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i4^

ON MONEY

AND OTIIKU

TRADE QUESTIONS

HKIN(i A ItlCVlKW OF

MR. WALLACE'S SPEECH

ON AN INCONVKirnnLE crKKKNOY.

y. L. fP. O'lUMLY, C><'il Engineer.

HH 2705
03

miCE, IS CElSiT'S.

OTTAWA.
I'lUMKI' HV r. W. MITCllKl.L, 1:, s AM. 10 !:i,(;l.\ .STIfKKT.

t'^

r 1

!♦

National Library Bibliotheque nationale
of Canada du Canada

ON MONEY

AND OTHER

TRADE QUESTIONS

BEINU A REVIEW OP

MR. WALLACE'S SPEECH

ON AN INCONVEUTJBLE Cl'llKENOY.

J. L. ^.

O'HAJ^LY, Civil Engineer.

I>IIICE:. is OEISTTS.

OTTAWA;
PRINTED DY C. W. MITCHUM., tl, S AND 10 ELGIN STREET.

IDS-

^^^^^^^^i^J^^l^^^^^^

PREFACE.

e thonwnd
ne office of

TO THE READER :

The writer of the following pages feels, from his own ex-
perience, that it is impossible to understand triule questions
without a complete mastery of the functio?^s of money. Did
the masses once thoroughly understand these, political jugglers
<ould no longer conjure them into believing erroneous doctrines
on commercial questions. He can assure the reader that he
has no party intert^sts to subserve, no hobby to bolster
up. Although himself an advanced Liberal, he has no party
alliances, no partnership in any " machine " to hamper his
judgment or prejudice his opinions. His sole desire in the
present undertaking is to examine the machinery and working
of an imiDortant social problem. He impugnt. not the motives
of those holding opinions differing from his own, nor has he any
reason to doubt their sincerity. How far he has succeeded in
brushing away the cobwebs which lie strewn in the
path of the earnest inquirer after truth, he leaves to the
judgment of an impartial public, humbly bowing to its decision,
and scrupulously abiding by its verdict. He has devoted but a
very few days to his tr.sk, so that it goes forth with all its im-
perfections on its head. His sole motive is to add his mite to
the general stock of human happiness. He will feel amply re-
warded should this feeble attempt he the initiative of a dis-
cussion from which correct principles are evolved on a question
so deei^ly atiecting every member of the human family.

Ottawa, May, 1882.

The Author.

)lf

►5 MONEY AND OTHEK TRADE QUESTIONS

BEING A REVIEW OF MR, WALLACES SPEECH ON AN
INCUNVEIITIBLE CURRENCY.

]>RKMMINAKY KKMARKH.

Before entering on a review of Mr. Wallace's argnnientHin favor of an

|inconvertible currency, it is jMUtinent to define houio expressions of frequent

[occurrence in tlie diHcussion of economic questions. Value is one of thess.

I There are two kinds of value — ralne in huh and Wf/in- in err/iaiKjC It is

in tlie latter s(miso the expression is used hy economists. A thing to havo

valui' must have cost laltor, either in appropiiating it, or in producing it,

and sometimes in prcsjTving it. A thing whicli can l»e got without lalior,

even though :imoiigst the mo.st useful of sub.stances, ccnimands no value,

Iteciiiise a peison will not give anything useful or agreeal)le, which lie

possesses, and wliicl. has eost him lalior for that which he can get without.

Tne value of a coi iiuodity is its purchasing power, or the quantity of any one

thing or of things in general, f«ir which it will exchange. lfal>arrelof

llour will excliange for a jiair of hoots, then one value of a harnd of Hour

is a piir of Itoots. The /)rice of a comiuolity is Us value in money, oi tiie

amount of mouev foi which it will excliau<»e. If a hiishel of wheat is st»l(l

for a dollar, then the price or money value of the liushel of wheat is one

dollar.

1 hav(' not in this paper attempted to cla.ssify Mr. Wallace's argu-
ments, as, from their iii(;olierence and inconsistency with one another, they
are not susct'ptil>le of an intclIigiMc classilication. Morcovei-. their crU'lities
and fallacies are murli more ellectually exposed by talcing them Hinintiui
than l)y any |»ossilile groupings.

FAPTS WHICH ARE NOT FACTS.

Says Mr. Wallace {lI,i„H<i)d, .'.',(/i April, IXS!) : —

" I submit, Sir, two i)ri)positions which I think will not be gainsaid. One
is, that it is a fact that tiie jieriodical panics or crii^e^ which sweep over the (wm-
:uei(iftl world, bringing niiii and misery in their train, arc cauaed by a defective
inuuctary system ; and the other fact that there is nothing without a cause."

How can iiof/iimi have a cause? His latter fact is a very loose, un-
scientific mode of expressing the law of causality, or the sequence of cause
and eti'ect. The other so-called fact is but a bald assertion, and so little a

fact tliat it in univerHally (lonietl by uvery one conversant with the pheuoiu-
«|iun called a cnmiiiercial criHiii.

COMMoniTIRH NOT MONEY KAKNRD.

" Money is unlike anything else. There in no Huch thing among the pro.
(luctions of nature as money. Men cannot make money. They can earn it."

Ih theru rtiiv hucIi thinjif among th«^ proiluctions of naturo as a loaf t>f
luvad { or an nxv t or a ploiigii I or a Hheet (»f {wpcr . Vrrv few natural pi'o-
(luctH are tit for thn use of huiuuii heingH without undergoing many changes,
oftitu a c'()tnpl(H(> trau8formation. If men cannot make money, pray, who
does '( M«'U earn commodities not mom^y. The farm laborer, for example,
earns farm pro<luce, and he can earn nothing else, for farm produce of aomo
kind is the ultinuite result of his lahor. The factory hand earns a manu-
factured article, for that too is the ultimate result of his labor. A tacit
CO partnership »'xists iu'twciui the fanner and his workman. The former
furnishes the cnpital and the latter supplies the labor. Tlie coud>inatioii
of labor and capital is necessary to production. The farmer and the work-
man share the product among them on the teims implitMl in the deed of
partnei-ship. In the same way the factory hand shares with the capitalist the
manufactured article, which is th«' product of the labor of the one combined
with the capital of the other. The mint^r in the precious metals similarly
Hhares with the capitalist the jiroiluct of their united labor and capital, which
is gold or silver. 'I'he min(*r, it is seen, is the only person wlio can earn
money, for he earns the commodity from which money is uiiule. Tlu^
farmer aiul the manufacturer insteail of giving their workmen their share
of the profluct, whether wheat or cloth, in these commodities, sell the ar-
ticles for them, and hand them their share in the form of monc^y. This i.s
not only a great convenience, l)ut a great gaiii to the laborers, for it saves
them the time which they would ncicessariiy lose in dis;)osing of th«'ir
shaie, while entailing no additional lo.ss on the farmer and manufacturer,
who ari! sellers anyhow.

COININC; .V Pl'HLir (iUAUANTEE OF WEIGHT AND KIXKNK.SS.

" If ft man makes money and nuts more gold or silver into it than .shouM be
in the coin he in making, it is called a ctime, and he is liable to punishment."

Can anything bo more absurd ? Gold and silver became a medium of
exchange long before coining was thought of. Coining necessarily grew
out of their a ioption as money, being a contrivance to save weighing and
assaying at each succe.ssivs exchange. The stamp is simply a public
guarantee, often the only guarantee, which the receiver of the coin can
have of its genuineness, or that it is of the standard weight and fineness.
It is well known that if a gold coin is worn or clipped, its value is depre-
ciated in exact proi)ortion to its loss of weight, the stamp to the con-
trary notwitlistanding. An ounce ot gold, whether as coin or bullion, is
precisely of the same value, at least, it is so where the state coins without a
seignorage. Coining is prohibited and made penal, not because the uu-

itttbo^

iard,

ipuric

(poveri

jmistal

fevevyl

citiz«i

,it woi

'ceiveil

to i)r<

|)roUil

aUi«|

J tweel
' deter
nor l|
•ard<

iniUi
appv

crct

nioi

tin

lio

if
d

•tlitiiephenoM,.

"'noDK the pro
•Mn earn it."

"'•'•'w a loaf of
'**' "Htui-ul i,ro-
"•anv clian^rHs

♦ |o'- oxainpjp

'"•"« a inuiiu.

"k ^ ''''''
^ne roniit»r

cp'nl)iu«tiou
"d the wojj^..
' the flwU of
'"/>itHlist thr
""'coinl)ii„.cJ
"'« siniihi,.]^,

^/"■faJ, which

''<> oftn onvn

"i.ulo. Th,,

t''"''- sJi.tiH

«<'!! the „,•

J'- 'fiii.sis

^0«" it SHVes

'»,!,' of th.Mr
lufactuici-

i»ent."

6<Hiiii] of
'jy grew
"»g Hiul
t piihlie
'oin can

flepre-
'^ con-
lion, is
flout a
^e un.

uthorized coins contain more of the precious metals than the legal stan-
ard, but for preciHely the opposite reiison — to prevent the circulation of
purious coins. No one would lie such an idiot as to put more gold in a
overeign than he eoull sell it for. Hut though a man made such » clumsy
istake, he could Hell the coin for its full value according to weight. But
!every vagabond, and even Homo who would aHpiru to pass as honorable
citi/enH, would liko to put leHH than the standard quantity in the coin, for
(it would be an easy way of amuMHiug a fortune at the expense of tkkv re-
'ceiverH of spurious coins if Iuh nefarious conduct puHsed undetected. It is
to pi-event tliiH kind of fraud that coining has by common couHont bticu
.prohibited, and the issuers of uuauchoi'i/ed coins declared i.-riminals.

I I;hK of MONKY Tt) KA(IL1,TATK E.XCHANUE of <0MM0|)ITIE8.

i " Its use is to measure values aud facilitate theu' ^■•hauge."

; Facilitate the exchange of what ? Of valu« . Commodities, not

15' values, ar«( those which exchanj^'c for on<* another. Value is a relation be-
j tween two or more connnodities, of whioh co : of p 'oduction Is the chief
: determiin >g element. If a bushel of wheut will excluint." tur neither more
; nor less liian tive yards of cotton, then the buslie' f wheat ami the five
•ards of cotton are at that partculai time and piico of the same valuo.

