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@@ -1,42 +1,4 @@ -The Project Gutenberg EBook of Robinson Crusoe's Money;, by David A. Wells - -This eBook is for the use of anyone anywhere at no cost and with -almost no restrictions whatsoever. You may copy it, give it away or -re-use it under the terms of the Project Gutenberg License included -with this eBook or online at www.gutenberg.org - - -Title: Robinson Crusoe's Money; - or, The Remarkable Financial Fortunes and Misfortunes of - a Remote Island Community - -Author: David A. Wells - -Illustrator: Thomas Nast - -Release Date: August 6, 2012 [EBook #40429] - -Language: English - -Character set encoding: ASCII - -*** START OF THIS PROJECT GUTENBERG EBOOK ROBINSON CRUSOE'S MONEY; *** - - - - -Produced by Jeroen Hellingman and the Online Distributed -Proofreading Team at http://www.pgdp.net/ for Project -Gutenberg (This file was produced from images generously -made available by The Internet Archive/American Libraries.) - - - - - - - - +*** START OF THE PROJECT GUTENBERG EBOOK 40429 *** ROBINSON CRUSOE'S MONEY; Or, the @@ -1985,7 +1947,7 @@ was given: "Long familiarity with the practice of giving security for loans, and of paying them back at a fixed date, has blinded us to the national advantages of loans without security and payable at any - date."--Karl Marx, Secretaire, Organisation de l'Internationale. + date."--Karl Marx, Secrétaire, Organisation de l'Internationale. But the thing which the philosophers relied on more than any thing @@ -2712,7 +2674,7 @@ country. Framing an American system of finance, I do not propose to adapt it to the wants of any other nation."--Speech of General B. F. Butler before the New York Board of Trade, October 14th, 1875. -[6] "Some years since, Mademoiselle Zelie, a singer of the Theatre +[6] "Some years since, Mademoiselle Zélie, a singer of the Théâtre Lyrique at Paris, made a professional tour round the world, and gave a concert in the Society Islands. In exchange for an air from 'Norma,' and a few other songs, she was to receive a third part of the @@ -2888,7 +2850,7 @@ the services of doctors, lawyers, and cooks. So, then, if the note is not to be on its face a lie, and the promise is to be actually performed on demand, the necessity will be absolute on the part of the Government of the United States to have store-houses for wheat at -Chicago, pig-pens at Peoria, coal-mines or depots at Pottsville, and +Chicago, pig-pens at Peoria, coal-mines or dépôts at Pottsville, and trained professionals ready on call to plead a case, preach a sermon, cure a cold, and cook a dinner; and all of these last must take their pay in pigs if required. But as a pig has one value at Peoria, and @@ -3092,7 +3054,7 @@ vol. ii., part i., Forty-third Congress, First Session, p. 669. [35] The pertinacity "with which a mind befogged on the subject of money and currency holds on to the delusion that the making and issue of promises to pay, and calling the same money, is equivalent -to the creation of wealth; and, vice versa, that the cancellation +to the creation of wealth; and, vice versâ, that the cancellation or withdrawal, by payment, of such promises is the same thing as the destruction of wealth, and also tends to make money--in the sense of capital--scarce, and interest high, finds many amusing illustrations, @@ -3171,361 +3133,4 @@ currency. See Sumner's "History of American Currency," p. 46. End of Project Gutenberg's Robinson Crusoe's Money;, by David A. 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You may copy it, give it away or -re-use it under the terms of the Project Gutenberg License included -with this eBook or online at www.gutenberg.org - - -Title: Robinson Crusoe's Money; - or, The Remarkable Financial Fortunes and Misfortunes of - a Remote Island Community - -Author: David A. Wells - -Illustrator: Thomas Nast - -Release Date: August 6, 2012 [EBook #40429] - -Language: English - -Character set encoding: ISO-8859-1 - -*** START OF THIS PROJECT GUTENBERG EBOOK ROBINSON CRUSOE'S MONEY; *** - - - - -Produced by Jeroen Hellingman and the Online Distributed -Proofreading Team at http://www.pgdp.net/ for Project -Gutenberg (This file was produced from images generously -made available by The Internet Archive/American Libraries.) - - - - - - - - - - ROBINSON CRUSOE'S MONEY; - Or, the - Remarkable Financial Fortunes and Misfortunes - of a Remote Island Community. - - - - By - DAVID A. WELLS, - Late U. S. Special Commissioner of Revenue. - - - - "It requires a great deal of - philosophy to observe once - what may be seen every day." - --Rousseau. - - - - New York: - Harper & Brothers, Publishers, - Franklin Square. - 1876. - - - - - - - -PREFACE. - - -The origin of this little book is as follows: Some months ago, the -expediency was suggested to the author, by certain prominent friends -of hard money in this country, of preparing for popular reading--and -possibly for political campaign purposes--a little tract, or essay, -in which the elementary principles underlying the important subjects -of money and currency should be presented and illustrated from the -simplest A B C stand-point. That such a work was desirable, and that -none of the very great number of speeches and essays already published -on these topics in all respects answered the existing requirement, -was admitted; but how to invest subjects, so often discussed, and so -commonly regarded as dry and abstract, with sufficient new interest -to render them at once attractive and intelligible to those whose -tastes disincline them to close reasoning and investigation, was a -matter not easy to determine. - -At last the old idea--recognized in fables, allegories, and -parables--of making a story the medium for communicating instruction, -suggested itself; and, in accordance with the suggestion, a remote -island community has been imagined, in which, starting from conditions -but one remove from barbarism, but gradually rising to a high -degree of civilization, the progress, the use, and the abuse of the -instrumentalities and mechanism of exchange--through barter, money, -and currency--have been traced consecutively; and the effect of the -application of not a few of the most popular fiscal recommendations -and theories of the day practically worked out and recorded. And, -in carrying out this scheme, the reader will not fail to perceive, by -reference to the marginal notes accompanying the text, that hardly an -absurdity in reference to exchange, money, or currency can be imagined, -which somewhere and at some time has not had its exact counterpart -in actual history or experience. - -If any apology for the objects designed or the course pursued is -needed, the author thinks he finds it in the precedent established -by the illustrious Geoffrey Crayon, Gent., who, in the introduction -to his "Tales of a Traveler," thus happily sets forth the special -advantage which accrues from the proper employment of a story as a -means of communicating information. "I am not," he says, "for those -barefaced tales which carry their moral on their surface, staring one -in the face; on the contrary, I have often hid my moral from sight, -and disguised it as much as possible by sweets and spices; so that -while the simple reader is listening with open mouth to a ghost or -love story, he may have a bolus of sound morality popped down his -throat, and be never the wiser for the fraud." - -Whether in "Robinson Crusoe's Money" the author shall succeed in -inducing his fellow-countrymen--to whom the ordinary currency medicine -is becoming distasteful--to swallow without wry faces the same dose -sugar-coated, remains to be determined. - - - Norwich, Conn., January, 1876. - - - - - - - -CONTENTS. - - -Chapter I. Page - -The Three Great Bags of Money 11 - -Chapter II. - -A New Social Order of Things 13 - -Chapter III. - -The Period of Barter 15 - -Chapter IV. - -How They Invented Money 20 - -Chapter V. - -How the People on the Island and Elsewhere Learned Wisdom 26 - -Chapter VI. - -Gold, and How they Came to Use It 33 - -Chapter VII. - -How the Islanders Determined to be an Honest and Free People 50 - -Chapter VIII. - -How the People on the Island Came to Use Currency in the Place of -Money 55 - -Chapter IX. - -War with the Cannibals, and What Came of It 60 - -Chapter X. - -After the War 72 - -Chapter XI. - -The New Millennium 83 - -Chapter XII. - -Getting Sober 108 - - - - - - - -ROBINSON CRUSOE'S MONEY. - -CHAPTER I. - -THE THREE GREAT BAGS OF MONEY. - - -All who have read "Robinson Crusoe" (and who has not?) will remember -the circumstance of his opening, some time after he had become -domiciled on his desolate island, one of the chests that had come -to him from the ship. In it he found pins, needles and thread, a -pair of large scissors, "ten or a dozen good knives," some cloth, -about a dozen and a half of white linen handkerchiefs concerning -which he remarks, "They were exceedingly refreshing to wipe my face -on a warm day;" and, finally, hidden away in the till of the chest, -"three great bags of money--gold as well as silver." - -The finding of all these articles--the money excepted--it will be -further remembered, greatly delighted the heart of Crusoe; inasmuch -as they increased his store of useful things, and therefore increased -his comfort and happiness. But in respect to the money the case was -entirely different. It was a thing to him, under the circumstances, -absolutely worthless, and over its presence and finding he soliloquized -as follows: "I smiled at myself at the sight of all this money. 