^ 5 3 • « • « • • 4 • « • « c • • } 4f * ft ft I fr » • « ' C « • • • FIRST LESSONS ON MONEY. BY B. T. ROBERTS, A. M. A man should make it a part of his religion to see that his country is well governed — Wtlham Penn. ROCHESTER, N. Y., 1886. Entered according to Act of Congress in the year 1886, by B. T. ROBERTS, In the Office of the Librarian of Congress at Washington. [.t 5f PREFACE M HAVE writteft this little book because I f felt I must. It was begun several years ago when silver was demonetized. It was not finished because the hope was cherished that it would not be needed. But as it has become evident that the money question ,will not be settled until the people settle it, tais unpretending volume has been pub- 'lislied in the hope that it may help them to settle it properly and speedily. For the last twenty-five years I have mingled freely with the common people, from New England to California, and from Dal :ota to Texas. I have witnessed the distress that the bad management of our finances by our National Government has produced, and the injury that has been done by the same cause to our religious and benevolent enterprises. Some of the views presented are in advance <"j IV. PREFACE. of the times; bat we trust they will be seen to be sound. We ask a careful and candid perusal. B. T. Roberts, Rochester, N. Y., Maj^ 1886. CONTENTS. CHAPTER I. PAGE THE SUBJECT COMPRSHENSIBLE. 8 Money a Human Invention, H Wrong Instruction, 10 CHAPTER II. IMPORTANCE OF THE SUBJECT. 12 All Interests Affected, .13 Losses From Bad Management, - - - - 15 CHAPTER III. MONEY NECESSARY. 17 DiflBcuIties of Barter, 18 Mill and Gibbon quoted, - - . . . 20 CHAPTER IV. WHAT IS MONEY ? 23 Prof. Walker, Dr. Ely quoted, - - - - 24 Functions of Money, ------ 25 CHAPTER V. MATERIAL OP MONEY. 2S Leather Money, 29 "Watered Stock," .39 General Choice, 33 VI. CONTENTS. CHAPTER VI. GOLD AND SILVER. 34 National Debts, - - 34 Stock of Gold and Silver, ------ 35 Value of Debts Doubled, - - - . . 36 CHAPTER VII. SILVER. 40 Early use of Silver, - 41 Fluctuations of Value, . . . . . 42 Adam Smith quoted, - - 44 Double Standard, 45 Ratio of Value, - 49 Needless Fear, 50 More Gold than Silver, - - - - - - 52 Official Statements, 53 CHAPTER VIII. PAPER MONEY. . 58 Its Advantages, - 59 Macaulay quot- d, 59 Preferences of the People, 65 CHAPTER IX. COINING MONEY. 07 Our Constitution, 68 Jefferson quoted, 69 Should be Issued by Congress, - - - - 10 Prof. Jevons quoted, 71 National Bank Bills, - 72 Interest paid National Banks, - - - 73 CONTENTS. Vii. Capital Released, 75 Currency Inflated, ;g "Fiat Money," - - . . . . . . yg CHAPTER X. BASIS OF PAPKR MONEY. 82 Venetian System, ... . . The Bank of England, - The Proper Basis, ---... i 83 85 88 CHAPTER XI. BANKS. 90 Their Functions, Are Profitable, ---.... The Chemical Bank ...... 91 93 96 100 103 CHAPTER XII. AMOUNT OF MONEY NEEDED. 99 Fraud Encouraged, "Innocent Holders" --.... Letter to the President, ..... ^q^ Contracting the Currency, - - . . . i07 Money Stock of Different Nations, - - - 109 CHAPTER XIII. "ELASTIC CURRENCY." 112 Going into Debt, 113 Prof. Walker quoted, - 115 CHAPTER XIV. DISTRIBUTION OP MONh-Y. 120 Division of Property, - - - . . . i2l Vlll. CONTENTS. General Distribution, 123 Laws Favoring Great Fortunes, - • - - 127 Monopolies, - 183 CHAPTER XV. HOW TO MAKE MONEY. 143 Suggestions, - 144 Rothschild's Maxims, - 156 CHAPTER XVI. CONCLUSION. 158 FIRST LESSONS ON MONEY. CHAPTER I. THE SUBJECT COMPREHENSIBLE. ^ONEY is a human invention. Therefore <^^ the money question is a question that can be understood. Wliat is made by man can be comprehended by man. The mechanism of a watch is intricate, but one who studies it with diligence may learn all about its con- struction and movements. So, whoever gives a proper attention to the machinery by which the wheels of trade and commerce are kept moving, can gain all the knowledge respect- ing it which is necessary for practical pur- poses. With money itself every person in this country is familiar. He has used it from childhood. It is a great help towards un- derstanding the theory of any thing to have somo IvTiowle'lge of the tiling itself. A snil- 10 FIRST LESSONS ON MONEY. or, brought up on the ocean, can, with the same amount of study, get a much more accurate knowledge of navigation than he could if he had never seen a ship. So, one familiar with money, can understand the laws by which its issue and circulation should be governed, much more easily than he could if it was a new invention and for the first time coming into use. The great embarrassment to a right under- standing of the money question arises from the fact that what instruction the people generally have had upon it has been too of- ten wrong. They have to unlearn in order to learn. Prejudice is worse to encounter than ignorance. Mr. Walter Bagehot, one of the most dis- tinguished writers on the money question, in the introduction to his able work entitled "Lombard Street," says: "A notion prevails that the money market is so impalpable that it can only be spoken of in very abstract words, and that, therefore, books on it must be exceedingly difficult. But I maintain that the money market is as concrete and ronl ns nnv thin^ ol,«o; thnt it rnn bo c\o- SUBJECT COMPREHENSIBLE. 11 scribed in as plain words ; that it is the writer's fault if what h€ says is not clear." Then do not neglect to read upon this sub- ject, under the impression that you never can know anything about it. You niay un- derstand it sufficiently well for all practical purposes, if you will. Think for yourself. Weigh with an unbiased judgment the state- ments and arguments which you read and hear. The subject of money doubtless, is one that men of common mind and common educa- tion can comprehend. The terms used are familiar. They are not Greek and Latin, like those employed largely in treating of medi- cine. The subject is as easy to compre- hend as almost any other subject of equal importance. CHAPTER II. IMPORTANCE OF THE SUBJECT. j|N enlightened countries, money is the creature of the government. Then the law- making power should understand the j)rin- ciples by which it should be created and regulated. In this country the power to make and execute the laws rests ultimately with the people. If the civil officers of one term act contrary to the wishes of the people, then, at the first opportunity, they select those who, they believe, can be relied upon to carry out their wishes. It is important then that the people should have correct views upon this subject. In our present civilization the money in- terest aflPects every other interest, industrial, educational and religious. It is only a few years since this country, with every element of prosperity— peace at home and abroad, abundant harvests, and general health, suf- ±ered ifom a great prostration of business ITS IMPORTANCE. 13 occasioned by an unwise administration of our national finances. Manufactories, schools and churches were closed; and thousands of men, educated and uneducated, were tramp- ing through a land abounding in supplies of food, seeking in vain for a place where they could earn their daily bread. It is said that this paralysis of business was the necessary result of a great war. But France carried on in immediate succes- sion a foreign war and a civil war, and not only had her own expenses to pay, but a large indemnity to pay to Germany; yet she suf- fered no such prostration. The success of her financial system was as marked as the failure of her armies. The money question is now one of the great questions of the Nation. The natural resources of this country are but partially developed. Yet thousands who desire to work, are out of employment, because of the stagnation of business produced by the unwise administration of our national finan- ces. Every home, every church in the country, every business, every benevolent and reli^ 14 FIRST LESSONS ON MONEY. ions enterprise, every missionary sent from us to heathen lands, feels the effect of the monetary measures of our Government. If these measures are wise, then is there general prosperity, — ii unwise, there is de- pression and discontent, distress and degen- eration, and the wheels of progress are checked, or move backward. Says Walter Bagehot, "A good system of currency will benefit the country and a bad system will hurt it." (Lombard Street, p. 22.) Under our financial system, as adminis- tered, a great wrong is being done to the many for the benefit of the few. The rich are made immensely rich — those in moder- ate circumstances are reduced to poverty, and the poor are made poorer. Yet there is not a natural element of pros- peiity that the country does not possess in great abundance. Tlie distress results from artificial causes. The remedy is with the people. Politicians cannot be trusted to take the right side of a question, until the people, in large and increasing numbers, are found upon that side. ITS IMPORTANCE. 15 Bad management of the finances of this country have cost the people an amount, which, if it could be definitely ascertained and stated in figures, would seem incredible. The losses from the failure of banks, and from the depreciation of property conse- quent upon mismanagement of our national finances, have been enormous. There is no reason in the nature of things why the moneyed institutions of a country should not be as permanent as the govern- ment itself. Fluctuations there must be, consequent upon the variation in crops and in the state of affairs in the different nations with which we have commercial transactions; but these fluctuations need have but a nar- row range. From year to year there should be no greater difference in the purchasing- power of a dollar than that which arises from natural causes. There should be no prostration of business, no general distress growing out of money matters. If a system of national finances is adopted that shall secure permanent prosperity, as far as money arrangements can do it, this re- 16 FIRST LESSONS ON MONEY. suit will be effected in answer to the persist- ent demands of the people. The money power is a potent factor in our politics. It controls legislation until it be- comes so oppressive that the people rise up against its control. It places men, simply because they are rich, in official positions for which they are totally unfitted. But the intelligent convictions of a free people are stronger than the money power. "The sober, second thought of a people," said Daniel Webster, "is seldom wrong and always efficient." A few years ago the constitution of California was amended in opposition to the active and energetic influ- ence of the banks, the railroads, and a subsi- dized press. It was a spontaneous uprising of the people against the oppression of pow- erful moneyed corporations. What is now needed is, that the people at large of the United States emancipate them- selves from the prejudices that have been excited and fostered among them by the money power, and give to this question their independent, candid, sober, second thought. CHAPTER III. MONEY NECESSART. , ^HE necessity for money arises out of the 7 division of labor. The hermit who makes his own clothes, and shelter, raises his own provisions, travels on foot, and provides his own entertainment, needs no money. Even in a state of society in which the arts flourish to some extent, a good deal of trade can be carried on by barter. In the early settle- ment of this country those who began in the woods made maple sugar and potash,, and took them to the older settlements, and ex- changed them for food and clothes. This is the natural way of doing business. One man exchanges the product of his labor which he has iid excess above his wants for the products of another man's labors which he has 4n excess above his wants. Thus something of real value is exchanged for something of real value. No risks are run, no loss is incurred. 18 FIRST LESSONS ON MONEY. But the disadvantages of this system of traffic are numerous. It may be difficult for a man who has something to sell to find one who wishes to buy his goodf^ and wiio has something to dispose of which he wants. "One man, we shall suppose, has more of a certain com- modity than he himself has occasion for, while another has less. The former conse- quently would be glad to dispose of, and the latter to purchase, a part of this super- fluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them." (Adam Smith's Wealth of Nations, p. 17.) Then, in barter, there is the difficulty of making change. A man who has a horse to sell, and wants a harness, may find a har- ness maker who wants a horse, but how is the difference in their value to be paid ? Then in what terms shall this difference in value be expressed ? These difficulties led mankind in primtive times to adopt some- thing that should stand both as a measure and a representative of value. At an early MONEY NECESSARY. 19 age gold and silver were chosen. Thus, in the days of Abraham, silver money is spoken of as the well known, accepted measure of val- ue, and medium of exchange. "Entreat for me to Ephron, the son of Zohar,that he may give me the cave of Machpelah, which he hath, which is in the end of his field; for as much money as it is worth: he shall give it me for a possession of a burying place amongst you. And Ephron answered Abraham, saying unto him, My Lord heark- en unto me: the land is worth four hundred shekels of silver; what is that betwixt me and thee ? bury, therefore, thy dead. And Abraham weighed to Ephron the silver which he had named in the audience of the sons of Heth, four hundred shekels of silver, current money with the merchant." — Gen. 23: 9, 15, 16. This was about^lSGO'years be- fore Christ. ~ So, when an^hundied and fifty years later, the sons of Jacob went down to Egypt to buy corn they took money for the purpose. At present, money is the instrument of commercial transactions among all the tra- ding nations of the earth. But it is only an 20 FIRST LESSONS ON MONEY. instrument. Its value depends upon the fact that there are those who may be reached who will accept it in exchange for something tl.iat is useful. The solitary survivor of a feMp wreck, on an uninhabited, unknown is- ia lid, who saved a keg of gold coin from the ■.V eck, would have been richer by far, if it had been a keg of nails. "Money is a machinery for doing quickly and commodiously what would be done, though less quickly and commodiously, without it; and, like many other kinds of machinery, it exerts a distinct and independ- ent influence of its own only when it gets out of order." (Mr. Mill, as quoted by Prof. Walker, in Money, p. 4.) Gibbon says the early Germans "prized their rude earthen vessels as of equal value with the silver vases, the presents of Eome to their princes and ambassadors. The value of money has been settled by general con- sent to express our wants and our property, as letters were invented to express our ideas; and both these institutions, by giving a more active energy to the powers and passions of human nature, have contributed to mul- MONEY NECESSARY. 21 tiply the objects they were designed to rep- resent. The nse of gold and silver is in a great measure factitious; but it would be impossible to enumerate the important and various services which agriculture, and all the arts, have received from iron, v/hen tem- pered and fashioned by the operation of fire and the dexterous hand of man. Money, in a word, is the most universal incitement, iron is the most powerful instrument, of hu- man industry; and it is very difficult to con- ceive by what means a people neither actua- ted by the one nor seconded by the other, could emerge from tlie grossest barbarism." (Rome, V. 1, Chap. 9, p. 260.) But as the methods of doing business are improved, a system something like the original one of barter, but without its inconveniences is adopted. Thus a Liver- pool grain merchant buys a cargo of wheat in ^'ew ~l ork. About the same time a hard- ware merchant of New York buys a quanti- ty of cutlery at Sheffield. Instead of incurr- ing the risk and expense of conveying money from Liverpool to New York to pay for the grain, and from New York back to Sheffield 32 FIRST LESSONS ON MONEY. to pay for the cutlery, the Liverpool mer- chant gives for his grain a draft on the Bank of England which the New York merchant buys and sends to pay his bills at Sheffield So between the two countries only the bal- ance of the accounts actually passes in money. In the great money transactions of the day, owing to a carefully devised system of ex- changes, but a small portion of the money which enters into the calculations is actually paid. Still, money is at the bottom of these operations, and in the present state of things is as necessary to trade and commerce as are ships and railroads. We should find it diffi- cult to transact the ordinary business of every day life without money. CHAPTER IV. WHAT IS MONEY. I'HERE is a good deal of literature on the ^^ subject of money. But the writers on this subject seem cautious about defining the word money. It is difficult to give a defini- tion that will stand criticism. Perhaps it is sufficient for practical purposes to say that money is an article that will be taken in the final payment of debts, and that will pur- chase whatever is for sale in the market. Prof. Jevons says, "Much ingenuity has been spent upon attempts to define the term MONEY, and puzzling questions have arisen as to the precise kind of credit documents which are to be included under the term. Standard legal-tender coin of full weight is undoubtedly money, and as convertible legal tender bank-notes are exactly equivalent to the coined money for which they may at any moment be exchanged, it has often been considered that these also may be in- 24 FIRST LESSONH ON MONEY. eluded. But inconvertible notes are often made legal tender by law, and can discharge in inland trade all tlie functions of money. Are they not then to be included f (Money and Mechanism of Exchange, 248.) Prof. Walker, (Money, Trade and Indus- try, p. 4), says: "Money is that Avhich passes freely from hand to hand thronghout the community in final discharge of debts and full payment for commodities, being accepted equally with- out reference to the character or credit of the person who offers it, and without the inten- tion of the person who receives it, to consume it, or enjoy it, or apply it to any other use than in turn to tender it to others in dis- charge of debts or payment for commodi- ties." Dr. Ely, of Johns Hopkins University, says: ''That object is money in the legal sense which is used as money in any case in which the use of money is legally regulated; or whatever is legal tender ' is money in the legal sense." Prof. Jpvons, with whom in the main, oth- WHAT IS MONEY? 35 er writers on money agree, describes the functions of money as four: 1. It serves as a medium of exchange. The farmer sells his wheat for money. With his money he buys tools, clothes, groceries, books, whatever ho wants. "Money" says Adam Smith, "has become, in all civilized nations, the universal instrument of com- merce, by the intervention of which goods of all kinds are bought and sold, or ex- changed for one another." (Wealth of Na- tions, p. 21.) 2. It is used as a common measure of value. Instead of comparing the value of one article with another we express their value in money. We do not say that a horse is worth twenty sheep; but we say of a horse that he is worth a hundred dollars, and of a sheep that it is worth five dollars. 