The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-01-17
RATIONAL FINANCIERIN6

| Each contributes valuable suggestion quite in
| advance of the views of those who approach
the question from The standpoint OF banker
and OF them, J. r. b., it seems to me,
+ reaches the true solution in his practical { d.
| vice that the volume of paper currency be
kept at that amount that would remain at par
without any other redemption than being re-
| ceived for public dues, l suppose OF courst,
that j. X. b intends that this paper be male
legal tender for private dues also. But this
/ p actical direction is contrary to the theory OF
even J. X. B. himself and of your articles and
those of your other correspondents. en- as
sumes and is continually embarrassed by The
assumption that there is in their nature oil
ference between paper money and coin money.
! This is not true There is a difference but it is
not natura difference, but artificial, created
| by law in violation OF the natural qualities OF
these two kinds OF money and their relation to
each other. A nd this perversion OF the natural
relations OF coin and paper to acI other is the
cause OF all the embarrassment and di hculty
| in formulating workable hnanclal system,
and until this atal ror is eliminated paper
currency that will work smoothlyand perman-
i emily supply the needs OF business for money
beyond what is supplied by gold and silver is
! impossible
1t make no difference how much ingenuity
is exercised in devising financial scheme, 1t
must necessarily fail ii it assumes as part OF
it that paper is not money itself but is only
the representative Of money, for the reason
that it is not true. Any system based on it
cannot be ii success. for it is fighting against a
natural law of money. We nesd not wait To
see in attempted operation perpetual motion
machine. or any other machine, which
in its construction violates the natural
| law of mechanics, to tell the re-
suit. We know Def IRELAND that it must be IL
| failure. The natural laws OF money are equally
! infleNble and their violation means certain
! failure. The plan OF giving value to paper
money by redeemng it in coin on demand HIS
these faults: First, it locks up for redemption
purposes a large amount of coin; second, 81 zee
the amount of paper issued is several times the
amount of the coin redemption fund req uired
| by law. there is always a nervous attempt to
accumulate more coin for redemption purposes
whenever financial furry impends third at
such times the credit OF paper is impaired he
cause it is plain that ii all the paper is pre-
sented for redemption redemption must fail.
! That is, the plan is imprac icable depending
for success wholly on the forbearance OF note
| no ,ders in not dem inding redemption. This
fact alone. that the public can see that failure
70 redeem is possible, should condemn the
plan. The consequences have been nervous
uneasiness all the time and panlcs at irregular
| intervals, for confidence is lacking
Money originated in business, which creates
! a use for it, and an increased business creates
increased use for money. This use constit ties
the sole value of money. Money does not dif-
fer from other things in this respect The use OF
all tn ings constitute their value, food, cloth
ing, houses, ornaments, amusements, every
thing Business is more economically done
By tn use OF money, hence this gives it
| value.
The aw desgnates what is money and i'm
mediately this created by business at
| taches to it by virtue OF its selection by the
| law and gives it value as money. The law
gives it no value. The effect OF the law on
money is like the election OF person to an
Office The Office with its powers and duties
being in existence the election designates the
person wh) shall have them The election
does not create the Office. In like manner the
need or use for money existing, the law OF the
world (at first a custom so universal as to
amount to a law desgnates gold and silver
as the substances that shall supply the need
or use that business has created. 1t is only
| in this limited sense that it can be prop rly
said that money is the creatur of law. Moth
| ing but business need OF money can create
moneys value. The law is powerless to do it,
This being true the quantity OF money in
nation must be gagged by the quantity OF its
| business, the amount of it, business, whatever
! it may be, requires for Its convenient trans
action a certain amount of m ney, that is,
| there is use for some certain amount. All the
money there is use for will have value, the
| value of that AMI no more.
| Ii the quantity OF money be doubled the
amount of use remaining the same the double
quantity o; money will have no more valu, as
whole than the original or one-half amount
as a whole d. Two dollars OF the inflated
volume will be worth only as much measure
| by its purchasing power, as ole dollac WAS be-
fore the amount was doubl d. Two dollars
will buy after the initiation more than one
dollar before OF either property or coin money.
If this is the true idea OF money and of the
! source and origin OF its value and OF its whole
value then its value does not originate in any
9th r way arise from any otter source,
and gold and silver do not get their value
| mon-y from what is called their intrinsic value
! as metals. If they were not money, their value
would be only as metals, and they would have
| only the value of thei- uses such And what
! would 1t be? About the same OF tin. But
! whether much or little, their intrinsic value,
as metals for mech meal use has no effect
what on their value money for
not arising from their natural qualities as
metals but for given them by law OF
| man. They are not money because they are
| valuable, but ar mainly valuable because
| they money and because their
thereby enormously increased. Their two uses
! are entirely disconnected and the value arts
| ing from each use has no connection with the
other. Their great value is not natural
value but an artificial value arising from the
artificial use that mankind make OF them If,
! then, the intrinsic value of the material OF
money cuts figure in Civ .ng money made oft
its money value, there is no reason in the ma
ture OF paper money why it should not be
al money as gold or silver.
The claim has always been that paper must
| be redeemed in moneJ that had intrinsic
value. But MS no money has intrinsic value,
and as all money derives its value solely from
| the uses that be made OF 1t money and
| not as material it is clear tina. there is dis
| tinction between paper and coin money on the
| ground OF intrinsic value,
As said before. t amount OF money must be
| gagged by the amount OF use for money. Gold
! and silver are the universal money OF the
| civ liz ID world Eacn nation, therefore, a
| member OF the family Of nations, has il, gold
| and silver as its money as far as it goes and
| makes up any deficiency by paper money But
| instead OF pursuing the same course in making
| its national paper money that the world did in
making the worlds coin money, gold and sill
yer, by simply selecting or designating them
! to supply an exist Z need or use, and thereby
| giving them the value OF that use. it assumes
| that its paper money is not in reality money,
and gives il value by redeeming it in what it
assumes to be the only real money, gold and
| silver.
The need OF monly for the transaction OF
| t..,tf