'Oh, -drug!' said I, aloud, 'what art thou good for? Thou art not worth to -me, no, not the taking off the ground. One of these knives is worth -all this heap. Nay, I would give it all for a gross of tobacco-pipes; -for sixpenny-worth of turnip and carrot seed from England; or for a -handful of pease and beans, and a bottle of ink.'" - -In introducing this episode in the life of his hero, nothing was -probably further from the thought of the author, De Foe, than the -intent to give his readers a lesson in political economy. And yet it -would be difficult to find an illustration which conveys in so simple -a manner to him who reflects upon it so much of information in respect -to the nature of that which is popularly termed "wealth;" or so good -a basis for reasoning correctly in respect to the origin and function -of that which we call "money." And in such reasoning, the truth of -the following propositions is too evident to require demonstration: - -1st. The pins and needles, the scissors, knives, and cloth were of -great utility to Robinson Crusoe, because their possession satisfied -a great desire on his part to have them, and greatly increased his -comfort and happiness. - -2d. Possessing utility, they nevertheless possessed no exchangeable -value, because they could not be bought or sold, or, what is the same -thing, exchanged with any body for any thing. - -3d. They had, moreover, no price, for they had no purchasing power -which could be expressed as money. - -4th. The money, which is popularly regarded as the symbol and the -concentration of all wealth, had, under the circumstances, neither -utility, value, nor price. It could not be eaten, drunk, worn, used as -a tool, or exchanged with any body for any thing, and fully merited -the appellation which Crusoe in another place gives it, of "sorry, -worthless stuff." - -Finally, the pins, needles, knives, cloth, and scissors were all -capital to Robinson Crusoe, because they were all instrumentalities -capable of being used to produce something additional, to him useful -or desirable. The money was not capital, under the circumstances, -because it could not be used to produce any thing. - -Starting, then, with a condition of things on the island in which -money had clearly neither utility nor value, let us next consider -under what change of domestic circumstances it could become useful, -acquire value, become an object of exchange, and constitute a standard -for establishing prices. - - - - - - - -CHAPTER II. - -A NEW SOCIAL ORDER OF THINGS. - - -The first person that came to join Robinson Crusoe on his island was -Friday, and next, Friday's father. But even with this increase of -numbers there was still no use for the money, inasmuch as the three -constituted but one family, the members of which labored and shared -all useful things they acquired in common, and made no exchanges. But -when Will Atkins and the English sailors came, and the population of -the island, we may suppose, was largely and permanently increased, -a new social order of things became inevitable. Incompatibility of -taste and temper, and a natural desire for personal independence, -soon made it impossible for all to live and share in common as one -family. And self-interest also soon taught, that, in order that the -quantity of useful things available for the new community as a whole -might be increased, and their quality perfected, it was desirable, -that, instead of each man endeavoring to supply all his own wants, -and for this purpose following irregularly the business of a carpenter, -baker, tailor, mason, and the like, it was best for each man to pursue -but one occupation, and, making himself skilled in it, procure the -things which he himself did not produce, and which he might need, by -exchanging his own products or services for the products or services of -some other man. They saw instinctively that Robinson Crusoe, although -originally civilized, would, if he had remained alone on the island, -have inevitably become a pure savage, and simply because he was -alone, and could make no exchanges. For a time, the things which he -obtained from the wreck raised him above this condition; for what the -ship brought him--the knives, axes, guns, cloth, etc.--were capital, -or the accumulated labor of other men. But if the ship had given him -nothing, he would have had to make every thing for himself--"his hat, -his garments, his feet-covering, his bread, his meat with bow and -arrows, his house by blows of his hatchet, his hatchet by blows of -his hammer, his hammer heaven knows how"--and become a barbarian in -spite of himself, because all his effort would have been required, -and would have only sufficed, to insure him a bare subsistence. - -Systematic division of labor and the exchange of products and services -thus, for the first time on the island, came in, and constituted a -part of the perfected machinery of production, or the means of getting -a living. And it is also to be here noted, that, because commodities -and services now for the first time became exchangeable, they also -for the first time acquired the attribute which we call value. - - - - - - - -CHAPTER III. - -THE PERIOD OF BARTER. - - -All exchanges must, however, in the first instance, have been made -directly, or, as we term it, by barter; so much of one commodity -or service being given for so much of some other commodity or -service--corn for cloth, furs and skins for knives or tobacco, so -much labor in building a house for so much skill in constructing -a canoe. But in all this method of exchanging, which, while it is -the most ancient, is also one which still extensively prevails in -even the most civilized societies, there was no place for the use -or intervention of money; and consequently, also, there was no such -thing as price; for price, as before stated, is the purchasing power -of any commodity or service expressed in money. - -But the people on Robinson Crusoe Island soon found out by experience -that there was an obstacle in the way of carrying on all exchanges -according to the principle of direct barter, so serious in its nature -as to constitute, unless removed, a complete bar to any further -considerable progress in civilization and social development. And -the discovery happened somewhat in this wise: - -Twist, who was a tailor, and had made a coat, discovered all at -once that he was out of bread; and being hungry, suspended work, -and went in search of Needum, the baker, to effect an exchange. He -found him without difficulty, just heating his oven, and with plenty -of bread to dispose of; but as the baker had all the coats he wanted, -he declined to trade. Needum, however, kindly informed Twist that if -any fellow should call with any surplus grain or flour, he (Needum) -would be most happy to supply him with all the bread he needed in -exchange; but as the tailor was neither a farmer nor a miller, and -had neither of these articles, he (Twist) set off for the other end -of the island, where there was another baker, to see how the latter -was situated in respect to garments. On his way, Twist was overtaken -by Pecks, the mason, who had no coat, and, wanting the very garment -which Twist had been making, had stopped work on a stone wall and -gone in search of the tailor, to whom he proposed to exchange the -coat for a new chimney. But as Twist had already two chimneys to -his house, and nothing to cook, and didn't want another chimney, the -mason was as unsuccessful in his effort to trade with the tailor as -the tailor had been just before with the baker. At last, after much -vexatious traveling about, involving great waste of time and labor, -Twist found a baker who wanted to exchange bread for the coat, and -Pecks a tailor who would give a coat for a chimney; Needum having, -in the mean time, shut up his bakery and gone in search of Diggs, the -farmer, who was willing to supply grain for bread. But when all these -different persons, each desirous of exchanging his special products -or services, had been found, and had come together, a new perplexity -at once made its appearance, and one so embarrassing as to cause each -man seriously to consider whether it were not better to return home -and endeavor to produce every thing for himself, rather than attempt -to exchange any thing. "For how," said they all, "is the comparative -value of our different commodities and services which we propose to -exchange to be ascertained?" "How can I know," said Twist, "how many -loaves I ought to receive for my coat?" "Or I," said Pecks, "find out -how high and broad a chimney I ought to make for my garment?" Diggs, -furthermore, got up a little private dispute of his own with Needum, -growing out of the circumstance that the latter wanted to make his -entire payment in bread to the former at once; while Diggs, who did -not relish the idea of living on stale and possibly moldy bread for -an indefinite length of time, wanted pay for his grain, from the -baker, at the rate of one fresh loaf per day. As for poor Twist, -he had become by this time so humble through hunger that he had not -the heart to object to the proposition to take a cart-load of bread -at once in exchange for his coat, although his house was so small -that he knew he would have to store part of his "pay" on the roof, -where it would be certain to be eaten by others than his own family. - -There was another incident which happened about this time which made -much talk among the island community. A man who had nothing to sell -but his labor had been employed to load a vessel with coal--a vein -of which had been discovered; and, after working faithfully all day, -had received in pay for his services a ton of coal. But as it was -meat, drink, and lodging, and not coal (although the latter was -greatly needed for some purposes), which the laborer