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The EDITH and LORNE PIERCE 
 COLLECTION of CANADIANA 
 
 ^een's University at Kingston 
 
 \ 
 
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 F 2'/(i/ 
 
 [No. 6.] 
 
 "THE SPECIE BASIS," AS RELATED TO INDUSTRY 
 AND THE CURRENCY. 
 
 BY WILLIAM BROWN. 
 
 / 
 
 One of my correspondents, who was acquainted with the late Amasa, 
 Walker, writes me as follows : — " I think he (Mr. Walker) suspect- 
 ed or was inwardly conscious of the defects of Political Eco- 
 nomy as it stands, but he lacked nerve to expose them — perhaps 
 he also lacked nerve to seek with diligence for the truth." lam 
 struck with the remark. From all that I see and hear, the convic- 
 tion is forcing itself upon my mind that there are not a few political 
 economists who are beginning to lose faith in the current expositions 
 of the science, and that there are even some who begin to suspect 
 what they have themselves written on the subject. 
 
 But though there may be here and there encouraging signs that a 
 few earnest and thoughtful men are drawing towards the light, it is 
 but too painfully evident that some of our recognised expounders of 
 Political Economy, even in the great centres of thought and activity, 
 are receding further and further from it. Witness the following 
 from a recent immber of the London Fortnightly lUview. 
 
 " The science of Political Economy, as we have it in England, may 
 
 be defined as the science of business Some hold, and as 1 think 
 
 hold justly, that, extraordinary as it may seem, these regular changes 
 in the sun have much to do with the regular recurrence of difficult 
 times in the money market." So saith Mr. Walter Bagehot in an 
 article on "The Postulates of English Political Economy." As- 
 tounding discovery! The sun in tlie heavens bringing a money 
 panic on London or New York ! One would hardly think tliat such 
 a remarkable case of sunstroke or color blindness could have 
 occurred in the foggy clirar.te of England. Such " postulates " as 
 these almost take away one's breath. Perhaps we may have, in the 
 next revolution of the Fortnightly, an arraignment of the fixed stars, 
 or of Saturn's ring, or of Jupiter's satellites^ as the guilty sources of 
 paper lies and inflation among the sons ot^ men. Who knows but 
 the recent transit of Venus has had something to do with the 
 troubles down here among the legal tendera? Is it not possible that 
 the persistent discount on this class of paper delusions may be attrib- 
 uted to Venus having got a little oil" the square ? A lunar or solar 
 eclipse would be a Splendid case to goto a Jury — or to Congress. 
 Let the Fortnightly Review choose twelve men, good and true, who 
 believe that a correct definition of the science c)f Political Ecoiwniy 
 '*'as they have it in England" is, that it is " the science of business," 
 and let them take evidence as to whether "perturbations" in the 
 heavenly bodies are the direct cause of "perturbations" in the 
 "paper" market, or vice versa; and then we may have the whole 
 thing fairly advanced as a i)ostulate or estfiblished Jis a principle in 
 monetary science. Nothing could be more seemly than tbf(,t the 
 
2 
 
 wise men of London, the 
 
 ({ 
 
 .» 
 
 paper 
 should institutG ft scsiicu lOr tii6 specie 
 
 centre of the financial world, 
 iiois. 1 hoy arc xar^oly 
 accountable for the disappearance of the people's money from the 
 hand of industry. Will they allow me to suggest that possibly 
 Orion may have it stowed in his belt or under his feet. Could 
 industry only have the assurance that its cash forms a sort of 
 pedestal for the brilliant constellation, it might feel somewhat more 
 satisfied than with the present hollow delusion of the specie basis. 
 Let us have a Prospectus forthwith of the Bank of Orion placed 
 upon the London Stock Exchange. We know the trouble is, 
 that even at the Bank of England people sometimes want their 
 money and occasionally venture to make a clamor for it. Let us 
 transfer the people's money from both departments of the bank to 
 the feet of Orion. There would be a specie basis for you, safe from 
 all " runs " ! The idea is at once so startling, so novel, so intelli- 
 gent, that I claim it as one of the postulates of " the science of 
 business as they have it in England." And I am quite satisfied, if the 
 thing could only be accomplished, that it would do less harm to 
 industry than the present " postulates " as to the specie basis. The 
 idea of relegating, to the heavenly bodies, our responsibility in the 
 practical destruction of the people's money, is so fascinating, that one 
 sinks down into the easy chair of financial tranquillity quite over- 
 come with the delicious aroma which fioats about " postulates " 
 which not only at once relieve us from all care and fill our cofters to 
 overflowing, but settle for ever the troublesome questions as to 
 returns to specie payments, or the practical difficulty of finding the 
 specie basis when foolish and suspicious people begin to clamor for 
 it. I shall lay claim now to a joint occupancy ot the first vacant 
 chair of Political Economy. 
 
