, 1892-10-01
WHAT is MONEY?
Lucid Analysis Of an Abstruse
Problem.
Information of an Especial In nterest
to CamPaigners-Diff Be
tween Gold and silVer-Danger
of Fiat Money.

|
to CampaIgners-D Be
tween Gold and SilVer-Danger
of Fiat Money.
In view of the prevailing discussion of
the money question the following analysis,
prepared for THE TRIBUNE by Professor M.
G. Royal will be read with interest:
What is money! Money is a legalized
measure of value and medium Of exchange.
1t is measure of value, in the same sense
that yard stick is a measure Of length, a
gallon is a measure of capacity or pound
is a measure of weight. 1t is different
/ from these measures, however, in that 1t is
circulated as a medium of exchange, or in
other words, it is that for which all other
articles are exchanged.
As a measure Ofvalue, money must pos
sess real or intrinsic value, or represent
something having that value, and be read
lily convertible into that thing of value.
Just as the measure Of length must have
in some degree the quality of length, the
measure of capacity the quality Of capac-
| ity, the measure of weight, so the measure
of value must have value.
Gold and silver, as precious metals, have
used for money through all ages, except
when debarred from such use by their
scarcity, as in early colonial times when
bnG V lIBlQld GOlOHlbbb uo6u bOUuCCO lOI a
circulating medium, or among saYages,
who in America used wampum and in
parts of Africa use small brass rods. There
is another instance on record noteworthy
in this connection, that of an Olden king,
who, reasoning that because. of the inOrdi-
nate love of his subjects for the shining
metals. ayarice and attendant evils were
increasing, he would relieye the situation
by coming iron, that all might be rich.
When this was done all were rich for they
had tons of money; all were poor for their
money was worthless.
In attempting to find some suitable ma
terial for use as money, we soon discover
that it is impossible to find any substance
that has a permanent and unvarying value
in the markets of the world. The we'll
known law of supply and demand causes
fluctuations in values so that commodity
worth today ninety cents, may be worth
100, more or less, tomorrow. The civilized
nations have adopted and used the precious
metals as money, for the reason that they
are the commodities which through all
time have huctuated the least in value.
If. then, for any cause there should be
sudden and enormous increase in the
worlds product of either, that metal
which is thus suddenly thrown upon the
market would begin to lose its value, and
thus according to natural law begin to
be untitled for use as money. This may
be illustrated in our own history.
In 1874 when the annual production of
gold and of silver in the United States was
nearly equal. the gold and the silver dollar
circulated side by side at par. In lS49, go,
81, '52 and SO the production of gold sud
denly increased from ten million dollars
annually, to sixty-hve million. What
effect did that have upon the gold dollar2
It became Deprecated and it took SlO5 in
gold to buy 500 in silver as late as 1859.
On the other hand, in 1860 the silver pro
duction was only 100000 per annum, but
it suddenly rose from that amount to $780,
900, 900 in 1873, exactly equalling the gold
product for that year, and the two dollars
were again at par Since that time, the
silver product has increased enormously,
until in 1890 it reached $70000,0 900 to $780,
900, 900 of gold. What effect did it have on
the silver dollar2 1t deprecated in value,
so that in 1890 its actual value was only
eighty-two cents. AT the present time our
silver dollar is deprecated COIN
Then why does it pass at par with gold
Because the United States treasuryis is hold
ing it up to par by paying the silver certif-
icates in gold. These silver certificates are
only promise to pay in silver, but they
are being redeemed in gold. Only short
time ago an importer brought to the treas
ury 81 900 900 in silver certificates and de-
manded gold for them. 1t was promptly
paid. Now, if he had been compelled to
take silver at the market price and buy
gold at the market price, the silver paper
and the silver dollar with it, would rapidly
depreciate in the hands of the people. How
long this condition, with silver rapidly fall
ing in price on account Of increased pro-
duction, and $115,000,000 in gold in the
treasury to meet 1926, ,0O0, 900 OfOutstanding
certificates, who can sayR
The scarcity of the precious metals and
their bulkiness make them very inconVen-
lent for use in large money transactions.
q tayp nf pWChanDng
are made by means Ofpaper representatives
of value. These are the gold note, the
| bank note, the silver certificate, the green
back, and checks, drafts, bills Of exchange,
etc., 95 per cent. of our entire entire busl-
ness being transacted without money or
currency Of any kind. What gives these
papers these papers their value2 The fact
that they are to be paid in coin gives them
/ their value. Let any Well-founded sus-
| picion arise that these papers or any
| part of them will not be paid in coin or
| its representative and depreciation will
at once set in. Nobody will want
! that which is not to be redeemed; nobody
will take it if he can help himself. The pa
per has lost its desirability. A legislative
act might call it legal tender, but no enact
ment could make a man work for 1t or
sell his goods for it. All goods, such as
coffees, teas, etc., from foreign countries
must be paid for in gold. All our dealings
with foreign nations must be in the worlds
standard of gold.
The coolie that cultivates our coffee for
us demands his wages in gold. Our gums
and our spices, gathered by dusky bar
barians, are sold for gold alone, and shall
the product of American toll, and the
wages of American freemen be measured
by deprecated currency2
Our experience with deprecated money
during the dark hours of the revolution
and the rebellion should lead us to a cor
rect and patriotic conclusion.
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