wanted, there -was nothing left for the laborer to do but to attempt to exchange -his coal, and that, too, as soon as possible, in order to satisfy -his immediate necessities. Being too poor to hire a horse and cart, -he therefore borrowed a wheelbarrow, and, filling it with coal, went -in search of persons who had a surplus of meat, drink, and lodgings -to dispose of. But all of them happened to have all the coal they -wanted; and morning found the laborer still trundling through the -streets his most useful commodity unexchanged, and ready to sink with -hunger and exposure. A like experience befell also the journeyman -butcher, blacksmith, carpenter, and dry-goods clerk, who received -for their day's labor respectively a sheep-skin, a dozen horse-shoes, -a piece of pine timber, and two yards of red flannel. All were in no -condition, through bodily exhaustion, to resume work on the next day; -and all also clearly saw that their condition would not have been much -improved, if each had received an entire payment in either meat, drink, -or lodging, in place of coal, skin, lumber, horseshoes, or cloth. - -The laborers, therefore, held a meeting, and at once resolved: -"That whereas it was evident that the system of paying for labor -with a portion of the commodity which each laborer produced would -necessitate as much time and labor to make their wages serviceable to -their wants as was required in the first instance to earn said wages; -therefore, it was but right and proper that the employers should allow -the laborers to use half of the whole time for which they were paid, -for the purpose of rendering their wages wholly available for their -immediate necessities." But to this the employers rejoined that such -an agreement would be equivalent not only to doubling the proportion -of wages to direct production, but also to impairing, to the extent -of one-half, the effectiveness of all labor engaged in production, -thereby increasing scarcity, diminishing abundance, and rendering -further advance in material development exceedingly slow, if not -altogether impossible. For a time, therefore, there was a prospect of -a very serious difficulty between the representatives of labor and -the representatives of capital; resulting, as is always the case, -in immense losses, not only to those directly concerned, but to the -whole community. - - - - - - - -CHAPTER IV. - -HOW THEY INVENTED MONEY. - - -The people on the island--both laborers and employers--were, however, -fully agreed that life was too short to waste a good part of it in -a game of "blindman's-buff" on a large scale--for such this attempt -to conduct exchanges on a basis of direct barter substantially was; -[1] but they nevertheless also clearly perceived that the game -would continue to be played, to the interruption of all material -progress, unless some other method of exchanging could be devised -and adopted. Under the guidance, therefore, as it were, of instinct -(Robinson Crusoe encouraging), and without any enactment of law, -Twist, Needum, Pecks, Diggs, Friday, Friday's father, Will Atkins, -and every body else, by common consent, agreed to select and adopt -some single commodity which all should agree to take in exchange -for whatever of products or services they might have to dispose of; -so that whenever any one had any thing to exchange, he might first -exchange it for this commodity, whatever it might be, and then with -such intermediate object purchase at such times and places, and in -such proportions as he might desire, whatever he might need. And the -moment this was done, civilization on the island took a long step -forward, and the first great embarrassment growing out of the attempt -to exchange exclusively by direct barter was removed. The tailor was -no longer in danger of starving; the mason had no longer any anxiety -about procuring clothing, and the laborer received as pay for his -labor something which gave him an equivalent in meat, drink, lodging, -and other necessities which he might need, without trouble; every man -giving freely of his goods or services for the intermediate object, -because he knew that every other person desirous of exchanging would -be willing to do the same. - -Again: the selection of some commodity or article, and the investing -it by common consent with a universal and comparatively unvarying -purchasing power, also solved the second perplexity, inasmuch as it -provided a measure or standard, for ascertaining the comparative value -or purchasing power of every other exchangeable commodity or service; -and in precisely the same manner as the length or weight of any thing -is ascertained, i.e., by comparing it with some other thing which -the community have universally agreed to recognize as a standard of -length or weight--as, for example, the rod of wood which we call a -yard-stick, or a piece of metal which is termed a pound. "My loaves -are each worth ten pieces of the intermediate commodity," said Needum, -the baker! "My coat," rejoined Twist, the tailor, "is worth a thousand -pieces!" The terms of fair exchange between the baker and the tailor -would therefore have been one hundred loaves for one coat. - - - -The general name given to the commodities or articles which the -people of different countries universally accept in exchange, as the -equivalent for all other commodities or services, and as the measure -of values, is money. - -The commodities or articles which have been selected by men at -various times and places to serve as this universal equivalent, -intermediate agent, or medium for facilitating exchanges, have been -exceedingly various. Among the North American Indians, and the early -settlers who came among them, wampum and beaver-skins were used as -money; among the natives of West Africa, money consists of small -shells called "cowries;" in Abyssinia, the common money of to-day -is salt; in Chinese Tartary, it is cubes of pressed tea; and within -a comparatively recent period small cakes of soap have been used as -money on the west coast of Mexico. Among pastoral people of antiquity, -cattle and sheep were so extensively used for money that our common -English word pecuniary has its derivation from the old word pecus, -signifying a flock. And while we read in Homer that the price of -the armor of Glaucus was one hundred head of cattle, we also know -that the Zulus of South Africa pay their debts to-day in cattle, -and reckon their wealth by the same standard. - -Money, therefore, existed before statutes, and exists and is used -to-day among nations who have no written or acknowledged code of laws. - - - -It is also of importance to a clear understanding of this subject to -recognize at this point another fundamental fact, namely, that there -is no evidence that any nation or people has ever adopted, in the -first instance, any article or commodity to use as money which did not -possess, by reason of some inherent or intrinsic desirable qualities, a -natural purchasing power or value. And a little reflection will make it -obvious that this must have been so from necessity. For in the absence -of all law defining what money should be, and regulating exchanges, -the adoption of any article to serve as money which represented -little or no effort for its production or accumulation would enable -the shrewd, the idle, or unscrupulous, easily, and without fear -of punishment or restraint, to take from the rest of the community -products which represented the expenditure of time and labor, without -giving in return any equivalent. Thus, for example, if dried leaves, -or pieces of paper with such marks as any might choose to stamp or -scrawl upon them, had been invested with a universal purchasing power, -the primary practical result of the use of such money would have been -to enable somebody to obtain something for nothing, or to permit those -who would not work or save, to rob those who did. The people on the -island, being uneducated, never did any such foolish thing; but when -they came to study history, they found out, to their great surprise, -that the people of other countries had repeatedly used things worthless -in themselves as money; and many years afterward a man who aspired -to be a great teacher even came to the island from the United States, -and endeavored to convince the people that it was a great defect to use -any thing as money which had any intrinsic value as a commodity. [2] -The children of the first school he attempted to talk to soon made -his position embarrassing by reading from their histories that the -people of every country, especially the poor and ill-informed, who -had ever attempted to facilitate their exchanges by using something -as money which had no intrinsic value, had in every case been so -swindled and robbed, as a consequence, that sooner or later they -were always compelled, as a measure of simple self-protection, to -abandon its use, and in its place adopt something as money which had -a generally acknowledged and comparatively permanent inherent value -or purchasing power as a commodity. - -The following were some of the narrations which the children found -and read out of their histories: - - - "In December, 1861, a poor soldier's widow put into the - savings-bank two hundred dollars in specie, and then removed with - four young children to California. In July, 1864, when gold stood - at two hundred and eighty, she sent for her money. In return, she - received a gold draft for eighty-three, accrued interest at six - per cent, included."