SOMK KKKKCTS OF I-KCJAL TEXDER ISSl'K.

" If the Parliament of this country were to start ,1 printing jiross and create
millions of lej^nl tender U')tes, and yive a gram of them to any iudividual, 1
apprehend tha» grant would make liim rich."

There in not the least doubt of it, b\it it would be by robbing every
creditor, every (contractor, every annuitant, and every receiver of a Hxed
money payment. There is not a mortgaijor or othf.'r d(d»tor in tlu country
who would not purchase such notes for the express purpose of defrauiling
their creditors, and they would be willing to share their ill-gotten gains
with the privileged inlividual. J'mt for any other purpose they (the mil-
lions of lei^al tender notes) would be utterly worthless.

IJONDS AND DKHKNTUUKS A I.IKX OX J'ROI'KHTV.

"And if you were to start a |>rinting iiress and make bonds and debentures.
if they are wealth you can make men rich by giving them these bonds and
debentures."

Bonds and debentures, no more than any other pieces of pa|)er, can
nmke no one rich, except in so far as they constitute a lieu or mort^jago
on some property. How much richer is the man who has got a hundred,
thousand doUais of the bonds and debentures of a railroad company whose
road has no existence ? Just al)out as much as is the man who has got
the mortgage of a property to wliich the mortgagor has no title.

VALUE OF XIOXEV IS WHAT IT WILL EXCHANGE FOR.

"What i8 the value of money ? It is not valuable because it is made of a
commodity uf value ; its usefulness Is its value."

The value of money, like all othei useful or agreeable things pi-ocured
bj labor, is the quantity of any one commodity or of commodities in gene-
ral for which it will exchange. If a $20 gold cciii wil' exchange for a
certain kind of stove, then one of the values of that coin is that stove.
There is not in nature a thing more useful than air It is absolutely
indisi)ensubie to animal and vegetable life. Without it the earth would
l)e a chaotic waste. Yet it has no value ; no one would give anything
for a quantity of it, because he can have as much as he wants of it for
nothing.

WHAT CONSTITITES VALUE.

In order that a thing may have value it is necessary that it must
Lave some use, satisfy some desire, answer some purpose, and that labor
Las been exp mded on it, either in its appropriation or production. For
no one would part with that which answers some purpose and which has
cost hiui labor in acquiring it for what he can get for nothing.

HUMAN" LAW CAN' CKKATK NO COMMODITY.

'■Then money is a commodity created by the law."

Huniiiu l;iw, no doubt, is nu^aut. Everyone knows that human law
cin create no commodity. You niiii;ht h^islate till Dooiiisday, and if no-
boily ploui;lH'(l or sowed, rea})e(l or tlimshed, ground or baked, you
would have no bread.

"A barrt'l of Hour that costs $10 is nu more valuable as an article of food
thai; it' it only cost 81."

The b.u Tcl of llour would, in the one case as in the other, be just as
useful foi- the suppoi't of lit\', ami so would it be to one who got a gift ot
it, but celt liiily noo as valualiU'. .Suppose the barrel of tlour wa.s only
worth a dollar, and that a miller had to exchange flour foi- a coat worth
.*S!in. In this cas'! one coat would be worth ten ))arivls of tlour. Suppose
ac:ain that the barrel of tlour was worth .*1U, then one barrel of Hour
would be woi ill one coat. It is needless to ask the miller which barrel of
Hour he considers tlie most valuable. The iiiauua ot the Israelites was
just as useful as if they labored to pioihict! it ; and would in their tluni
circuinstaiices be exceedingly valuabh' if a few of them could monopoli,.e it.

NKKDS KXr'LAINI.Nc;.

Who will explain this ?

"The ((iiantity of money rej^ulates its selling price, its marketable value, th«
same as any otlier roiuinudity ; but it dues not regulate its money price ?"

What is the selling price of a thing but its money price ? (/.''.,) the
amount of inouey for which it will exchange. If an ounce of gold in bul-
lion was worth more than an ounce in c )in-', the t-oins would be melted
int(i bullion. If, on the contrary, an ounce of gold in coins was worth
more than an ounce in bullion, the holders of bullion would soon present it
at the mint to be coined.

{■ocured
n gene-
je for a
t stove,
solutely
li would
nything
f it for

it must
at labor
n. For
lich has

(iian law
d if ne-
ed, you

of food

THE CAUSE OF CHANGE IN THE PRICE OF COMMODITIES.

** A dollar of monev that would buy twenty pounds of butter is no more val-
uable than a dollar that would buy ten pounds of outter."

No dollar can perform this function at one and the same time and
place, unless that one kind of butter is of very inferior quality, and the
other a very superior, or that the owner of the butter is a fool. The tem-
porary fluctuations of the market depend on the demand and supply of
commodities in that mark<it. Suppose that through an abundant harvest
last year, a bjvrrel of Hour sold for $4, while a yard of broadcloth sold
for $2. In this state of the market a barrel of flour exchanges for two
j'ards of cloth. Suppose that owing to vicissitudes of seasons that a barrel
of flour is this year worth .^12, with the cloth at its former price. A
barrel of Hour will now be worth six yards of cioth, or will exchange for
three times as much cloth as last year. Jn the plentiful year the barrel of
flour exclmni'ed for two yards of cloth, in the scarce vear for six. It is
manifest that the change in the price of Hour has not arisen from any
olmnge in the value ot money, but from the difference of vield between the
scant and bountiful harvests. In the abundant year the liushel of wheat
eo.-;t the fanner, say GO cents ; in the scarce season it has cost him $1.JS0.
In order to give liiui e<jual profit on the .same laiioi' and capital in each
year, he must get triple the price for the jtroduct of the scarce season that
he got fof that of the alniudant one, for by ihe hypothesis the yield is only
on(!-thircl.

just as
a gift ot
vas only
it worth
Suppose

of Hour
l)arrel of
itcs was
eir then

)nli/,e it.

alue, the
?"

.fi.,) the
d in bul-
melted
as worth
)re8ent it

PiriCHASINC I'OWICK OK MuNEV TlIK SAMK, IH)WE\VEVKR 0HTA1XED.

"A dollar of money that takes two days labor to earn is no more valuable
for the payment of debt than a dollar that is earned by one day's labor,"

Nor is a stolen dollar less valuable for the same purpose. No one
labors for dollars except the miners in the pt'ec'oiis ni'^tals : and ultimately
even these, like all others, generally labor for coi.^uniable eoniniodities.

Tin: LAW CANNOT CONVKRT A THIX(i OF NO VALUE INTO A TIlINd OF VALUE.

" Well, the law can take an article that is of no value, and by converting it
into money, can yive it a value."

This sta*^ement is ambiguous, and needs explanation. If it is meant
that the Governinout can by its Hat convert a thing of small into a
thing of great value, as a piece (yf nickel worth one cent, which, if n)ade of
gold, would be wortli ??l(l, Mr. WUace is entirely mistak"-n. as he
would find out on presenting it to the first trader. Hut, if he would say
to the trader, " Mr. A, if you accept thi.s nicked coin as if it were gold, .
assure you that whenever you or any other person present it at my counter
I will pay ij?10 in gold, ' the trader would accept the nickel if he had
sutHcient confid(rnce in the credit of the issuer to redeem it as promised.

THE USAGES OF CIVILIZED SOCIETY COMPEL NO ONE TO PART WITH HIS PKO-

PERTY WITHOUT COMPENSATION.

"No man can be compelled to sell anything for money, whether it is made of
paper, gold or silver ; but, having gold, he may be compelled to take money in
payment."

This is as extraordinary as it is senseless. If the la\/ will compel a
man to sell his gold for nothing, (for it is presumed that Mr. Wallace refeva
to inconvertible pai)er), it can also compel another to sell his whfat for
nothing ; and the compulsory process would be much simi)litied in the
case of th" whpat, as gold, representing great value in small bulk, is much
easier hidden than wheat, and does not deteriorate in concealment,

AN INVARIABLE MEASURE OF ANY MATERIAL SUBSTANCE IMPOSSIBLE.

" A measure to be of any value must be a fixed quantity."

There is no denying that an invariable is much preferable to a variable
measui'e of any kind. But an invariable measure of anv material sub-
stance has no existence in nature. Tt is a mathematical conception.
There is an invarial)le measure of tune, the sidereal day, or the tin.e which
the earth takes in making one revolution on its axis.

ALL EX(IIAX(iE IS BARTER.

" If that is not money, it simply becomes barter, exchanging one commodity
of value fur another."

\1I exchange is barter whether money is introduced or not. What is
a sale followed by a purchase but barter? If A, a former, sells to B, a
grocer, 100 lbs. of butter at 20 cts. per lb., receiving therefor $20, and
B st'Us to A 40 IVks. of tea at HO cts. i)er lb., making i^20, is not that
barter? But if A, instead of selling his butter to B, sells it to C, a doc-
tor, for the same price, and buys his tea from B as l>efore, it is evident
that he is still bartering his butter for the tea. In tact, butter, if noiL his
only, is evidently his most convenient, means at the time of procuring tea.
But how with the doctor, is he also bartering, and wiuit has he to barter
against A's biitter i Not being a miner, nor a capitali*<t, his only means of
subsistence is his skill and lalior. He has set a limb for B, and instead of
taking tea to exchange with A for V>utter, he takes money, being more
convenient, which again returns to l), through the hands of A. Ho that all
exchange of commodities, disguised as it may^ is finally re.solved into
barter.

A CHANGE IN VALUE OF MONEY DOES NOT CHANGE THE RELATIVE VALUES OF

COMMODITIES.

" Money should have no real value ; because its increase in volume may so
decrease the value of other articles that they cannot be produced at the price at
which they would have to be exchanged into money, and the production would
have to stop, because they would not pay for production."

An increase or diminution in the quantity of money does not in the
slightest degree affect values, though it does prices. Suppose, on a

in the
on a

particular day, that a barrel of flour sold for $6, and a yard of broadcloth
for $1.50. It is obvious that a barrel of flour was then worth four yarda
of cloth. Suppose that next day the money of the community was
doubled, say by a miracle, so that everyone who had a coin or a j^ote in
his pocket found two there the next morning. All commodities wculd
rise in jrice; and exactly in the proportion that the circulating niediinii
was ip.creased, so that the barrel of flour which yesterday sold for $G
would to-day sell for $12, and the yard of cloth would sell also tor !?."J.
It is at once seen that nothing but money has changed in value. For
to-day, as yesterday, a Vjarrel ot flour just exchanges for four yards of
cloth ; and so with everything else. All commodities have risen in money
price, but $1 yesterday would puichase as much connaoditie.s m $2 to-day.

