The Madisonian. (Virginia City, Mont.) 1873-1915, 1895-08-31
THE MONEY QUESTION.
A Key to the Financial Situa-
ton.
HON. JOHN P. JONES ON FINANCE.

HUN, JUHN r. JUNES UN flNANCE.
The Quantitive Theory of Money-valre
of Dollars as Compared to the Number
Issued-If Money Were of Unlimited
Quantity. 1t Would Have No Value.
Political economy has been called
fthe dismal sciunce." The most dismal
branch of it, if men are to endeavOr to
force conclusions to fit some precon-
ceived theory without reference to prin-
ciples, is that which relates to money.
The persistent determination to make
the whole science subordinate to the alb
suraities Of the gold standard has oper-
ated like d Westinghouse brake on the
progress of the civilized world.
But there is one principle of monetary
science that, if held steadfastly in view,
will constitute an unerring guide
through what would otherwise be a path
of inextricable difficulty.
That principle is that the value Of the
unit Of money i'll any country is deter
mined by the number of units in circu-
1ation. In other words, the value of ev-
cry dollar depends on the number Of
dollars out.
The greater the number of dollars out,
other things being equal, the less will
be the value Of each dollar; the fewer
the number out, other things remaining
the same, the greater the value of each,
and this without any regard whatever
to the material Of which the dollars are
composed. This is the key to the fnan-
cial situation in the United States
Much more, it is the key to the financial
situation in every land. Without this
key it is in vain that the student at
tempts to unlock the door leading to the
rcanum Of monetary knowledge. IN
like many Of the locks made by man,
the lock on that door is unpickable.
The household of science is one that
thieves cannot break through and steal.
He who would enter must first find the
key. With this key in hand, the most
secret recesses may be explored with
confidence. Without it, the student trav-
els in a circle, returning after much la
Dor to the point from which he started
upon his journey. Like II in a maze,
when most confidently expecting to find
his way out he but sees himself coming
up against impossible barriers.
If money were unlimited in quantity,
it would have no value whatever. Moth
ing has value that is unlimited in guam
tity. If instead of sand the ocean beach
were strewn with gold dust, it would
have no value whatever as a commodity.
Yet if that gold dust were taken up and
coined into pieces Of money, the number
of such pieces being limited, they would
have value precisely Is goldpieces have
value today. And, ON the other hand, as
Adam Smith says, if gold should reach
a certain degree of scarcity, the slightest
bit Of it might become as valuable as 6
diamond.
So absolutely clear are the leading
writers that the value Of money unit il
in every case, other things being equal
determined by the number of units GU
and does not depend on the material O.
which tho money may be composed thai
they have not the slightest hesitation il
asserting that the rule applies ever t,
uncovered paper money, SO that the valu'
of every dollar of gold and silver in Cir
~culation is diminished or increased &C
'cording as the quantity Of paper mono,
is increased or diminished, and, recipro
cally as to all of these, the increase il
the number of dollars Of either kind di
m%inishing the value of each dollar Q
the others, while the decrease in tn
number of either increases the value G
each Of the others, without the slightes
regard whatever to the material of whic
either Of the dollars is composed.
If this be SO, if the value of the uni
Of money depends not OF the material
the dollars, but on their quantity, wins
becomes of the gold standard? If this Il.
so, inasmuch as silver has been utilize
as money since the dawn of creation
why abandon it nOw,u unless senators al
prepared to abandon the automatic sy
tenn altogether? If we must by legisl;
ton compel a change in the value
money, why legislate so that it ca
change in II direction only, and tn;
the direction which is always favoTab
to the classes that lend money and Ii
idly on their incomes, the direction mo
injurious to society, most fatal to indu
try, most narcotizing to energy?
The idea that the value of a treasul
note issued by a government such
ours is not based on the number issue
but on something behind the note,
upon the credit of the government, d
forms the whole idea Of money. 1t
clungto because people have been accu
toned to look upon money as somethl
of intrinsic value, and OF that theo