--Henry Bronson, Nature and Office of Money. - - "The morals of the people were corrupted (by the Continental - irredeemable money) beyond any thing that could have been believed - prior to the event. All ties of honor, blood, gratitude, humanity, - and justice were dissolved. Old debts were paid when the paper - money was worth no more than seventy for one. Brothers defrauded - brothers, children parents, and parents children. Widows, orphans, - and others were paid for money lent in specie with depreciated - paper."--Breck, Sketch of Continental Money. - - "The assignats gradually dwindled down to nothing, involving - the whole land in ruin--excepting a few lucky speculators--and - resulted eventually in national bankruptcy. When thousands of - wretches, even before the final collapse of the assignats, were - committing suicide to escape starvation, war was a blessing; - and Napoleon was the instrument by means of which all Europe was - made to feel the results of worthless money, either directly or - by inoculation, from its maddened victims."--Notes on the French - Assignats, and their Influence. - - "He had to pay four hundred dollars for a hat; for a pair of boots - the same. He wanted a good horse, but was asked a price equivalent - to ten years' pay." "My six months' earnings will scarce defray the - most indispensable outlay of a single day. * * * For a bed, supper, - and grog for myself, my three companions, and their servants, - I was charged, on going off without a breakfast next day, the - sum of eight hundred and fifty dollars."--Life of General De Kalb. - - "In all, from first to last (1835 to 1841), the amount of - notes, bills, drafts, bonds, etc., issued by the Treasury of the - Republic of Texas, and serving to a greater or less extent as a - 'circulating medium,' amounted to $13,318,145, or at the rate of - more than two hundred and sixty dollars per head of the entire - population. If paper issues serving as money could have made a - people rich, the Texans ought to have been the richest people in - the universe. In January, 1839, Texas treasury-notes were worth no - more than forty cents on the dollar; in the spring of 1839, they - were worth thirty-seven and a half cents; in 1841, from twelve - to fifteen cents; and in 1842 it required, in the characteristic - language of the times, 'fifteen dollars in treasury-notes to - buy three glasses of brandy-and-water without sugar.' 'By this - time there was little circulating medium of any kind in Texas; - but this was no great calamity, as the people had but little left - to circulate.' The evils the system did were immense, and such as - for which, even were it so disposed, the Government could afford no - compensation to the sufferers."--Gouge's Fiscal History of Texas. - - -Again, one of the principal objects for which money was devised and -brought into use was to serve as a measure, or standard, for estimating -the comparative value of other things. But it seems hardly possible -to conceive of a person desirous of using money for such purpose, -selecting an article to measure values which in itself possesses no -value, or costs no labor to produce, any more than he would select -as a standard for measuring length something which had no length, or -as a standard for measuring weight something which had no weight. The -people of the island must have been unusually stupid if they did not -from the outset, therefore, clearly see that nothing can be reliable -and good money under all circumstances which does not of itself possess -the full amount of the value which it professes on its face to possess. - - - - - - - -CHAPTER V. - -HOW THE PEOPLE ON THE ISLAND AND ELSEWHERE LEARNED WISDOM. - - -But while any commodity possessed of acknowledged purchasing power or -value may be used as money, the experience of the islanders and every -other people must have soon taught them that some commodities are much -better adapted to this purpose than others; or, rather, that the use -of certain commodities as money, while they may answer the purpose, -nevertheless entail very serious disadvantages. And the details of -the manner in which this information has been acquired by experience -constitute one of the most interesting chapters in the world's -history. The experience of the islanders was somewhat as follows: - -At the outset they agreed to use cowries--a pretty shell picked -up on the beach, and which the women all desired to have and use -as an ornament. These shells were not, however, plentiful; and, -in fact, it was found that it required about as much time and labor -for a man to collect a hundred of them as it did to grow a bushel -of wheat. Consequently, wheat regularly exchanged for cowries (as -money) at the rate of one hundred cowries for one bushel, while the -farmer with two thousand cowries could readily buy a plow, which -was considered equivalent in value to twenty bushels. By-and-by, -some idle fellows that were in the habit of sailing made a long -excursion, and, for the first time, visited a little island on the -remote horizon. When they landed, they found, to their surprise, -that instead of cowries being very scarce on the beach, they were -very abundant. They winked at one another, and said little; but each -man proceeded to gather all the cowries he could, and, returning to -the main island, kept their discovery a profound secret. - -The first thing of note that next happened among the Robinson Crusoe -people was a great and unexpected revival in business. Money began -to grow abundant. Societary circulation was never so active. Every -thing that was offered for sale speedily found a purchaser, and, -demand increasing, prices rapidly increased also. It was also noticed -that a few persons who never did any regular work, but speculated -and gambled all the morning, and took pleasant sailing excursions -every afternoon, had, especially, plenty of money, which, as patriotic -citizens, desirous of making trade lively, they were always most ready -to part with for other commodities. The shop-keepers, the farmers, and -the mechanics, all also finding that they had more money than usual, -all also felt impelled to buy something, and prices took a fresh start -upward, so that a bushel of wheat that could previously have been sold -for one hundred cowries easily brought one hundred and fifty, and even -two hundred. But, on the other hand, the farmer, instead of being able -to buy, as before, a plow for two thousand cowries, now found that he -had to pay double, or four thousand; or, in other words, the cowries -had only about one-half the purchasing power they possessed before. - -But for a time every body was jubilant. Was it not evident that -the value of every man's possessions, measured in cowry money, had -greatly increased--and what could be more natural than that the shrewd -adventurers who had been the authors of these golden days should be -highly honored, invited to speak before cowry clubs in all parts of -the island, and be even talked of for the chief offices, which still -continued to be filled by Robinson Crusoe and his man Friday? The -continually augmenting prices--measured in cowry money--of all -commodities, or, what is the same thing, the continually diminishing -purchasing power of the cowries, at last began to attract attention, -and this in turn induced distrust; so that the price of a bushel -of wheat, which had been at first one hundred cowries, and then two -hundred, rose to three, four, and even five hundred cowries. Another -remarkable circumstance noticed was, that, as prices increased, -the wants of trade for cowry money also increased proportionably, -which want the adventurers who had been the means of giving the -island its increased volume of money took care to supply by bringing -additional quantities of cowries as they were needed. It was also -observed that, as distrust increased, there was also a remarkable -increase in societary activity; for every body desired to change off -his cowry money for something else. [3] Persons who were in debt made -haste to pay their debts, and every body was ready to lend cowry money -to start all sorts of new enterprises. A company was organized, for -example, with a capital of ten million cowries, to explore the wreck -of the original ship which brought Robinson Crusoe to the island; and -although nobody knew exactly where the wreck was, or what was supposed -to remain in it, it was advocated as affording great opportunity -for labor. Another project, for which a company with fifty million -cowries capital was started, was to build a system of canals across -the island, although the island had a width of only about ten miles, -with a remarkably safe ocean navigation all around it. - -Finally, the secret of the whole matter gradually leaked out. Other -people besides the original three shrewd fellows found out where the -supply of cowries came from, and made haste to visit the remote island, -provide themselves with money, and put it in circulation. But the -more money that was issued, the more was needed to supply the wants -of trade, until at last it took a four-horse wagon-load of cowries -to buy a bushel of wheat. Then the bubble burst. Stock-companies -all failed. Trade became utterly stagnant. The man whom Robinson -Crusoe had made secretary of the island treasury thought he could -help matters by issuing a few more cowries, but it was no use. Some -very wise persons were certain that every thing would be all right -again if people would only have confidence; but as long as the people -who worked and saved were uncertain what they were to receive for -the products of their labor--something or nothing--confidence didn't -return. Every body felt poor and swindled. Every body who thought he -had money in savings-banks woke up all at once to the realization -that his money was nothing but a lot of old shells. Every body -had his bags, his tills, and his money-boxes filled with shells, -which he had taken in exchange for commodities which had cost him -valuable time and labor. Strictly speaking, however, calamity did not -overtake every body. There were some exceptions, namely the shrewd and -idle fellows who had first found the cheap supply of cowries, and, -taking advantage of the ignorance of the community, had added them -to the before-existing circulation to serve as money. All these had -taken very good care to keep the substantial valuable things--houses, -lots, plows, grain, etc.