The comet. (Johnson City, Tenn.) 1884-1916, 1895-10-17
Two Kinds of Money.

thing is adopted by the people as II com
mon measure of the worth of cOmmodi-
ties, it performs the office Of money.
two Kinds of Money.
There are two kinds of money. One is
standard money, by which term we mean
independent money, the purchasing pow
er OF which is determined by the value
of the substance out of which ii is made;
and the other is dependent money, the
purchasing power Of which is by law
made equal to that of standard money.
1t is therefore necessary, in order to have
clear conception of our monetary Sys-
tenn, to understand the difference be-
tween standard and all other kinds of
money.
Standard Money,
Gold is the standard money of the
United States, ANA has been for many
years. Let us see why it is entitled To
this dignity. We cannot do tins better
than to describe the essential features of
the gold dollar 1t is composed of u sub
stance which has Il fixed and known
value in the OpeE market 1t would be
useless TO discuss t. what extent the use
Of gold as money has contributed to its
value as Il commodity, The truth is that
1t has Il known CONNER cial value, and
it would be a waste of time to speculate
why it is so.
sIhe law prescrtbcs chat 2322 grains of
pure gold snail be amalgamalvd with
lbs grains of base metol in order to
harden ii, making -o.S grains of what
is called standard gold, and that this
shall constitute aegold dollar The legal
gold coins are multirles Of this unit. The
gold COINS contain respectively two and Il
half, five, ten and twenty times as much
standard gold as the dollar.
The coinage of gold is free; that is
to say, the owner Of gold bullion, who
ever he may be, has the lawful right to
take his refined gold bullion to the mints
and there have it compd into money
without cost to him. The government
makes no charge for selgniorage, Again,
the coinage Is unlimited that is to say,
all the people in the world have the law
iul right to take all tie gold bullion they
may OF can acquire 10 our mints and
there have it converted into American
money, Then again, the gold coins are
a legal tender in payment of all publi:
and private obligations. They are so
stamped as, to make them distinguish
able as'American money, and are difficult
of imitation,
These being the essential features of
the gold dollar, il is very plain that it
does not and cannot have purchasing
power greater than the value of the sub
stance out of VIII. oh it is made As the
refined bullion may be converted into
coin ut the pleasure of tine holder, it
| necessarily follows that the purchasing
power of the coin and the value of the
bullion which compOses it are practically
the same, People are mistaken who as
sumo that the legal tender quality which
attaches TO gold coins fixes their pur-
chasing power The law does not pretend
to fix the value of the substance, or the
purchasing power of the COINS. 1t says
that the dollar shall contain so much
gold, and flat dollar so constituted
| shall be u legal tender in the payment of
| debts. 1t is not the stamp of the gov
ernment which is made legal tender,
| but the number of grains the coin con
| tains. If the coin has lost by abrasion
or otherwise any part of it's weight. it is
| not legal tender. A twenty-dollar gold
! piece is il legal tender in the payment of
! of twenty dollars because it purports to
contain twenty times 25.S grains of stand
ard gold; and should it, when weighed
fall short, it would not be legal tender
| for that amount. In all large transac
tons the coins are taken by weight, and
not by count, In the transaction involv-
! Ing the last sale of bonds the Secretary of
! the Treasury expressly stipulated that
the gold should be received by weight
! Hence it is that a jeweler would buy
either the gold coins or the gold bullion
indifferently for purposes of his trade
because the same amount of gold would
command the same price. without regard
to whether it was in the form of bullion
or money. Melt the gold coin down into
bullion and it does not lose any of its
value
Therefore it is demonStrable that the
purchasing power of gold coins is equa
TO the commercial value of the gold out OF
which they are made, and gold is the
standard because this is so Otherwise
it would not be independent money
Without regard to any other form OF
currency, it has fixed and uniform pur
chasing power equal to the market value
of the number Of grains which enter int
its composition. Double the number Of
grains in the gold dollar, and you ex
actly double its purchasing power; reduce
the number of grains One-half, and it.
purchasing power will be diminished ex
Octly one-half.
In countries where silver is STANDARD
money the same rule applies. The Mexi
can silver dollar contains 377A grains Of
pure silver and its purchasing power i,
determined by the commercial value O.
that amount of silver. You will see il
the morning papers that Mexican dollar,
are quoted at 53H cents, and that mean,
that the bullion in the Mexican dollar /,
worth that amount in our money
1t is legal tender money also
in Mexico, but that does no
contribute to its purchasing power b,
any means, 1t Is the number of grains o.
which it is composed which is made
legal tender, and it is the value of tn
grains which determines how much TIN
Mexican dollar will buy.
So the rule is universal, and applies t
all countries alike, whether gold or silve
be the standard. Everywhere STANDARD
money is independent Of all other money
and its purchasing :-sEer is co-extensiv
with the value of the substance out 0
which it is made. Free, unlimited an,
independent coinage is the essential char
acteristic of standard money, and when
ever either gold or silver is denied thi
attribute it ceases to be the standard o
value, and becomes a subsidiary or dc
pendent currency, or ceases altogether t