The Philipsburg mail. [volume] (Philipsburg, Mont.) 1887-current, 1895-06-20
THE MONEY QUESTION
A Key 10 the Present Financial
Situation in This CoJnfrq.
The Quantitive Theory of Money
Value Of Dollars as Compared to
the Number Issucd-If Money
We're OF Unlimited Quantity,
1t Would Have No Value. ..

FO1tlcal economy has been called
the dismal science" The most disma
branch of it, if men are to endeavor tt
:orce conclusions to fit some precon
'eived theory without reference to prin
ciples, is that which relates to money
The persistent determination to make
the whole science subordinate to the alb
surdities of the gold standard has oper
ated Like a 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 in any country is deter
mined by the number of units in circu.
lation. In other words, the value of ev-
cry dollar dep.lds 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 finan-
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
arcanu1n Of monetary knowledge. I'm
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 circle, returning after much la
Dor to the point from which he started
upon his journey. Like one in maze,
when most confidently expecting to find
his way out he but sees himself coming
up against impossible barriers.
II 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
We're strewn with gold dust, it would
have no value whatever as 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 as goldpieces have
value today. And, Oh the other hand, as
Adam Smith says, if gold should reach
certain degree of scarcity, the slightest
bit of it might become as valuable as a
diamond.
So absolutely clear are the leading
writers that the value of money unit is
in every case, other things being equal,
determined by the number Of units out
and does not depend on the material of
which the money may be composed that
they have not the slightest hesitation in
asserting that the rule applies even to
paper money, SO that the value
OF every dollar Of gold and silver in cir
is diminished or increased ac-
cording as the quantity of paper money
is increased Or diminished, and, recipro-
cally as to all of these, the increase in
the number Of dollars of either kind d.
the value Of each dollar Of
the others, while the decrease in the
number OF either increases the value Of
each of the others, without the slightest
regard whatever to the material Of which
either Of the dollars is composed.
If this be SO, if the value Of the unit
of money depends not OH the material of
the dollars, but on their quantity, what
becomes of the gold standard? If this be
80, inasmuch as silver has been utilized
as money since the dawn of creation,
why abandon it now, unless senators are
to abandon the automatic sys-
'en altogether? If we must by legisla-
lion compel a change in the value of
money, why legislate SO that it can
change in one direction only, and that
;he direction which is always favorable
% the classes that lend money and live
dly on their incomes, the direction most
Injurious to society, most fatal to indus
~, most narcotizing to energy?
The idea that the value Of q treasury
lote issued by government such as
'urs is not based Oh the number issued,
'ut on something behind the note, Or
lpon the credit Of the government, de-
orms the whole idea Of money. It is
lung to because people have been accus-
omed to look upon money as something
f intrinsic" value, and on that theory
hey have been at loss to account for
he fact that uncovered paper dollars,
yhen sufficiently restricted in number,
AVE precisely the same purchasing
'ower as gold money, quantity for guam
ity. There is no question of credit
bout it. Norman takes piece of money
+ any kind, whether gold or silver or
aper, as piece of credit. If it is not
egal tendar, it is not, in the true and
uu sense, money at all; if full legal
ender, it needs nothing behind it but
he law which makes it legal tender
Or all debts and demands, and regu-
alton of it's quantity, to maintain the
monetary unit at any desired level Of
alue.
It is not the credit, but the power of
he government that is behind it in the
aw OF legal tender and in the right to