3. Money serves as a standard of value. A farmer going into a new neighborhood wants twenty bushels of wheat to live on. He expects to have wheat to sell in the fall. But he promises to pay — not twenty bushels of wheat — but twenty dollars, the market value of the wheat, with interest. It may 26 FIRST LESSONS ON MONEY. be that fifteen bushels of wheat will pay the debt— it may take thirty. A bushel^ of wheat will make no more bread at one time than it will at another. Yet it may take more labor to raise a bushel of wheat one year than it does another. If this is the case generally, then, it being scarcer, the price is higher. A bushel of wheat in a bad season represents a greater quantity of la- bor than it does in a good season. Though money is nominally the standard of value, yet labor, the source of wealth, is the real standard. "At all times and places," says Adam Smith, "that is dear which is diffi- cult to come at, or which it costs much la- bor to acquire; and that cheap which is to be had easily, or with very little labor.^ La- bor alone, therefore, never varying in its own vahre, is alone the ultimate and real standard by which the value of all commo- dities can at all times and pla<'es be estima- ted and compared. It is their real price; money is their nominal price only." (Wealth of Nations, p. 25.) 4. Money serves as a store of value. A man cannot move his farm from New York WHAT IS MONEY ? 27 to Illinois, but he can put, its value in money, in a small bulk, so as easily to transport it and with it buy another wherever he chooses. "At times," says Prof. Jevons, "a person needs to condense his property into the smallest compass, so that he may hoard it away for a time, or carry it with him on a long journey, or transmit to a friend in a disrant country. Something which is very _ valuable, although of little bulk and weight, and which will be recognized as very valua- ble in every part of the world, is necessary for this purpose. The current money of a country is perhaps more likely to fulfil these conditions than anything else, although diamonds and other precious stones and ar- ticles of exceptional beauty and rarity might occasionally be employed." (Money and Mechanism of Exchange, p. 15.) CHAPTER V. MATERIAL OF MONEY.. kN new and partly civilized countries differ- f ent materials have been used as money. "In the rude ages," says Adam Smith, "cattle are said to have been the common instruments of commerce; and, though they must have been a most inconvenient one, yet in old times we find things were fre- quently valued according to the number of cattle which had been given in exchange for them." (Wealth of Nations, p. 17, 18. A. D. 1776.) "The armour of Diomede," says Homer, "cost only nine oxen ; but that of Glaucus cost an hundred oxen. Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Vir- ginia; sugar in some of our West Indian colonies; hides or dressed leather in some other countries; and there is at this day a MATERIAL OF MONEY. 29 village in Scotland where it it is not uncom- mon, I am told, for a workman to carry nails instead of money to the baker shop or the ale house." Furs and skins were used as money by •many ancient nations, and recently by traders with our North American Indians. " Leather money is said to have circulated in Russia as late as the reign of Peter the Great, and it is worthy of notice, that classic- al writers have recorded traditions to the ef- fect that the earliest currency used at Rome, Lacedaemon and Carthage, was formed of leather." (Money and Mechanism of Ex- change, ]3. 20.) It is probable that this leather money was representative or token money. The figure of an ox was stamped on leather, and the Shepherd prince who issued it held himself ready to give an ox, on demand, to the per- son who owned this piece of leather. Hence, the vfovdi pecunia, from p ecus, cattle, meant money. From this word is derived our word, pecuniary, relating to money. As cattle were reckoned by the head, capitale, in Latin, the word capital came to mean one's 30 FIRST LESSONS ON MONEY. stock in trade. So the word stock is used to denote either the domestic animals on a farm, or the shares in an organized company, or in the funded debt of a Government. Stock is said to be "watered" when the stock which represents a certain property is arbitrarily raised in amount. Thus, when for a railroad which cost thirty millions, stock to the amount of sixty millions was issued, the stock was said to be "watered." The expression originated with a Wall street broker who, before the days of railroads, drove cattle to New York. Dishonest dro- vers would stop a few miles out of the city and salt their cattle and thus cause them to drink a large quantity of water before they were weighed. If the people generally will take any thing in payment of debts or in exchange for what they have to sell it answers the purpose of money. "It is," says Prof Walker, "the disposition, or the indisposition, of the great majority of the community to receive it in payment which, settles the question whether a particular commodity shall become money or not. The carved pebbles formerly used MATERIAL OF MONEY. 31 by the Ethiopians, the wampum which cir- culated between the New England colonists and the natives, the glass beads used in small payments even down to this day along the Arabian gulf, the shells and the red feathers employed throughout the islands of the Indian ocean, were good money, though serving no other purpose but orna- ment and decoration, they were desired by the community in general; men would give for them the fruits of their labor, knowing that with them they could obtain most con- veniently in turn, in form and amount, the fruits of the labor of others. "It is in view of its general or universal acceptability that certain writers speak of money as a pledge or security for whatever the holder may wish, now or at a future time to obtain. "Thus Aristotle, in the ' Nicomachian Ethics,' says: "With regard to a future ex- change (if we want nothing at present) money is, as it were our security. "Mr. McLeod, in the same connection, quotes as follows: "Boudeau: 'It,' money, 'is a kind of bill 33 FIRST LESSONS ON MONEY. of exchange, or payable at the will of the bearer. ' "Adam Smith: 'A guinea may be con- sidered as a bill for a certain quantity of necessaries or conveniences, upon all the tradesmen of the neighborhood.' "Thornton: 'Money of every kind is an or- der for goods.' " (Money, p. 25, 26.) In modern times, most commercial nations, civilized and semi-civilized, are agreed in taking gold and silver as money. There are good reasons for this choice of these two metals above all others as the ma- terial from which to coin money. 1. They have a high market value as bullion among all trading nations. For ac- tual use in daily life neither of them has the intrinsic value of iron. They are not neces- sary, as material, for the construction of railroads, or for the making of farm or do- mestic implements, or machinery for factor- ies. Gold and silver are used for works of ornament: iron is a necessity. But both gold and silver have a much higher market value than iron, and on that account, if no other, are a mnch more suitable material for MATERIAL OF MONEY. 33 money. Witli iron at four cents a pound it would take one hundred and twenty-five wagon loads of a ton each to buy a farm worth ten thousand dollars. 2. They are sufficiently plenty to furnish material for money and yet sufficiently scarce 'and difficult to obtain, to prevent their greatly depreciating in value by becom- ing too plenty. 3. Gold and silver coin will bear a good degree of use in circulation without being so worn by attrition as to lose their weight to that extent that the people will be reluctant to receive them as money. The softer met- als would sooner wear out. 4. They are the most beautiful and at- tractive of all the metals. These are doubt- less among the reasons why, by the nations generally, gold and silver are employed as materials for coining money. Other metals may hereafter come into use. CHAPTER VI. GOLD AND SILVER. HERE is especially in England and Ger- many a movement, of modern origin, to throw silver out of circulation as money. This movement is doubtless made in the interest of those to whom large sums of money are due. It is the fashion for individuals, corpora- tions, municipalities and nations to go into debt. The national debt of Great Britain was stated to be in 1884, $3,732,149,820; that of Germany, $102,750,000; of France, $3,- 930,584,845; of the United States $1,830,- 528,923. Besides this ISational Debt many of our States are owing large sums. Then nearly every city and village is in debt. Many of the rural towns are bonded, and many farms are mortgaged. The most of this indebtedness is owing to our citizens. This is also true of Great Britain and France and Germany. This mnlses a lnro:e creditor clnss. It is com- GOLD AND SILVER. 35 posed, for the most part, of intelligent, far sighted members of community. Naturally they are anxious that their money should make as /inuch more money as it honestly can. In proportion to the scarcity of money the greater is its purchasing power. When money is plenty the price of labor and of property is high. When money is scarce the price of labor and of property is corres- pondingly low. The less money there is the greater is the purchasing power of a dol- lar. For this reason the large creditor class is in favor of contracting the currency, because it would enliance their wealth. This is the reason why silver was demonetized in Ger- many and in Great Britain. It is the reason why the war against it is waged so persist- ently in this country. It is for the interest of those to whom debts are owing to have money scarce. Mr. Seyd estimates that the stock of gold, and silver now current as coin, or existing as bullion, is 6,750 millions of dollars, of which 3,250 millions is in silver. 36 FIRST LESSONS ON MONEY. If silver is generally demonetized tliat will nearly double the value of debts. A dollar would then represent nearly twice the amount of labor and property that it does at present. To pay the debts of local and national governments, taxation would have to be greatly increased, while the ability to pay taxes would be proportionally diminished. The scheme is an ingenious, inhuman one to rob, under the forms of the law, for the benefit of capitalists, the people who must pay the public debts. In England, silver was legal tender down to the year 1816. The public debt had become great, and at that time the influence of the creditors, who were the capitalists of Eng- land, became strikijigly apparent. Parlia- ment decreed that gold should be legal- tender in all payments of more than forty shillings. In Germany gold alone is uBlimited legal tender, silver being a legal tender only to a small amount. In 1873, the Congress of the United States, either through ignorance, or corruption, passed an act demonetizing silver. It is said GOLD AND SILVER. 37 tliat the President who signed the bill, did not nndersta.nd its import. The belief is general that it was passed through the man- agement of the bondholders to multiply the value of their bonds. In consequence of this Act, and of calling in greenbacks, to a large amount, there was great distress throughout the country. Manufacturing, to a great ex- tent, was suspended, workmen could not ob- tain employment, and in the midst of x)lenty, j)eople were dying of starvation. Thousands who had been in affluent circumstances were suddenly reduced to poverty. Property mortgaged for one fourth its value when the debt was made, would not sell for enough to pay the mortgage. Able bodied men, by thousands, tramped through the land, seek- ing m vain for work. At length silver was, by act of Congress, again made legal tender, money became more plenty, and business began to revive. But avarice is clamorous. At its bidding renewed efforts are being made to degrade silver by stopping its coinage. In violation of the plain provisions of the law, the Treasury Department refuses to use silver 389;264 38 FIRST LESSONS ON MONEY. in payment of the public debt. At tlie dic- tation of tlie bondholders ^old alone is used for this pm-pose. The linancial policy of the Government under the new, as nnder the old administration is the same in disregai d- ing alike the interests of the people, and their will as expressed by the Laws of the United States. William of Normandy, with only sixty thousand disciplined soldiers, conquered England full of valiant men. But the Eng lish leader, King Hatold, was slain in the first battle, the army disorganized and there was nothing left for the undisciplined masses but submission. The bankers and bondhold- ers of this country are comparatively, but a small body, but they are organized and dis- ciplined, and they control, on money matters, the two great parties of the country, and over-ride the interests of the people. They make their influence felt by every Depart- ment of the Government. Our law-makers, and our judicial and executive officers are elected by the people. The farmers, unor- ganized and undisciplined, are overpowered • GOLD AND SILVER. 39 by the money lenders though they greatly out-number them. Men are blinded by thftir own interests. Those who have fixed incomes find plausible reasons for diminishing the volume of cur- rency in circulation. But no one will confess that he aims at this. Yet this, says ex-Senator Hill," was the avowed object of the persons who, under the head of Chevalier, originated, thirty years ago, the plan of employing one and the same metal in all commercial countries. They at first proposed that this metal should be sil- ver, and they actually persuaded some Euro- pean countries to demonetize gold. They soon, however, changed their tactics, and pro- posed the demonetization of silver as a more practical metliod of accomplishing the object of 'abridging the quantity of the circulating medium.'" (N. A. Quarterly, Nov., 1885.) CHAPTER VIT. ^SILVER. iOME recent writers on money, take the q^ position that gold should be the only money of nnlimited legal tender .This posi- tion is wrong. Tliat silver, as well as gold, should be used as material for money, is evident from many consideiations. 1. There is not enough gold and silver together to form the necessary medium of exchange in the commercial world. . Said Alexander Hamilton, the great iinan- cier of Washington's administration: "To annul the use of either of the metals as money is to abridge the quantity of circulating me- dium, and is liable to all tlie objections which arise from a comparison of tiie benetits of a. full, with the evils of a scanty circulation." (Report on the Mint.) This observation has far greater weight now than it had when it was made; for the dcmnu'l for monev ha'' in- SILVER. 41 creased in greater proportion than the quan- tity of gold and silver in circulation has in- creased, notwithstanding the large quantities of bt)th which have been mined within the last half century. Trading nations are still obliged to use a large amount of paper money. , 2. Silver has been used as money from the earliest historic ages. In fact, its use from the remotest antiquity has been more general than the use of gold for money. The first mention in history of money is of silver, in the transaction of Abraham, to which refer- ence has already been made. Herodotus is the oldest of the ancient, pro- fane historians whose works have come down to us. He flourished about 450 years before Christ. In speaking of the great pyramid of Egypt, he says, ''On the pyramid is shown an inscription, in Egyptian characters, how much was expended in ladishes, onions and garlic for the workmen; which the inter- preter, as I well remember, reading the in- scription, told me amounted to one thousand six hundred talents of silver." (Carys He- rodotus, p. 145.) Assyria was one of the oldest oC nations 43 FIRST LESSONS ON MONEY. Its history has come down to us inscribed in Cuneiform characters on tablets of clay, many of wWch have recently been discov- ered. In a history compiled from these monuments, Dr. Smith says, "A husband had the power of divorcing his wife on pay ment of half a manch of silver," (History ol Assyria, p. 14.) This shows that silver was used as money by that ancient nation, prob- ably as long ago as 1120 years before Christ. A metal which has commended itself to mankind as suitable material for money for over three thousand seven hundred years should not be set aside for the unworthy purpose of making heavier the burdens of debtors. 3. Ot the two metals, silver is less liable than gold to large fluctuations in value through a long period of time. The market value of articles of commerce depends largely upon the amount of labor required to pro duce them. There is far less variation in the amount of labor and capital required to obtain from the mine a given amount of sil- ver than there is to obtain a given apio^tot of gold. Silver is found, almost entirely in SILVER. 43 the form of ore, combined with other metals. It must be dug, and smelted, and sepM rated from all other substances. To do this al- ways requires labor, and skill, and capital. Gold is often found in laioe quantities, in the form of dust or flakes, or nn^'-ge ts, in its pure metallic state, mixed in Avith ground or sand, from which it is easily sej)arated by washing in water. To do tliis requires no capital but physical sirength, no machines, except a spade and a pan or trough. In this way in 1853 gold was obtained in Catifoinia to the value of $60, OOC, COO. A common la- borer would get from live to lifty dollar§ a day. Silver is never mined by so simple and inexpensive a method. When these sniface, placer diggings, are exhausted, then gold is obtained by getting,often from a great depth, the rock in which it is imbedded, ciushing it and separating the gold fiom the lock and from other minerals. This requires a large capital and a great amount of labor. 4. Again silver is better than gold for money, because it is a harder metal, and therefore can be circulated more without losing in weight and value by abrasion. 44 FIRST LESSONS ON MONEY. For the same reason silver is more useful for domestic purposes, to wMch use it is ap- plied to a greater extent the more abundant it becomes. The English, in demonetizing silver, are constantly leproved by the terms they use when speaking or writing of money. For their common denominations of money imply a silver standard. Adam Smith says, "There were silver coins in England in the time of the Saxons; but there was little gold coined till the time of Edward III., nor any copper till that of James I. of Great Britain. In England, therefore, and for the same reason, I believe, in all other modern nations of Europe, all accounts are kept, and the value of all goods and of all estates, is generally computed in silver, and when we mean to express the amount of a person's fortune, we seldom mention the number of guineas, but the number of -pounds sterling which we sup- pose would be given for it. "In England gold was not considei-ed as a legal tender for a long time after it was SILVER. 45 coined into money." (Wealth of Nations, p. 30.) In speaking of coins, stamped on both sides, he says, "The denomination of those coins seem originally to have expressed the weight or quantity of metal contained in them.. "The English pound sterling in th<- time of Edward I. contained a pound, Tower weight, of silver of a known fineness. The Tower pound seems to have been something more than the Roman pound, and something less than the Troyes pound." (Wealth of ISTations, p. 20.) 