 " Bank of England notes are not exactly coin." says Professor 
 Jevons, in his recent work on Money and the Meciianism of Ex- 
 change. No, not exactly. They are as far from coin as north is 
 from south ; just as far as payment is from non-payment. They are 
 the very opposite of coin. Coin accomplishes barter in and by 
 itself; and it does so because it has labor value in it ; and the labor 
 is transferred for the equivalent value acquired. But Bank of Eng- 
 land notes are evidences of debt. They are proof to the holder (?/«<? 
 be a producer), and i)roof beyond all question, that those who issue 
 them are fattening off his labor or his products ; that he has given 
 toil and got no return ; that payment is suspended. That is ** not 
 exactly " the work of coin. Does it bear any resemblance to it 
 at all? Goods may be transferred by any underhand method, Ikit 
 industry wants to be paid for its goods and labor. Surely the holder 
 needs no other evidence than the five pound note in his pocket that 
 the Bank has got his money or his toil^ and that he has got the Bank's 
 ])aper ; tliat the Bank has his capital in hand and is reaping from its 
 employment; and that he can never get the same value in exchange 
 for that paper which he passes away and for the use of which, or 
 rather for the time he holds it in possession, he pays out of his own 
 toil, as if he used his own money, true money, in payment of the 
 things he buys. 
 
 Another postulate, this time from the American continent, has just 
 turned up. Mr. H. C. Baird lays it down in the Atlantic Monthly tor 
 March (1876) in an article on " Money and its Substitutes." Here it 
 is : " Value being a measure of the resistance to be overcome in get- 
 ting poascsaiou of anything, the paper money issued by a responsible 
 
 4 
 
 I 
 
 
 
i 
 
 <r 
 
 government, like that of the United States or Great Britain, for com- 
 modities or services received, would represent and indeed embody 
 value in such an eminent degree, that it would closely approximate 
 in this respect to money of inlierent value equal to its face," Now I 
 defy anv one who lot a lunatic on the subjects of value and money 
 to swallow such a dose as this. The only interpretation which the 
 passage will bear is this — that value has been imparted to the " paper 
 money" because a certain resistance had to be overcome in taking 
 the money out of the people's hands. But if Mr. Baird means to set 
 forth the well known fact that labor has to be given, or resistance 
 to be overcome, by muscular toil, before people can get their 
 money or their goods ; and that there/ore responsible or any other 
 governments can imjtart value to bits of paper in such an eminent 
 degree as tliat they shall closely ajjproximate in that respect to a pro- 
 duct of toil, then I confess I am blind enough not to perceive the 
 connection. And Mr. Baird will pardon me when I say that there is 
 not the remotest industrial connection between the two things. The 
 article is a plea for more paper for the American people ; and though, 
 as appears to me, it is a signal failure in that respect, and abounds 
 with propositions which no true economist can for a moment enter- 
 tain ; yet, on the other hand, it is a damaging statement of what is 
 popularly known as the specie basis. The sentence " money of inher- 
 ent value equal to its face " is quite beyond my comprehension. I 
 have always understood that, practically, value is a relative term, 
 having reference to nomft other article owning an equivalent amount 
 of labor. Mr. Baird says, and says truly, " Under the British credit 
 system some $115,000,000 or a little over, of specie is made to serve 
 as a so-called ' basis ' for $4,000,000,000 of bank circulation and 
 deposits." So that, even if the money were the property of the 
 banks — if they had given labor to the people for it instead of bits of 
 paper — it would still be a complete delusion to call it a basis of any 
 kind for the huge mountain of paper by which " business " is trans- 
 acted and industry ruined. 
 