--which they had received in exchange. They -had, in fact, grown rich by robbing the rest of the community. [4] -The community, however, were too courteous to call them thieves, and -in conversation they were usually referred to as shrewd financiers, -and as men ahead of their time. The concluding act of this curious -island experience was, that the formerly so highly prized money -became depreciated to such an extent as to possess value only as -a material for making lime. The people accordingly, by burning, -made lime out of it, and then, in order to make things outwardly -cheerful, used the lime as white-wash. But upon one point they were -all unanimous, and that was, that the next commodity they might select -to use as money should be something whose permanency of value did not -depend on elements capable of being suddenly affected by accidental -circumstances, or arbitrarily and easily changed by the devices of -those who desired to get their living without working for it. - -But this experience of the islanders in reference to the originating -and using of money, although curious, has not been exceptional; for the -records of history show that men almost everywhere, in going through -the process of civilization, have had a greater or less measure of -the same experience. One particularly noteworthy illustration of this -is recorded in the "History of New York," by Diedrich Knickerbocker, -and in the manuscript records of the New York Historical Society. It -was in the days of Dutch rule--1659--in New Amsterdam (afterward New -York), when the common money in use was the so-called Indian money, -or "wampum;" which consisted "of strings of beads wrought of clams, -periwinkles, and other shell-fish. These had formed a simple currency -among the savages, who were content to take them of the Dutch in -exchange for peltries." - -William Kieft was at that time governor, and being desirous of -increasing the wealth of New Amsterdam, and withal, as the historian -relates, somewhat emulous of Solomon (who made gold and silver as -plenty as stones in the streets of Jerusalem), he (the governor) -determined to accomplish his desire, and at the same time rival -Solomon by making this money of easy production the current coin of the -province. "It is true, it had an intrinsic value among the Indians, -who used it to ornament their robes and moccasins; but among the -honest burghers it had no more intrinsic value" than bits of bone, -rag, paper, or any other worthless material. "This consideration, -however, had no weight with Governor Kieft. He began by paying all -the servants of the company, and all the debts of the Government, -in strings of wampum. He sent emissaries to sweep the shores of Long -Island, which was the Ophir of this modern Solomon, and abounded in -shell-fish. These were transported in loads to New Amsterdam, coined -into Indian money, and launched into circulation." - -"And now for a time affairs went on swimmingly. Money became as -plentiful as in the modern days of paper currency, and, to use a -popular phrase, 'a wonderful impulse was given to public prosperity.'" - -Unfortunately for the success of Governor Kieft's scheme, the -Yankees on Connecticut River soon found that they could make wampum -in any quantity, with little labor and cost, out of oyster-shells, and -accordingly made haste to supply all the wampum that the wants of trade -in New Amsterdam required; buying with it every thing that was offered, -and paying the worthy Dutchmen their own price. Governor Kieft's money, -it is to be further noticed, had also in perfection that most essential -attribute of all good money, "non-exportability." Accordingly, -when the Dutchmen wanted any tin pans or wooden bowls of Yankee -manufacture, they had to pay for them in substantial guilders, or -other sound metallic currency; wampum being no more acceptable to -the Yankees in exchange than addled eggs, rancid butter, rusty pork, -rotten potatoes, or any other non-exportable Dutch commodity. [5] - -The result of all this was, that in a little time the Dutchmen and -the Indians got all the wampum, and the Yankees all the beaver-skins, -Dutch herrings, Dutch cheeses, and all the silver and gold of the -province. Then, as might naturally have been expected, confidence -became impaired. Trade also came to a stand-still, and, to quote from -the old manuscript records, "the company is defrauded of her revenues, -and the merchants disappointed in making returns with which they -might wish to meet their engagements." It is safe to conclude that, -after this, the commodity made use of by the Dutchmen as money was -something less liable to have its value impaired than wampum. - -The early settlers in East Tennessee also came to a similar conclusion, -after a somewhat similar experience. Raccoon-skins were in demand for -various purposes, and consequently were valuable. They accordingly -selected them for use as money. Opossum-skins, on the other hand, were -not in demand, and therefore had little value. Those of the settlers -who desired to discharge their obligations without giving a full -equivalent paid their taxes in opossum-skins to which coons' tails -were attached. The counterfeits having once got into the treasury, -could not be exported out of the treasury to meet the payments of -the State, and the use of coon-skins as currency came to an end. - -But to return to the island. Although the first experience of the -islanders in selecting a commodity to be used as money had been -particularly unfortunate, the necessity of having some agency to serve -the purpose of money remained as great as before, and consequently -a new commodity had to be selected. Various people proposed various -things. Some proposed to use bananas, which were always desirable, -and, when good and ripe, were always exchangeable at a very constant -value; but their unfitness to be used as money was acknowledged as -soon as it was pointed out that bananas decayed very quickly after -they became most useful, and that therefore a man who had plenty of -money to-day might have none tomorrow, and that through no fault of -his own. [6] Wheat, cattle, and pieces of stamped iron were also -proposed, but all of these were found to be unsuitable in some -essential particular. Thus, for example, it was objected to wheat, -that, though it was almost always in demand, and represented a very -constant amount of labor for its production, it was too bulky to -carry about, and rarely had the same exact value one year as another; -to cattle, that it was impossible to divide up an ox, cutting off -the tail at one time and the ears at another, for the purpose of -making change, without destroying the value of the animal as a whole; -and that if cows in general were to be used as legal tender to pay -debts, the very poorest cow would very probably be selected from -the money-pen for such a purpose; [7] while, if iron were adopted as -money, and circulated at its current value, it might be necessary to -move about a ton to pay a debt of twenty or thirty dollars. - -A peculiar kind of beads, made of blue glass, had come into use with -the women on the island as ornaments, and being greatly in demand, -small in bulk, and of most durable material, they were thought to -be peculiarly well fitted to serve the purpose of money. They were -accordingly adopted, and for a time fairly answered the purpose. But -all at once the women declared their continued use to be unfashionable; -and all use and demand for the beads at once ceasing, the merchants -and others who had accumulated a large stock of them, in exchange -for other commodities, at the same moment found that what they had -regarded as money had no longer any purchasing power or value, and -in consequence experienced great losses. Thereupon the community -concluded not to use blue glass beads any longer as money. [8] - -How fast the people on the island, by reason of their varied -experience, educated themselves up to a knowledge of what constitutes -good money may be inferred from the following incident: - -A portion of the inhabitants on the island were heathen, and, to defray -the expense of efforts to civilize and Christianize them, it was the -habit of certain good men to take advantage of the assembling of the -people from time to time to solicit and receive contributions for -such objects. It was observed, however, on such occasions that some -persons, either through ignorance of what constitutes money, or by -reason of great poverty, were in the habit of depositing commodities -in the hat which were not money; and the practice having been brought -to the attention of Robinson Crusoe (who generally presided at such -meetings), he is reported to have administered rebuke and instruction -in the following impressive manner: - -"Before proceeding to take up our regular contribution for the -heathen," he said, "I would suggest to the congregation--and more -especially to those who sit in the gallery--that the practice of -putting into the hat commodities which are not money, more especially -buttons, shows a degree of ignorance respecting the uses