5. The value of money, that is, its pur- chasing power, will be subject to less varia- tion with a double standard, than if gold alone is used as a standard of value. A sudden shower will raise the water in a mill pond when it will not sensibly affect Lake Erie. So the more money there is in circula- tion the less will its value be affected by some temporary variation in the amount. The sudden discovery of a rich gold mine is not usually attended by the discovery of silver at the same time. 46 FIRST LESSONS ON MONEY. No two distinct articles of commerce will always have in the market the same relative value. Wheat and corn are in this country staple articles. It costs, in general, twice the labor to produce a bushel of wheat that it does to produce a bushel of corn. But some- times a bushel of corn sells for as much as a bushel of wheat. But that is no reason why a restriction should be placed upon the rais- ing of either wheat or corn. It can but be in the nature of things that the relative value of gold and silver should vary at times. But this is no reason why the coinage of either into money should be stopped. Yet this is the only reason assigned by the mono-metal- lists for their bitter warfare upon silver coinage in this country. Grermany, by demonetizing silver, has greatly increased the value of the war indem- nity which the French are compelled to pay it. England has demonetized silver in the in- terests of a moneyed aristocracy. The de- pressing effect upon the common people is seen in the large numbers that emigrate year- ly from those countries. In conspqnencp of the rlemonetiznfion of SILVER. 47 silver in those countries its marl^et valne as bullion has fallen. So we are often told what is the market valne of our silver dollar, as hvllion, in those countries. This is done to excite prejudice against it. Why are we not told what is the niai-ket value of the nickel, the half dime, or of the copper in the cent, or of tlie paper on which the bills are printed \ But even in England the metal in their silver or cop])er coins has not the market value, as bullion, of the face of the coin. Prof. Jevons says, "The metal contained in a token coin has of course a certain value; but it may be less than the legal value in almost any degree. In our English silver coinage the difference is from nine to twelve per cent, according to the market price of silver; in our bronze coinage the difference is seventy-five per cent. The metal contained in the French bronze coins, is, in like manner, equal in value to little more than one quarter of the current value. In many cases th(3 difference has been far greater as in some of the old kreutzer pieces, lately current in (he German States," ("Money" p. 74.) 4S FIRST LESSONS ON MONEY. Though the relative valne of gold and silver to each other may vary somewhat, from age to age, owing to the difference in supplies of each of these metals, and toother causes, yet by using both as material for money a closer approximation is made to a permanent and fixed measure of value than would be the case by using one to the exclu- sion of the other. Heat expands different metals in different degrees. But it is proved that a pendulum composed of several metals will more nearly preserve its length the same in all weathers than one will composed of any one metal. No two horses can be found of precisely the same weight, and speed, and strength, and power of endurance. Yet an ordinary teamster can draw a greater load with two good horses than with either of them alone. Money, in this commercial age, has railroads and steamboats and costly machinery to build, enormous purchases to make, vast quantities of produce to transport, expen- sive wars to carry on, and debts to pay of individuals and governments, amounting in the aggregate to enormous sums. Never, / SILVER. 4'.) in any period of the world's liistory, was this load as heavy as now; and it would seem the height of madness and of folly where it has heretofore taxed the strength of the two to pull the load, to turn out and dismiss the heavier, steadier and stronger horse of the two, and attempt to move with a one-horse team the burden which the com- mercial transactions of the day impose on money. The ratio wiiich the market value of gold and silver bear to each other varies less from age to age than really might be expected. Herodotus, speaking of the tribute that was paid to Darius, said that "gold was es- timated at thirteen times the value of silver." (History, p. 212.) At present the ratio of gold to silver, as established by law, in this country, is 16 to 1. In France it is 15.5 to 1. The difference be- tween their relative value now and twenty- four hundred years ago is not sufficiently great to be alarming. The -quantity oi: gold and silver in the markets of the world gradually increases as new mines are discovered. In ten years 50 FIRST LESSONS ON MONEY. after the discovery of gold in California, in the year 1848, as much gold was produced as had been in the previous 356 years. British America and Australia gave large contributions to the vrorld's store of the precious metals. Commercial nations were greatly alarmed at this sudden iiitlux of gold. They sup- posed that it would suffer a great deprecia- tion in value. Says Prof. Levi, "Frightened, and not without reason, at the possible con- sequences, some countries, heretofore anx- ious to attract and retain gold in circulation, even at great sacrifices, showed a feverish anxiety to banish it altogether. In July, 1850, Holland demonetized the gold ten dol- lar piece and the Guillaume. Portugal pro- hibited any gold from having a current value, except English sovereigns. Belgium demon- etized its gold circulation, Russia prohibited the export of silver; and France, alarmed, but less hasty, issued a commission to in- quire into the matter." (Hist. British Com- merce, p. 336.) Yet these fearful forebodings were not realized. No sensible harm has resulted / SILVER. 51 from the great quantities of gold and silver, which in modern times have been discovered and put upon the market. There are enough poor people in the world, who can use for procuring the comforts of life all the gold and silver which they can obtain by honest industry. Both should be kept in circulation. The efforts making to degrade silver do not ap- peal' to be in the interests of humanity. The impression is sought to be made that silver is not used as money by commercial nations generally. This is a great mistake. The Bank of France alone holds over seven- teen millions of dollars more in silver than the United States ever coined. The people probably hold half as much more. Her sil- ver is a full legal tender. Yet it does not drive the gold out of the country. All the continental nations of Europe, except Gei*- many, make silver a legal tender. It is the money chiefly used in India, Japan and China. " The English government," says Prof. Jevons, "has repeatedly tried to introduce a gold currency into our Indian possessions, 52 FIRST LESSONS ON MONEY. but has always failed, and the gold coins now ciiculaiing there are snpposed not to exceed one tenth part of the metallic cur- rency. Although rhe pouring out of forty or fifty millions stoiling of silver from Ger- many may for some years depress the price of tlie metal it can be giadnally absorbed without difficulty by the Kistern nations, which have for two or three thousand years received a continual stream of the precious metals from Europe. If other nations should one after another demonetize silver, yet the East may be found quite able to absorb all that is thrust upon it, provided that this be not done too rapidly." (Money, p. 142.) Those who in this country are carrying on the war against the farther coinage of silver make the impression that silver is so much more plenty than gold that there is danger that silver will supplant gold, and that our metallic money will be chiefly silver. This idea is often presented, and many have come to believe that it is true. But it is utterly false. There is no undue proportion of sil- ver in the country. During the fiscal year ending June 30th, SILVER. 53 1885, the value of tlie gold deposited at the mints and assay offices of the United States was $56,748,752.60. The value of the silver so deposited during the same peiiod was $8«, 082, •2-22.87. (Kei)ort of the Director of the Mint, p. 8, 4.) Here we see that the excess of gold over silver brought to our mints the last year \Aas $18,606,529.73, or almost 50 per cent. But it is claimed tluit, because England and Germany have demonetized silver, nnd silver has, in consequence depreciated some- what in market value as bullion, that "'the poorer money will drive out the better," and the gold be carried out of the country, and the silver from those countries be brought in to displace it. But this is also disproved by the facts. From the same authoiity we learn that the imports of silver into the United States were — for the fiscal year above referred to — of bullion to the value of $4,530,384; of coin, $r2,020;243, of which #673,926 were our own coin. This makes a total of silver imported for the year, $16,550,627. During the same period gold was imported to the value of, in 5f FIRST LESSONS ON MONEY. bullion, $11,221,846.45; in coin, $17,842,459. Total, $29,063,305.45. (Ibid,) So that iiotwitlistandinfT all these predictions, there were imported into the country during the last fiscal 3^ear, $12,512,678.45 more gold than silver ! But this does not probably represent the whole truth; for the imports of silver are given from the books of the Custom houses — though much of it did not go to the mints — but only that amount of gold imported is given above which was deposited at the mints and assay offices. The exports of silver for the same period were — of bullion $20,422, 924— of A^merican coin, $1,211,627— Foreign silver coin, $12,060, - 612. Total export of silver $33,695,163. The exports of gold were, of bullion, $395, 750; of American coin, $2,345,809. Foreign gold coin, $5,736,333. Total exports of gold; $8,477,892. This shows that the value of silver exported for the year exceeded the value of the gold exported by $25,216,671. This shows that the accumulation of gold over silver in the country during the last fiscal year has been over 300 per cent. SILVER. 55 It seems incredible that, in tlie face of these facts, intelligent men can raise such a clamor against silver coinage ! Dwell upon these figures until you become familiar with the true story which they tell. You will then see that if there could be such a thing, we should be in much more danger of a glut of gold than of silver. The Director of the Mint estimates the amount of coin in this country, July 1st, 1885, at $820,000,000; of which, $542,000,000 consisted of gold coin, and $278,000,000 of silver coin. (Ibid, p. 27. ) It is objected that the silver does not go into general circulation. To this we reply that there is more silver in circulation among the people than there is gold. "The number of silver dollars coined un- der the provisons of the act of February 28, 1878, amounted to $213,259,431 on November 1st, 1885, of which $163,817,342 remained in the Treasury of the United States, while $49,442,089 were in circuhition on that date." (Report of the Comptroller of the Currency, p. 18.) m FIRST LESSONS ON MONEY. Why does so large an atrioiint of silver re- main in the Treasuiy ? II is Simply because t?ie paper which rep- resents it is lighter to carry and easier to count. The next paragraph in the Report says that "Silver certificates have been issued, which are re]m'sented by standard silver dollars in the Treasury of the United States, to the amount of $125,053,286." If silver certificates are in circulation it is the same as if the silver was in circulation. Of these certificates $31,906,514 have, in the course of business found their way back to the Treas- ury. It would also add to the circulation of sil- ver if the Treasurer would use the silver re- ceived for duties, to pay the interest and principal on United States Bonds, as he is required to do by law. The money d power has already become so strong that it overrides the laws. This silver is kept hoarded cx)ntrary to law, and the officials who do it, complain that it is not in circulation, and ask to have silver coinage stopped on that account ! SILVER. 57 Remember that, aecoi-diiig to the official reports of tlie ooveinment there was dniing the last Hscal year. 1. More gold than i-ilver brought to the mints and assay offices of the U. S. Govern- ment 2. More gold than silver imj)orfed into the country. 3. More silver than gold exported from the country. So that relatively over three hundred per cent, more gold than silver was in the year past being accumulated in this country. ' In the light of these facts there does not seem to be but one explanation of the outcry made against silver coinage and that is that this outciy is made in the interests of the bondholders without regard to the welfare of the country as a whole. CHAPTER VIII. PAPER MONEY. ^'HOUGH gold and silver be both used as 1 material for money, yet the quantity of those vhich any commercial nation can keep in circulation is insufficient to meet the demands of trade. Hence the necessity for paper money. In commeicial centers, checks, bills of exchange, and other representatives of value, are made to do the work of money. In the Clearing Houses of New York and London, by means of which the accounts between banks are settled, an immense business is transacted daily with the use of but very little money. Balances only are paid and they generally by checks. Paper is Iso used as a substitute for metallic money for its greater convenience. To carry about a few thousand dollars in gold would be a burden; but a hundred, five hundred, or thousand dollar bills would not be inconvenient to carry, and tiie same PAPER MONEY. 59 fi mount in a draft would not be noticed. Jlence, no matter how plenty metallicmoney is,extensive business transactions require the use of paper in some form as a substitute. In some other respects paper money has the advantage over metallic. Gold andsilver suffer abrasion and consequently lose in value by daily use. In time, this money becomes so worn and light, that people are unwilling to take it, and difficulty, and sometimes great national distress results. It is also liable to mutilation by boring, and sweating, and other processes by which a pait of the metal is abstracted, while the coin presents the appearance of being simply worn by use. In England, before the art of coining money was brought to its present state of perfection, their coins were mutilated by clippings and parings, as well as worn by use, until the current money lost nearly half its value. To put a stop to mutilating the coin, the severest penalties were inflicted. Macaulay says, (History of England, p. 87, et seq.). "It is to no purpose that the rigorous laws against coining and clipping were rigorously executed. At every session 60 FIRST LESSONS ON MONEY. that was held at the Old Baily, terrible examples were made. Hurdles, with four, five, or six wretches convicted of counter- feiting, or mutilating the money of the realm, were dragged, month after month, up Hol- born Hill. One morning seven men were hanged, and a woman burned for clipping. But all was in vain. "The evil proceeded with constantly accel- erating velocity. At length in the autumn of 1695 it could hardly be said that the coun- try possessed, for practical purposes, any measure of the value of commodities. It was a mere chance whether what was called a shilling was really ten pence, six pence or a groat. "The results of some experiments which were tried at that time, deserve to be men- tioned. "Three eminent London goldsmiths were invited to send a hundred pounds each in current silver to be tried by the balance. Three hundred pounds ought to have weighed about twelve hundred ounces. The actual weight proved to be six hundred and twenty - four ounces. PAPER MONEY. 61 "The evils produced by this state of the currency were not such as have generally been thought worthy to occupy a prominent place in history. Yet it may well be doubted whether all the misery which had been in- flicted on the English nation, in a quarter of a century, by bad kings, bad ministers, bad parliaments, and bad Judges, was equal to the misery caused in a single year by bad crowns and bad shillings. Those e^vents whicli furnish the best themes for pathetic or indignant eloquence are not always those ' which most affect the happiness of the great body of the people. The misgovernment of Charles and* James, gross as it had been, had not prevented the common business of life from going steadily and prosperously on. While the honor and independence of the state was sold to a foreign power, while chartered rights were invaded, while funda- mental laws were violated, hundreds of thou- sands of quiet, honest, and industrious families labored and traded, ate their meals and lay down to rest, in comfort and security. But when the great instrument of exchange became thoroughly deranged, all trades, all 62 FIRST LESSONS ON MONEY. industries were smitten as with a palsy. The evil was felt daily and hourly in most every class; in the dairy and on the thresh- ing floor, by the anvil and the loom, on the billows of the ocean, and in the depths of the mine. Nothing could be purchased without a dispute. Over every counter there was wrangling from morning to night. The ^vorkman and his employer had a quarrel as regularly as the Saturday came around. On a fair day, or a market day, the clamors, the reproaches, the taunts, the curses were incessant, and it was well if no booth was overturned and no head broken. No mer- chant would contract to deliver goods with- out making some stipulation about the qual- ity of the coin in which he was to be paid. Even men of business were often bewildered by the confusion into which all pecuniary transactions were thrown. The simple and the careless were pillaged without mercy by extortioners whose demands grew even more rapidly than the money shrank. The price of the necessaries of life rose fast. The la- borer found that the bit of metal, which, when he received it, was called a shilling, PAPER MONEY. 63 would hardly when he wanted to puichase a loaf of bread, go as far as sixpence. Wliere artisans of inore'than usual intelli- gence were collected in great numbers, as in the dockyard at Chatham, they were able to make their complaints lieaid and to obtain some redress. But the ignorant and help- less peasant was cruell^^ ground between one class which would give money only by tale and another which would take it only by weight. ''To remedy these evils the Recoinage Act was passed. The debased coins were melted and recoined at an expencse to the country of one million two hundred thousand pounds sterling." Coins made of gold and silver, durable as they are, yet when constantly used, even in a legitimate manner, undergo a loss which in a few years sensibly detracts from their value. Speaking of the present gold coins of En- gland, Prof. Jevons,says, "A large part of the gold coinage is worn below the least current weight, and all persons of experience avoid paying old sovereigns to the Btmk of England. fi4 FIRST LESSONS ON MONEY. Only ignorant and unlucky persons, or else larger banks and companies which cannot otherwise get rid of light coin, suffer loss. The quantity of light gold coin withdrawn by the banks did not for many years exceed half a million a year; during the last few yeai'S it has varied from £700,000 to £950,- 000. As the average amount of gold coined annually is four or five millions, and the coins melted or exported are for the most part new and of full weight, it follows ne- cessarily, that the currency is becoming more and more deficient in weight." There is great injustice in making the loss in the weight of gold coins which have been in use for thirty or forty years fall upon the last holder. The mint should take all light coins at their nominal value and replace them by coins of full weight. Still the loss lesulting from the use of coin money is a total one, though borne, as it should be by the people at large. Paper money has this advantage over metallic money that it can be replaced when worn by use, with but trifling expense. Another advantage is that large amounts PAPER MONEY. 