The herald., 1896-09-10
GOLD AND FIAT

A forceful exposition Of the fallacy
entertained by many that gold owes
nothing to governmental fat, for its
present prestige and purchasing power,
is contained in the following excerpt
from an article printed in an eastern ex-
change from the pen of Mr.. S. L. Greg
ory:
Congress, on the 18th day of Febru-
ary, 1873, passed a law making 1922
grains of gold, when stamped by our
government a dollar and the unit of
values. Now, 1922 grains of gold
when stamped by our government, is a
dollar, because the supreme power of
the land says 1t is. Then why is 1922
grains of gold bullion worth a dollar?
1t is not worth dollar because it took
just one dollars worth of labor to pro-
duce 1t. There is no means of know
ing just the exact amount of labor and
cost of it's production. Its cost may
and does vary at different times and in
different mines. Then, if so.. why
should not it's bullion value vary also :?
| repeat the inquiry, why should not
its bullion price vary also?
Here is the answer as 1 see it: The
law has given to it it's monetary value.
1t is worth a dollar, because the law
has given it market and arbitrarily
fixed the value thereof at one dollar.
-NoW, WHY lS IL tHdl SOlu uOeS uOt IluC-
tuate in price? The reason is mani
fest. 1t is because of the law. No one
will take less than one dollar for 23 90
grains of gold bullion when he can
take it to the mint and have the gov
ernment stamp it a dollar for him. No
one can get more than a dollar for 1t,
because there is no value in it above
and beyond it's monetary value. 1t
can no more rise above its unit of value
than can water rise above it's fountain
head.
Our mints are open to the free and
unlimited coinage of all the gold in
the world. 1t is, therefore. and by rea-
son thereof, utterly impossible to change
the monetary value of 1922 grains of
gold bullion, as compared or measured
by the gold dollar. The value Of 49, %
grains of gold bullion is as fixed and
stationary and inexorable as the law of
gravitation or the polar star.
But suppose you strip gold of some
of it's prerogatives and privileges given
it by law, namely, close the mints t.
its free and unlimited coinage, and you
will take from it Immediately and at
once it's stability of value. 1t would
then fiuctuate in price, as measured by
its unit value. Not to the extent of
silver since 1873, perhaps. but its fuc-
tuation will be greater or less, as the
government permitted it's coinage.
But can you legislate relative or mon
etary value, or commercial value, If you
please, into or out of commodity?
Listen to what one of our makers
says. In speaking of the value of gold
and silver, one of our eminent states
men, few days ago, on the stump at
Columbus, said: 'These two metals
not only measure all other things, but
they measure each other. Their relative
value constantly changes. Twenty.
three years ago 16 ounces of silver were
worth an ounce of gold. Now thirty-one
ounces of silver can be bought by an
ounce of gold. This fiuctuation of value
can not be prevented by law. 1t is be-
yond the reach of legislation 1t is
caused by the changing demand"
Now let us test his words by the his
tory of our coinage law. Congress, in
the year 1892, fixed by law the weight of
both our gold and silver dollars; BIN
grains of pure silver was made the unit
of values. and to constitute one dollar
1t remained the unit of values until Feb
ruary ~, 1873. Twenty-four and seven
tenths grains of gold was to constitute
one dollar. That remained the law until
1884. when congress, in that year, by law
made the gold dollar to constitute 1872
grains of gold. Now, by that act, did not
congress increase the monetary value of
PAT grains of gold? You could take 23.5
grains of gold bullion and have it coined
irto a dollar and have 1.5 grains left,
Again, suppose that a law should be
passed prohibiting the use of corn for
any purpose, except to make intoxicat-
ing liquors, and what would be the
effect on its price? There Is no man that
would dispute the fact that it would
lower its price one-half. Just SO with
silver. Congress closed the mints to its
free and unlimited coinage in 1873. It