The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1878-10-11
FIAT MONEY.
(Contiuuod.)

currency nc Circulating mouium' n o'"e'S'
OF Mill who is familiar with the fiat money
craze" can hut be astonshed at the close appli-
cation which his writings on this subject have
TO tue doctrines which are taught to the people
Of this country by the disciples OF this new
gospel OF finance Indeed, had he been gifted
with the spirit OF prophecy, and could he have
foreseen just the present financial condition OF
this eouulry. aud had he written for the express
purpose OF controverting the doctrines OF our
greencaek friends, be could scarcely haye made
a stronger argument for their overthrow than
Is found in the chapter Of Lis work devoted to
the subject OF an inconvertibls currency; and
vet Dir. Mouton bases his whole argument on
Mill. and ereenbackers in the same breath
shout Hurrah for Moulton and for Mill.
But let us see just what Mill says on this
subject We quote from chapter -, vol. of
" Mills Political Economy" beginning on p. 80:
AFTER experience had shown that pieces Of
paper OF no intrinsic value, by merely bearing
upon them the profession Of being equal to
certain number of francs, dollars, CT pounds,
could be made to circulate As such, and to pro-
duce all the benefit to the issuers which could
have been produced by the coins which they
purported to represent; governments began to
think it would be happy device il they could
appropriate TO themselves this benefit, free
from the condition to which individuals issuing
such paper substitutes for money we're subject.
OF giving, when required, for the sign, tue thing
IL. .l.ost. Al.
could not emancipate themselves from this I'M
pleasant obligation, and make piece Of paper
issued by them pass for pound, by merely
calling it pound and consentng to receive it
IN payment OF taxes And such is the influence
OF almost all established governments, that
they lave generally succeeded in attaining this
object; 1 believe might say they have always
succeed for time, and the power has only
been lost to them after they had compromised
it by the most fragrant abrse.
In the case supposed, the functions of mon
ey are performed by thing which derives Its
power OF performing them solely from conven
ton; but convention is quite sufficient to con-
fer the power; since nothing more is needful
to make person accept anything as money,
and even at any arbitrary value, than the per-
suasion that 1t will be taken from him on the
same terms by others
will recognize the last few sentences quoted as
the ones read by him and on which he builds
up his wonderful theory Of " fat money! Had
Mr.. Mill left the subject here, Moulton's argu-
ment might have possessed certain degree Of
plausibiity and candor, but he was very care
full not to quote farther and it was well for his
theory that he did not. But to continue our
quotation:
We have seen, however. that even in the
case OF metallic currency, the immediate agency
in determining its value Is its quantity. II the
quantity, instead OF depending on the ordinary
mercantile motives OF profit and loss, could be
arbitrarily fixed by authority, the value would
depend on the fiat of that authority, not on the
cost of production. The quantity OF a paper
currency not convertible into the metals at the
option OF the holder, can be arbitrarily fixed,
especially IL the issuer is the sovereign power
Of the State. The value OF such currency is
therefore entirely arbitrary.
Suppose that, in country Of which the cur
rency ID wholly metallic, paper currency Is
suddenly issued, to the amount of half the
metallic circulation not by banking estab-
lishment, or in the form OF loans. but by the
government, in payment OF salaries and pur-
chase OF commodities. The currency being sud
denly increased by one-half, all prices will rise,
and among the rest, the prices Of all things
made OF gold and silver. An ounce OF manu-
featured gold will become more valuable than
an ounce OF sold coin, by morelthan that GUS
tomary difference which compensates fer the
value Of the workmanship and it will be prof
liable to melt the coin for the purpose OF being
manufactured, until as much has been taken
from the currency by the subtraction OF gold,
as had BEEN added to IT by the issue OF paper.
Then prices will relapse to what they were at
first, and there will be nothing changed except
that paper currency has been substituted for
half OF the metallic currency which existed be-
fore. Suppose, now, second emission of pa
per the same series Of effects will be renewed
and so on, until the whole OF the metallic mon
ey has disappeared that is If paper be issued of
not, as much Will remain, as convenience re-
quires for the smaller payments. The addition
made to the quantity of gold and silver dlspos-
able for ornamental purposes, will somewhat
reduce, for time, the value OF the article: and
as long as this is tho case, even though paper
has been issued to the original amount OF the
metallic circulation. as much coin will remain
in circulation along with it, as will keep the
value OF the currency down to the reduced val
ne of the metallic material; but the value hay
ing fallen below the cost OF production, stop
page or diminution of the supply from the
mines will enable the surplus to be carried off |
by the ordinary agents Of destruction, after
which, the metals and the currency will recover
their natural value. We are here supposing,
as We have supposed throughout, that the coun-
try has mines of its own, and no commercial
intercourse with other countries for. in q coun- |
try having foreign trade, the coin which is rem
dered superfuous by an issue Of paper is car
RED of by much prompter method.
Up to this point, the effects of paper cur |