HOW TIIK SOCIETY ARE AFFECTED BY CHANGES IN THE CCKRENCY.

There are other ]n'ocesses besides magic by which the circulating
medium may be rendered redundant. Sui)pose it is done l:»y the issue ot
Exchequer bills, paid out to workmen, and they reniiim in circulation.
The effecj on prices will be the same. All comiuodities will rise in price
in proportion to the addition to the currency. If the currency is iloubled
prices will be doubled. In both suppositious all creditors will suffer by the
depreciat'on, as well as ab persons receiving fixed money payments. But
the working classes will, in the latter case, be the gieatest sutlereis from
the inHatioij. For pricts rise much quicker and in gi'eater strides th<n
do wages, even, from day to day engagements ; and the iujustige is still
more severely felt under lahoi contracts. But when the ju'ecious metals
and convertible psiper constitute the currency inflation is checked before
much mischief can be done. For so soon as the liolcfei- of gold finds its
pui'chasing power diminishing, he will export it like any other commodity ;
and the exportation will cease only when the price of gold ri.ses to a level
with other ciuntrics. Nor could the most r^strictivt! Irgislatiou prevent
the exportation. JiJ converse, if the cvn-rency is scant, ihe prices of all
things will fall, and thac too exactly in proportion to the conn-action.
But as all values will b^ alike afl'ected, the change will only be felt in
existing contracts, and engagements to pay flxed sums of money. The
working classes rather proht by a oonti'action of the currency, particularly
those who have pre*^i0us\y entered into labor conti-at :>s, for wages seldom
fall as quickly as ])rices ; and therefore, while money wages is unchangeil,
wages in kiiul or real ^>age-t are increased, so that the very opposite ett'ects
on the laboring c'asst:-; are produced by changes in the currency to tho<e
fancied by Mr. Wallace. But if the currtncy is on a gold basis, so soon
as it becomes scant the purchasing power of the i)recious metals having
increased, it will be profitable to import them, and accordingly they will
be inqior ed tintil the vacuum is tilloKl up, when prices will attain their
normal condition.

COMMODITIES UNUSED PRODUCE NOTHING.

"If you put away $1 for one hundred years it will ouly be $1 at the end,,
unless the value has been changed by law."

What if it happened to be a paper dollar that was secreted, and the
bank bnrst in the interval 1 The great«!r number of valuable things, if
p it away for that time, would leave nothins; but dust behind. Su that
even in the hoarding process the preciout metals have an undoubtedly
great advantage over commodities generally.

MONEY ALWAYS VALUABLE.

" A. man might possible [possibly] have in his pockets all the money in the
world, and yet it would be of no value until parted with."

Let Mr. Wallace ask the possessor of money convertible into gold if
this is his opiaion, and I venture to say that he would receive a decidedly
negative reply. Here Mr. Wallace, as usual, c mfounds use with exchange
value. Of what use is a warehouse full of cotton cloth to a manufacturer
until he parts with it. Everything which a person possesses in excess
of his own cousu 'Option is useless to him until he parts with it as well
us money, but not the less valuable.

A VALUELESS MONEY IMPOSSIBLE.

" A valuftless money is a perfect money."

There can be uo such thing as a value' !.ss money, for the instant it
liecomes valueless it ceases to be money. A valueless money meiins money
which has no value in exchange, a thing for whicli no person wOuld give
:iny couiniodity. Any kind of money, how much soever depreciated, to
o ntinue in circulation, must hfive some value. The <iUO franc Aasiyuatu,
which exchanged for a pound ot butter, had still some value left.

PATRIOTISM V. KACi-MGN'EV.

MO.NEV r. CAPITAL.

"If a man has .^l,()ti() in ))aj)er u.oney, the value of which exists only in the
couiitiy of its creation, while it may not lie worth ten cents outside that ';ountry,
he has an iuceiitiv-e to suiipurt its institutions, in addition to his patriotism, l)e-
tause he kho-.vs if the country goes down his money will he valueless. But the
nia)i with a .?l,i>.Mt of gold in the bank, which he knows will be taken in any
part of the world, ca:i readily withdraw it and leave his country if it should get
into difhcuhy : he is not obliged to tight its battles."

Of all till- reasons evi^r urgir I for cliiiugin:? the currency of a country,
this is the most extraorcliu uy and fai'-fetehed. Mr. Wallacj .seems iii-
c;ii).iblo of seeing the distinction between money and capitid. Very few
imlividu lis, even in the weathi-st countries, ha/e much of their wealth in
money. It is geufraily in n-claini'^d land and its improvements, ia roads,
iu railways, in canals, in buildings, in machinery, in materials and in
tinished unconsumjd products. I Ij.-jlieve I am within the mark in esti-
jiritiug the whole wealth of Canada at one hundred billions of dollars ; and
of this ther! is littl-^ over six million dolUrs in specie, or one-sixt«eu
thousandth part of the whole Jt is thus seen what an insignificant part
of th-) wealth of a community consisis of money. There i-", however, little
doubt that the substitution of an inconvertible for a convertibi currency
would kee[) capital and immigration from the country.

sd, and the

e things, if

I. So that

indoubiedly

aoney in the

into gold if
a decidedly
ith exchange
nanufacturer
sea in excess
th it as well

he instant it
nieins money
m w6uld give
'preciateil, to
iiic Aasiyuiits,
left.

ists only in the
ethat '.ouutry,
patriotism, he-
iiess. But the
taken in any
it should get

of a country,
acii seems lu-
ll. Very lew
bell wealth in
euts, ia roads,
terials and in

mark in esti-
if dollars ; and
r oue-sixt«en
igniticaut part
however, little
•tib) currency

MONEY IS THE INSTRUMENT OF EXCHANGE.

" Money is the motor by which production and commerce is moved."

If Mr. Wallace had substituted " money is the instrument l>y which
products are most conveniently exchanged," his sinuh ^ould liit nearer
the mark, for therein consists its sole use.

THE PURCHASING POWER OF MONEY VARIES INVERSELY AS ITS i^UANTITY.

" Money, whether of gold, silver or paper, will decrease in purchasing power
in accordance with its inciea-sing ([uantity."

Mr. Wallace here has got a glimps*^ of the truth. The statement is
strictly correct with regard to an inoouvertibls currency, and would be .so
likewise of the jtivcious metals if it were impcssible to export or import
them.

MONEY WHEN EXCHANGED IS SOI.O.

'•Every time you exchange money you redeem it. If the baker pays it to
the miller, or the miller to the farmer, is it not redeemed ?"

Most assuredly not. When tlie baker parts with uumey for tlonr. he
sells it (money), and the miller purchases it, just as he does the farmer's
wheat.

FEATS IN FINANCIAL LEGERDEMAIN.

" It is true 1 advocate a money that wouM not be convertible in a Govern-
ment institution into gold ; but it is a muu-y that would l)e convertible into
other things, and empowered l)y the law to be convertilile into everything else,
though not redeemable in everything."

To call this style of reasoning sophistry would be dignifying it. It is

1| downright invincible stupidity. How can that which is not redeemable in

any given article be redeemable in every aitiele ; and as to converting

money into anything else but UKMUiy or bullion is w. logical as w»'ll as a

I physical absurdity. Xor does Mr. Wallace inform us who shall be the re-

I deemer. Assuming that he intends the Goverum»-nt. 1 present mv.self at

I the Finance Minister's bureau with a jBlO,n(H) f-hiu-plaster, for which I de-

^; maud Hour. He will tell me that he is ueitlier a farnnr nor a miller. I

:; answer, '' lint, look here, boss, you jiromise to redeem this heie note in

I everything." " Ah I ipiite true, my dear sir, but not in any given article.

i You see flour is a given article, therefore, you are pn-eludci ly the very

■j terms of its issue from demandinii: it ; a id so with cverv other thins;."

4 Hence Mr. Wallaces e(V'/7////t»// when analysefl means nothiinj.

m PRODUCTION CARRIED ON HV LAHOK AND CAPITAL.

I " The worst money of all is a scarce money, liecause it being scarce stops

; commerce for the lack of a medium of exchange by which the productions of one
I man can be exchanged for those of another. Commerce is stopped and produc-
tion ceases ; this I hold is one of the causes of the depression thiough which we
have passed. The scarcity of money prevented the exchange of productions at
profitable rates, therefore production had to cease as no man couhl pay the rate
uf interest demanded for money."

Production not only would not cease, but must be carried on, though
there was not a single coin in the wliole world ; otherwise civilized society
would soon be deciujated by starvation, and speedily i-elajjse to the lowest
degradation of savage life — nomadic huntei-s. So long as production con-
tinued, commerce or exchange of commodities would be carried on. The
wheels of commerce would not be stopped, only badly handicapped if money
were supei-seded altogether. The diiierence between the state of commerce
with and without a medium of exchange may be compared to the diiierence
between travelling by rail and trudging on foot through a trackless forest.

PROFIT THE EXCE.SS OF PRODUCTION OVER CONSUMPTION.

Mr. Wallace seems not to underatand the vf ry elements of his problem.
Profit is the excess of production over consumption. If a farmer has a
capital of 1,000 bushels of wheat consumed in the production of 1,?00
bushels, then his profit is 200 bushels, or 20 per cent, on his capital,
i'rotit therefore is not the '•esult oi exchange, but of production. If I
have a barrel of flour which has cost me ten days' Jabor, why do I
exchange it for a coat ? It is because the coat has also cost ten days'
labor. It is evident that wheat or othtr agricultural y)roduce is the only
capital which a farmer has, for in the division of lab r he devotes his
whole time and energies to tilling the soil, nor can Le have any other
means of profit but the excess of his production over his consumption.
Whatever other commodities he at any time possesses are obtained by
exchanging some of his own capital (farm produce) for that of some other
person who in like manner has produced it. If he wants shoes or coats
or hats, he has nothing else to give the shoemaker, the tailor or the hatter
lor these articles but farm produce, for all his wealth is in that form.

INCONVENIENCE OF BARTER ILLUSTRATED.