65 are more readily counted. A New York daily paper, in i-eporting the business of the Clear- ing House of that city for that day says that its exchanges amounted to $116,747,578: the balances to 14,551,297. This amount of bus- iness' is not spoken of as exceptionally hirge. It would be simply impossible to do it in a single institution if in eich transaction gold and silver were actually paid. If paper money can be made perfectly safe, without a possibility of losing its value either in whole or in part, it will be gener- ally preferred in common use to gold or silver. The preference which the people have for paper money if perfectly safe is seen by a fact stated by the United States Treasurer in his recent report. He says, page 14, "The issue of silver cirtificates, by treasury officers in the South and. West, for gold coin deposited with the assistant treasurer at New York, under departmental circular of September 18, 1880, was discontinued in January last (1885). The amount which had been issued in this manner to the date named was $80,- 730,500." 66 FIRST LESSONS ON MONEY. Gold coin was paid for these silver cer- tificates^ redepniable only in silver, sim])]y because the people prefer good paper niunny to the very best metallic money. But paper money should be money, and not a promise to pay money. The money of a country, gold and silver and paper, shonld be interconvertible: but neither kind should be redeemable. Payment in any kind of money should be final. (^'^ CHAPTER IX. COINING MONEY. ^HE money of any nation should be a le^al 7 tender for debts in every part of that nation. It should carry its full nominal value with it wherever it goes. But this is not likely to be the case unless the govern- ment creates the money. The power to control the money of a na- tion carries with it almost every other power. The money power is well nigh supreme. Hence, the right to coin money is vested in the Supreme Power of the State. It is a maxim of the civil law that moneiandi jus principum ossibus inhceret. ''The right of coining money inheres in the bones of princes." In all monarchical countries this right is jealously guarded as the prerog- ative of the Crown. Says Prof. F. A. Walker, " In all lands coinage has been one of the most cherished 68 FIRST LESSONS ON MONEY. prerogatives of sovereignty." (Money, p. 168.) Our constitution vests in Congress the right to coin money. No state, however far it may have pushed its theories of "State Rights," has ever ventured to claim in words this fundamental prerogative of sovereignty. This right of the National Government re- mains unchallenged. If the National Government has the ex- clusive right to coin money, then it should furnish the money for the use of the people, no matter of what material it is made. If a substitute for gold and silver is permitted, then the government should furnish the sub- stitute. This is evident. A prerogative can be of but little value if it may be easily sup- planted. Yet, up to the period of our civil war, the bulk of the money in use in this country was furnished by banks chartered by the several states. This was a strange inconsist- ency. It was a great annoyance and detri- ment to the people. The money current in one State was not good in another. The TTiotT^v of TllinoiG! wonid not bnv n rllnner in COINING MONEY. 69 New York. Many of the banks were worth- less. A general bank failure occurred every few years. Thomas Jefferson said of the bank suspen- sion of 1814, "The banks have pronounced their own sentence of death. Between two and three hundred millions of dollars of their promissory notes are in the hands of the' people for solid produce and property sold, and they formally declare they will not pay them. * * "Thus by the dupery of our citizens, and tame acquiescence of our legislators, the na- tion is plundered of two or three hundred millions of dollars, treble the amount of debt contracted in the revolution»y war, and which, instead of redeeming our libert}^, has been expended on sumptuous houses, carri- ages and dinners. A fearful tax if equalized on all, but overwhelming and convulsive by its partial fall." (Jefferson's Works, vol. 6, p. 295.) That all the money, paper as well as met- allic, needed by the country should be issued by the National Government directly, we ursfp from flip folio win ir consirlerRtions : 70 FIRST LESSONS ON MONEY. 1. Congress is exclusively empowered by the Constitution to do it. Our best writers on constitutional law agree that the phrase "To coin money" ap- plies to paper as well as metallic money. Judge Farrar, in his "Manual of the Con- stitution," §568, says: "Congress is not lestricted as to the ma- terials they may make use of, or their worth or value, independent of their authorized use as money; nor is it required that they should have any such value. Even the oper- ation of converting them into money is described only by the verb 'to coin,' whi'h, if it means anything in addition to the act of converting it iflto money, includes only the Government stamp, by which the act is au- thenticated." Daniel Webster (Works, vol. 4. p. 315), says: "It is clear that the power to regulate com- merce among the states carries with it, not impliedly, but necessarily and directly, a full power of regulating the essential element of commerce, namely, the curiency of the COINING MONEY. 71 country, llie money which constitutes the life and soul of commerce." In his "Money and the Mechanism of Ex- change," p. 317, ad sequitur, Professor Jevons says: "The issue of notes is more analagous to the royal function of coinage than to the ordinary commercial operation of drawing bills. We ought to talk of coining notes, as John Law did; fo though the design is impressed on paper instead of metal, the function of the note is exactly the same as that of a representative tol^en. As to the right to issue promises, it no more exists than the right to establish private mints. As almost every one has long a,greed to place the coinage of money in the hands of the Execu- tive Government, so I believe that the issue of paper, representative money should con- tinue to be practically in the hands of the Government, or its agents acting under the strictest legislative control." It would be less absurd and less dangerous to permit private individuals, or corporations to coin metallic money than to permit them to issue paper money. But the Constitution 72 FIRST LESSONS ON MONEY. in prohibiting the one proliitnts tlie other. 2. Paper money issued by the National Government in a properly l.itnited amount would be of permanent value It would ie.>t upon a real basis— the entire lesources of ihe country. Pai)er money issued ui>on what is called a '\gold basis," rests upon a fid i I ions basis. The banks do not have gold in their vaults to the value of the bills they issue. If they did, why issue the bills? Why not put the gold in circulation I But the banks formerly issued at least three tiuies as much paper money as they had coin with which to redeem it. Said a bank president, holding out a bill, "We hei'e promise lo pay five dollars, but there is the tacit proviso, if we are not called upon to pay it. If the pay- ment of all our bills is demanded w^ can but suspend." Our National Bank Bills are good simply because they rest upon the credit of the Government; they are redeemable in legal tenders issued by the Government. The Banks do not indorse their bills. They are, therefore, no better than if issued directly by the Government. COINING MONEY. , . 73 3. It would be a great saving to the country if all the bills now issued by the National Banks were issued by the Govern- ment. These bills are secured by Government bonds. On these bonds interest is paid. The amount that has already been thus taken from the tax-payers and given to the rich is enormous. This drain from the pockets of the people into the pockets of rich capital- ists should be stopj^ed. The Government should, as rapidly as possible, pay these bonds and issue all the paper money direct- ly. Let the people at large be the creditors of the Government. The total amount of bonds held by the National Banks November 1st, 1885, was, according to the Report of the Comptroller of the Cui-rency, 1808,364,550. (Report, p. 70.) "The average rate of interest now paid by the United States on the bonds deposited as security for circulating notes is a little more than .036 per cent, upon their par value." (Report; j). 32.) The rate of inter- est formerly paid to the banks was 6 per cent. But even at the reduced rate, the amount of interest now yearly paid by tlie Government 74 FIRST LESSONS ON MONEY. to the National Banks is a large sum. For every liundred thousand dollars in bonds tliat a bank deposits with the Gov- ernment, it gives the bank ninety thousand dollars. The Government pays the banks interest on the bonds; but the banks do not pay the Government any interest on this money. The interest donated by the Gov- ernment to the National Banks for the year 1885 amounted to ^10,590,011.42. If this large sum was donated yearly to the poor families who are struggling with hardships on the frontier to make themselves homes, we would not complain. But it is given, without any just reason, to the rich. But not only would the interest be saved, if the Government issued all the paper money ,^ but much of the principal. Every year a large amount in bills is destroyed by fire and flood and other accidents. The loser would be the individual, the tax-payers would be the gainers. We may form some opinion as to what this would amount to in the aggregate from a single circumstance. During the war, the Government issued fractional currency to the amount of 45 mil- COINING MONEY. 75 lions of dollars. When called in, but" 30 millions were presented. The j^eople gained 15 millions of dollars b}^ this one transac- tion. 4. It would add greatly to the prosperity of the country to release, for industrial pur- poses, the capital now tied up' by the "Na- tional Banks in Government boiids. The resources of this country, to a great extent, are yet undeveloped. There are plenty of men willing to work but no man li ires them. The capitalist, who should set the' unem- ployed to building and manning' ships, and railroads, and working mines and farms and factories, spends at his office an hour or two a day examining securities, reckoning his interest, and cutting off his coupons. Set the three hundred and eight millions now lying idle in Government bonds at work in legitimate, useful enterprises, and it would, do a vast amount of good. It would give a mighty impetus to business to unloose this large amount of capital so that it could' be employed in productive industries. It would make many homes comfortable that are now destitun\ It would increase im- 76 FIRST LESSONS ON MONEiT. meiisely the wealth of the country, by en- couraging labor, the only source of wealth. 5. No self- constituted body of men should have, under a republican form of govern- ment, the power to control the business in- terests of the country, so as to make them at their own will, prosperous or adverse. No matter how respectable may be thin body; no matter how wisely, on the whole, they may use this power; it is too dangerous for any but the people at large to wield. But the National Banks possess this pow- er. They can make every branch of business lively by inflating the currency. They can clog and stop the wheels of industry by contracting the currency. There is no legal limit to their power to inflate the currency; or, on the other hand^ to contract it. One year, business may be prosperous, prices good, labor in demand. Every body is encouraged to enlarge his business facili- ties, and to go in debt, and to make ventures. Then the banks may contract, call in their money, refuse accommodations; and bank- ruptcy and misery follow. This power, to COINING MONEY. 77 a limited extent, was exercised in Jefferson's day. Respecting it he says, "It is cruel that such revolutions in pri- vate fortunes should be at the mercy of ava- ricious adventurers, who, instead of employ- ing their capital, if any they have, in manu- factures, commerce, and other useful pur- suits, make it an instrument to burthen all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs." (Jefferson's Works, vol. 6, p. 296.) Again he says, (Works, vol. 7, p. 64), "The bank mania is raising up a moneyed aristocracy in our country which has already set the government at defiance, and although forced at length to yield a little on the first essay of their strength, their principles are unyielded and unyielding. These have taken deep root in the hearts of that class from whicli our legislators are drawn, and the sop to Cerberus, from fable has become history. Their principles lay hold of the good, their pelf of the bad, and thus those whom the con- stitution had placed as guards to its portals 73 FIRST LESSONS ON MONEY. are sophisticated or suborned from their duties." It must be borne in mind that for men to obtain this power, the one qnalilioation is, the possession of money. No matter how they obtained their money, or what is tlieir char- acter. If ten men buy a hundred thousand dollars worth of Government bonds, tliey can obtain a. charter for a National Bank. The Government will give them ninety thou- sand dollars in bills, loiiJiout interest^ hold their bonds for the redemption of these bills, and yet pay them interest on the bonds. These bills they can loan out on interest to business men. Or they can add ten thou- sand dollars to the money received from the Government and again buy bonds and obtain the charter for another bank. This opera- tion, it was said, was repeated ten times by certain parties when the National Bank Act first became a law. With less than two hundred thousand dollars invested they drew from the Government interest on one million of dollars ! And they did hothing contrary to law. The National Banks can expand or con- COINING MONEY. 79 tract at pleasure, the currency they issue. In point of fact they have (Keport of the Comptroller of the CuiTency, p. 14) con- tracted their circulation the last three years $48,000,154. 6. The objection so often made, that bills issued by the Government are "fiat money" has not in it the slightest force whatever. It is a ridiculous attempt to frighten the people with a harmless bugbear. A "fiat" is a decree or command. All money is "fiat money." That is, it is constituted money by the decree of the Government. The material of which it is made has noth- ing to do with it. Gold of the finest quality is not money until it is made into money by the Government. Men may buy it as a com- modity, but no one is obliged to take it for a debt. But let the Government coin it, and stamp it as money, and it becomes money. It passes now everywhere in the Nation for the sum stamped upon it. Before it was made into coin it had a market value, as metal, but it was not money. No one was obliged to take it. Whatever is legal ten- 80 FIRST LESSONS ON MONEY. der is made so by civil authority. It is "tiat money." Oui- gold coins uie not current in England. They are bought, like iron and steel, by weight, at market value. Our metallic money is there a commodity. Bullion is gold or silver uncoined — usually in bars. "Within a country," saj^s Bagehot, "the action of a Government can settle the quan- tity and therefore the value of its currency, but outside its own country no Government can do so. Bullion is the 'cash' of interna- tional trade; paper currencies are of no use there, and coins pass only as they contain more or less bullion." (Lombard Street, p. 44.) The Revised Statutes of the United States, Sec. 3,588, say, "United States notes shall be lawful money and a legal tender in pay- ment of all debts public and private, within the United States, except for duties on im- ports and interest on the public debt." Thus the law declares that United States notes shall be — not the representative of money — not a demand for money — but money itself — lawful money. And this money was COINING MONEY. 81 to be good for all purposes for which money could be used, with a single, specified excep- tion. This exception was a great mistake. But for that, these notes would not have depre- ciated as they did. The National debt could have been paid and the Nation saved an un- told amount of misery. All money, then, should be issued by the Government. The power to issue paper money should be taken from x^i'ivate cor- porations and placed in the hands of the Representatives of the people, where by right and b}^ the Constitution it belongs. CHAPTER X. BASIS OF PAPER MONEY. [E have shown in brief that the basis of paper money is actual property^ and not imaginary gold and silver. But there is so much misapprehension on this subject that it needs a farther elucidation. The money issued by our National Banks is better than that formerly issued by the State Banks, for this reason ; the State 'B-Aiak.'A promisecl to pay the amount represent, ed by theii- bills in current coin\ when they did not have, never had, and never expected to ha^e sufficient coin to pay their notes in circulation. When the call to pay was generally made they met it by suspension. They sometimes paid from ten to fifty cents on the dollar; and sofnetimes nothing. Their circulation rested on an imaginary basis. The National Banks do not promise to pay in coin; but in United States legal ten- ders. Hence their bills are as good as the BASIS OF PAPER MONEY. 