Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1896-08-05
METALLIC MONEY.
Standard Money, Token Money and
Gresham'S Law,

we udu IuGSuu0u Ii bulS ISSUE Ol
The REPUBLICAN to discuss the sub
iect, ''The Quantity of Money Ma
tion Needs" But certain statistics
which we desired to use in the treat
ment of the theme not being at hand
nor easily obtainable, we concluded to
defer it to a later time, and for the
present to substitute the subject given
above.
The precious metals have been used
as money from very ear y period.
There is no authentic record of the
time or place of beginning of their use
for this purpose. We know that this
use preceded the invention of coming
and any legislation of governments
regarding it, and we may safely infer
that men were led to this use by the
perception Of the eminent fitness of
these metals for it. In their earliest
use as money they were weighed out
in each transaction, the names of
some coins, as the pound, being evil
dence of this early practice. When
governments began to coin these
metals, and to legislate concerning
their use as money, they were not in
augurating a new practice, but simply
endorsing an old one which men had
rrev- ously adopted of their own ac-
lord. In the course of centuries these
metals have become an almost uni
versal money, all monetary systems
throughout the world being based
upon them or upon one of them, and
there is scarcely spot on the big
round earth where gold will not pass
current. AS we said last week, these
metals have intrinsic value, and that
is exceptionally stable. They are
convenient for this use because they
are portable, Invisible, homogeneous
and easily recognized, and they are
reasonably economical because Of
their great durability. Their value,
while comparatively steady, is by no
means invariable. There have been
three great permanent changes in
modern times, one after the discovery
of the American mines in the sixteenth
century, another after the discovery
OF the mines in California and Austria
liza in 1913 and 1851, and the change
in the value of silver which has taken
place gradually during the last quar-
ter of a century, in which time it has
deprecated nearly fifty per centum.
Two causes chiefly operate to bring
about steadiness of value in these
metals-frst, their durability, second,
their universal use. Because of their
durability the quantity in existence at
any time is very large compared with
the annual production. Because of
their universal use in the arts and as
money the annual supply diffuses it
self over the whole world, thus pre-
venting local fall in value. We will
eIdeayOr in a future article to quote
the actual statistics bearing on the
first point and particularly to show
the changes in production which have
occurred in the past twenty years.
Let us now discriminate between
standard coin and token money. Stand
ard coin is coin whose value is solely
determined by the weight and fineness
of the metal of which it is composed.
We wish to make this statement I'M
qualifiedly and with emphasis, not
withstanding the fact that some writ
ers have claimed and many people
believe that it is the action of govern
ment which gives coins their value.
The value of a standard coin is the
value of the material of which it is
made. It's value as coin and its value
as bullion are equal, coinage being d
comparatively inexpensive process
and one for which most governments
make no charge. Token money is
coin which has a fictitious value-a
value determined by the fact that it
can by force of custom or legal enact
ment be rendered as an equivalent Of
the standard coin, although it is below
the grade of the standard coin in
weight and fneness. For example,
from 1853 to 1873 the United States
had a standard silver dollar contain
ing 4129 grains of silver. During the
same period we had silver half-dol-
lar of 1872 grains, and these half-dol-
lars were legal tender in sums not to
exceed five dollars. Thus by force of
law two silver half-dollars weighing
together 1884 grains passed at a valu-
alton equal to a standard dollar con-
tanning 4123 grains. The half-dollar,
the quarter-dollar and the dime in
silver were all slightly overvalued at
the time their coinage was provided
for. Of course it follows that at the
present price of silver bullion the in
trinsic value of these three coins is
less than one-half their nominal value.
In the nickel fve-cent piece and the
copper cent the intrinsic value of the
metal is but a trife of their legal
value and they are legal tender to the
amount of twenty-five cents.
This token money is always the
minor coins in any monetary system.
Coins of the smaller denominations
must be had for use in the smaller
transactions, and so they be not issued
in excess of the needs of trade, men
will everywhere take these over
valued coins without any hesitation,
They are convenient and necessary.
They are issued by the government,
and, in the case of the minor silver