of money on -the part of some in this community which I had not supposed possible, -after all our recent and varied experience on this subject. But if, -through ignorance or impecuniosity, any should feel obliged to continue -to contribute buttons in the place of money, I would request that -they do not stamp down or break off the eyes; inasmuch, as while by -so doing they utterly destroy the utility of these commodities as -buttons, and do not increase their desirability as money, they also -utterly fail to deceive the heathen; who, although ignorant of the -Gospel, and not using buttons for any purpose, are nevertheless, -as a general thing, good judges of currency." - - - - - - - -CHAPTER VI. - -GOLD, AND HOW THEY CAME TO USE IT. - - -Finally, time and circumstances helped the islanders to a solution of -their difficulties. A man, walking in a ravine one day, picked up a -small bright mass of shining metal. Although it had evidently lain -in the sand, been washed by the water, exposed to the atmosphere, -and rubbed against the rocks, nobody knows how long, it had a -remarkable brightness and color; and the more it was rubbed, the -brighter and more attractive it became. This little mass of metal, -which afterward came to be designated as gold, the man carried home -to his wife, who in turn was so much pleased with it that she hung -it by a string about her neck as an ornament. Its attractiveness of -course excited the desire of every other woman to have the same, and -a further search in the ravine resulted in the discovery of other -nuggets. Closer examination of the new metal also showed that it -possessed many other remarkable qualities besides brightness. It was -found it could easily be melted and cast, and also be readily molded -without heat by hammering and pressing; and that when so cast, molded, -and pressed, it persistently retained the shape and impression that -were given it. Further, that it could be drawn into the finest of -wire, hammered into the thinnest of plates and leaves, and be bent -and twisted to almost any extent without breaking; that an admixture -with it of the slightest impurity or alloy so immediately changed its -color, that color became to a very high degree a test of its purity; -[9] that fire, water, air, and almost all the agencies destructive -to other things, had comparatively little or no effect upon it; -that with the exception of size and weight, every piece, no matter -how small, possessed all the attributes of every other larger piece; -and that when any large piece was divided into a great number of -smaller pieces, these last, in turn, could be reunited without loss -or difficulty again into one whole. Of course, the discovery of all -these remarkable qualities united in one substance not only greatly -increased its utility, but at the same time greatly increased the -desire of every body to have it. In place of being worn in a rough -state as an ornament, it was converted into rings, bracelets, chains, -pins, etc. It was found to be almost indispensable for a great number -of mechanical and chemical purposes; and, finally, the charm for its -possession and desire for its use proved so overpowering that to many -it actually became almost an object of worship. - -If a man was a Pagan, he felt that in no way could he so honor and -symbolize the god he worshiped as to fashion in gold the image of -that which he imagined; if he was a Christian, he chose gold for -the fabrication of his symbolic vessels and ornaments, as, of all -material things, the one which was most typical of purity, beauty, -durability, and worth. If a great government or a people desired -to commemorate the deeds of a hero or statesman, it impressed their -effigies in medals of gold; if a maxim was enunciated which by general -consent embodied the best rules of life, it was called golden; if -a law or precept was thought worthy of being kept in ever-present -remembrance before the people, it was emblazoned in letters of gold; -while for speech, prophecy, or poetry, this same metal has ever been -a never-failing source for the finest of comparisons and the most -attractive of figurative illustrations. In short, from the time of -its first discovery, among all nations, in all countries, with the -ignorant and the learned, the savage and the civilized, the rich and -the poor, the humble and the powerful, gold has always been, of all -material things, the one which most men have desired most; the one for -which, under most circumstances, they have been willing to exchange -all other material possessions, and for the sake of acquiring which, -even part with immaterial things of greater value--honor, creed, -morality, health, and even life itself. - -Gold so becoming an object of universal desire to the people on the -island, and made exchangeable for all other things, it soon acquired -spontaneously a universal purchasing power, and from that moment -became Money. - -This purchasing power was at first by no means fixed or constant. So -long as there was but a small quantity of gold, its purchasing power -was large. As the quantity extracted from the rocks or washed from -the sands became greater, and the wants of the people became more and -more satisfied, its purchasing power or value decreased; and if the -supply had continued, and the demand had been limited to the wants -of the island exclusively, its value in time would have undoubtedly -been no greater than copper or iron, and possibly not so great. But, -very curiously, an abundant supply did not continue. That which was -obtained first and with little labor proved to be the result of the -decay and washing of the rocks through long ages; and when the readily -accessible or surface deposits became exhausted, as was soon the -case, the conditions determining the supply of gold became altogether -different. On the one hand, there was no lack of gold. Instead of being -a very scarce metal, as was for a time supposed, it was found to be -so widely disseminated that the chemists and metallurgists readily -detected traces of gold in almost every extensive bed of clay and -sand they examined. [10] - -But, on the other hand, experience also proved that to collect any -very considerable quantity of the metal required the expenditure not -only of a vast amount of most disagreeable and exhausting labor, but -also of a great quantity of other commodities. So that the people who, -at the outset, abandoned their various occupations of raising wheat, -making coats, building boats, baking bread, and constructing stone -walls and chimneys, and betook themselves to digging gold, soon -learned that, as a general rule, the results of a day's labor thus -employed purchased no more of useful or desirable commodities--meat, -drink, clothes, etc.--than the results of a similar amount of labor -exerted in the most ordinary occupations; and not a few even were -ready to assert, as the result of their individual experience, that -a man could do better for himself in the way of earning a living by -following any and every other occupation rather than that of seeking -for gold. [11] Accordingly, after trying it for a little while, the -most skilled laborers left the gold regions and went back to their -old occupations; and these, in turn, were followed by the unskilled -laborers in such numbers, that had it not been for the encouragement -growing out of the hope of suddenly enriching themselves through -the chance discovery of a great nugget (as sometimes happened), -the mines would have been entirely deserted. As it was, the supply -of gold greatly fell off, and, the demand for it remaining about the -same, the purchasing power of the stock on hand for other commodities -gradually increased, until it came about that the result of an average -day's labor in digging gold was found to buy more than the result of -an average day's labor in other occupations. But as soon as this was -observed, an additional supply of labor went back to gold-mining, -and continued to follow it, until an equalization of results from -effort in gold-digging and effort in other corresponding employments -was again established, as before related. And this interchange of -employments and equalization of results from labor went on, year by -year, until at last the people, as it were by instinct, found out that -a given quantity of gold represented more permanently a given amount -of a certain grade or kind of human labor or effort than any other -one substance. And the moment this fact became apparent, the people -on the island for the first time also clearly perceived that gold, -in addition to the universal exchanging quality or purchasing power -which it had before naturally acquired, from the circumstance that -every body from the time of its first discovery wanted it, had further -acquired two other attributes, which fitted it, above all things else, -to serve as money; namely, and first, that it had become a measure or -standard of value, by which, as by a yard-stick, the comparative value -of all other commodities might be measured or estimated; and, second, -that its value or purchasing power was so constant and continuously -inherent in itself, even under circumstances when the value of most -other commodities would be destroyed, that the greatest security or -guarantee which any person owning gold could possibly have of its -remaining valuable to him for any length of time was, that the owner -should simply keep possession of it. - -By no portion of people on the island was this last attribute regarded -so much in the light of a blessing as by the poor old men and women. As -a general rule, they earned but little more than sufficed to support -them, and