We can conceive a civilized community without a medium of exchange,
»nd trace a few of the inconveniences and difficulties that would attend
the exchange of commodities by barter. Suppose a farmer wanted a pair
of boots ; he would apply to a shoemaker to exchange wheat for boots.
The shoemaker may be supplied with wheat enough to meet, at least, his
immediate wants, but he may want a stove. Tiie farmer would have to
iind out a stove manufacturer, who may not want wheat, but may want a
coat. The farmer nmst next seek out n tailor, who in his turn may not
want wheat, but may require a hat. The farmer must still seek out a
hatter, who may happen to recjuire wheat to exchange with he miller for
flour. The farmer, who in this roundabout way having succeeded in find-
ing a customer for his wheat, would find that his troubles w<;re far from
ended. He and the hatter must ag'ee on how much wheat was wo th a
hat ; and having done so, the .selected hat may not be of the kind or size
which the tailor wanted. Assuming that he took that precaution, the
tailor may have no coat of the exact value of the hat ; and even supposing
that he had, it may not be the one that would either suit or i>lea.se the
stove manufacturer, who, again, may have no stove of the value of the

d on, though
ilized society
o the lowest
eduction con-
led on. The
ped if money
of commerce
:he ditlerence
ckless forest.

'ION.

t* his problem,
farmer has a
ion of 1,?00

his capital,
notion. If I
r, why do I
)st ten days'
je is the only

devotes his
e any other
consumption,
obtained by
)f aome o'lher
hoes or coats
ar the hatter
at form.

of exchange,
voulJ attend
v^anted a [)air
at for boots.

it least, his
3uld have to

may want a
;urn may not
1 seek out a
he miller for
eded in tind-
vcio far from
was wo th a
■ kind or size
Bcaution, the
en supposing
ir please the
value of the

coa^, and at the same time of the value of the boots. Nor would this be

all. Every time that an exchange took place new values would have to

be agreed on. Tlie difficulties of barter would be so iuhurmountable that

civilization could make but little progress, everyone would be driven to

produce necessaries, and division of labor or complex co-operation could

scarcely exist ; and even such exchange as would take place would be

carried on in some sort of a money of account, as is practised amongst

^ many savage triljes. Amongst customs of this kind, one prevalent amongst

I some tribee of our northern Indians in their dealings with the Hudson

|l)ay Company is peculiar. They count all their transactions in Martens.

I Every article is worth a certain number oi' martens, A blanket is worth

height or ten martens ; a pound of tobacco, two martens ; a yard of cotton,

lone marten ; a (Uy's lalVor, one marten ; and so on. The Company, in

^converting this trathc into currency, value the marten at half a crown, or

lis. 6d. sterling (G2 cents).

IN LOANS CAPITAL TRANSFERRED.

When producers borrow, it is not money but capital they borrow ;
[and even when a debtor only wants money to satisfy a debt, it is capital
jthatis really borrowed, for the money carries with it its purchasing power.

THE LATE DEPRESSION. — ITS CONSEQUENCES.

Mr. Wallace entirely mistakes the cause and origin of the depression
'through which this country i)assed from 1873 to 1879, or I should rather
I have said, it is impossible for him ever to comprehend such phenomena
until he gets rid of his infantile notions of money and commerce. The
period from 1868 to 1873 is often, but very impi-operly, called a time of
.great prosperity in Canada. A glance at the obverse or dark side will give
a more accurate view of the true state of the social picture, oii which >'ill
b(.' seen unusual extravagance, rare im|)rovidence and wholesale burrowing.
These, I take it, are not usually taken to be the best criteria of prosperity.
About this time, owing, probably, to the change in our political institutions,
the public mind became unsettled, not unlikely expanding with our increase
;o£ i)opulation and extension of territory. It is worthy of remark that in
framing our constitution we set out with the dangerous precedent of
bribing the extremities of the confederacy in joining the trunk, and that in
all subsequent attempts at extension this jjrecedent has loomed up like the
ghost in the play. Our eyi)erience in constitution mongeriug has also con-
firmed the well-known physical phcniouienon that the extremities of the
<;0nfederacy, like those of living organisms, rer,uire more care and the
txpenditure of more vital forces to keep them in a state of healthful
Lyarmth, than do the central and life-sustaining members.

iThe Federal (roveiinnent eml)ark('(l in schemes of great magnitude,
nvolving a verv large expenditure. Tlie grand era was undf^r the terms
n)i the confederation inaugurated by the construction of the Intercolonial
'Kailway ; and one eminent public man, now no more, said that he would
build six Intercolonials if the success of the scheme demanded so great a

' t

sacrifice. He must have had a ))io|)hetic vision of the C. P. R. The
grand era was «ub8e((nently extended to the enlargement of the canals, to
the acquisition and the settlement of the North-West Territory, cul-
minating under further extension of the confederacy iu the still more
gigantic scheme of the Canadian Pacific Railway.

Nor did the grand era exhaust itself with these great efforts. It had
an eye in every direction for magnificence and extravagance on a great
scale. The buildings in which was conducted the outside civil service
were not in keeping with our enlarged ideas, so they must be pulled down,
and more commodious and elegant l)uildings occuj)y their places. So we
got new post ottices, new custom houses, etc. Nor were the vagabond
classes forgotten. Tlier too must have increased elegance and accomoda-
tion ill stately penitentiaries.

The Provincial magnates were not slow in catching the contagion.
They too embarked in hchemes, which were just as much beyond their
means or their necessities us the lai-ger ones of their prototyjjes. Railways
and other pul)lic works were largely aided or entirely constructed from the
provincial ext;lie(|uers Prisons and asylums were built on a scale of mag-
nificence and folly hitherto unknown. As might have been expected, the
contagion spread from the provincial governments to the nmnicipal councils.
The old town halls were poor and inconvenient; and wx>re soon replaced by
elegant and comiui'dious stiuctures, fitted up with all modern improve-
ments, so that nmniciiKil ottioials may wallow in luxuriousness. From the
municipal bodirs there was but a short step to the multitude. This step,
though short, engulfed the wlioU^ population in the vortex of extravagance,
fretting and foaming in a cauldron kept boiling by the fruits of borrowing.

The farmer no longer was satisfied with the old homestead, its j)lain
decorations ;. id homely fnrnisliiugs, noi' with the common spring-waggon
turned out by the village artizan, m which " Pliillis dear" rode to church
in days less ostentatious. Y\e must foisooth have a superl) mansion, with
surroundings a'sthetic enough to satisfy the cravings of an Oscar Wilde.
Elegantly polishiHl black walnut furniture, a Hteinvvay grand, and cor-
responding internal fittings, with a " top buj;gy " and fine equipag.i fit for
a " laird," suit the scale of his exalted aspirations. Following the plough
has become a degredation. His "boys" must adopt the learned [)rofessions,
«iud i)roductive labor must be consigned to menial hands

Nor did that staid, sober, educated class, the clergy, escape the epi-
demic. They too got dissatisfied with the old church, its fittings, its
ornamentation. It looked mean and shabby beside the elegant mansions
of the worshii)pers who weekly trod its aisles. Taking in the whole sit-
uation they concluded that the Lord was entitled to a share in the general
borrowing grab. There is not in this or any other city in the Dominion a
fashionable church I'earing its lofty dome and tapering spire to Heaven
but has deprived from fifty to one hundred laborers of the means of per-
manent subsistence. The Lord be praised ! Does this require proof I
Then here it is. Let the " fashionable " church have cost $50,000, while

R. Tho-
le cAnals, to
I'ritory, cul-
Htill move

'ts. It had
on a great
jivil sei'vice
)ullecl down,
ices. So we
i<; vagaVjond
Id accomcda-

le contagion,
beyond their
s. Railways
cted from the
scale of mag-
expected, the
cipal council*!,
m rei»laced l»y
lei-n improve-
Hs. From the
i. This step,
extravagance,
i of borrowing.

stead, its plain
spring-waggon
ode to church
mansion, with
\ Oscar Wilde.
'n7id, and cor-
iquipagrf tit for
ng the plough
led professions,

escape the epi-
its fittings, its
gant mansions
I the whole sit-
I in the general
he Dominion a
aire to Heaven
means of per-
require proot t
$50,000, while

■'!■.

a church worth $10,000 would answer all the purposes of the congregation.
Here then are $40,000 unproductively consumed. $40,000 would employ
for a year 100 laborere at $400 each, so that the laboring classes ure not
only deprived of $40,000, but they are deprived also of the annual profits
on $40,000 productively employed, which in a few years would exceed the
principal. By every such diversion of capital from productive purposes the
working classes are the great, the chief sufferei's. In these times labor wa»
relegated to menials or production had to cease. It became a popular
axiom that so long as people could live on borrowing it was folly ti work.

It is computed that the collective indebtedness of the community,
private, municipal, provincial and federal, in these six years was increased
l)y the enormous and almost incredible sum of SI, 000,000, 000 being nearly
$250 per capita of our present population. It is estimated that the farmer»
and other borrowers on mortgage security of Ontario alone borrowed no
less a sum than five hundred million dollars, the interest of which at 8 per
cent, amounts to forty million dollars a year. With such demands on the
loan market, it is not surprising that even such good security as farm
ju'operty realized so high a rate of interest. All these improvements
would be highly commendable if made from savings, but most reprehen-
sible when etiected by borrowing.

Under this retjime a farmer, say, borrowed $10,000 at 8 per cent. ])er
annum. With $8,000 of this he l)uilt a residence, suitably furnished, and
j)rovided new eijuipage. There was left S2,000 for expending on the farm,
in fencing, draining, improved iniplemcnts and stock. It will be observed
that four-tifths of the loan has been spent unpioductivelv, and only one-tifth
productively. The interest of $ 1 0,000 at 8 |.er cent, is $800. But $8,000
having been spent unproductively yields nothing, tht?refore $2,000
which was spent productively nmst yield all the int(^rest ($800) which i»
40 per cent., so that in reality the capital productively invested is paying
not 8 but 40 per cent. It would be a strong camel's back that could bear
the tension of that load. There are numerous cases in which the whole
loan was unproductively consumed.

