The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1870-07-02
A New Monetary System,
II I'd " NhU NJ LLVWua
PART II.
A TRUE MONETARY SYSTEM.
CHAPTER III.
By EDWARD KELLOGG.


currency upon the prosperity Of countries
having materials for the formation Of either.
Suppose two fertile islands to exist, each
containing a silver mine as productive as the
average of those now worked. Two parties,
Of a hundred thousand settlers each,
emigrate to these islands, taking with them
implements of husbandry, stock of cattle,
merchandise, tools, etc, and provisions fosA
year, in procuring which they nearly ex-
haust their money Arrived at their
respective destinations, they locate their
lands, ETC., and each party begins to make
exchanges among its members. The want
Of money is soon severely felt The inhabi-
tants of one island determine to have a
metal currency, and accordingly prepare
TO work their silver mine One-ffth Of the
whole population. T. e., twenty thousand,
are men capable Of labor. Three thousand
engage in working the mine, end with their
families constitute a population Of fifteen
thousand, who consume the products Of
Others Suppose each man to earn or
make half dollar day; total 10 year four
hundred and fifty thousand dollars. This
sum being exchanged by the miners for
food, clothing, ETC., goes into immediate
circulation. 1t will require nearly three
years to supply the money necessary for
their internal exchanges, say Sl2 for each
inhabitant, 1. G., $1.2OO,000 and during
this period money must be very scarce. The
shipment of any specie abroad to pay for
goods, will increase the want Of money at
home. Suppose the population to increase
three per cent, that is, three thousand a
year, they must continue to mine $50, 900
yearly, to maintain the proportion Of $12
to each individual.
The inhabitants Of the other island deter
mine not to work their silver mine, but to
establish Safety Fund, and lend the paper
money, as heretofore stated. All have the
opportunity to borrow to one-half the value
Of their productive land. This money costs
nothing but the comparatively trifing labor
Of the paper and engraving. If a surplus
be in circulation, its owner can at any time
pay of a mortgage to the Fund and stop
the interest, or fund the money and receive
interest. The exact amount required Will
always be in circulation, and the interest
z being regular, the value of the money will
be invariable.
The difference between the labor to mine
and coin the silver money, and the labor to
make and engrave the paper money, will be
a clear saving to the island using the paper
money and all this difference Of labor can
be applied to the production of articles for
export. The island using the paper
money con export about as great an amount
of products as the other island will coin 10
money. If the latter island require the PRO
ducts of the former, and exchange coins for
them, the former island will use the silver
money for manufactures, or for export; it
cannot need them for money. If the Fund
lend at one and one-tcnth per cent. interest,
the island will always have an abundance Of
money at a low and uniform rate, so that
every branch Of industry can be carried On
to the best advantage, and the property will
be distributed to those whose labor shall
earn 1t. But the business and produc-
tive industry of the island using coins will
be constantly retarded for want of money,
and the high and fiuctuatiDg rates of interest
will inevitably concentrate the wealth in the
hands of few capitalists and leave the pro-
ducers in poverty. The people of the
island using the paper currency will be rich,
virtuous, and happy, while those using the
silver money will be poor, wicked, and
miserable, because poverty and avarice will
lead to crime If the two islands, instead
Of trading with each other, maintain trade
with other nations, it must be obvious that
the one using the paper money will have a
great advantage over the one using the
silver money.
Suppose tho same number of emigrants I'd
settle on a third island, and borrow their
whole currency of foreign nation, say 81 :.
100000 in gold, silver, or paper money, a.
an interest Of eight per cent. per annum,
payable half yearly. Iftheir imports equal
their exports, and they be obliged to issue
bonds every six months at eight per cent.
to pay the interest, in tihy.three years tht
island will become indebted to foreign
nations $64,00O,OOO S63,O0O,0OO ii
which will be the interest on the 81 ,O0O.-
600 originally borrowed. The people must
lose this amount in consequence Of defective
legislation. If the emigrants through their
government establish Safety Fund, and
provide their own currency, instead Of im-
porting it, they will save the whole interest,
besides having great advantages by the
abundance Of money.
Paper money can be as easily made to
exceed coins in value, as coins to exceed
paper money, because the value Of all money
is governed by the per centage interest. Let
the Safety Fund lend paper money, and
fund it with Safety Fund Notes bearing six
per cent let it lend coins and fund
them with Safety Fund Notes bearing but
four per cent, and the paper money will al
ways be the more valuable, and command a
premium in exchange for the coins. The
paper money will as certainly command a
premium above the coins, as a ground rent
at six per cent. will command more than at
four per cent. If this nation had a sufi-
Gent quantity of specie for a currency, il
would still be necessary to have an insttu-
ton similar to the Safety Fund; for the H.
terest upon it could only be kept regular by
the establishment of an institution to make
loans at a uniform rate Of interest whenever
good security was offered, and to fund the
specie whenever it was redundant.
A government may obtain an immense
power over the property Of the people by
furnishing paper currency at six per cent.
interest. Suppose our Government to es-
tabllsh Safety Fund, and make its paper
money the only tender in payment Of
debts. Let the Safety Fund lend an
amount equal to say 81 to each inhabtant
for a population Of 10000, 900, thai Is
100000. 600, and money would become
plenty. This sum lent on double ~
amount Of landed estate, would cover 5000
100000 worth of property. If the Govern
ment should lea ne the principal outstanding