they were therefore always naturally very anxious lest what -little they saved should be impaired in value or made worthless by -keeping, before the time when they might especially need it to pay for -doctors and medicine, or insure them a decent burial. The cowry money, -which had before represented their hard toil and personal deprivation, -had turned out, on keeping, to be only worthless shells; the bead -money had become valueless when it became unfashionable; the cattle -money had to be fed every day to keep it from experiencing a heavy -discount, and penned up every night to prevent it from walking off; -the wheat money was always liable to be injured by damp or devoured -by vermin; while twenty pounds of pig-iron had proved too heavy -for their old limbs to carry to the store every time they wanted -to purchase a little cloth or tobacco. But here was something at -last which completely satisfied the necessities of their situation, -and enabled them to feel certain that, whether they buried it in the -ground, where it was always damp and moldy; or put it in the chimney, -where it was always hot and smoky; or lived at one end of the island -among the heathen, or at the other end among the Christians, would -always, year in and year out, buy about the same average quantity of -all sorts of things; and which, when offered in payment for services -or commodities, to the doctor, lawyer, merchant, druggist, undertaker, -mason, or tailor; to the Yankee, Irish, Dutch, Turk, or Hindoo; to -the governor of Ohio, or a senator from Indiana, did not require any -of them to look in a book, examine a law, read the Bible, or hunt up -the resolutions of the last Congress or political convention, to tell -how much it was worth, or whether it was safe to take and keep it. - -There was a very wise man on the island who objected to the use of -gold as money, for the reason that he felt afraid that the poor old -women who wanted to feel certain of having always something of reliable -value in their possession would fill their old stockings with it and -hoard it. [12] But he was soon shut up by some one asking him, why, -if the old women wanted to keep something by them perfectly secure -against a rainy day, and slept better nights because they knew they -had it, they shouldn't be allowed that privilege? and if there could -be any possible reason why any one should object to the old women -hoarding gold, except that he wanted to cheat and wrong the poor by -compelling them to keep their hard-earned savings in something whose -value was not certain, and which might have no value whatever when -it came time to pay the doctor or the undertaker? - -When the people on the island first began to use gold as money, they -carried it around with them in the form in which it was first found; -the fine dust or scales inclosed in quills, and the nuggets in bags; -or they melted and hammered it into large lumps and bars; [13] and, -as the purchasing power of the gold was always proportioned to its -weight and purity, every body carried round with him small scales -and tests with which he proved the gold before making exchanges with -it (the same as is customary at the present day in China). But this -method involved great inconveniences; and although the statement of a -person of recognized honesty that he had proved the value of the gold -he offered in payment was generally accepted, it was nevertheless -recognized that there was no more unfairness or discourtesy in the -claim of the grocer to test the quality of the money of his customer by -scales and acids, than there was in the claim of the customer to test, -by tasting, the salt and sugar of the grocer. As might be inferred, -therefore, it often required a good deal of time to complete the most -ordinary exchanges, and people everywhere complained about it and -wrote letters to the newspapers. Merchants who were very cautious -and particular, irritated their customers, and got the reputation -of being very exacting and distrustful; while merchants who had but -little capital and wanted to get business, advertised they would take -gold on the simple word of their customers. But it was observed of -the last, that, owing to being constantly cheated, they all, sooner -or later, failed. At last the difficulty was remedied by a series of -happy circumstances. - -Robinson Crusoe had, some years before this, died, at a good old age, -as had also Will Atkins, and all the sailors who had come with him -to the island from other countries; so that there were none now on -the island who had ever known any thing about or ever seen any coined -money. In making some public improvements, however, a party of workmen -one day broke into the old cave in which Crusoe had first lived when -he escaped from the shipwreck, and there, in the dirt beneath the -floor, were discovered the three great bags of money which Crusoe -had found in the chest, and in his disgust had buried and utterly -forgotten. Every body at once recognized the metal to be gold, and -was perfectly willing to exchange other commodities for it with the -finders, the same as he was willing to do for any other gold. But -why it should be in the form of flat round disks, and stamped with -inscriptions and images, was something that puzzled every body; and -the Antiquarian and Philosophical Society called a special meeting -to discuss the subject. Some, looking to only one side of the pieces, -thought they were medals struck to commemorate some distinguished man, -or a woman, whose name often appeared to be "Liberty." Others, who -looked only at the other side, thought they were intended to signalize -a great contest between the lion and the unicorn, or to make the people -familiar with the peculiarities of some unnatural bird or beast, which, -as it was not like any thing either in the heavens, or on the earth, -or in the waters under the earth, it might not be sinful to worship. - -At last, after the flat disks or coins had been for some time in -circulation, and the community had found out, by repeatedly weighing -and testing them, that each disk represented a constant weight of -gold of uniform purity, the idea came at once to every one that the -only use of the fanciful images and inscriptions on the disks was to -officially testify to the fact of their uniformity of weight and value; -and then every body wondered that he could have been so stupid as not -to have before recognized the idea and adopted it, in place of every -man weighing, cutting up, and testing his gold every time he desired -to part with or receive it in making an exchange. An arrangement was -accordingly at once made for a public establishment--afterward called -a mint--to which every person who so desired could bring his gold and -receive it back again after it had been divided into suitable pieces of -determinate weight and fineness; the fact that the weight and fineness -of each piece had been so proved being indicated by appropriate marks -upon the metal. And in this manner "coined money" first came into use -on the island. And by this time, also, the money which Robinson Crusoe -found in the chest, and which, when it first came into his possession, -had neither utility, value, nor use as a standard, or measure of value, -had gradually acquired all these several attributes: utility, when the -material of which it was composed became capable of satisfying some -human desire for it, as an ornament, as a symbol of worship, or for -some mechanical or chemical purpose; value (the sole result of labor), -when it became an object of or equivalent in exchange, or acquired a -power of purchasing other things; a standard, or measure of value, -when its purchasing power, by reason of various circumstances, was -found to be, if not absolutely permanent, at least more permanent, -on the average, than that of any other commodity. - -The conversion of money into coin was something purely artificial, and -the result of law, or statute enactments, the sole object of which was -simply to make the money (previously in use) true and in the highest -degree convenient. But, as has already been pointed out, money came -into use in the first instance without statute, and was the result, -as it were, of men's instincts; and the subsequent choice by them -of gold, in preference to any other commodities for use as money, -was for reasons similar to those which induced men to choose silk, -wool, flax, and cotton as materials for clothing; and stone, brick, -and timber as materials for houses. It was the thing best adapted to -supply the want needed. - -The introduction and use of coined money at once gave an impetus -to business, and made the people richer, because it saved time and -labor in making exchanges, and relieved every man from the trouble -and expense of buying and carrying round with him scales and other -tests. The only persons dissatisfied were the scale-makers, who found -their business almost destroyed, and they petitioned the authorities -to have their interests protected by the enactment of a law compelling -all persons to weigh their coins with scales before exchanging, as -formerly they did their gold. But, as every body at once saw that the -effect of such a law would be equivalent to compelling all exchangers -to do useless work, the petition amounted to nothing. - -For convenience in speaking and writing, also, each piece of gold or -coin of determinate weight and fineness regularly issued by the mint -received a particular name and had a particular device impressed on -it. Thus, for example, the piece of lowest denomination, containing -25.8 grains of standard gold, which had on it a likeness of Crusoe's -old and faithful servant, was