By the introduction ot so large an amount of capital distributed as wages
and in the i)urchase of materials, the currency was inflated, commodities of
all kinds, labor included, rose enoi-niously in price, importation was stim-
ulated to a degree hitherto unknown, while exportation almost ceased, and a
tit of reckless speculation seized the whole mercantile comnnmity. So long as
borrowing could l>e r(!sortetl to things went on swimmingly. But lx)rrowing,
like other human devices, must stop some time. When the lenders cried
" Halt !" the farmer began to realize his 40 per cent, interest. He cried
ruin and decay, surrendered " tlie beast for the damage," and many fled to
Manitoba and the neighboring Republic. A commercial depression simul-
taneously occurring in England and the United Stat(is aggravated the re-
vulsion here. Thes" coxmtries are our chief customers for lumber, our
staple export. Their, and our own difficulties, stopped the home and
foreign consumption of that article, pai-alysing that important industry.

;

:i l

with millions of capital locked up in the shape of nnsaleahle lumber in our
mill yards, covos ami booms. These are the principal causes, and not
scarcity of money, wliich ltd to the commercial crisis of 1874-79.

rUEDIT.

"Scarce money lias begotten credit and usury, the two monsters, one of
^'hich creates debt, which demoralizes and destroys a man, and the other eata up
his subsistence."

Credit means trust or confidence, i. e., in commercial parlance, the
confidence which A has in B, if he, A, lends IJ his capital or any part of
it, that B will return it to him at some stipulated time, with generally
some compensation for the ua^ of it. Now, in tlu; name of common sense,
what has such a transaction as this to do with the abundance or scarcity
of money 'I I ask for credit from a grocer. Why 'i Either because I
liave no cinital or not enough for my purpose, whether that purpose be
personal consumption, ])rodnctiou or commercial enterprise. Money
might be as jdentiful as autumnal leaves in Vallambrosa, but evidently 1
had nrit the wherewith to purchase it. So that it is an entire mistake to
suppose that credit or usury has anything to do with the ({uantity of
money in the hands of the comnmnity. In mercantile countries there is
a class of persons possessed of capitil who want either the ability or incli-
nation to employ it themselves. These is another class of persons without
capital, but with the training and kixowledge that would enable them to
employ capital advantageously if they had it. These two classes come
together a' id agree to a transference by which this ca[)ital laying idle is
productivf iy employed. But those who part with their capital not only
recjuire sci.ie guarantee that it will be returned to them at a stipulated
time, but also some compensation for its use, and for the risk which they
run in i)artiug with it. And no wonder, for it is well known that it
sometimes never returns to the owner. If no inducement was held out to
the owner of the capital, it is obvious that he would not part with it, for
he would be not only leaving himself no better off, but far

]>y so doing

worse ; he would be incurring the risk of its total

loss.

CAl'ITAL, NOT CREDIT, CAIUIIES ON INDUSTRIES.

" Scarcity of money has begotten credit in this way, that there not beinj*
enous;h money to carry on the business of tlie country, credit takes its place, and
the expansion of credit carries on the industries of a country for a while, until,
perhaps, some man overstrains his credit and fails."

No industry can be carried on by any exf)edient but labor and capital ;
and the industries of every country are limited by these factors. All
credit does, or can do, is to transfer caj ital from one hand to anothttr;
and generally from hands unlit or unwilling to employ it to hands more
«8fhcient, by which means the wealth of the community is augmented.

CREDIT THE CAUSE OF PANICS.

-<(

I believe that a scarce, fluctuating money is the cause of panic."

mber in our
ics, and not

liters, one of
uth'ii' eats up

pa»'lance, the
• any part of
th generally
oinnion sense,
ice or scarcity
ler because I
at purpose be
prise. Money
ut evidently 1
tire mistake to
he (luantity of
intries there is
ability or incli-
lersons without
snable them to
vo classes come
ill laying idle is
lapital not only
1 at a stipulated
risk wliich they
known that it
; was held out to
part with it, for
^tter oti; but far

The cause of a commercial panic is a great contraction of credit
rimmediately following its inordinate expansion, when a gambling tit of
speculation has seized the mercantile community ; or it is, in other words,
a complete loss of contidence by the poseeHSors of cajiital in those who
desire to borrow ; and the remedy is not increase of money, but incrtaso of
confidence.

INTKUKST — ITS CAUSE.

"Scarcity of money begets usurj."

Interest or usury is the compenstt'''"ion required by the owner of capital
for lending or giving the use of it to anothar ])er8on. Its rate depends on
i-<leman1 and supply. When the >imount required by the Itorrowing class
is less thin the amount in the hands of the lending class seeking invest-
inent, the competition of the lenders will reduce the rate of interest.
When, on the contrary, the amount required by ihti l)orrowers exceeds
that seiiking to be lent, the competition of the borrowing class will raise
the rate of interest.

LKNDINli CAPITAL AT INTEREST AS T.ECJITIMATE AND USEFUL AS

OTIIEK t ALLINC.

ANY

IF.S.

it there not being
takes its place, an<l
f for a while, until,

labor and capital ;
tiese factors. All
hand to ai.oth(!r;
f it to hands moro
is augmented.

)f panic."

" No man can deny that usury is to-day eating up more of the profits of the
Ijtroducer than anything else, and what does it do ? It only keeps a lot of men
^'lliving in idleness, who produce nothing, but eat the subsistence of those who
Rework."

f The owner of lent capital is no more amenable to this communistic
'|charge than is he who, instead of lending, employs it himself in pro-
?fluctive industry. For if borrowed for that purpose, it is quite immaterial
^o the community whether A the possessor of 1,000 bushels of wheat,
%mploys it himself in feeding laborers and providing their necessaries, or

t'^ends it to B for a like purpose : only with this difference, that B is likely
3 employ it more ethciently, which is an advantage to the whole commu-
ity. Indeed, the caj)ilalist who will neither employ his capital himself
;|ior lend it to another for that purpose is a far greater enemy to the people
^t large, and to the working classes particularly, than is he who even
lends it at the most exorbitant rate of intenist that was ever dreamt of,

the miser who hoards is the worst enemy of the i)eople ; the miser who
inds is the benefactor of the working classes. For the lending or transfer
|f capital sets industries in motion, tind gives eni[)Ioymeut to labor, which
iherwise could not be carried on for want of means. It is capital that
always lent. When a manufacturer of shoes, for example, borrows ; it is
jot money, but leather and other materials and instruments and food and

fjcessaries for his workmen, that he borrows, for these are the only things
hich he requires to carry on his business with

^ CONVERTIBLE CIRRENCV IS NEVER SCARCE.

M " Scarce money is always dear money, and every man knows whenever
fijloney is dear everything else becomes cheap."

There ig no doubt but the price or money value of oommoditiei;
dependa on the quantity ot money in circulation or offered for sale in tho j
purchase of these commoditieH combined with the rapidity of the c'rcula- ,
tion. If the currency is convertible, and that the value of the precioUH ,
metals has in the slightest perceptible degree increased in this country,
the gold and silver of the mercantile world will be attracted hither for <
investment, because it will be profital)lo to do ho ; and this will continue <
to |)our in until this currency becomes of the like value with other countries. ^
Just in the same manner as if Hour was higher here than in the Uhited
States, the flour of that country would pour in here until prices are equalised,
cost of carriage excepted.

WA0K8 IN KIND IMPORTANT TO THE LAHORER. *

"We have had an illustration of this in this country during the last four or
five yeai-s. Money was scarce and labor was low and the country was in a j
depressed condition,"

I have explained above the jdienomenon through wi)ich this country
pasced during the depression, to which may be added an unusually large
share of tlie circulating capital of the country was converted into fixd
capital. This circulating capital is the wage-fund, and by whatever
amount reduced, by so nuich is the fund for ths sustenance of labor dimiii-
ished and the means of the laborers curtailed. In consequence of this
nsduction, the laborer and his family are unable to Hve uj> to their usual
standard of comfort, and each laborer's competition for a share of tlit
reduced fund adds to the depressed condition of the lowest strata, who an
often reduced to tho very verge of starvation. In illustration, suppos-
the circulating capital of this country, in its normal condition, i
$200,000,000, divided amongst 500,000 laborers, giving an average t
each of $400. If this fund, by tho conversion of a portion of it into fixe
capital, as railways, buildings, etc., is reduced to $150,000,000, while th
number of laborers remains the same, the average share of each laborer :
reduced from $400 to $300 a year.

But this has nothing to do with the anioimt of money in the counlr
or in existence. During the depression there was the same facility ther
is now for acquiring money, if there was any way of using it. The quantity (
money in circulation has no efi'ect on wages. The wages of the labon
is the share which he receives of the product of his labor. This and nothii
else constitutes his remuneration. If a farm laborer gets a bushel <
wheat or other equivalent of farm produce, which is the only thing wlii(
the farmer can give him, for a day's labor, whether the bushel of wheat
worth one or two dollars matters not to the laborer, if the price is i
iluenced by the quantity of money in circulation, for all other commoditi
■will be affected similarly. For example, if the quantity of the circulatii
medium seeking investment in the market of commodities were sudden
reduced one-half ; the price or money value of all things would fall oi :
half, — in other words, the bushel of wheat which sold yesterday for '
would sell to-day for $1 ; the lb, of tea which sold yesterday for ■.

If oommoditiei^

[for sale in the

of the c'rcula-

)f the precioutj

this country,

3ted hither for

18 will continue

J other countrieK.

In in the Uhited

bes are equal iHed,

ig the last four or
country was in a

liich this country

I unusually lavgf

ertfd into fixed

unci by whatever

ce of labor dimiii

nsequence of th^

^ up to their usual

»r a share of tin

est strata, who an

ustration, suppos

mal condition, i

ing an average t

ion of it into fixe

,000,000, while tli

3 of each laborer i

uey in the countr
same facility ther
it. The quantity (
vages of the labon
r. This and nothit
;r gets a bushel *
le only thing wlm
3 bushel of wheat
, if the price is i
1 other commoditi
ty of the circulatii
lities were suddon
ings would fall or.
Id yesterday for ;
\ yesterday for t

irould sell to-day for 60 cents ; the coat which yesterday sold for $10

rould sell today for $5 ; the day's labor which sold yesterday for ^2 would

Bell today for .^l, unless under contract. It is, however, manifest that

[the dollar of to-day for the purchase ur transfer of commodities is as efficient

|«H the $2 of yesterday, and that nothing but ukuney has changed its

lvalue ; and that beyond existing contracts and fixed money payments no

[one is artected by the change except miners in gold and silver, who now

Kge.i a double (|uantity of all uther commodities in exchange for the only ones

.{•which they produce, and, therefore, have tj sell.

