The herald., 1896-10-25
FIAT MONEY

The objection to the coinage Of silver
at the ratio of 16 of the white to of the
yellow metal because it is not the mar
ket proportion Is not q valid one; more
over, it is made for no purpose other
than to discredit silver as a money
metal. 1t will be admitted that for some
time past the commercial value differ
ence between the metals has been very
much greater than 16 to 1, but like all
other commodity values the commercial
prices of the metals fiuctuate, and not
only so, but the price Of one does not
necessarily disturb the price of the
other There is no such thing as a fixed
value for any article Of commerce, and
although there is more or less interde-
pendence, prices Of things Of trade are
determined by the present necessity for
them.
AS between gold and silver, commerce
never more than fixes temporary DIFF
ference in value, hence there could not
be fixed coinage ratio based upon the
market price of the metals in bullion
form. It happens very often that the
bullion price of both gold and silver
rises above and falls below the coin
value; nor do they rise and fall in har-
mony, but on the contrary, the one Of
ten appreciates while the other depre-
ciates Hence, however. much Sound
money" men may protest against fiat
money" the fact remains that but for
the fiat of the government declaring
that given quantity of given quality
of an article shall be a legal tender
dollar, as we'll as the ultimate redemp-
tion dollar, gold and silver in the form of
coins would have no more stability OF
purchasing power than they have as
mere merchantable articles of COM
merce in the form of bars.
The law against icounterfeiting coins
provides for punishment for deceiving
as to the fiat Of the government making
a given quantity Of given quality of
gold or silver a dollar. because 1t is is
suing unauthorized money. One might
make, D. ten dollar gold piece and not
only employ dies that were counter
part of those used by the government,
but put 260 grains of standard gold in
1.-two grains more than the govern
ment itself puts in2thus giving it a
greater commercial value than the gov
ernment's coins, but 1t would be an un-
lawful coin. because 1t would not have
the governments fiat behind it, and its
maker could be punished just the same
as IL he had made the coin of an inferior
quality Of metal and reduced its weight.
The government is not little both
cred because of silver dollars in circula-
ton which are inl'every respect the
same as those coined by the mints They
are counterfeits, of course, and could
those who make them be apprehended
they would be convicted and impris-
oned. Notwithstanding the fact that the
product Of their dies is in all respects
exactly the, same as the product of the
government mints, except the very es-
sential quality OF possessing the func-
tion Of money, which the government
alone can cQnfer.,. When, therefore, the
gold standard advocates say that silver
dollars coined without limit would be
fiat money they say what is true, but
they do not say. that a gold coin is
money only because Of the fiat of the
government authorizing tie coinage. If
the output Of, siIxer and gold were so
large that together they you'd make
supply Of. money greater than the de-
nhnQ, CORlIh6fCee WOutO SuTIeT greatly,
but perhaps not more-than it now suf-
fers because of the inadequacy Of the
supply. ;sf ~
1t so happens. however, that the
commerce of the United States more
particularly knows what the supply Of
gold and silver is and what its demands
for money are, and hence 1t knows that
were silver made redemption money
and the equal Of gold money there would
still not be enough metallic money, and
that paper money redeemable in metal
money would have to be issued to pro-
vide commerce with a sufficient circu-
lating money medium. That being true,
1t follows as a common sense business
proposition that in opening the mints
to the free and unlimited coinage of sill
yer and gold into redemption money
commerce would be stimulated and all
lines Of trade and traffic would expand
in harmony with the increased supply
of money, and that the supply could
not possibly be greater than the de-