83 legal tenders of the United States Govern- ment, but no better. If the banks fail, the depositors suffer, but the bills remain good. They rest on a solid basis— on the credit of the government of a country, ricli in its resources and in the general industry and thrift of its inhabitants. It is remarkable, that the only paper mone}' that has never depreciated is that which has been issued b}^ Governments to meet an exigency, with no definite promise to pay, either on demand or at any stated time. Venice was founded on seventy or eighty islets in a lagoon on the northwest fringe of the Adriatic Sea, by refugees from the Huns, when they ravaged Italy A. D. 452. It soon rose to importance, and for many years was one of the first commercial cities in Europe. In the year 1171 the Venetian republic (Abridged from "-The Money Question" by Wm. A. Berkey. See also N. A. R. Sept. 1885, p. 205.) being engaged in expensive wars, made forced loans upon its wealthiest citizens, on which loans it agreed to pay four per cent interest per annum. A chamber of 84 FIRST LESSONS ON MONEY. loans was organized and the creditors made the managers. Each one was credited on tlie books the amount of his loan. These loans were transferable on the books, either in whole or in part. This institution naturally grew into a bank. It was soon found tliat to pay debts of large amounts by a tiansfer of a loan on the ])ooks was much more easily and safely done than by carrying and counting coin. Hence, after the Republic ceased to want money, merchants and others deposited coin and secured credits. The transfers were made so frequently that no one cared for the inter- est, and the goveinment ceased to pay inter- est. In the year 1428 it was decreed that all bills of exchange payable in Venice should be paid in this bank unless otherwise stipu- lated. This added greatly to its business. Its paper was generally at a premium, often so great that the premium was limited by law to 20 per cent. Though established at so early a period, when society was unsettled, and the subject of finance was so little undeistood, this bank BASIS OF PAPER MONEY. M never suspended, nor failed. Durino^ the 600 years of its existence there was never a money panic at Venice. Its credits remained good until the Venetian Republic was overthrown in the wars of Napoleon. The Bank of England was also created to meet the necessities of the Government. Charles II. committed a great crime and blunder. "The goldsmiths of London," says Walter Bagehot, "who then carried on upon a trifling scale what we should now call banking, used to deposit their reserve of treas- ure in the 'Exchequer, 'withtlie sanction and under the care of the Government. In many European countries the credit of the State had been so much better than any other cred- it, that it had been used to stiengthen the beginnings of banking. The honesty of the English Government was trusted implicitly. But Charles II. showed that it was trusted undeservedly. He shut up the 'Exchequer,' would pay no one, and so the goldsmiths were ruined. The credit of the Stuart Government never recovered from this monstrous robbery, and the Government created by the Revolution B6 FIRST LESSONS ON MONEY. of 1688 could hardly expect to be more trusted with money than its predecessor. A goyerniiient created by a revolution hardly ever is.". (Lombard Street p. 93.) lnJ694, the credit of the Government of William III. was so low in London that it was : impossible for it to borrow any large sunt-."' '. ■-•■■■.' '-"■'■■■. ■ Tlie GrQverntnent was in the greatest linan- cial straits. At last they hit upon a scheme to rpU^yes. their \pressing nt^cessities. ''T.he plan,'.' -says Macaulay, "was that twelve hundred thousand pounds should be rais<;jd at what was then considered the moderate rate of 8 per cent, interest. In or- der to induce the subscribers to advance the money promptly on terms so unfavorable to the public, the subscribers w^ere to be in- coiporated by the name of the Governor and Company of the Bank of England. They weie so incorporated and then £1,200,000 was obtained." (Lombard Street p. 94.) This was the beginning of the English National Debt. To tins Bank were granted several impor- tant privileges.. B.\SIS OP PAPER MONEY. 87 1. It was to be the sole depositoiy of the Government funds. 2. It Avas the only bank in whfch the stockholders were not- •personally Ii;7ble for its debts. ^ . ' ■ , 3. It had the privilege of being the sole joint stock company permitted to issne bank notes in England. These bank notes were to be redeemable in coin. In times of panic the Bank suspended cash payments. At one time the suspension lasted 22 3^ears, from 1797 to 1810. ■ ■' In 1844, the Bank of England was re-or- ganized. The Bank was authorized to issue bills to the amount of fifteen million pounds sterling secured by Government bonds mits possession, loithout being obliged to redeem these bills in coin. All notes that it issued above this amount w^re- to "be secured by gold and silver €oin and bullion in its. y.jtults. In consequence of -this' 'arraiigeEttOht/^f-^ has not again suspended; 1 1 lias passed" thtt)ugh several panics since, biit lias not 'been obliged to suspend specie payments oil that part of its circulation which it was under 88 FIRST LESSONS ON MONEY. obligation to pay in coin. So large a portion of its circulation is secured by the credit of the Government that the Bank is able to keep the rest good under all circumstances. We see then from these instructive exam- fHes that the proper basis for paper money is the credit of the Government — that is the X)roperty, the business, and the resources of the entire country. Our National Bank bills rest upon this basis, and, therefore, they are better than any paper money this country ever had, ex- cept the greenbacks which they, to an extent supplanted, which rest upon the same basis. But there is the objection to the issuing of paper money by the National Banks wdiich we have already mentioned. The Government gives these Banks the use, witJi- out interest, of all the notes they have in cir- culation. The National Banks pay a tax of one-half of one per cent.on their circulation,and this is the only offset they make for the free use of the money furnished them by the Govern- ment. The proceeds of this tax are used to pay the cost of printing the bills and other BASIS OF PAPER MONEY. 89 expenses incident to the furnisliin"- of tliese bills by the Government. The objection is sometimes made to paper money that it has but little intrinsic value. The same objection might be made to an ordinary deed. But it conveys a title to that which has value. Properly speaking, the intrinsic value of any thing to man, is the value that inberes in the thing itself. The intrinsic value of food to a starving man is the same whether it costs little or much. The market value of any thing is the price which it will bring. Iron, in itself consid- ered, is of much more value to man than gold or silver. We could not very well keep house without iron. But its abundance, and the ease with which it is obtained makes it cheap. When a savage who had never heard of gold or money, was offered by Captain Cook, a guinea, or a handful of nails, for provisions, he wisely chose the latter. They had the greater intrinsic value. CHAPTER XL BANKS. jlN the modern mode of conducting busi- ness, banks are a. necessity. But the issuing- of money is no necessary part of banking. Some of the best banks have never had a bill of their own issue in circu- lation. It would be about as proper for a farm to issue money as for a bank to issue mone}^. Referring to the bank of England, Prof. F. A. Walker says, "The greatest bank in the world is not, as a bank, an issuer of notes, a manufacturer of paper money. Nor are the joint stock banks of London, with their enormous deposits and discounts dependent in the smallest degree for their power or their profits on note circulation. No London bank can issue notes, nor can any bank which has been chartered since May 6, 1844, while the issues of the English banks then existing are limited to their ordinary out- BANKS. 91 standing circulation befoie that date." (Mone}^ p. 449.) Among thepi'oper functions of a bank are these: 1. To receive deposits. The capital of a bank is not needed so much to carry on its business as to inspire public confidence. People who have confidence in the bank, deposit their money with it for safe keeping, and that usually for short periods, subject to being paid whenever called for. This money the bank lends on short loans. 'Thus a banker's business — his proper business" — says Walter Bageliot — "does not begin while he is using his own money; it commences wlien he begins to use the cai)ital of others." (Lombard Street, p. 244.) 2. To make discounts, or loans, on good se- curity and for a short time. The same men who deposit money with the bank, subject to call, that is, loan it to the bank, frequently have occasion to borrow of the bank. But all who deposit mone}'' do not do it at the same time, and all who borrow do not borrow at the same time. Money is being' paid out and paid in to the bank all the time, and these «2 FIRST LESSONS ON MONEY. amounts generally very nearly balance each other. 3. To exchange — that is to receive money at the bank and pay it out in a distant, or even foreign city. Usually, banks have funds on deposit at a convenient business metropolis for this purpose. Banks do not need subsidies from the Gov- ernment any more than mills or stores or farms. Wherever a bank is really needed, a bank will be established. The demand will bring a supply. Men of means will enter upon the business of banking as they do upon any other kind of business— to make money. For, apart from issuing bills, bank- ing, when properly conducted, is profitable business. In speaking of joint stock com- panies, Walter Bagehot says, ''As a rule, the most profitable of these companies are banks. Indeed, all the favoring conditions concur in many banks. An old, established bank has a 'prestige' which amounts to a 'priv- ileged opportunity;' though no exclusive right is given to it by law, a peculiar power is given to it by opinion. The business of banking ought to be simple; if it is hard it is lorong. BANKS. 93 The only securities whicli a banker, using money that he may be asked at short notice to repay, ought to touch, are those which are easily saleable and easily intelligible. If there is a difficulty or a doubt, the security should be declined. No business can of course be quite reduced to fixed rules. There must be occasional cases which no precon- ceived theory can define. But banking comes as near to fixed rules certainly as any existing business, perhaps as any possible business. The business of an old, established bank has the full advantage of being a simple business, and in part the advantage of being a monop- oly business. Competition with it is only open in the sense in which competition with "the London Tavern" is open; any one that has to do with either will pay dear for it. But the main source of the profitableness of established banking is the smallness of the requisite capital. Being only wanted as a "moral influence," it need not be more than is necessary to secure that influence. Al- though, therefore, a banker deals only with the most sure securities, and with those which yield the least interest, he can, never- 94 FIRST LESSONS ON MONEY. theless, gain nid divide a very large profit upon his own capital, because the money in his hands is so much larger than that capi- tal. Experience, as shown by plain figures, confirms these conclusions.'" (Lombard Street, p. 244. et seq.) He then gives the respective profits of HO banks in England, Scotland and Ireland. These banks pay dividends as follows: 15 banks pay above 20 per cent. 30 " " between 15 and 20 per cent. 30 " " •' 10 " 15 3i •■ " " 5 " 10 3 only pay less than 5 per cent. "That is to say, above 25 per cent of tlie capital employed in these banks pays over 15 per cent, and 62 1-2 per cent of the capi- tal pays more than 10 i)er cent. So striking a result is not to be show^n in any other joint stock trade. "The period to which these accounts refer was certainly not a particularly profitable one — on the contrary, it has been specially unprofitable. The rate of interest has been very low, and the amount of good security BANKS. 95 in the market is small. Many banks — to some extent most banks — probably had in their books painful reminiscences of 1866. The fever of excitement wbicli passed over the nation was strongest in the classes to whom banks lent most, and consequently the losses of even the most careful banks (save of those in rural and sheltered situa- tion) were probably greater than usual. But even tried by this very unfavoiable test banking is a trade profitable far beyond the average of trades." These remarks, coming from a high finan- cial authority, are made respecting banks in countries, the resources of which are well developed. Money cannot be used to the advantage that it can in this country. There is not the demand for it that there is here, nor can they afford to pay the sam.e rate of interest. Then, to have banks, it is not necessary to have "National Banks." It is not necessary that the use of the capital of these banks shall be furnished by the Government, free of interest. Let those who engage in the banking business furnish their own capital. 96 FIRST LESSONS ON MONEY. Some have done so all along. We give a sketch, kindly furnished ns by the cashier of the Chemical Bank of New York, Wm. J. Quinlan, Jr.: "The Chemical Manufacturing Co. was chartered, in 1824, with the privilege of banking. The charter expired in 1844, when the Chemical Bank was organized, with a capital of $300,000. On January 1st, 1849, the first dividend was paid, being 6 percent., the surplus then amounting to about $200,- 000. A yearly dividend of 12 per cent, was paid for several years, which was then in- creased to 18 per cent, per annum ; in a few years the dividend was increased to 24 per cent, per annum; again, to 36 per cent.; again, to 60 per cent., and in 1872 the divi- dend was made 100 per cent, per annum, and has continued at that rate to the present time. All the accumulations have been earned since 1844. The bank became the " Chemical National Bank of New York" in 1865, under the pro- vision of Congress, allowing State organiza- tions to enter the National system. The Chemical Bank issued currency, and BANKS. 97 there is about $10,000 yet outstanding. The Chemical National Bank never issued any bills. The bank has never suspended. The par value of each share is -^100. The bid price is 12,800 to $2,900, for each share, but it is rarely offered for sale, excepting when an estate is closed. Dividends paid since 1844, in round num- bers, 16,000,000. Our success is largely due to the able management of Mr. John Q. Jones, who was President from 1844 to his death, 1878, and to that ot our present President, Geo, G. Williams, who was Cashier from 1855 to 1878, and who succeeded Mr. Jones to the Presidency. Besides, we have always been blessed with an able and influential Board of Directors. Very resp'y, Wm. J. QUINLAN, Jk., Cashier." The report of this bank, jiublished Oct. 1st, 1885, showed a suri;)lus fund of four millions of dollars. It has been so common in this country for banks to issue money that the impression is quite general that we 98 FIRST LESSONS ON MONEY. cannot have banks unless they are permitted to issue money. This impression we see is without foundation. Nor is banking such a difficult business that only men of extraordinary ability can master it. "Any careful person," says Walter Bagehot, (Lombard Street, p. ^56.) "who is ex- perienced in figures, and has real sound sense, may easily make himself a good banker. The modes in which monej^ can be safely lent by a banker are not many, and a clear-headed, quick, industrious person may soon learn all tnat is necessary about them." The most im.portant Bank in the world is controlled by men not brought up to the business of a banker. "By old usage, the directors of the Bank of England cannot be themselves by trade, bankers. In London, no banker has a chance of being a Bank director, or would even think of attempting to be one." (Lombard Street, p. 212). CHAPTER XII. AMOUNT OF MONEY NEEDED. ^HE amount of mouey which our Nation 1 needs to carry on the business of the country cannot be definitely stated. We need more in proportion to the number of inhabitants than old nations, the resources of which are generally developed. We are an active, restless, manufacturing, trading people: and we need more money than we should if we were settled down, contented to qi^ietly earn our living, and nothing more, from the cultivation of the soil. But we raise enormous crops to sell; and we make and sell and buy vast quantities of manufact- ured articles, and it takes a great deal of money to carry on all this business easily. 1. We should have money enough in the country to do all the work for which money is needed. The attributes of money should not be given to anything but money. A piece of monev carries with it the value 100 FIRST LESSONS ON MONEY. stamped upon it, wherever it goes in the na- tion that coined it. A dollar is a dollar, whether obtained by honest labor, or by gambling, or by robbery. But this should not be the case with any other paper than paper money. It is not with a deed. A deed carries with it no bet- ter title to the property which it assumes to convey than the maker of it possessed. If there is a taint in the title, the deed carries the taint with it. This should be the case with every kind of paper that is used to transfer values, except actual money. There is great need of a radical change in our laws in this respect. If a promissory note is obtained by fraud, it is worthless in the hands of the man who obained it. He cannot collect it by law. But he sells it to a money shark for half its face, and the new owner readily obtains judg- ment against the victimized maker, for all that the note calls for, with interest and costs. This opens the way to endless ras- cality. It encourges villainy in every form that depraved ingenuity can devise. AMOUNT OF MONEY NEEDED. 101 Similar items to the following, which we clip from to-day's x)aper,are not uncommon: " The ' preacher ' is the latest swindling dodge being worked in Central Iowa. He ca'ls on his way distributing Bibles, and often presents the family with a handsome book. He then asks for dinner or other meal, and then takes a receipt for twenty-five cents paid for the meal. A few months later the neighboring bank calls for the payment of a note for a large amount." There are many whose sole business is to obtain money by similar methods. A gentle- man in appearance calls upon a farmer and explains to him a valuable farm implement. He appoints him local agent and gets him to sign an apparently harmless contract. Be- fore ninety days are up a money shaver in the adjoining village gives him notice that he holds his promissory note for several hundred dollars ! He has given no note, and seeks an explanation. The signature is gen- uine: he cannot deny it. He finds that when he signed the contract he unwittingly signed a note, artfully concealed. But he is com- pelled to pay it to the '■'"innocent'''' holder. At one time this fraud was carried on exten- sively, and hundreds were made victims. 102 FIRST LESSONS ON MONEY. Depraved ingenuity is tasked to- the ut- most to obtain fraudulent paper for "inno- cent holders'' to collect. Sometimes whole communities are swin- dled. A few months ago, fraudulent county bonds were issued in Indiana by rascal!}- ofRcials. They sold these bonds for money, traded them for horses or buggies or any thing they could get in exchange. One of them said in his safe retreat in Canada, that he h;id issued of these fraudulent bonds enough to fill his room! In many towns in the State of INew York, prominent citizens were hired to go around and get the consent of the tax-payers to bond the town for a j^roposed railroad. No pub- lic meeting was called, no opportunity for discussion was presented. They obtained a majority of the names. The town was bonded for many thousands of dollars. The bonds were sold. But the railroad was never built. There was probably no intention to build it. The Company which obtained the bonds could never collect them, but irr the hands of "innocent holders" they must be paid. It is fully time that the laws in such cases AMOUNT OF MONEY NEEDED. 108 and all judicial decisious concerning them, vv ore reversed. All commercial paper should be divested of the attiibutes of money. If a man buys a horse he buys it at his own risk. Though he be an " innocent" purchaser, the sheriff takes it, if the horse was stolen. The buyer of property gets no better title to it than the man had of whom he bought. It should be so in the sale of a promissory note, or of any other evidence of indebtedness. No promissory note, bond, check, diaft, or other evidence of indebtedness should acquire any degree of validity by sim^^ly passing into the hands of a third party. Any defence of the maker, or indorser, should possess the same virtue against whoever may hold it that it would possess against the party to whom it was given. It is objected that this would hurt credit. It would hurt the credit of scheming sv»'in- dlers. But this is precisely what ought to be done. It would close up one of the oldest and most faithfully worked mines of fraud. It would render impossible countless villain- ies that are practiced upon the unsuspecting, and often even upon experienced men of 101 FIRST LESSONS ON MONEY. business, and uptm whole communities. It would put a stop to many a scheme to plun- der towns and cities under cover of law. But it would render credit stronger by rendering it safer. It would put a premium upon honesty. Every man who buys any form of credit, would be careful with whom he deals. He would depend upon the responsibility of tlie party of whom he buys. The same rule should hold in regard to the purchase of what is called "commercial pa- per" that does in the purchase of other com- modities. The maxim of the Civil Law, Caveat emptor — Let the purchaser beware^ should apply inthis,as in other cases. There is a stronger reason for it because of the greater opportunity for fraud. The property of money of carrying a title to it on its face should not be given to any. thing else. Properly speaking, "nothing can perform the functions of money which is not money." ^Walker on Money, p. 405) The country, then, should be so well sup- plied with money that there would be no need of substitutes. If any are provided, AMOUNT OF MONEY NEEDED. 