MAN MAKKS HIS LIVIN<i IIY HIS LAHOR OR CAPITAL,
f

'' Money ianuw abundant and cheap, and men must ein])luy their money to
:;get allying."

j It is not money that men employ to g<;t a living. The capitalist em-

})loy8 his capital and his labor too, if lie superintends the business, to get
lis liviii" . I'd the workman employs his labor for a like purpose.

I'KOIM-K MANUFACTUHK MOIIK TO BIY MORK.

" The National Policy and ihe conipelliiiy of the people to maiiufacture more
ifand buy less, was one of ihe causes ; but one of the principal causes is the iu-
,| -creased (piantity of money in circulation."

^ People do not inamifacture more to buy less. Is not the effect the

'.^ veiy contrary ? The more you produce the more you can purchase. Every
fi increase of production augments the puichasing power of the society.

I I'MOTKCTION. — SOMK OF ITS CONSKyl'KNCES.

i' If a country has an advantage in the jirorluction of any one article

.':forniing the staple of the necessarit's of the people, if that country directed
Jits whole ca|)ital to the production of that oiieai-ticle, it could purchase more

jeofail other things than if its capital were diverted into a thousand difi'erent
]-clmnnels. To illustrate this, I will suppose that the normal condition of

^Canada as resfpects soil, climate and means of communication, the skill,

■|<lexterity and industry of her inhabitants, or the efficiency of her labor, are
i«uch that it was indifferent to her whether she produced all her require-
S«nent8 directly, or only prod\iced some, with the surplus of which she sup-
|plied the rest through the double process of exjjortation and importation.
TXJnder these circumstances, I will suppose she gives a preference to pro-
Iducing all within herself, and, us it is called, " promote her industries."
I'onsequently she could neither export nor import. I will further suppose
llhat tho cai ital invested in all her industries, reckoned in money, is
1$ 100,000,000, of which one-half, or $lf)O,00t),00O, is invested in agriculture,
md the rest in manufacttu-es, and that the expectations of profit in all
I'occupations are 10 i>er cent. We will further suppose that the agricultural
jclass, after supplying their own wants had §25,0(10,000 of farm produce
to exchange with the mauufactuiers for manufactured commodities

,^l Suppose now that while the soil of all other countries retained its

tjiormal fertility, that of Canada, say, by a miracle, is doubled, so that the

)

labor which formerly produced one bushel of wheat now produces two_
This increased fertility gives Canada a groat advantage over all other
countries in the production of all kinds of farm pi'oduce, and the advantage
not being common to other occupations, she can keep to herself the whole
benefit, just as a i)atentee can engross the whole profits of his invention.
For the price of food will still continue to be regulated by the cost on the
least fertile lands, which the demands of the population require to be cul-
tivated. By the change the capital of $i)0,00(),000 invested in agriculture
v/ill be doubled, and the profits of the agricultural class will also be doubled
while the whole wealth of tiie society would be at once increased
from §10«,OUO,000 to )? 150,000,000, assuming no change to have
tak*^n place in manufactuiing pursuits. How will the change affect the
manufactuiing class I They will one and all be driven from their employ-
ments. This will be brought al)out in two ways. 1st. The agricultural
class will now have not .'^l^S.OOO.OOO, but .S7r),()"(;0,000 worth of farm pro-
duce to exchange for manufactured commodities, of which 825,000,000 will
he required, as before, to feed the manufacturing classes. ]>ut will the
farming class consent to continue to feed them wt'll on the old terms (
Most assuredly not, for if they did they would he foregoing a legitimate
profit on the $2."), 000,000 worth of produce which was devoted to that pur-
])Ose, as is evidf-nt from the following cousidci'atiori.-i : — The oreadstufts of
('anada being ))roduced at ha'^ the cost of that of other countries, the people
will get all their imports at iiuii'-price, for the cost of the imports to the
importers is not the cost of ju'oductiou of the imported article, but the cost
of production of the exported cnmuiodity with which they were juirchased.
Hence the agrici Itural class will not only have three times as much as
before to spend on manufactured necessaries and luxuries, but they will get
all their commodities for one-half what they formerly cost, so they will l)e
enriched six-fold, lint if they traded with the houie manufacturers on the
old terms they would be losing a cousid"rable share, exactly one third, of
this advantage. It is plain that they will not do so, and conse(juently as
the manufact'.ners must by some means [)rocure their usual food, they will
be driven by the comj.etition of the importers to sell their commodities for
one half of the old ])rice. Here we have an illustration of that great
grievance, the so-called " slaughter market," about which so many crocodile
tears ha^■e been shed. '2nd. Another reason why nuuiufacturing would be
abandoned is: Capital is always flowing towards those employments which
promise the greatest expectations of proHt. The manufacturing capitalist
would not content himself with 10 per cent, profit while ihe agriculturist
was making: 20 per cent. Therefore he, wohld withdraw his capital from
the less to the more profitable employments, even if the underselling pro-
cess did not operate at all. It is obvious that it would be in the interest
of the whole community that this transfer of capital shou' I take place.
For with the whole capital transferred to agriculture, the wealth of the
country, would amount to .^200,000, 000, with a profit of 20 per cent.,
while if manufacturing was continued, the entire wealth would be only
$150,000,000, with a profit of 20 per cent, on $100,000,000, and only 10

■i:i

Iduces two,
all other
h advantage
If the whole
invention,
cost on the
le to be cul-
aarriculture
be (louble'l
;e increased
;e to have
Ige affect the
[leir employ-
agricultural
of tHrni pro-
000,000 will
But will the
old teims t
a legitimate
to that pur-
readstuffs oi
es, the people
r.ports to the
, but the cost
re ])urcliased.
■i as much as
: they will get
3 they will be
cturers on the
one third, of
nseijuently as
bod, they will
mmodities for
of that great
iiany crocodile
iring would be
yments which
ring capitalist
s agriculturist
s capital from
tlerselling pro-
in the interest
Id take place,
wealth of the
20 per cent.,
vould be only
0, and only 10

per cent, on $50,000,000 ; or in other words the society would be poorex'
by $50,000,000 capital, and the profit of 10 per cent, on $100,000,000.

Suppose now that the mdnufacturers, instead of abandoning their
pui suits, appealed to the Legislature for piotection to their industries on
any one of the numerous jjatriotic and philanthropic " stock-in-trade "
pleas of the advocates of restrictions on importation ; and that the Legis
lature favorably entertained their petition, it is pertinent to in([uire what
amount of protection would enable them to compete with for'ugn goods (
The purchasing power of the agricultural class over anil above their share
of farm produce foi- their own food has been sliown above to hv. equal to
S75,O00,000. If a tax of 100 per cent, is laid on that it reduces their pur-
chasing power to $37,500,000. Jiut before the increased fertility their pur-
chasing power was only $25,000,000, so that notwithstanding this enormous
tax they are still l»etter off by $12,500,000 than before the change in tht^ soil ;
and therefore commodities will still continue to be iinpoi'ted. At a duty of
150 per cent, the agricultural class will, as to their purchasing power over
manufactured commodities, Ije in the same position as they were in i)efore
the change of fertility, bat it will ho. still their interest to iuiport ; and
they will contimie to import, on account of their increased profits, until
the duty exceeds 200 per cent., after which the home nroducers vvill have
a monopoly of the home market. Mark the conse(iuenees. For.'ign good*
having been driven out of the mai'ket, importation must cease and with it
exportation. For the foreign customer cannot jjurchase our produce if we
refuse his ; there can be no exchange, he having nothing else to gi\e us
for our Hour or I)eef but his cloth or liurdwaie. Owing to the increased
fertility one-half of the land must go out of cultivation ; and one-half of
the agricultural ])Opulation and capital must go too, and find a refuge in
the only employnuait left them — manufacturing, unless the capital and
population migrate to some other j)lace more congei'ial to their pursuits.
The latter alternative would be the worst of calamities that could befall the
society. Assuming no emigration from the country of either labor or capital,
Chi-ee-foiu'ths of the capital would 1)e invested in manufactures, and only
one fourth in agriculture. But the profits of the agriculturists Inung still
20 per cent., while that of the manufacturers was only 10 ])er cent,
capital would still flow in until profits weie reduced to a common level.
8o that by the imposition of the tax the society would again Ite reduced
to its original condition : and the beneficent designs of I'rovidence frus-
trated by the perversity of an ignorant Legislature.

It will be argued that the competition of the manufacturers them-
selves will bring down prices and reduce profits. The manufacturers will
not be content with a less profit than other capitalists ; and no amount of
competition will reduce it below that, for rather than sul)mit to a diminu-
tion they would withdraw their capital from the underpaid industry, and
invest in some other way.

In whatever proportion a country has an advantage in the production
of any one commodity, by the imjwsition of a protective duty is that
advantage by so much annihilated, and the whole society impoverished.

M •

|! '

Suppose that instead of the fertility of the soil being miraculously
increased, its natural fertility was such that it gave an advantige in
any proportion over the soils of other countries in the production of agri-
cultural prodiicts, just in that proportion would it be the interest of
Canada to turn her capital to agricultuml production. For by so doing
the collective wealth of the community would be gi'eater ; and we would
obtain all other commodities, in which our advantage was less, cheaper,
and consequontly in greater abundance. In a free, unrestricted state of
trade, capital would flow from the less to the more profitable employment,
and the whole society would be better off. Suppose that our farmers, from
situation or fertility of soil, had such an advantage over their brethren of the
United States as would enable a Canadian farmer to lay down in Liver-
j)ool five barrels of flour for the same labor that it would take an American
farmer to lay down four barrels. The Canadian exporter would have an
advantage of 2.") per cent, over the American, or in other words, his profit
on every barrel of flour would exceed that of the American by 25 per
cent., and i e would get all his imports 25 per cent, less than the American
farmer, giving a total advantage over his rival in the same market of 50
per cent. If a tax on impoitaticn was laid on, the foreign commodity
would not bo driven from the home market until the tax exceeded 50 per
cent. Then exportation, and with it importation, would necessarily cease,
and the home manufact ^rer would be in complete possession of the home
market. This will be at the expense to all the rest of the community of
50 jier cent, additional cost. To say that the manufacturers will not profit
to the full extenc of their privileges, and that the increased duties hurt
nobody, is the merest rot. If so, why stop at 30, 40 or 50 per cent 1
"Why not nrike it 1,000 per cent, if it makes no difierence to the con-
sumers ? If there is any article of production in which we have an advan-
tage over other countries, that commodity needs not protection, and it is
the one to which all our labor and capital .should be directed, and to which
it Hould spontaneously gravitate in a state of freedom.

