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Page 8
And you can't have 'em, my dear sir. A dollar consists of 100 cents. The
phrase "50-cent dollar" and that other phrase "honest money" remind me of
what I used to hear in my boyhood when the slavery question was debated
with such heat: "What! Would you want your sister to marry a nigger?
Whoosh!" It was assumed, if a man denounced slavery, that he wanted the
colored man for a brother-in-law. Men who employ such phrases show a
secret consciousness of having a weak cause. And while I am about it I may
as well add that I do not admire the way some of our fellows have of
denouncing gold as "British money." Great fools, indeed, the British would
be if they did not fight for a gold basis, for by reason of it they get
twice as much of our wheat, meat, and cotton for the $200,000,000 per year
we have to pay them in interest. According to the Chancellor of the
Exchequer, the world owes England $12,000,000,000, on which she realizes a
little over four and a half per cent., or pretty nearly $600,000,000 per
year. Fully that, if we add income from property her citizens own in this
and other countries. On the day we demonetized silver, that $600,000,000
could have been paid in gold in the port of New York with 450,000,000
bushels of wheat; to-day it would take 900,000,000 bushels. In short, the
amount of grain England has made clear because of the rest of the world
adopting monometallism would bread all her people, feed all her live
stock, and make three gallons of whiskey for every person on the island.
Why shouldn't they take what the world willingly gives them? I have my
opinion, however, of the common sense of a world which does things that
way.
=We want money that is equally good all over the world.=
There is no such money. The coin we send abroad is only bullion when it
gets there, and most dealers prefer government bars. The exchange must be
calculated exactly the same whether we use gold, silver, or paper in our
domestic trade; and this notion that we "should be at a disadvantage in
the exchange" is a delusion. The variations in the value of the greenback
during our war era were calculated daily, and prices in this country rose
or fell to correspond. It must, I say, be calculated just the same in gold
or silver, and any smart schoolboy can do it in a minute on any
transaction.
=What I mean is that the silver dollar is worth only 50 cents in gold.=
And by the same token the gold dollar is worth 200 cents in silver. The
answer is as logical as the quip, and neither is worth notice. Such a
process merely assumes an arbitrary standard and measures all other things
by it, as the drunkard in a certain stage of intoxication thinks that his
company is drunk while he is duly sober. And, by the way, where do you get
your moral right to say that a dollar which will buy two bushels of wheat
or twenty pounds of cotton is any more honest than one which will buy one
bushel or ten pounds? Is it because with the dear dollar the farmer must
work twice as long to pay off a mortgage, that the interest paid on the
great debts of the world will buy twice as much, and the debtor nations
are put at a terrible disadvantage as to the creditor nations personally?
Is that honest?
A very safe test of any theory is to follow it to its logical conclusion.
Take your "honest" money argument, on the basis of twenty years'
experience, and see where it will take you in the near future. The dollar
which buys two bushels of wheat or sixteen pounds of cotton is "honest,"
you say, and a dollar which buys but one bushel or eight pounds is not. By
and by, if your fallacy prevails, the dollar will buy three bushels of
wheat or twenty-five pounds of cotton, and will then, by your reasoning,
be much more "honest" than now. Is that your idea? How much lower must
prices go before you will admit that gold has gained in purchasing power?
=But it cannot be that prices have fallen because of the scarcity of
money, for the low rate of interest now prevailing proves that money is
abundant and cheap.=
That is a very old fallacy, and a singularly tenacious one, as it seems
that no amount of experience drives it from the minds of men. Look over
the history of our panics and you will find that after the first
convulsion is past the banks are soon crowded with idle money, and the
rate of interest falls. Take notice, however, that the money lenders
always declare that they must have "gilt-edged paper." Interest on
first-class securities is never lower than in the hardest times which
follow a particularly severe panic, and the reason is obvious: all
far-seeing business men know that prices are likely to fall, and,
consequently, investments become unprofitable: therefore they do not
invest; therefore they do not want money; therefore they do not borrow,
and idle money accumulates. This is a phenomenon always observed in hard
times. In good times, on the contrary, when investments are reasonably
sure to be profitable, there is naturally an increased demand for money,
and so the rate of interest rises. As a matter of fact, however, interest
rates, when properly estimated, have been for several years past very much
higher than previously--that is, the borrower has, in actual value, paid
very much more; so rapid has been the increase of the purchasing power of
money, that the six per cent. now paid on a loan will buy more than the
ten per cent. paid a few years ago. In addition to that, the value of the
loan has been steadily increasing. Make a calculation for either of the
years since 1890, and you will find it to be something like this: the six
per cent. paid as interest has the purchasing power of at least ten per
cent. a few years ago, and the lender has gained at least two per cent. a
year, if not twice that, by the increased value of his money; so the
borrower will have paid, at the maturity of his obligation, at least
twelve per cent. per annum, and probably much more.
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