 But, seriously speaking, who are we deceiving by all this course of 
 conduct? It is ])ainfully evident that many writers of undoubted 
 ability are unconsciously engaged in the propagation of the most 
 vulgar and dangerous errors. I say unconsciously — for I have hope 
 that these gentlemen, when they have laid hold of the fundamental 
 truths of Political Economy in the right way, will consecrate their 
 talents to the propagation of those principles which they now labor 
 to destroy. It is hard to say to what extent we are deceiving the 
 working men, the producers. They, poor simple souls, never look 
 into the matter at all. They have not the least suspicion that so 
 great a wrong is done to them. They confide in what they consider 
 the integrity of the system which is working their ruin. I fear we 
 are but deceiving our own selves, and it is a terrible thing indeed 
 when a deceived heart turns us aside. 
 
 A correct " postulate " of the science of Political Economy as they 
 have it in England would be — the science of destroying money, or 
 of constantly suspending payment — of escaping productive toil — of 
 living off the unrequited labor of others — and of eflfecting the ruin of 
 industry. 
 
 What is the convertibility of paper currency ? It has been buried 
 under so many fine commercial phrases that it is no wonder the 
 paper men themselves are continually wrangling over the subject. 
 An individual, a bank, a corporation, or a government, gets hold of 
 
tho money of industry in exchange for bits of paper. Industry does 
 not in this way part with its money willingly. Tiirough the inter- 
 vention of the men of " business," it parts with it unwittingly or 
 ignorautly. It deliver.'? it up unconscious of the fact that paper can 
 never be received in exchange for the products of toil without oppres- 
 sion of toil. It matters little whether this is done by force or guile. 
 It would not be so bad were it done by the former method. The 
 re.><titution of tiiis money, when restittUion can be had — the return- 
 ing to industry of that which it hasslowly and laboriously produced — 
 the giving back to labor of that which is its own, is dubbed in com- 
 mercial phrase, " tiie convertiliility of the currency"! It is a mia- 
 nomor and a (leception. Convertibility is that which is susceptible 
 of change. There is no change in the bit of paper. It has not been 
 converted into gold. There is no exchange or barter, in the true 
 sense of the term, in handing over a bit of paper for solid gold — no 
 exchange of value for value as when two workmen nnitually transfer 
 the products of their handiwork. A moment's reflection will shew 
 that there can be no etjuivalence between gold and engraved pieces 
 of paper. To hold that a paper ]>romise to pay gold is a representa- 
 tive of gold, is to hold that my obligation to pay for the thing I have 
 purchased represents the thing purchased, which is absurd. For, 
 the debt written or printed on the face of a slip of paper is different 
 in no respect from any other debt, and all exchange is just simple 
 barter, goods for money or money for goods. The issuer of the 
 paper, in returning another's money, is <l<)ing nothing more than I 
 do when I i)ay for my tea and sugar — indeed, not so much ; for I 
 give valn« for value, but he only returns that which belongs to 
 another. He has paid over to you the money which belongs to you, 
 and you have returned to him the slip of paper, the written or printed 
 ev'Jeap.e of his debt, that is all. 
 
 But the pa])er men are not satisfied with taking the specie out of 
 the hand of industry and lending it back to the producers for a prof- 
 itable return of interest. Such a gross delusion could hardly be 
 accomplished even with simple and unsuspecting industry. Modern 
 banking is something far worse and far more destructive. It retains 
 th^ money, or permits it to fall into the hands of speculators and 
 gamblers; or transmits it, as profit or safety demands, and for its 
 own purposes, from one locality to another ; and then, deceiving 
 itself and others by the specie basis phrase, issues an avalanche of 
 paper currency, and discounts paper at the rate of about one hundred 
 and fifty millions of dollars for every million of producers, the interest 
 of which has all to be paid by tliese i)roducers. Let any one estimate 
 if he can, tho enormous pressure brought to bear in this manner alone 
 upon working men. That which is the " basis " of the system is not 
 gold or silver, but millions of toiling human beings for ever crushed 
 beneath this cruel and unrelenting power. Instead of a specie basis, 
 it has a human basis of never-ending suffering and wrong. It can 
 live and thrive and do its work without spt^cie at all, as we have 
 witnessed in the United States for several years past. It will be a 
 dread awakening, will it not, when toil comes to realize the stupen- 
 dous fraud. 
 