Suppose, now, that Canada has not an ar'vantage over any one coun-
try in any aiticle of production, but that her disadvantages are in different
degrees. It will, nevertheless, be to her interest to cultivate those indus-
tries in which her disadvantages are least, by which the efficiency of her
labor will be the greatest, by which she shall have all her other produc-
tions at the least expenso of labor and capital, and therefore have the
gieatest amount of them, or in other words, she will be we.\lthier than if
|)roducing the most disadvantageous kinds, either freely or by protection.

THE NATIONAL POLICY'S DOINGS.

What, may I ask, has the National Policy done? What has been its
social tffect? Its advocates claim that it has brought on good times, made
work abundant, that prices of all conunodities are high and trade booming.
The evidences of reviving prospei ity are not far to seek, they are visible on all
sides. One of them, however, is not hiyli prices. But to claim that these
signs of improvement are due to the National Policy is all moonshine. In

liraculouslj
Ivantige in
ion of agri-
interest of
by so doing
d we would
!S8, cheaper,
•ed state of
mployment,
ivmors, from
ithrenofthe
1 in Liver-
n American
Id have an
Is, his profit
by 25 per
le American
arket of 50
commodity
•eded 50 peV
sarily cease,
>f the home
mm unity of
ill not profit
duties hurt
5 per cent ?
to the con-
•'ean advan-
II, and it is
nd to which

y one coiin-
in different
:h0se indus-
mcy of her
ier jjrodue-
e liave the
lier than if
protection.

as been its
imes, made
e booming,
siblc on all
that these
shine. In

,^11 commercial countries revivals and depressions of trade follow one another

rith. the certaintly and almost the regularity with which day succeeds night,

)r ebb succeeds flow. Is it to the National Policy that we owe the increased

jrosperity of the lumber trade, our most important, our staple industry ? Is

lit not rather to the increased demand in England and the United States '?

fly it tf) the National Policy the farmer owes the good crops of the last three

• or four years'? Is it to the National Policy that he owes the increasd price of

flour and beef, or to the demand in the English market^ Is it to the National

gPolicy that the agriculturist owes the high price of potatoes and other root

i-crops, eggs, butter, etc., or to a scant crop and brisk demand in the United

^ J^tates ? But to the National Policy is fairly due the increase to the work-

3"ing and farming classes of such absolute necessaries of life as light, fuel,

"iclothing, sugar, furniture, implements of husbandry and the tools of

artizans. In the working class I include farm labort-is, mechanics of all

kinds, miners, fishermen, navvies, professional men, and all others who

; •earn their subsistence by the labors of head and hands.

Every farmer knows that with an abundant harvest, here and a scant
V one in Europe, raising wheat from a virgin soil is one of the most profitable
of industries. Every workingman knows that activity in lumbering and
farming is the best guarantee of steady and remunerative employment.
The success of these industries stinmlates all other improvements. a.s rail-
roads, buildings, etc., which enlarge the demand for labor for mechaniea
and merchants. The revival of these staple industries is quite sufficient,
now as of yore, to account for the increased prosperity visible all round.
Nor is there any room for the share of the National Policy in the revival, nor
■any necessity for inventing any such contrivances. But to the National
Policy is fairly due the increase to the working, farming, and other classes
outside the protected manufacturers, in the cost of such prime necessaries of
life as fuel, light, clothing, bedding, sugar, furniture, implements of
husbandry and the tools of artizans.

Is nothing then due to the National Policv in the general revival of
trade 1 In so far as that policy has been instrumental in the introduction
of foreign capital for permanent investment in this country, which other-
wise would not come, by so much h s its results been beneficial ; and this
is all the advantage that can fairly be claimed for it.

When the advocate of ])rotection is /lors de combat in argument, he
l)oints to the greatness of England as a signal result of protection. He
takes care, in this appeal to sentiment, to exhibit only the sunny side of
the shield. He carefully ignores the dark side. He omits all mention of
the gaunt poverty, the brooding despair, the squalid misery which trace its
footprints on all sides, and made still more odious and intolerable by the
contrast with tlie immense wealth of the few. He keeps the poor-house,
the gin-shop, the garret and the prison out of sight. Is this a wholesome
example to follow 1 —

*" Where wealth accumulates and men decay."
It is in the abolition of protection that the best hope of English r&-

•^

generation lies, by which the evils which it has engendered may be eradicated
before the superstructure, raised on so treachei-ous a foundation, may topple
over, bringing chaos ia its tiain.

If protection in Canada should be followed by similar results as in
Britain, Canadians may well pray; — "From protection. Lord, deliver us."

The worst etTects of a protective policy is its tendency to mal^e the
rich richer and the poor poorer. Unequal distribution of wealth is the
great danger which threatens social institutions. It is the burning question
of the age. It is on the solution of this great economic problem depends
the success or failure of the existing social fabric. It is the duty of true
Conservatism, if it cannot remove, to temper the great inequalities be-
tween the extremes of societv, to soften those startling contrasts between
excessive luxury and squalid misery, which form so painful a feature of
modern civilization. If legislators are unable to grapple with this fcisk,
to tind a remedy for this gseat social scandal, then the system itself is
judged, and stands condenuied as a nuisance.

" THE SLAUGHTER MARKET."

A word on the "slaughter mai-ket " grievance. The interest of the
consumer is the public interest. The interest of the seller is always
antagonistic to that of the purehasei". The seller is invariably the pro-
ducer or distril)utor ; the purchaser is ultimately the consumer. When a
procbicer or dealer has a warehouse full of goods unsold, he is always
grumbling al)Out hard times and the scairity of money. But the secr(>t
burden of liis refrain is disajtpointuu'nt at the diminution of his jn-ohts.
If a foreign conqietitor is underselling him, he cries ruin, but what really
occurs is that his profits are reduced, wliile his grief is cause of rejoicing
to the conniiunity collectively. For what does this teii"ible lUider-SfJlnig
])rocess mean \ It means, when all is told, that a i)oor man can buy his
necessaries cheaper than the wealthy ca}>italists would wish he could get
them for. Suppose that the Americans, during the slaughter excitement,
sent over their goods here and distributed them gratuitously amongst the
people, would anyone call that an evil ] Would it not l>e the most muni-
licent generosity '] Well, supi)ose that instead of giving them for nothing,
that they gave them for one-half what similar commodities could be
obtained from the home dealers, is that an evil to be deploi-ed ! Is it not,
on tlie contrary, a great blessing, differing only in degree from the first
supposition ; and if there is one time more than another when this is a
blessing to the poorer classes it is in times of depression. Suppose, coming
on winter, that I want an overcoat, and that owing to commercial ditti-
culties my means of purchasing it has been considerably reduced, so that
if I am compelled to buy it from the home dealers I may go without or have
to^take a very infeiior article. Will any one pretend to say that it wouKl
not be a great boon to me to get a coat of good (puvlity of foreign manu-
facture for the same or less price than an inferior one of home growth
would cost me 1 I take it to have been in some respects a most fortunate thing
for this country, in its last commercial crisis, that accidentally a similar

;:.tr|

■a

>| an

ly be eradicated
ion, may tojiple

r results as in
rd, deliver us.'"
to inalje the
wealth is the
iraing question
obleui dojK'uil.s
e duty of true
nequalities hv-
rasts between
1 a feature of
■vith this tRisk,
stem itself is

nterest of the
ler is always
al)ly the pro-
ler. When a
he is always
ut the secret
his profits.

what really

of rejoicing
'iidfr-srJllng
can buy his
lie could "et

excitement,
amongst the

most miini-
for nothing,
fcs coidd be
Is it not,
)m the tirst
'n this is a
>ose, coming
lercial dis-
ced, so that
out or have
at it would
eign manu-
me growth
Linate thine-
y a similar

rouble existed amongst our neighbors, for we were enabled to get many
things which we would have had to have done without, if our neighbors'
lecessities had not compelled them to sell their goods at such low prices ; for,
Sin ordinary times, we could not purchase them at such rates ; and hj
; whatever the cost exceeded the selling price, V)y so much was our wealth
5 increased or our wants better supplied than they otherwise would have been.

CREDIT THE CHIEF CAUSE OK PANICS.

"I hold that if there were no credit there could be no panics."

■ Ther(> is no doubt but the state of credit, and not the state of the

'^currency, is one of the chief causes of commercial revulsions. Speculative

J trading, stimulated by great facilities for obtaining credit, undue confidence

by lenders, followed l)y a sudden curtailment of ci-edit, are prime factor

in the phenomenon. But the quantity of the circidating medium has n >

share in it.

THE LOSS THE DISSIPATION OF THE CAPITAL.

" A man might lose all he had in speculation, but his loss would not create
-| any disturbance. It would injure him, but the money would have ]>as.sed into
5 the pocket of some one else. There would be no loss of money to carry on busi-
ness with. But you take the failure of a man who is carrying,' on business at
; <redit ; his faihire hurts someone else, and thus disturbs the tr?.de, and the dis-
turbance creates a panic."

The same confusion [ttrvades all Mr. Wallace's reasoning on this
important branch of political economy. He cannot distinguisli between
the extinction of capital and the ti'ansfer of the medium of exchange.
Suppose a cai)italist undertakes the eonstiMietion of some work of public
or private utility, and that after spending all his capital the work is aban-
doned in an unfinished state, like the celebrateil C/if(t>t Canal, does that
hurt nobody but the owner \

The ciipital is dissipated, gone for ever, except whatever portion may
happen to be saved by the laborers who received it, or by the producers of
materials as profits. A person cannot both eat his cake and be able to
transfer it to another, 'riie capital lost in speculation, no matter whether
owned by the speculator himself or lent him by another, is gone, dissipated,
lost for evei'; and the loss of the community is the same, whether the dissi-
pated capital is owned by the spendthrift himself or borrowed. According
to Mr. Wallace's reasoning, the capital — as champagne, oystei-s, etc., con-
sumed at a vice-regal dinner — instead of being dissipattxl, would be only
transferred, and be so much added to the wealth of the community. From
this doctrine necessarily follows the coroUai'y : — The greattr the extrava-
ganee the greater the prosjierity.