105 their circulation should be discouraged by law. 2. The volume of money in circulation should preserve from year to, year as nearly as possible the same relative proportion to the number and wants of the people. There should be no violent, arbitrary fluctuations. Any great intiation of the currency raises the price of property, and in the same pro- portion, lessens the value of debts. It is an injustice to the class of creditors, and encour- ages wild speculations. To contract the currency increases the val- ue of debts, lowers the price of property, and robs debtors by obliging them to sell a greater amount of property to pay their debts. An immense wrong has-been done to the American people by contracting the vol- ume of their currency. In this way the val- ue of the national debt was doubled. Ninety-tive members of the la»t House of Representatives of the United States, say in a letter to the President of the United States, Feb. 11, 1885, "It can be shown that it will take more labor or more of the produce of labor to pay whiit remains of our national 106 FIRST LESSONS ON MONEY. debt now than it would have taken to pay it all at the close of the war. Eighteen million bales of cotton were the equivalent in value of the entire interest bearing debt in 1865, but it will take thirty-five million bales at the price of cotton now to pay the remainder of the debt. Twentj^-five million tons of bar iron would have paid the whole debt in 1865. It will now take thirty five million tons to pay what remains after all that has been paid." (iSorth American Review, Nov. 1885, p. 493.) But individual debtors suffer most from the enhancement of the value of debts they owe. Many industrious men have lost the frugal savings of years, because it took much more of the products of their labor to pay the mortgage on the place they bought, than it did to represent it when the debt was made. Many a home half paid for when bought would not sell a few years after, for enough to pay the balance. If a law were to be en- acted saying that a debt made for one hun dred dollars, on which interest had been reg- ularly paid,could not be discharged with a less sum than two hundred dollars, it would be AMOUNT OF MONEY NEEDED. 107 seen to be no better than robbery. But this is precisely what is done when the currency of the country is so contracted as to require double the labor to pay a debt that it did when the debt was made. It is legalized robbery. Jeiierson says, "This state is in a condi- tion of unparallelled distress. The sudden reduction of the circulating medium from a plethory to all but annihilation is producing an entire revolution of fortune. In other places, I have known lands sold by the sher- iff for one year's rent." (Works v. 7. i51.) Many cannot understand why there is so much money to be lent when the currency is being contracted. They say that money is plenty because any amount of it can be had on good security. The reason is that nobody who has money is willing to put it into busi- ness. One will not buy property only as obliged to, wlien he knows that the property will depreciate on his hands. The manufac- turer properly avoids getting a stock of goods on hand which he must sell for less than it cost to make them. The consequence is that every one who has money, is anxious to loan lOS FIRST LESSONS ON MONEY. it on good security. Hence there is this seeming contradiction, when money is scarce in the country generally there is plenty of it on the market in the money centers. There should be, therefore, not only a pleiitiful, but also a steady supply of money in the country. It should not be subject to arbitrary variation brought about by the greed of men. When, on some emergency, more than an ordinary amount of money is required, a safe provision should be made to meet the demand. ''There will be," says Alexander Del Mar, (N. A. Review, Nov., 1885), "no settlement of the laws relating to money until the Gov- ernment assumes entire control of it; and this is what should be done without further delay. The interests of society demand a precise, a stable, an equitable measure of value, and the Government alone can furn- ish one. The preservation of our national unity invites the exertion of a force which, like that of a uniform money, is all perva- ding in its influence and constant in its operation. And when we come to the law of the matter, we have only to recall the AMOUNT OF MONEY NEEDED' 109 words of the great Expounder of the Consti- tution, 'Whenever paper is to perform the functions of coin, its regulation naturally belongs to the hands which hold the power over the coinage.' " It is impossible to determine, with precis- ion, just how much money a nation should have in circulation. It should have enough to meet all its wants. "Mr, Mulhall gives the total amount of all kinds of money, gold, silver, and paper, per inhabitant, as, in Britain, live pounds, six shillings; in France, ten pounds, ten shil- shillings; in the United States, five pounds fifteen shillings. Holland, a mercantile na- tion, stands eight pounds five shillings. The nations having little business and no great amount of wealth have small amounts of circulating medium. Russia having only one pound, fifteen shillings, a great part of which is irredeemable paper." (N. A. Re- view, Nov., 1885.) According to this estimate, France has al- most double the amount of money in circu- lation, per inhabitant, that the United States has. But that France has none too much is 110 FIRST LESSONS ON MONEY. evident from the general prosperity her peo- ple enjoy. Notwithstanding the great re- verses this nation met with lately in her war with Germany, and the heavy taxes her peo- ple have, in consequence, to pay, yet they do not emigrate in such vast numbers as the people do from Germany and Great Biitain. In none of our cities are found Frenchmen, who have recently left their native land, in sufficient numbers to become the ruling pow- er in the city. The difference in the amount of the circulating medium in these European countries is one great cause of the great dif- ference in the relative contentment of their people. This young and growing country needs relatively more money for general circula- tion than France does. But France evident- ly has none too much. Then we have far too little. A greater supply is needed to develop the natural resources of the coun- try, and to put and keep our manufacturing industries in motion. To use what we have to advantage we need more. It would be hard for a man to make his living on the best fai m with nothing but his hands. But AMOUNT OF MONEY NEEDED. Ill give him team and tools and seed, and he will have plenty of produce to spare. A vast amount of money is invested in costly machinery in manufactories. More money is needed to keep them in operation and to prevent what is invested from becoming a dead loss. Our population is rapidly increasing, and the Government should make provision to furnish the nation with an increase of money for its use in proportion to its increase in population. The banks should not have the power to do this; and they could not be depended on to do it if they had. As Andrew Jackson well said, "The banks can- not be relied upon to keep the currency uniform in amount." The people should require Congress to faithfully perform the duty imposed upon it by the Constitution, and furnish them with a proper amount of good, reliable money. CHAPTER XIII. "elastic currency." MN any given locality more money is need- f ed at some seasons than at others to transact its business with facility. In some of our counties many thousands of dollars are paid out in the fall of the year for ap- ples, in the winter for wheat; in others in the spring for cattle, and wool, and cotton. Hence some maintain that the quantity of money in the country should be variable — that it should be easy to put more money in circulation or to retire a surplus as demand- ed by the fluctuations of trade. Hence it has been proposed that (rovernment bonds bearing a low rate of interest, and paper money issued by the Government, be inter- changeable with each other. Tiien, if there is more money than is needed, it could be changed into bonds; if there is less than is needed, the bends could be changed for money. "ELASTIC CURRENCY." 113 To this plausible plan there are fatal ob- jections. First, the prosperity of the country would be at the mercy of capitalists. They could, by combination, expand or contract the vol- ume of money in circulation at their will. The prices of commodities and the value of debts would be in their hands. It would depend upon their edict whether the farmer would have to pay for a machine which he bought on credit a hundred bushels of wheat, or two hundred bushels of wheat. This is a power too dangerous to be placed in the hands of any class of men. This country has had a bitter experience of the readiness of a favored class to unsettle val- ues whenever they can do it to their own ad- vantage. This of itself is a sufficient object- ion to the proposed arrangement. Second, the National Government should not be in debt. It should " owe no man any thing." The paper money which it issues should be as good as gold and silver, but it should be money, and not a promise to pay; therefore it would not be a debt. The fashion of going into debt should not 114 FIRST LESSONS ON MONEY. be set by tlie supreme authority of the land. States and cities and towns are burdened with debts. The custom of going into debt for improvements leads to extravagance and villainy. Many a public work built on credit cost double of what it would if it had been paid for as it was carried on. Those who vote expenditures of money should pay their proportion of the expenditure. '• Im- provements " not needed are often projected because those who project them manage to have others pay for them. States and cities and towns are burdened with debts that never should have been contracted. It would greatly improve tiie government of our cities and towns if they were obliged to pay their expenses as they go along, and if their local elections could be held the next week after the paym.ent of taxes. But is it really necessary tiiat money should be '"elastic" to any considerable ex- tent 'i A farmer needs more teams when getting in his crops than at other seasons of the year. But he does not ordinarily buy more horses. He works to the best advantage all "ELASTIC CURRENCY." 115 that he has. Some of his teams do double the work that they do at other seasons. So, when money is specially needed, it should be made to do more service by being more ac- tive. Bishop Berkeley pertinently inquires, "Whether six-pence twice paid be not as good as a shilling once paid ? " The amount of ]Daper money should be kept within fixed limits. In an exigency, enough unnsed metal suitable for coin can be brouo'ht forth to meet the demand. It is said that Napoleon, finding in a church some statues made of silver, inquired what they were. The priests replied that they were statues of the twelve apostles. "Then," said the Emperor, "like their Mas- ter, they should be going about doing good." He ordered ihem to be melted up and coined into money. Prof. Frances A. Walker v/rites so sensi- bly on this i)oint that we quote him at some length. He saj^s, (Money p. 416.) "Those who demand that money shall be 'elastic,' mean b}' this, that there shall be more of it at one time than at another. Is this elastic- 116 FIRST LESSONS ON MONEY. ity? A rubber band is elastic, but there is no more of it at one time tlian at another. It will cover more ground at one time than at another, but it only does so by becoming thinner. There will be more of it, in any one place, at one time than at another, but for this reason, there is less of it in some other place. There is no more rubber when the band is stretched than there was before. Now, elasticity in this, the true sense, be- longs eminently to metallic money. No class of commodities, known to men, yield more quickly under piessure, or re-act more promptl3^ If an exceptional demand arises anywhere, gold or silver responds with an alacrity which would be unattainable by any article not possessing great value for its bulk, and not, at the same time that article in which the values of all commodities are expressed for purposes of exchange. But while, in obedience to economical impulses, however slight, there may be more of such money in anyone place at one time than an- other, the total amount is not on that account, increased. There is less at the same time in some other places, or in all other places. 'ELASTIC CURRENCY." 117 This fact is essential to create tliat tension which shall make it certain that, when the exceptional demand in the first in- dicated place shall cease, the volume of money will be promptly and accurately redistributed according to the prevailing conditions of international commerce." Money, like labor, will make its own way to any place where there is a special demand lor it. It is nr>fc necessary to create more money to meet a temporary demand. For, as Prof. Walker says, (Money p.448.) "First. The peri- odical occasions for a larger use of money, on the part of different trades and different localities, go far to oft'set each other. The busy time of the manufacturer is not neces- sarily the bnsy time of the agriculturist; lumber and cotton are not moved to market in the same season In the same way tiade reaches its height in different sections and countries at different periods of the yeai-, so that money may be doing its work this month in France, return next month to England to meet the demands of Lancashire, and go two weeks later to Glasgow, in the usual November drain northward, to satisfy the 118 FIRST LESSONS ON MONEY. wants of the iron trade of Scotland. Secondly. It does not follow from the fact that more exchanges are to be effected by the use of money that more actual pounds or dollars are requisite. Money is a quanti- tj'of two dimensions, — the number of pieces of gold, or silver, or paper, and their rate of movement. A scarcity of money will first make itself felt in an increased activitj^ of what is on hand. Each piece will accomplish more paj^ments in the same time. A'rising rate of interest makes the use of money worth more, and hence it will not be allowed to remain so long idle in the pocket or the drawer. If the merchant or the manufact- urer has to pay eight per cent, in ])lace of six for discounts, he will calculate his out- goings and incomings more closely, in order to reduce the average amount lying in his till. He will deposit more promptly to se- cuie the highei- interest; he will take more pains in collecting sums due from his cus- tomers, with whom the money might other- wise have tarried a day or a week longer. ''Thirdly. While there is a tendency, in a normal condition of production and trade, "ELASTIC CURRENCY." 119 to a greater demand for money at one period than at another, a certain stringency at such times is desirable as exerting a wholesome repression upon speculative movements. The present industrial and commercial organiza- tion of the world powerfully tends to gather production into great waves with correspond- ing intervals of depression — overproduction succeeded surely by stagnation. A certain waste of energy, which always results from fitful exertions, must be acce^Dted as among the economical conditions of this age. But it is utterly undesirable that the tendency should be quickened and strengthened by the facility of issues of local origin and cir- culation." The main thing necessary for this country is to have a sufficient volume of money, and there will be no difficulty in meeting a special demand in any particular place. CHAPTER XIV. DISTRIBUTION OF MONEY. ^ONEY, as the representative of value, f' will go where there is something of val- ue to be exchanged for it. It is given for labor, and for the products of labor and skill. The great centers of wealth are great money centers. If a man has monej', but engages in no re- munerative labor or business, those who la- bor for him will, in time, honestly obtain his money. Spain, possessed of the mines of Mexico and Peru, the richest in the world, became tlie poorest among the great nations of Europe; ''owing to the accumula- tion of estates in the hands of communities and noble families, and the predominant in- fluence of the Catholic priesthood, wl«ch for centuries had rendered that line king- dom little else than a cluster of convents surrounded by a hardy peasantry." (Ali- son's Hist, of Europe, vol. 1, p. 168.) DISTRIBUTION OF MONEY. 121 No matter how widely rnoiiey may be scattered, it returns to those wlio own the pi'operty, as naturally as running water re- turns to the ocean. It is in the order of na- ture that to "him that hath shall be given, and he shall have more abundance." That money may be g'^neially distributed among the people it is necessary that prop- erty, for which money is given, should be distributed. It is impossible that there should be an equality of property among a people free to act and possessing an equality of rights. If an equal division of the property of the countiy were made among the people, there would be great difference in the amounts which different persons would possess in a year afterward. In the old Jewish republic, the greatest possible ^precautions were taken that each family should possess a compe- tence. The land was divided among them. Every one had a farm, a homestead, in the country. If one was compelled to sell his in- heritance, he could alienate it from his family for only fifty years at the longest. At the year of jubilee debts were can- 123 FIRST LESSONS ON MONEY. celled and inlieritances restored. Yet in their palmiest daj/s they had their poor among them. But they had none, while the republic lasted, tnormously rich, and prob- ably none who suffered from poverty. All, while obedient to God, were in comfortable circumstances. It is better for the families and better for the country in every respect, that the farms be owned by the persons working them, than that one man own a county, and all the other men in it work for him. The few im- mense farms in the Northwest are a curse to the community in which they are situated. No pleasant homes are made. Schools and churches are not founded and sustained. The farms are worked by tramps and va- grants who leave the country as soon as the season is over, and they get their pay. The sole interest the owners feel in their farms is to make all the money off from them that they possibly can. They put on as little as possible and take off all that is possible. Grood order and general prosperity prevail in our cities in proportion as the business is DISTRIBUTION OF MONEY. 