Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1896-08-05


limitations prevent their gaining more
than a limited circulation and there
fore from expelling standard money,
and also prevent private persons from
increasing their quantity in order to
profit by the difference between their
real and their nominal value.
Some one may ask why, since token
money can circulate at a valuation far
above it's intrinsic value, the govern
ment cannot make all token money
and cause it to circulate at a similar
generalization. The answer is sim
ply this: The very conception of token
money involves the prior conception
of standard money-money of superior
value, fractional parts of which the
token money represents and for which
it passes as an equivalent. If the
standard money, of which the token
money is the legal tender equivalea-.
/ be taken away, the token money
ceases to be such and itself becomes
the standard money, to circulate at
value determined by the value of the
material contained in it.
The subsidiary coins, then, in
nations currency, are Over-valued.
They have q nominal value, impaired
by authority of the government, which
may be to almost any extent in excess
of their real value. We have stated
the fact and have shown the reasons
for it, and we have indicated that this
may be done safely and without injus-
tice to any one so long as the supply
and legal tender quality of this money
are strictly limited. But, it is of the
highest Importance that the standard
money of nation should not be over
valued, but that the stamp of the gov
eminent should represent the real
value of the metals, as determined
not by its fiat, but by the great laws
of trade, and based upon their intrinsic
utility.
Perhaps the first reason why this
should be so is because any other valu-
alton would be dishonest. No one is
deceived or defrauded by the over
valuation of token money. That over
valuation is simply an eXpedient by
which the government seeks to supply
for the convenience of trade limited
quantity of small coins which will not
disappear from circulation No indi-
vidual profits by it at the expense of
others. On the other hand, if the gov
eminent were to stamp its standard
coin with a fictitious value, its act, al
though done openly, would be very
1i1xo he ,a4D 60 !, e.
or the act Of the dishonest tradesman,
who would brand piece of Shoddy as
a frst-class article.
In the next place the attempt to do
this would be futile. We have said
that the government cannot give these
metals value, nor add to, nor take
away from their value. Any attempt
of the government to over-value them
is sure to be Immediately discovered
by the people, and the remedy for the
wrong is applied which consists in de-
creasing the purchasing power of the
monetary unit, or, in other words,
raising prices.
In the third. place, let us consider
the case of the nation employing, or
attempting to employ what is common
ly known as the double standard of
values that is, the employment of
equivalent units of two metals, and let
one of these metals be over-valued,
either purposely or by the operation
of the laws of trade. If dollars of
equal nominal value but of different
real value are in circulation, it is for
the interest of every man who pays
money to tender inferior money, and
retain the superior money. And here
lies the secret of universal law in
regard to money. SirThomas Gresham,
the founder of the Royal Exchange of
London, over three centuries ago, was
the first man to state this law, al
though he was not the discoverer Of
it. 1t has come to be called Gresham's
Law, and is as follows: Whenever
money is furnished in unlimited guam
titles, that is, practically unlimited, an
inferior money always tends to drive
out the superior money, while the
superior money has no tendency to
expel the inferior.
History affords many examples of
the operation Of this law. The issue
of our government legal tender cur
rency in 1862 is an example. Coin
was almost entirely driven out of cir
culation by this issue. Up to 1884
the United States had two standard
dollars-the gold dollar and the silN ar
dollar, the relative valuation of the
metals being as 1 to 10. This ratio
soon proved to be incorrect. The gold
coins were worth more than the silver
coins, and consequently were largely
boarded, or melted, or exported to
foreign countries. In 1884 a change
was made in the ratio, the new ratio
being as to 16, or more exactly to
1888. This ratio soon proved to be
incorrect. The silver coins were then
worth more as bullion than as COIN
that is, gold coins were worth less than
their equivalent in silver, and the sill
yer coins were driven out of circula-
ton, congress being compelled in 1858
to reduce their weight in order to re-
tain them.
One fact must be carefully borne in
mind with regard to the operation of