 The conductors of the American daily press are, on the whole, 
 
 acute enough to perceive that it is hardly within the province of 
 
 reason to call a bit of paper a dollar. They have generally held up 
 
 to scorn the idea of stamping a morsel of paper with the phrase, 
 
 •This is a dollar." But here they stop short. They fail to perceive, 
 
 
 ) 
 ) 
 
IS 
 
 id 
 
 'I 
 
 ) 
 
 or at loost they fail to tell, that it raatterg little to that world of toil 
 from whence all our resources come, whether the system of univer- 
 sal suspension of payment is accompi ' ^l^ed by {;reenl)acka, or national 
 bank notes, or by treasury notes, or '' promises " to pay, or is con- 
 cealed under the thin disguise of a specie basis. They tefl us that the 
 bit of paper is nothing. Well, t^ke away the paper and what have 
 we left? Anything that industry has i)roduced? Anything that it 
 can buy or sell? Anything on whicii it can lay its hand? 
 
 Of course the men of London wlio handle in one day the accnmti- 
 lated transactions of the industrial world j and, on the back of that, 
 the fabulous amounts of share and stock jobbing andother forms of 
 speculation and gambling ; and, on tlie back of that again, the whole 
 of these " transactions " repeated four or five or six times ere they 
 arrive at the central point, the Clearing House, for adjustment — 
 these men, I say, are careful, very careful, to tell us that there is 
 not enough of money in the world. And so, to put the thing rigiit 
 and to supplement the shortcomings of nature, and correct the 
 designs of Providence, they issue an avalanche of promises to pay 
 that which they tell us has no existance ! Never was there a greater 
 delusion foisted upon a credulous people. There is a superabundance 
 of money in the world to perform, twice told if necessary, all the 
 requisite and legitimate transactions of industry. Every economist 
 ought to know that there is no special or determinate amount of 
 money needed for the world's exclianges. There never can be too 
 much — there never can be too little. 7%-ou(/h price, it has a self- 
 regulating power, which never can be destroyed, if people will but 
 let it do its own work. The labor embodied m it at the mine is the 
 one thing needed to secure at once its value and its volume. 
 
 Money is simply a commodity, just like any other commodity. It 
 is more frequently bought than other commodities, that is all. Its 
 use does not destroy barter, it rather intensifies it. It is no more an 
 instrument of exchange than corn is an instrument of exchange. It 
 carries labor in its hand — that it exchanges, nothing else. It is not 
 an instrument of exchanging anything outside of itself You can 
 get things you want quicker into your possession by having this 
 commodity to give, than if you had it not to give. These and other 
 interesting points as to money, I have fully set forth in previous 
 papers. 
 
 Nothing is more common than to hear what is understood by the 
 convertibility of the currency urged as an excuse for the use of 
 paper. It is constantly said that you can go to .the bank and 
 exchange the paper for specie. Be it so. Would any man who 
 has given even ordinary attention to the subject, advance a simple 
 fact like this in justification of paper currency and its attendant 
 evils? For, what is the fact? In seeking for payment at the 
 bank, you are only asking for what is your own. You have the 
 bank s paper, and it is plain that the bank owes you money. You are 
 but asking for payment of labor given or service rendered. You 
 have given your toil, aad certainly your money is due. The banks 
 have got the people's money into their hands on a promise to return 
 it when asked. They have got it without an industrial equivalent. 
 Labor has given it away for bits of paper. Can we justify one or 
 any of the ruinous effects of paper by the fact that an occasional call 
 for money is promptly met ; or that, in a time of panic, a few lucky 
 ones near the bank, or foremost in the crush, can get cash for the 
 notes they hold. It may be of importance to gold speculators that 
 
