The Indianapolis journal., 1896-10-12
JOHN LOCKE ON FINANCE.


In the great treatise on the value of
money by John Locke (see works of John
Locke London, 1923, Vol. 81 one of the
= most acute and logical reasoners that any
nation or any age has given to the world,
he defines money to be necessary to all
sorts of men in trade both for counters
and for pledges" This is his quaint and
old-fashioned way of saying that it is both
IA measure or standard of value and me-
dunn of exchange. Money, he tells us,
carries with IL as counters what he calls
"even reckoning;" and pledges it car
ries security that he that receives it shall
have the same value for it again, of other
things that he wants, whenever he pleases.
The one OF these it does by it's stamp and
denomination; the other by its intrinsic
value, which is its quantity The stand
ard money of Locke's day was silver. A
given quantity silver, whether stamped
unstamped. has certain intrinsic value,
and this intrinsic value constitutes the ''se-
curity that he that receives it Shall have
the same value for 1t again.. The only
purpose of the stamp and denomination is
to make "a given quantity of silver serve as
a Counter" in order that there may be
"even reckoning in all business transac-
tions. The stamp he correctly declares to
be nothing more than "a public voucher of
it's weight and fineness;' and SO little i'm
portance does he attach to the denomina
ton that he observes that here in Eng
land there might well have been twelve
shilings in a penny, as twelve pence in a
shilling"
Basing his argument, as he does. upon the
fundamental truth that there is and can
be no difference in value between bullion
coined and uncoined, and upon the supple
mental truth that the value of bullion is
1,a I,iy1
readers that 1.-THE necessity of proportion of
money to trade depends money, not as
counters for the reckoning may be kept
or transferred by writing, but on money as
pledge. which writing cannot supply the
place of. because law cannot give to bills
that intrinsic value which the universal
consent OF mankind has annexed to silver
and gold This is the very essence of the
fatal objection to our modern American
"ereenback' heresy. The Greenbacker re-
CARDS money merely as counters" and
very truly argues that there is no need that
money, from this point of view. shall
have intrinsic value. But he overlooks the
fact that money is also "a pledge and
that a pledge or security must have in
trinsic value IL 1t has no intrinsic value
il will be accepted in trade on trust, as a
memorandum of indebtedness to be dis
charged at some future time, and the mo-
ment that confidence is shaken in its ulti-
mate redemption it's nominal value begins
to decline, until. when confidence in its re-
demption is destroyed, it no longer passes
current.
Concerning the vexed question Of the
amount of money required Locke remarks
that 1t is hard to determine the necessary
proportion of money to trade, because it
depends not barely the quantity of
money but the quickness of it's circulation.
The very same shilling may, at one time,
pay twenty men in twenty days; at an
other rest in the same hands hundred
days together He anticipates the argu-
ment of MIR. Bryan and others who advo-
cate the cheapening of the American dol
lar and even Mr.. Bryan's quaint illustra-
ton taken from the 'steeter board in the
following words: There is another SEEM
ing consequence of the reducing of
money to a low price, which at
first sight has such an appearance
of truth in 1t that | have known it
10 impose upon very able men, and that
is that the lowering of interest against
which he was writing) will raise the value
of all other things in proportion, For
money being the counter-bdlancc to all
other things purchasable by it. and lying,
as IL were, in the opposite scale of COM
merce. 1t looks like natural consequence
that as much you take off from the
value of money. so much you add TO the
price of other things that are exchanged
for 1t. . = The mistake of this plausible
way of reasoning will be easily discovered
when we consider that the measure of the
value of money, In proportion TO anything
purchasable by 1t, is the quantity of ready
money We have In comparison with the
quantity OF that thing and Its vent" (by
vent" he means demand In its relation TO
supply. -',or which amounts TO the same
thing. the price OF any commodity rises
or falls BIZ the proportion OF the number
Of buyers and sellers" In other words. the