at the option of the holder. The rate of interest should be open to readjustment every ten years, when the estimates for the currency are made. Thus it would come that whenever there should be so much currency in circulation that it would be worth less than four per cent. for business uses, the surplus would immediately be converted into four per cent. bonds; and whenever money for business should be worth more than four per cent., the bonds would be converted into the currency in just sufficient quantities to meet the demand and to restore the equilibrium.
It will be readily seen how perfectly this meets all the requirements of money, and how perfectly all the irregularities of demand and supply are met by it. Thus, when business is dull, and but little money is required, it (the surplus) will be in bonds drawing four per cent. interest; the moment business revives, the bonds will be at once converted, and the currency will meet the demand, and thus the constant conversion of the one into the other will regulate and maintain the equilibrium that all previous systems of money have so signally failed to do.
In our next the advantages of such a system will be still further considered and expounded, so that every one may be able to comprehend that a money system is possible of invention, upon which foreign bankers can not play their long-practiced games to any further one-sided advantage.
New York, Oct. 11, 1870.
PAPERS ON FINANCE AND COMMERCE.
NO. X.
The advantages of a currency which, instead of possessing the capacity of redeemability, is at all times convertible into something that is itself productive, cannot fail to be appreciated by all who have given any attention to the science of money. Theories regarding this branch of social science have been about as destructive to the proper development and understanding of the science as religious theories have been to that of a proper appreciation of the functions and the benefits of religion. The last have at all times stood in the path of progress. So, too, have the first. And for this reason are we to-day almost at the mercy of those who are possessed of the accumulated wealth of the world, which in combination would be a power sufficient to control all government in its interests, and thus it would be enabled to bring the world again under a despotism to which that of past despotism would hold no comparison.
In such a money system too much circulating medium could never be uttered, for the moment a surplus quantity over the demands of legitimate business was in circulation, that moment it would begin to be converted into the four per cent. bonds; so that if there were two thousand millions uttered, it would always be worth just four per cent.; and if there were but five hundred millions uttered, it would never be worth any more than four per cent. Thus it is plainly to be seen that the government would always be necessitated to provide just as near the amount of circulating medium demanded as it would be possible to arrive at, and no more; for on any such surplus it would, as a matter of course, be obliged to pay the interest provided, which thus becomes the absolute measure of value that money requires to make it substantial, and which is required to deprive it of that capacity for producing great commercial inflations, which, in the financial history of this country, develop and burst about every second decade, and which produce not only the complete destruction of all purely speculative enterprises, but also the most wide-spread and fearful demoralization in all legitimate business.
Under such a money system, speculation, with all its accompanying demoralization, would rapidly depart from all classes of society. It is a notorious, yet unappreciated fact, that speculative enterprises lie at the foundation of all financial disorder, for which, if a remedy can be provided, the very considerable talent and time which is now devoted to it would be turned into channels of general usefulness and productiveness. Production is the foundation of all wealth, and, consequently, to increase wealth, production must be increased. Speculation is that spirit which constantly saps the vitality of wealth, and, therefore, society has no greater nor more debasing enemy than speculation.