123 divided np among the inliabitants. Tiie greater the proportion of men who work for others, the greater danger there is of riotous disturbances. It is as ad- vantageous to the city, as it is to the ^country, to have the property and the busi- ness divided up among a large number of owners. In this country there are two strong rea- sons -why every provision consistent with the rights of all should be made for the gen- eral distribution of money among the peo- ple. First, OUT laws establish manhood suff- rage. In deciding who shall rule over us, one is given as much influence as another. The millionaire casts no mightier a ballot than the pauper. In feudal times, when one was made a lord he was given an ample do- main to maintain his dignity. So, now, those who determine what protection shall be given to property, should have some property to protect. When it gets to the point that one class of men vote taxes which another class of men are compelled to pay, the Government will be little better than a 124 FIRST LESSONS ON MONEY. legalized conspiracy against private as well as public property. Second, the State provides the means of education for all the people. It is expected that all born on American soil shall be en- lightened. Any one, no matter what may be his condition, may obtain, if he has the determination and the ability, a respectable education. It is often the case that the young man who works out, is better educa- ted than the man who employs him. His tastes and instincts are higher, A people thus educated, need money to purchase the comforts and conveniences of life which have become a necessity to them. Tliey cannot be happy and contented in a condi- tion of poverty that might be endurable by a people who never possessed their advan- tages. The Government, in giving the masses education, obligates itself to afford them all reasonable facilities for acquiring the competence which it has fitted tliem to enjoy, and to keep them from that biting poverty which it has unfitted them to en- dure. He who teaches the savage to gain his liv- DISTRIBUTION OF MONEY. 125 ing witli the plow and hoe, instead of with the bow and arrow, should render it possible for him to obtain the plow and hoe. If the nation educates the people so that good clothes and comfortable houses are a necessi- ty, then it should render it possible for them to obtain good clothes and comfortable houses. The very least that our Government can do, with safety, is to give to all its citizens, as far as possible, an equal facility for ma- king money. There should be no favorites; there should be none proscribed. France was able to put down her commu- nistic war,because the great mass of her peo- ple are property holders. It pays the Ger- man war indemnity, and thrives under it, better than Germany does in receiving it, because all her people have money. It has, as we have seen, more money in proportion to its population than any other nation in the world. There is, in France, compared with other nations, a remarkably equal distribution of property among her people. This is owing largely to the nature of her laws. 126 FIRST LESSONS ON MONEY. The tendency of our laws is in the oppo- site direction. Under their influence, the rich are made richer, and the poor poorer. There have probably been more vast fortunes ac- cumulated in the United States during the last quarter of a century than in any other nation of the world. This has been done under the operation of laws fostering it. The favor- able conditions created by law have contrib- uted largely to this result. All such laws should be changed. These ^ast accumulations of fortune in the hands of a few are detrimental and danger- ous to the people at large. They nre not obtained by honest industry or beneficent skill. The farmer who raises a thousand bushels of wheat, or the manufacturer who makes a thousand yards of cloth, adds so much to the actual wealth of the countr3^ But he who, in carrying their wheat to the market takes from each of ten thousand farmers ten bushels of wheat more than his services are actually worth, simply enriches himself at their expense. Thousands are de- prived of needed comforts that he may revel in luxury. Discontent and anarchy are DISTRIBUTION OF MONEY. 127 created. Now and then, riots break out as an indirect result of the unequal distribution of gains among thofr'e by whose labor they were made. The way is gradually being paved to a terrible, communistic war. All laws which specially favor the gaining and the holding of great fortunes should be changed. Among such laws are those relat- ing to 1. The gift of franchises. A company of men are given by statute the right to build a railroad through other men's lands. This right is one created by law. It is not one of t\iQJura natura — natural rights of mankind- It is an interference with the rights of many for the benefit of a few, under the plea that it is for the public good. It is conferred by the state by positive enactments, and should be regulated by the state. A rail- road or a ferry is not private property in the sense that a farm or a house is private prop- erty. All franchises given hy the state should he distributed hy the state. The men who make themselves rich from one fran- chise should not be allowed, out of its prof- its, to buy up others that come in competition 128 FIRST LESSONS ON MONEY. with it. For example, there should be a constitutioDal enactment which would pre- vent the owners of the New York Central Railroad from owning any interest in the Erie or the West Shore. Let the special privileges which the state gives be divided among many. Because one man has been given an advantage over the rest of the community that is no reason why he should be given another. When a sufficient amount has been realized from a franchise to pay for all that has been expended in rendering it productive, and a reasonable profit in addition, it should then revert to the state. Corporations created by the state, and endowed with special privi- leges by it, should not be allowed to go on, and out of the comm.unity at large, pile up wealth indefinitely for the individual bene- fit of those who may be in control. Such privileges are dangerous. They will make trouble. Already in some of the states it is said that the railroad corporations control the successive Legislatures, whether they be Republican or Democratic, in all matters affecting their interests, as absolutely as DISTRIBUTION OF MONEY. 139 they do their engineers and conductors. The change of the party in power does not change the policy of the state towards these wealthy corporations. Enactments are made giving them advantages which would be con- sidered as little better than grand or petit larceny in other kinds of but^iness. It is time that a stop was put to the making of laws in the interests of rich corporations against the common riglits of the people. The hard-working farmers in some of the most productive sections of our country are kept poor by the exactions of the raiboads on which they depend to get their produce to the market. 2. Joint Stock CoTnpanles. The laws creating and governing these popular com- panies appear to be made wholly in the in- terest of the rich and the unscrupulous. One who owns or controls a majority of the stock has as absolute control as if he owned the whole. He decides who shall be the officers and what shall be their salaries. He makes sales or mortgages at his will. A railroad is projected. People living along the line are urged to take stock. 130 FIRST LESSONS ON MONEY. Many do so. The road, when completed, is successfu]. But it Is mortgaged, ostensibly to raise money to pay floating debts. In due time it is sold under the mortgage, and the small stockholders lose every dollar they put in. It is said that the only ones who did not come out millionaires from building one of our great railroads were those who had paid up their subscriptions for stock. The inhabitants of a thriving town are persuaded that it would add greatly to the business of the place and to the value of the property in it, to have a smelting furnace, or a sewing machine factory, or agricultural works. All who can be, are influenced to take stock in the new enterprise. It succeeds even better than was expected. But those who have a controlling interest are not satisfied with their large sal- aries and large profits. They desire to ab- sorb the whole. They adopt a system of an- noyance which the laws render not only possible but easy, and compel the small stockholders to sell out on such terms as those having a controlling interest may dic- tate. In this way aged men and women who DISTRIBUTION OF MONEY. 181 had saved enough to make them comfortable and were anxious to make a profitable in- vestment have lost all their money. The laws governing joint-stock companies should be so amended as to protect the rights of small stockholders. 3. Stock Ganibllng. Many large for- tunes are made by manipulating stocks. But where one makes, many others lose. Where one becomes a millionaire, thousands are reduced to poverty. It is a great loss to to a country, when the sharpest, most far- seeing, capable men, instead of engaging in some useful pursuit, devote all their ener- gies to gambling. A man buys a million bushels of wheat to be delivered in three months. Neither of the parties to the transaction owns a bushel of wheat and does not expect to. When the time for delivering the wheat comes, if the market price is higher than it was when the purchase was made, the seller pays the dif- ference; if it is lower the purchaser pays the difference. The whole transaction is simply a bet that wheat will be worth so much at a given time. Stocks are bought in the same 132 FIRST LESSONS ON MONEY. 7 way. All such trading in margins should be strictly prohibited by law. 4. Monopolies. Brain work is entitled to its just compensation as really as manual labor. He who invents any thing useful should be recompensed for his invention. Hence, our laws on patents give to the pa- tentee of any article a monoply for its manu- facture and sale for a limited number of years. He can fix his owq price and shut out all competition. The profits on some patented articles are simply enormous. He who started poor becomes in a few years a millionaire. The same law that creates a monopoly should fix a reasonable limit to the amount that may be realized from it. When that amount is reached, the monopoly should terminate, and the public reap the benefit of tue invention. No unnatural facilities should be afforded by the law to take money from the many for the benefit of the few. In all ages monopolies have been a source of dissatisfaction and contention. Every thing tending to create or maintain a monopoly should be looked upon with a jealous eye. DISTRIBUTION OF MONEY. 133 "Monopolies." says Adam Smith, "de- range more or less the natural distribution of the stock of the society." \^ Wealth of Nations, p. 493.) • Many of the bad results of monopolies are produced by the combinations which at pres- ent are so popular. Nearly all the great pro- ductive industries of the country, except the agricultural, are combined. There is a sys- tematic interference with the law that prices should be regulated by supply and demand. Whenever this interference prevails, disas- trous results are sure to follow. The prices of manufactured articles are generally regu- lated by the arbitary agreements of the manu- facturers. The price of the article in question is put a little lower than it could be sold in our market if bought in Europe, and the amount which must be paid for duties and transpor- tation added. But little reference is had to its cost here. The workmen, perceiving that they do not have their share of the products of their labor, follow the example of their employers, and form combinations to secure larger prices for less labor. Fierce antagonisms are provoked, 134 FIRST LESSONS ON MONEY. and business derangements and family siif- erings follow. The actual cost of manufacturing goods in this counfry, under our present system, is such tiiat we cannot, to any great extent, compete with other nations where we meet upon an equal footing. But such are our natural advantages that we ought to be able to undersell all other manufacturing and commercial nations. We have water power sufficient to run all the machinery of the world. Our mines of iron an I coal are ap- parently inexhaustible, and are easily reached. Cotton, and wool, and 1 umber, and other law materials are produced in abun- dance. We can furnish supplies of food to feed all who come. Our great rivers, and lakes, and numerous railroads furnish every facility for cheap transportation. Yet with all these advantages, our trade with our next door neighbors in Mexico and Central Amer- ica and South America is small. They depend mainly upon Europe for their manufactured goods. We are pretty nearly shut out of the market of the world. This is brought about by purely DISTRIBUTION OF MONEY. 135 artificial means whicli have the effect of monopolies in raising prices above the nat- ural standard. As a result, our manufac- turers are obliged to depend almost wholly upon the home market. But the same cause limits the abilit}^ of the purchasers in the home market, to buy. Their purchases vv^ould be much larger if they had the means with which to pay. Suppose a dozen families live on a remote island, shut off from all communication with the rest of the world. One half of them are mechanics, and one half farmers. The me- chanics combine, and say that their labor is skilled labor. They will therefore require two days work of the farmer for one of their own. If this agreement is carried out, the mechanics must, of necessity, lie still half the time. There is no help for it. This is essentially the state of things in this coun- try. About one half the people are farmers. Every one of them could use a thousand dol- lars worth of goods a year if he had the means with which to buy them; but as he has not, he can get along with a much smaller amount. Those who make his tools, and furniture, 136 FIRST LESSONS ON MONEY. and clotli liave procured the enactment of laws that compel Jiim to buy his supplies of them. Then* by combining together, they compel him to give the product of two or more days of his labor for the product of one day's labor of their own. 5c et, as farms and factories are now carried on, the farm labor is of tne two, skilled labor. It takes a longer time to learn to run a farm success- fully than it does to learn to i uu a machine in a manufactory. On an average, the farmer gives more than two days of his labor to pay for one day's labor of the man who made the goods he buys. Hence this man must go unemployed more than half the time. It is unavoidable. Every autumn, it is confidently asserted that there is to be a revival of business because there is an abundant harvest. But business does not revive. Thousands go unemployed, a large portion of the time. There will be a comparative stagnation of business as long as these two conditions exist. First, wdiile the currency is being contracted from year to year. Second, while the equilibrium of prices is destroyed by artiticial combinations DISTRIBUTION OF MONEY. ISf which amount to a monopoly. We may have every other element of prosperity but while these two causes continue in operation the wheels of business will drag heavily. It is sought to justify these substantial monopolies on the ground that they are in tlie interest of our workmen, and are in- tended to protect them from competiiion with the pauper labor of Europe. But mo- nopolies are not intended for the protection of laborers. As Adarn Smith Justly says, "It is the industiy which is carried on for the benefit of the rich and the powerful that is principally encouraged by our mercantile system. That which is carried on for the poor and the indigent, is too often either neglected or oppressed." (Wealth of Nations p. 604.) The workingmen in th« woolen manufactories of England receive much bet- ter wages now than' they did when the im- portation of woolen cloths from nny foreign countiy was absolutely prohibited, and when, by the 8tli Eliz., chap. 3, "The ex- porter of sheep, lambs, or rams, was for the first offence to forfeit all his goods forever, to suffer a year's imprisonment, and then to 138 FIRST LESSONS ON MONEY. have his left hand cut off in a market town upon a market day, to be there nailed up; and for the second offence to be adjudged a felon, and to suffer death accordingly." (Ibid 507.) The best encouragement that can be given to manufacturers is to f uinish them with a plenty of prompt paying con- sumers. "Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer! The maxim is so per- fectly self-evident that it would be absurd to attempt to prove it. But in the mercan- tile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider produc- tion, and not consumption, as the ultimate end and object of all industry and com- merce." (Ibid p. 517.) - Monopolies, what- ever may be their form, operate against the welfare of the community at large. 5. Laws of Inheritance. In nations which have a hereditary nobility it is consis- tent that the heir to the title should be the heir to the bulk of the property. In England DISTRIBUTION OF MONEY. 139 the eldest son is the heir. The law that se- cures this is called "The law of Primogeni- ture. ' ' It originated under the feudal system, in the dark ages. Landed property was given to " men renowned in arms, and was held on condition of their rendering military services to their chief. When the father died, the eldest son was generally best fitted to take his place on the held of battle. "The eldest son," says the Hon. G. C. Brodrick, in "Law of Primogeniture," "therefore, was invested with his exceptional privileges under the feudal system, not because he was sup- posed to have any exceptional rights, but rather because he was supposed to be the most eligible for the performance of excep- tional duties." In England this developed into the Law of Primogeniture. By this law and that of "Entail," large estates are kept in the same families, especially in those of the nobility, from generation to generation. But such laws are not popular with the com- mon people. The writer last referred to says, "Rich capitalists who do not invest in land, or aspire to found a county family, seldom make an 'eldest son,' (that is chief 140 FIRST LESSONS ON MONEY. lieir) and of those who do indulge this am- bition, some prefer to buy a moderate estate for each of their sons. Still more habitually is equal division recognized as the dictate of natural equity by the great body of mer chants, tradespeople, and professional men, as well as by the laboring classes through- out Great Britain and Ireland; in short, by the middle and lower orders of society, 'divorced from the soil' in this country, and by the landless members of the upper oi'- ders." (Land Tenure p. 374.) The founders of our government were aware of the incompatibility of large heredi- tary fortunes with free institutions. They endeavored to guard against them by abolish- ing the Law of Primogeniture and the law of Entail. But experience proves that this is not sufficient. We need, in addition, some thing like the French law of succession. This law "limits the parental power ot testa- mentary disposition over property to a part equal to one child's share, and divides the remainder among the children equally." (Land tenure, p. 290.) If there are hve chil- dren, the property is divided into six parts. DISTRIBUTION OF MONEY. 