EXCHANtiE MAY BE CARRIED ON BY CHEQUES.

It is easy to conceive a condition of society by which its industries
might be carried on without the intervention — nay, the existence — ot a
single coin or its representative paper. Suppose that we had one banking

':^'f.^;"i:r^^

institution, say a Government department, with a branch in every city,
town, village and hamlet throughout the country, and that eaeh capitalist,
trader and laborer of the community had an account in it, and that all
})t.yments were made by cheques, there need be no money in existence as
far as that society was concerned, nor would the machinery for carrying it
out be either impracticable or cumbrous. There would be some devia-
tions from existing bank routine. For public convenience it would, like
the post office, have to be kept open from 7 a.nj. to 8 p.m. each day to
facilitate the convenience of work-people to do all their banking transac-
tions after their ordinary working hours. Deposits and cheques could lie
entered each day, and to prevent frauds it might be a sater rule to require
that all cheques be marked ^' good," and payable to the order of the
drawer himself. The telegraph and telephone would enable persons
having deposits in one bi'anch to draw at another. In country districts
the branch could be managed in connection with the post office, if the tele-
graph and telephone also were conducted by the public. By this method
all transactions, great and small, could be managed by a transfer of
accounts in the books of the bank.

A PORTION OF THE NATIONAL WEALTH DLSSIPATED.

"It was not because there was less wealth in the country, not because the
productions of men were less required, because there wer". as many men to feed,
clothe and house as in previous years, but they could not get anything to eat,
■comparatively speaking."

Without stopping to enquire what kind of eating is comparative eating,
a beggar, no less than a prince, stands in need of food, clothing and shelter,
though he has often to go without for the want of means to procure them.
There is not the least doubt but a very appreciable amount of the nation-.J
wealth was dissipated during the late depression, besides what w^as con-
verted into fixed capital.

A NOVEL METHOD TO PREVENT PANICS.

" I hold that the way to prevent these panics is to make money iipon them."

And, pray, how can that be done 1 This, surely, is the most novel
Avay yet ot making money — upon panics. But Mr. Wallace knows how,
as his context shows. He continues : —

"I say by the Government making it, for the Govpinment can alone make
it, and paying it out for the public works we carry ok, and for the services ren-
dered to the Government, and the supplies furnished to the Government, making
it a public duty to pay for value received (?) until money is as it ought to be, the
^iheapest thing in the country, until a man could not live by loaning money, but
would have to go to work and earn his money as the toilers do."

As I said above, no one V»ut the miners work to produce money or its
constituent, everybody works to produce jonsumable commodities. As
before remarked, there is no such class in a civilized society as money-
lenders, and therefore no man can make a living by lending money. It is
•capital, not money, which is lent. Suppose the Government issued notes.

^nch in every city,
hi^t eaeh capitalist,
in it, and that all
ney in exiatence as
lery for carrying it
Id be some devia-
ence it would, like
5 p.m. each day to
ir banking transac-
1 cheques could be
iter rule to require

the order of the

lid enable ])ersons

'n country districts

3t office, if the tele-

By this method

by a transfer of

[ PATED.

ntry, not because the

s many men to feed,

get anything to eat,

comparative eating,
othing and slielter,
s to procure them,
int of the natiomil
es what was con-

noney iipon them."

is the most novel
illace kno\vs how,

it can alone make
or the services ren-
overnment, making
it ought to be, the
caning money, but
o."

duce money or its
commodities*. As
ociety as money-
ing money. It is
lent issued notes.

which ic, no doubt, the hind of money referred to by Mr. Wallace, of any
denomination you please, as fast as a printing press could strike them oil",
and distributed them indiserimately to all classes, until they became so
abundant that every hou8ew7fe in the land could each morning light her
hre with a handful of $1,000 bills, it would not have the slightest eft'ect
on the rate of recompense paid a capitalist for the use of his capital.
Withoutcompensation he would not part with it, and to prevent that compen-
sation being given by penal legislation or other restrictions would be the most
direct and fatal blow that could be aimed at the prosperity and develop-
ment of any country under existing social relations. Tf capital is being
rapidly accumulated and abundant, the rate of interest or compensation will
be small, if it is scarce or the security doubtful, the rate of interest will be
proportionately high.

GOVERNMENT BONDS A LIEN ON THE COMMUNITY'S WEALTH.

"I think -» .it the Government of this country can save the people of this
country on ^ he $32,000,000 of bank circulation. There ib no money afloat by
paying out for the services rendered to their circulating notes that the people
want to do business with, and sa', j the interest that ia ]iaid on the $32,000,000 of
bank notes tnat are put in circulation, that are necessary for carrying on the
business of the country. When the Government go to Great Britain to borrow
money, what do they take ? They take paper, they take the bonds of this
country, over there and get money for it."

When a borrower, A, receives capital from a lender, B, A usually
transfers to Bin return a share in his (A's) interest in jn-operty owned by him
on certam conditions set down in a piece of paper called a mortgage. Every-
one knows that the paper is worthless, except as an abstract of the con-
ditions of contract, so with the Government bonds. They constitute a lien
on the entire wealth of the state, which the sheriffs, in their respective
bailiwicks, would collect under the direction of the Judiciary, if not other-
wise provided for.

GOVERNMENT LOANS WOULD RAISE INTEREST.

If this Gove.inmen". proposed to raise its loans at home, it would so
greatly raise the rate of interest against all other borrowers that every in-
dustry would stand in danger of being paralysed, if additional supplies did
not pour in from other countries. 1 presume that the reason the Govern-
ment go to London to float their loans is in expectation that they can bor«
row cheaper there than here. If they did not go there, it is probable that
some of the London capital seeking investment would, on hearing of a
Canadian loan, be sent hither for that purpose, but as the amount would be
much less than in the London market, causing the competition of tlie
lenders to be proportionally less active, the rate of interest would be higher.
Therefore, it is not only in the interest of the taxpayers generally, 1>ut of
borrowers, i.e., all producers, pai'ticularly, that the Government should con-
tract their loans in the cheapest market, because (1st) the taxes will be
less, and (2nd) the productions of the country increased. In so far as
the interest of the loan is so much abstracted from the annual income of

the society, that would he so whether the capital w^as sent here for inveat-
ment or the Governiiicnt went where it was, with this difterenc6, that
the efttux would be greater if borrowed at home.

Mr. Wallace, [(erliapa, means that the retjuired loan should be borrowed
from our own capitalists without the introduction of foreign capital. Such
a policy is impossible, and it attempted could not fail to be a most
<lisastrous experijieut in financiering. There is not capital to spare in this
country ; if there was we would not l)e borrowing in foreign nmrkets.

Suppose that the (4overnment floated -i loan in the home market for
$10,000,000 for the pui'chase and «M(uipment of a navy, and the competition
was limited to home capitalists. It is obvious that this large sum must be
withdrawn from existing employments, for we have no capital to spare, no
hoards, no unemployed oaj)ital to fall back upon. This would greatly
depress labor if foreign capital did not flow in to fill up the vacuum, or
if a proportional number of laborers did not join the marines. Mr. Wallace
■will answer the capital has only changed hands, the money is only trans-
ferred from one hand to another, and still i-emains in the country. This is
looking at one side only of the picture. It is true that the capital is still
in the country in the form of ships, machinery, tackle, etc. It has been
withdrawn from the wage fund and consumed unproductively.

THE GOVEKNMENT MAY ISSUE THE CURRENCY.

There is no doubt but the Government might legitimately take to
itbelf the issue of the whole circulating medium, without detriment to the
society, nor yet without any very signal advantage. The public benefit
would consist in saving the interest on the gold or other securities held as
bank i'eserves,if tlie (xovernment were absolved from that necessity. Or the
Government might charge two or three per cent, on all bank issues above
their reserves and other securities. It is also practicable for the Govern-
ment to issue legal tender or inconvertil)le notes without endangering their
depreciation, but this subterfuge would confer no other advantage than the
interest on the gold reserves for the redemption of convertiV)le currency.

MISTAKEN NOTIONS AUOIT WEALTH.

" Again, why is it that we who have more wealth in this country than Eng-
land have, however, to go to England to borrow money ? Do not all our fertile
lands, our forests, our minerals, constitute wealth ? "

Had not the aborigines these same fertile lands, forests and minerals 1
yet they have never been accounted a very wealthy community. Were they
not, and are they not still, in the midst of all this so-called wealth the
most wretched of the human race ?

USE ALONE DOES NOT CONSTITUTE VALUE.

" A man would give all the gold in the world, if he had it, for a loaf of bread
•when he was starving, or a drink of water when he was a thirsting."

To which Mr. Wallace might have added, and for a mouthful of air
if confined in a dungeon from which the air was excluded, or if drowning.

take to

it to tlie

benefit

held as

Or the

above

Jov'ern-

ig their

In Eng-
fertile

lierals 1
they
bh the

bread

But would that lessen the value of the gold in the hands of the new pos-
sessor ] We all know that the finding of a treasure of gold would be of
no use except for ornamentation to a tribe of savages until they held com-
munication with a civilized community. But the instant that happened
their treasure would be of great use and value to them, and might be the
means of bringing them into a high state of prosperity and civilization,
though not invariably.

CONCLUSION,

The Finance Minister while repudiating the bantling, eulogizes its
sponsor, thus : —

"Sir LEONARD TILLEY. The hon. mover of this resolution spoke at
the close of his remarks of the imperfect manner, as he was pleased to say, in
which he had presented his case. Now, it is perhaps doubtful if there is any
other gentleman in the Dominion of Canada who has given this subject more
consideration, who undei-atands the subject better, or who could present it in a
more forcible manner than the hon. gentleman himself.'"

Such soft-solder is not only nauseating, but mischievous. If Mr.
Wallace has given the subject much or any consideration, all that can be
«aid is that it has been expended to little purpose ; and as for understanding
it, he does about as much as a "monkey " does Sanscrit.

TIIK END.

jf air
fniug.