6 
 
 they should have the privilege of gambling with the people's money 
 at pleasure. Rut what does it matter if a toiler, a worker, a producer, 
 can occasionally on demand get the money for which he has 
 wrought? Is it not those who toil who pay the enornious amounts 
 drawn out of industry for the loan of this endless paper, and the 
 strain of which is not lessened one iota hy the fact that the banker 
 may be able to return one geniune dollar for every five or ten or 
 twenty or fifty fictions issued from a pai)er mill? The thing called 
 "(Tovernment," whatever that may mean, cannot manufacture 
 money at will. It proihires no connnodity. It seems to mo 
 that the principal reason for its existence, as we now witness 
 it, is that it can live off industry. At all events it would bo 
 a very different thing, and present very different features, \f labor 
 declined to feed and pani[ter it any longer with the enonnous sums 
 drawn out of heavily taxed toil. Government, as we know it, is 
 only hmnan influence localised; and it ought to develop itself, not 
 as an instrument of crushing industry, but as the generous and 
 faithful friend of humanity. In jiermitting tlie money of industry to 
 be taken out of the hands of the producers, and in deceiving the 
 ]»eople with all the absurd notions and legislation about a specie 
 basis. Government is lending its i)owerful aid, not to build up, but 
 to destroy the industry of the lan<l. The laws of political economy 
 are the same in Fiji and Honolulu as in Washington and London. 
 And the great laws of exchange (wl)ich I suppose embrace what 
 Mr. Bagehot means by his " science of business") cannot bo manip- 
 ulated by either CaHre or Cockney. 
 
 A word now to intelligent working-men. You must try and gras|> 
 this paper system as a whole. You must endeavor to understand it 
 as the most extraordinary and compact development the world has 
 ever seen of a vast and uncompromising system of industrial oppres- 
 sion. You must perceive the special interest that this specie basis 
 cry has for all who live from your labor. To the real producers, the 
 working-men, it is a matter of really small importance. Specie 
 basis or no specie basis, there would bo no decrease of discounted 
 paper, and that is one mighty instrument by which you are now 
 oppressed. A little gold and silver afloat among the work- 
 ing classes, as in England, will not prevent their downward 
 progress in presence of that vast paper system which there exhibits 
 unlimited power and complete concentration. You know how 
 modern writers are fond of telling, and apparently as a matter 
 of boasting, how the daily payments in London are said to bo 
 accomplished by the intervention of less than one per cent, of money. 
 Once paper, you see, always paper and never-ending paper. It 
 matters nothing to industry, I repeat, whether all this is done by 
 greenbacks or other forms of legal tender, or by treasury notes, or 
 promises to pay, or exchequer bills, or bonds of any kind, or even 
 by bank cheques or by entries in bank books. The oppression to 
 industry will be all the same; for it is off industry that the whole 
 system must live. I can easily perceive why the mercantile and 
 certain other classes should strive to uphold the paper system. I 
 can even perceive why the Church should dread investigation. But 
 I can see no reason why millions of working-men should continue in 
 bondage to ignorance as well as to oppression. 
 
 I write this pai)er in the midst of a time of severe and persistent 
 commercial distress. Mercantile firms of the highest standing are 
 falling on every side. There is abounding and widespread sorrow. 
 
 (|i 
 
This terrible dostroyer spares Poithorrich nor poor. All go through 
 the furnace uliko. One's sympathies are deeply stirred to see old 
 and honorable ni'.irchants going down in a common ruin. How 
 many of tiiem will now pause and see that this is indeed the 
 finger of God? What does the reader think of this dark system 
 of [)alpable unrighteousness? Cau wo for umomcut doubt that 
 its davs are numbered ? 
 
 WORKS ON Tim LABOR AND MONEY 
 QUESTIONS.— By William Brown. 
 
 1. Thoughts on Paper Currency and Lending on Interest, as affect- 
 
 ing the prosperity of Labor, Commerce and Manufactures : 
 247 pages 75 cts. 
 
 2. A New Catechism on Political Economy : G8 pages 20 cts. 
 
 3. No fund in (;ommerce or Labor for Lending on Interest: II 
 
 pages 10 cts. 
 
 4. The Church, our Modern System of Commerce, and the fulfil- 
 
 ment of Prophecy : 24 pages 10 cts. 
 
 5. The Claims of Capital considered: 36 pages 10 cts. 
 
 G. The Specie Basis, as related to Industry and the Currency : 
 7 pages 5 cts. 
 
 Published by John Lovell, Montreal. 
 
 NoTK.— All letters, iiewspaperR, reviews, &c., intended for t'<o Author, 
 are roqueHteil to t>(* addressed to tlie euro ot Mr. Lovcli, as above, i^'riendly 
 n'lidiTs can render important assistance by contributions, however small, 
 in aid of the printing and circulatiou of tlieso tracts.