Staunton spectator. [volume] (Staunton, Va.) 1849-1896, 1878-03-12

- For the SPECTATOR.
Some TIletghts about Money, Banking
| se shi and Currency.
There is hardly any subject upol
Whlcn such erroneous opinions prevail
as money. Many persons contour,
money with actual value. They seen
to think that when there is plenty o
money in circulation, wealth and pros
perity must, necessarily, exist. This il
grave mistake. Money is merely thu
measure Of ydlue, as the yard-stick, the
pound weight, or the bushel, is tn,
measure Of quantity. Our paper cur
rency has no intrinsic value. But q!
the representative or measure of value
it is greedily sought after. Gold ant
silver have certain intrinsic value, bu1
that is an entirely different thing from
their value as medium of exchange
Money is mere tool or implement, By
which the business of commerce is car.
ried on; as the hammer, the saw, the
auger and the plane, are the tools by
which 4he lrpenter carries on his trade
Labor is the produce of all actual val.
ues. Capital is the accumulated fruit ol
labor. Gold and silverare worth exact.
ly the value of the labor which it costs
to mine them and prepare them fol
market. So when they are mined and
prepared for market, they will command
the equivalent in labor, or the produc-
tions OF labor, of the amount Of labor
which was required to dig the ore, re-
line the metal, and maintain the labor
ers while they were engaged in getting
them ready for market.
In primitive times, all trade was car
ried on by bartsr-by the EXCHANGE of
one commodity for another. If it re-
quires given amount of agricultural
labor to produce one hundred bushels
OF wheat, and an equal amount of me-
chanical labor to build a wagon, then
the wheat is worth as much as the wag-
on, and one could be fairly exchanged
for the other. So, if it costs as much
labor to produce one fat OK as it does to
produce twenty fat sheep, the OK is
worth as much as the twenty sheep, and
the man who had more oxen than he
needs may barter his OK with the sheep
raiser for the twenty sheep which he
wishes to part with.
This sort of exchange, or barter, of
one commodity for another, was found
to be inconvenient in practice; for un-
less the owner of the OK could find some
sheep-raiser who had the twenty sheep
to spare, and which he wished to ex-
change for an OK, no trade could be eff
fected. 1t might happen that he could
find man with ten sheep which he
wished to exchange, but as they would
not be fair equivalent for the OK, and
as the OK was indiyisible, the trade could
not be effected.
With the advance of civilization, q
standard of measure of value was agreed
on by the common consent of the world.
1t was necessary that this standard or
of value should possess certain
viz: 1st, stability; End, in
destructibility; 3rd, divisibility. Gold
and silver were found to possess these
qualities in higher degree than any
other commodities, and hence they were
adopted. For greater convenience, gov
ernments undertook to coin these metals
into pieces of different size and value,
so as to meet the wants of trade. The
coinage by the government was neces-
sary also to give assurance that the coin
contained the quantity of metal which
1t purported to contain, and of the prop
er degree of purity. Thus we have the
dollar, which is the fair equivalent of
one days labor, because it would re-
qulre, ON an average, one days labor in
the mines to produce silver enough to
make a dollar. Gold being found in
smaller quantities than silver, and the
labor necessary to find it, to mine it, and
to prepare it for market, being ascer-
tanned to be about sixteen times as much
to produce pound of gold as a pound
of silver, gold has sixteen times as much
value as silver. If an ounce of silver is,
therefore, fair equivalent for one days
labor, an ounce of gold is estimated to
be the equivalent of sixteen days labor.
For the convenience of business, we
have coins of different values and diff
ferent denominations.
AS the business operations of the
country increased, it was found to be
very incOnvenient, as well as hazardous,
for men to carry about them large
amounts Of coin, and Banks were in
troduced. Originally, men deposited
their coin in Bank, and received a Ger
tificate that they had deposited SO much
CON, subject to their order, in Bank
This certificate thus became the repre-
sentative of so mach coin in the Bank,
precisely as the miller's receipt is the
of so much wheat in his
mill. When the holder of such certif-
cate wished to part with his coin, in
stead of going to the Bank to draw the
ooin, and hand it over to the person to
whom he proposed to transfer it, he
would endorse or assign the certificate
to him, and the assignee or transferee
would thereby become the owner of the
coin, and entitled to draw it from the
Bank.
The next step in Banking, was for
persons having more money than they
could use in their business to unite as
stockholders, and put given amount
of money in Bank and then issue GER
tificates or Bank notes as the representa-
tive of that money, payable to bearer,
certifying that upon the production Of
that certificate or note of the Bank, at
the office of the Bank, the Bank would
pay him in coin the amount specified
in the note of the Bank. Thus, origi-
nally, every Bank note was the repre-
sentative of actual money in the Bank,
and entitled the holder to draw it out at
pleasure. But, unfortunately, the State
Banks formerly were allowed by their
charter to issue more certificates or notes
than the money in their vaults would
redeem. These notes, therefore, did not
represent actual money. They were
mere promises to pay. They were in
effect substitutes for money. rather than
the actual Representatives. of money. AS
long as times were prosperous and cons
fidenoe was unshaken, these netes,
which were mere promises to pay by
the Bank, instead of certificates of de-
pesit in the Bank, were quite as current
as if they had been founded on actual
value. But when confidence was de
stroyed, and the holders of the notes
called for the money which they were
supposed to represent, the Banks could
not pay and were obliged to suspend
Farmers will readily understand the
difference between miller's receipt fol
so much wheat actually delivered in the
mill and premissory note of miller
by which he binds himself to deliver tC
the holder SO much wheat after harvest
or at sons other time. In the one case
the paper represents wheat actually de
livered and to be accounted for. In th,
other, it is a mere executory promise
representing NO actual delivery O
wheat, but mere promise which rest.