141 In any event each of the five cliildren gets one of these parts. The parent can dispose of but one of these parts by will. This right, it is said, is seldom exercised. In France, the law also favors the transfer of land by purchase. <^ As a consequence of the law dividing es- tates upon the death of the owner, and the law enabling one to purchase land at but little cost for transferiing the title, the com- mon people hav^e generally become land owners. It is said that there are in England two hundred and fifty thousand owners of real estate; — in France, from four to five millions. The peo^^le are prosperous and contented to a degree not found in any other nation of Europe. ''Those who have stud- ied the condition of the French cultivators not merely in books, but in their own coun- try, and who have witnessed the improve- ments which have taken place in it and in their cultivation year after year, will proba- blj^ regard the number with a feeling of satisfaction. One thing, at least, is estab- lished by it, that propertj^ in land is, in France, a national possession; that the terri- 142 FIRST LESSONS ON MONET. tory of the nation belongs to the nation, and that no national revolution can take place for the destruction of private property." (LandTenure, p. 289.) Our laws should make provision for the breaking up of great estates upon the death of ti^ owners. The steady nim of our Gov- ernment should be to afford to all. every just and proper facility for acquiring a mod- erate competence. To do this, the whole bent of our laws must be unfavoiable to the acquisition of a vast amount of pioperty by any one person, and to the handing of it down unbroken from generation to genera- tion. CHAPTER XV. HOW TO MAKE MONEY. UT is a gross caricature of Christianity to represent that it teaches that happiness in the future worid is to be secured by neg- lecting the duties which we owe to our fal- low men in the present world. It teaches quite the contrary. It insists upon the faithful performance of all the duties we owe to others in every relation of life. Nor is the prohibition to lay up for ourselves treasures on earth any exception. We must provide for our own wants, so as not to be chargeable to any; but we must not heap up riches that can do us no good. "But if any provide not for his own, and specially for those of his own house, he hath denied the faith and is worse than an infidel."— 1 Tim. 5: 8. It is right, then for any man to secure a moderate competence. How ma^'- it be done honestly and in the fear of God \ 144 FIRST LESSONS ON MONEY. Perhaps a better business manual cannot be found than the book of* Proverbs. It contains practical directions which, if fol- lowed o\it, can hardly fail of securing suc- cess in business. We offer a few suggestions to those wlio would make money in a way consistent with their happiness in this world and in the world to come. 1. Do not aim, at getting rich Money is valuable, onlj^ as a means to secure some worthy end. It is useful, only because of what it can secure. Money is neither food nor clothing. Midas, at whose touch every thing turned to gold, was obliged, in order to keep from starving, to beg to have the coveted gift recalled. The favor of God, an upright character, good health, confiding friends, go farther than riches towards secur- ing happiness. These, money cannot buy. Not the slightest sacrifice of any of these should ever be made for the sake of making money. The aim should be to do our duty to God, to our fellow men, and to ourselves. If this is faithfully done, a competence will ordinarily follow in the order of events. But HOW TO MAKE MONEY. 145 if one bends his energies to money-making, he is in great danger of sacrificing something more valuable than money in order to obtain it. ''But they that will be rich fall into temptation and a snare, and into many fool- ish, and hurtful lusts, which drown men in destruction and perdition," 1 Tim. 6: 9. 2. Be diligent in business. Man was made for wT)rk. His constitution fits him for it. His health requires it. We have no right to place ourselves, or others, not even our children, in a condition in which there is no need of working. Those who make the pursuit of pleasure the business of life, are, as a class, both useless and unhappy. "Six days shalt t ou labor and do all thy work,"' is as binding as the other part of the com- mand, ''Remember the Sabbath day to keep it holy." "When I was a boy," said a successful merchant, "I was set, with another boy, to watch my grandfather's sheep on the moun- tains of Vermont. The other boy was in- tent on amusing himself. I had to look after the sheep. I complained to my giand- father. He heard me patiently and then 146 FIRST LESSONS ON MONEY. said, 'Never mind. You mind the sbeep and you will own the sheep.' 1 thought it over. What can he mean? I own the sheep? It seemed impossible. But I did. He gave me one. I added to it, and while I was yet a young boy I ovviaed a flock. I learned thus early that to own a business one must attend to the business." Let a young man of good ability work for others. If he is steady and industrious and looks faithfully after the interest of his em- ployers as if the business were his own, he will, in a few years, probably have an inter- est in the business. The wages which one receives are a second- ary matter. High wages do not of necessity furnish the means to own a home. Right around us are tine, costly farms, owned by men yet in their prime, who began by work- ing out by the month on a farm. They never received high wages. They began per'naps at ten dollars a month, and never received, except for a few days in harvest, over a dollar a day. While they worked out, their wages would not average that. But they were faithful. In a few years HOW TO MAKE MONEY. 147 tlie}^ saved enough to enable them to work a farm on shares. Tliey laid by enough to make a good payment down, and then bought a farm, and in a few years finished paying for it. Many a large business concern is owned by men who began in it poor. ''''He becometh poor that dealeth with a slack hand; hut the hand of the diligent maketh rich.'" — Prov. 10. 4. "Seest thou a man diligent in his business ? he shall stand before kings; he shall not stand before mean men." — Prov. 22: 29. 3. Be careful about going into debt. Never go into debt for any thing that will not stand as security for the debt, and which will not fuinish j^ou with means to pay it. Live within your income, no matter how small that may be. Wear the old hat, and the old coat until you can pay for a new one. If you are working for wages lay by some- thing regularly out of your wages. Ordi- narily you can do this, if you will. If you rent a house, buy one as soon as you have saved enough to make a payment, and then pay towards it every tfionth what you would 148 FIRST LESSONS ON MONEY. otherwise pay for rent. In such a case, it is not so much j^our^elf as the property that is incumbered with debt. Avoid all mere spec- ulations. Have nothing to do with stock gambling and dealing in margins. But it is proper, and often wise, to buy real estate if the income from it will pay interest and taxes, as it is altogether probable that it will rise in value. 4. Never become respoiisihlefor the debts of others. Many, who, by industry and frugalit}^ had laid by a competence, have in their old age, been reduced to poveity by in- dorsing for others. Mr. Forester and his wife came from England thirty years ago. He worked in a mill, bought him a pleasant home of a few acres,- and had enough money laid by so that they could live comfortably the rest of their days. He then retired from business. An old friend from the same neighborhood in England owned the next farm to his. They had been intimate for years. This old fiiend wanted him to sign a note of eight thousand dollars with him for three months. He yielded to his persuasions. The man for whom he signed had secretly HOW MA.KE TO MONEY. 149 put Ills property out of his hands, and the indorser had the note to pay. His home was sold on execution, every thino; that the law- could take was taken; and now, nearly eighty years old he gets such jobs to do as he can, and his aged wife goes out washing to keep from starving. My friend, Mr. Gilroy, was a prosperous farmer. His farm was near town, had been brought to a high state of cultivation and had become valuable. He had good build- ings and was out of debt. His sons were well educated young men, full of ambition and enterprise. They could not wait to get rich in the old, plodding way. They engaged in large busitiess enterprises, and got their father to indorse for them. They drew him in gradually; and then, to save what lie had risked, he risked more. In a few years thuy were all left penniless. The pressure upon him was too great, his health gave way, and he wentdown in sorrow to an untimely grave. If you wish to help a friend, by giving him a sum of money, do so, if you can afford to. But do not indorse for any one for an amount that you cannot lose without distress- 150 FIRST LESSONS ON MONEY. ing 3'oiirself or Others. In becoming security for another,yoa not only indorse his honesty,' but also his business ability, and often you take the risk for him as well as for yourself of having unfavorable seasons, and of having hard times brought on by artificial as well as natural causes. It is a risk that no one ought to assume. "Be not thou one of them that strike hands, or of them that are sure- ties for debts."— Prov. 22: 26. 5. Maintain good habits. The great enemy of the workingmen of this country is not the capitalist but the saloon keepei-. It takes but a little time to spend the largest salary or the laigest fortune at the bar and at the gambling table. Ex-Governor and ex-Senator Sprague of Rhode Island spent a fortune of twelve mill- ion dollars in twent3'^ years. From being an acknowledged leader in business, society,and politics, he became a poor, degraded, base sensualist. His drunken brutality drove from him his devoted, accomplished wife, daughter of the honored Chief Justice Chase. But other habits besides the drinking habit keep men in poverty. Theatre going, HOW TO MAKE MONEY. 151 costly entertainm'iits, cigar smoking and tobacco using keep many poor. "In early life," says a New York mer- chant, "I smoked six cigars a day, at six and a half cents each ; they averaged that. I thought to myself one day: Til Just put aside all the money I am consuming in ci- gars, and all I would consume if I went on in this habit, and I will see what it will come to by compound interest.' Last July com- pleted thirty -nine years since, by the grace of God, I was emancipated from the filthy habit, and the savings amounted to the en- ormous sum of $29,102.03 by compound in- terest. We lived in the city; but the chil- dren, who had learned something of country life from their annual visits to their grand- parents, longed for a home among the green fields. I noticed a very pleasant place in the country for sale. The cigar money now came into requisition, and I found that it was iarge enough to purchase the place, and it is mine. I wish all could see how my children enjoy their home." . You say you wish to enjoy life as you go along; but that is a poor kind of enjoyment 152 FIRST LESSONS ON MONEY. which undeimines the health. That tobacco does this has been sadl}" demonstrated. Says the London Lancet^ one of the ablest medical Journals in tjie world. "The influence of tobacco is apparently cumula- tive. A warning sense of excess in the use of tobacco generally comes too late." Only a few of the more resolute ones heed the premonitor}^ warning. Says Chauncy M. Depew, President of the New York Cen- tral railroad: "I was a conhrmed smoker, smoking twenty cigars a day, up to about a dozen years ago, when I gave up the habit, I now do not use tobacco. Twelve or thir- teen years ago I found myself suffering from indigestion, with wakeful tits at night, nerv- ousness and inability to submit to much mental strain. I was walking up Broadway, I took the cigar out of v[\y mouth and looked at it. I had smoked about an inch of it. A thought struck me. I had been reading a jrerman savant's book on the un health fulness of the use of tobacco. I looked at my cigar and I said, 'you are responsible for this mis- chief.' I threw it into the gutter and i-e- solved not to smoke again. For six months HOW TO MAKE MONET. 153 I suffeied the torments of the damned. I wanted to smoke but I resolutely lef used. My ajipetite meanwhile was growing better, my sleep was growing sounder and I could do more work. "I found the use of tobacco was affecting my physical system and I stopped it entire- ly and have not commenced it again and probably never shall.'' If you maintain good habits you will natuially keep good company. This has, in many ways, much to do with one's success in life. Said the gieat merchant already referred to, "When I began business for my- self as a merchant, according to the custom of that time, I went to New York to buy a bill of goods on credit. I reached there on Saturday, was invited by to stay with him over the Sabbath. I did so, and went with him to church all day, Monday morn- ing I started out to make my purchases. I found goods and prices that suited me, at a large wholesale house. I spoke to the proprietor of opening an account and offered to show him my recommenda- tions, of which I had a good supply. He 154 FIRST LESSONS ON MONEY. said he did not want to see them, — he was ready to trust me. "But," I urged, "I am a stranger in the city." "Did you not," he asked, "go to church yesterday with Mr. , and sit with him in his pew ?" "I did." "Any man who goes to church with Mr. , and sits with him, can have all the goods he wants out of my store on credit.' "I saw then that a man's credit is affected by the company he keeps." 6. Be willing to commence business on a small scale. Follow up great rivers and you will find they come from little brooks. Many of the large business enterprises of this country had small beginnings. The late A. T. Stewart, the great merchant prince, taught school until he earned enough to start a small store. He raised up a business that his successors, though trained by himself, could not carry on successfully. The Rem- ington Works, which, at one time, employed a small army of men, originated in a com- mon blacksmith shop. The founder ham- HOW TO MAKE MONEY. 155 mered out for himself at the anvil a gun- barrel of such excellence that others wanted him to make one like it for them. So many orders came in that he was obliged to construct machinery to enable him to fill them; and the works gradually grew to mammoth proportions. Many of our great papers were started by men who posessed a talent for hard work but had very little money. Horace Greely, a journeyman printer, without capital, found- ed the New York Tribune, and left it, when he died, worth one million dollars, Mr. Ben- nett started the New York Herald without capital, and was its sole editor, reporter and business manager, and now it is said it could not be bought for five million dollars. The Philadelphia Ledger was started by three workingmen whose capital was their intelli- gence and industry and they thus founded a newspaper concern worth, it is said, three million dollars. 7. Be benevolent in the use of money. It takes but little to supply the wants of one. A man is never fully a man till he be- gins to care for others. 1/6 FIRST LESSONS ON MONEY. Systematic benevolence aids one to be sj^stematic in business and tlms in itself it contributes to success. "There is that scattereth, and yet increaseth; and there is that withholdeth more than is meet, but it tendeth to poverty." — Prov. 11: 24. Baron Rothschild had the following max- ims framed and huna' up in his banking house: "Attend carefully to the details of your business. Be prompt in all things. Consider well, then decide positively. Dare to do right. Fear to do wrong. Endure trials patiently. Fight life's battles bravely, manfully. Go not into the society of the vicious. Hold integrity sacred. Injure not another's reputation or busi- ness. Join hands only with the virtuous. Keep your mind from evil thoughts. Lie not for any consideration. Make few acquaintances. Never try to apx)ear what you are not. Observe good manners. HOW TO MAKE MONEY. 157 Pay your debts promptly. Question not the veracity of a friend. Respect the counsel of your parents. Sacrifice money rather than principle. Touch not, taste not, handle not intoxica- ting drinks. Use your leisure time for improvement. Venture not upon the threshold of wrong. Watch carefully over your passions. Extend to every one a kindly salutation. Yield not to discouragements. Zealously labor for the right. Success is yours." To these maxims add John Wesley's three rules: 1. Gain all you can. 2. Save all you can. 3. Give all you can. CHAPTER XVI. CONCLUSION. ^'HE money question is one that every 7 intelligent American citizen who aims to cast a conscientious ballot should endeavor to understand. It is in his power to compre- hend it and he should give it a careful, can- did investigation. 2. All money, no matter of what materi- al it is composed, is constituted money by the supreme authority oi the land. IN either silver nor gold, until it is duly coined, is money, any more than farms, or cattle, or dia- monds are money. Any one may buy them that chooses, but no one is obliged to take them in payment of debt. 3. Both gold |and silver should be used for making our metallic money. To stop the coinage of silver would act oppressively upon every class in the community except credi- tors. It would double the value of all debts, ^National, State, municipal, and private, and CONCLUSION. 159 would cause a general derangement and prostration of business. In its effects it would be legalized robbery. No limit should be put upon the coinage of silver any more than upon that of gold. But no nation which has depreciated the value of silver in the general market by demonetizing it should be allowed to take advantage of our continu- ing to coin silver and so get a higher price for the silver it has to sell than it will bring in the market of the world. This they might do under a system of "free coinage " Be- tween the years 1873 and 1879 German}^ sold 8220 tons of siber. But as our government buys the silver which it coins, at the market price of bullion, England and Germany can .get no more for their silver here than they can elsewhere. They cannot, as far as we are concerned, take advantage of their wrong. As they can get no more for their silver here than they can elsewhere, we are in no danger of any great influx of silver from those coun- tries. 4. All paper money should be issued by the National goverhment. The amount which it may issue should be restricted and 160 FIRST LESSONS ON MONEY. kept within sucli limits that it will always be as good as gold or silver. The Govern- ment should issue paper certificates for all the gold and silver, either in coin or bullion, that ma\^ be deposited with it. 5. There should be an ample suj)ply of money to meet all the wants of the people. Nothing but money should be allowed to possess the attribute of money. An end should be put to the countless villainies that aie practiced by reason of giving to evidences of indebtedness a degree of validity in the hands of third parties which they would not possess if held by those to whom they were given. 6. Our laws should make it difficult for one man to amass a vast fortune and keep it in his family from generation to generation. The property of the country should be held by the people at large. 7. The people should see to it that their representatives in Congress pass laws in their interest, and not in favor of the moneyed class and rich corporations to the injury of community generally. "Eternal vigilance is the price of liberty.'" . UNIVERSITY OF CALIFORNIA AT LOS ANGELES THE UNIVERSITY LIBRARY This book is DUE on the last date stamped below mRz5m UC SOlJTHtKN HtblUlNHL L Dn"m AA 000 601 502 8