called a "Friday;" a piece of ten times -its weight and value, with a small portrait of the founder of the -island community, was called a "Crusoe;" and a piece of double the -weight of the last, or twenty times the weight of the first, with -a large portrait on it, was called a "Robinson Crusoe" or a "double -Crusoe." Some time after, when the island became generally known to the -rest of the world, it was found that these coins exactly corresponded -in weight, fineness, and value with those adopted in that foreign -country called the United States, and there known under the names of -the gold dollar, eagle, and double-eagle; and after a time, for the -purpose of favoring the development of civilization and assimilating -nationalities by the adoption of a common monetary standard, it was -agreed to discard all local sentiments, and to substitute the latter -names for the former. - - - - - - - -CHAPTER VII. - -HOW THE ISLANDERS DETERMINED TO BE AN HONEST AND FREE PEOPLE. - - -Next came the consideration of the laws regulating the exchanges and -the use of money. Some people wanted laws enacted that every person -should be obliged to sell and part with any thing he owned, provided -a nominal or real equivalent in what the State should declare money -should be offered him; and, also, that when any person had bought -commodities and services of another, and had promised to pay for them -after a time, he might fully discharge the obligation by tendering -that which the State said was money, no matter whether in the mean -time the persons in charge of the mint had, for any reasons, taken -out one-half the valuable gold in the coins, and substituted in its -place comparatively worthless lead. - -But, to the honor of the islanders, these propositions met with little -favor. They said, we mean to be an honest and also a free people; and, -therefore, every one in buying or selling shall do exactly what he -has agreed to do; unless, by reason of some unforeseen or unavoidable -circumstances, he is absolutely unable to perform his agreement or -contract. And they said, further, that if any one receives commodities -and services, and promises to give, five years or five minutes -afterward, in return, an agreed-upon quality and quantity of gold, -wheat, cod-fish, or cabbages, it shall be considered, as in truth -it is, dishonest to attempt to discharge the obligation by offering -pig-iron in the place of gold, pease or beans in the place of wheat, -soft-shell crabs in the place of cod-fish, or pumpkins in the place -of cabbages; and any community which shall in any way sanction any -such evasion of the letter or spirit of its obligations can have no -rightful claim to call itself an honest, Christian people; and if any -community enacts and maintains laws compelling any person to receive -in exchange, or in pay for his services or products, something which -he did not agree to and would not otherwise receive, such a community -has no rightful claim to call itself a free community. The people -on the island, therefore, decided that they would allow the island -authorities to interfere with exchanges to this extent only: that the -medium of exchange and measure of values that they had adopted and -called a Friday, or a dollar, should always and under all circumstances -contain 25.8 grains of standard gold; that this standard should never -be departed from; and that although no one should be compelled to -use it, yet whenever any one talked about or promised to pay or give -money, without specifying whether the money should be wampum money, -bead money, cattle money, gold money, or any other particular kind of -money, the money issued by the acknowledged authorities of the island -should be understood and accepted as what was meant. In short, like -sensible men, the islanders concluded that as long as they maintained -in common use a real, good, and true money, which carried on its face -evidence (easily read and known of all men) of its value or purchasing -power, there was little use of cumbering up the statute-book with any -thing about legal tender. They would leave that to other people wiser -than they were, who desired to use money that would not circulate, -except it had some artificial power or agency back of it to make it go. - -After this, every thing for a time pertaining to trade and commerce -went on very smoothly on the island. It is true there were bad persons -who obtained commodities and services on credit for which they never -intended to pay; careless and extravagant persons who bought more -than they were able to pay for; and foolish and oversanguine people -who, after having by labor and economy accumulated a good store of -commodities, exchanged them for shares in enterprises which never -could pay. And when people by one or more of such methods lost the -results of their hard labor and toil, they naturally felt depressed, -lost confidence in their fellow-men, and thought times and things -might be improved by turning all those in office out, and putting -new men in. But no one on the island ever for a moment imagined -that there was any way to honestly replace the money they had lost, -except by acquiring through industry and economy a new store of useful -commodities with which to buy money; and no one who ever had any thing -to sell which others in the community wanted, and were able to give -in return a fair equivalent, ever found himself in want of money or -a market; while, on the other hand, no one who had nothing to sell -which the community wanted or were able to pay for ever succeeded in -obtaining either money or a market. - - - - - - - -CHAPTER VIII. - -HOW THE PEOPLE ON THE ISLAND CAME TO USE CURRENCY IN THE PLACE -OF MONEY. - - -As time went on, changes in the method of doing business gradually -occurred on the island. Instead of being an isolated and unknown -community, their existence as an organized, civilized state became -generally known to the rest of the world, and a brisk trade and -commerce resulted from the exchange of the products of the island for -the products of other countries. An excellent harbor existed at each -end of the island, and about these points the population naturally -aggregated, and built up two very considerable towns. The middle of -the island, on the other hand, was elevated into high mountain ranges, -covered with dense forests, in crossing which travelers journeying -between the two cities were often robbed of all the gold they carried -about them. To obviate this danger, and avoid the necessity of carrying -gold, persons living at opposite ends of the island, therefore, adopted -a system of giving written orders for money on each other, which each -reciprocally agreed to pay to the person whose name was written in -the order or draft, and then periodically settled or balanced their -accounts by offsetting one order or payment against another. In this -way value or purchasing power was transmitted long distances much more -cheaply and conveniently than could be effected by the transmission -of gold itself; and also much more safely, inasmuch as the thieves -could make no use of the orders, even if they obtained them. And thus -it was that the people on the island became acquainted with and first -used what were afterward known as "bills of exchange." [14] - -This labor-saving and danger-avoiding device, moreover, proved so -useful, that the idea soon suggested itself that by an extension -of the principle involved in the bill of exchange the necessity of -carrying gold at all in any quantity might also be avoided. A public -office was therefore established, where people might deposit their -gold under the guardianship of the state, and receive a ticket or -receipt for the amount, payable in coin on demand; which tickets, -from the fact that every body knew that they were convertible into -gold at will, and that no more tickets were issued than corresponded -to gold actually deposited and retained, soon came to be regarded as -equally good and valid as gold itself, and vastly more convenient -for the purpose of making exchanges. And thus it was that currency -(from the Latin curro, to run) originated and came into use on -the island as a substitute and representative of money. [15] The -name originally given to these receipts was first "bank-credits," -and then "bank-notes," but after a time people acquired a habit of -designating them as "paper money." But this latter term was conceded to -be but a mere fiction of speech and a bad use of language; for every -intelligent person at once saw that a promise to deliver a commodity, -or an acknowledgment of the receipt of, or a title to, a thing, could -not possibly be the commodity or the thing itself, any more than a -shadow could be the substance, or the picture of a horse a horse, -or the smell of a good dinner the same as the dinner itself. - -Nevertheless, as an instrumentality for transferring commodities used -for money, and avoiding the loss and waste unavoidable in handling and -transporting such commodities, the currency thus devised was a great -invention, and being always represented by, or, as we may express it, -covered with, the commodity--gold--which, of all things, fluctuates -least in value, it perfectly answered the purpose of money, without -actually being so. It also furnished another striking illustration of -the superiority of the commodity gold to serve either as money or as -an object of value for deposit, against which receipts or certificates -of deposit might be issued to serve as currency; for if other valuable -commodities, like cattle, corn, cloth, or coal, had been selected for -a like purpose, the bank would have been obliged to erect large pens, -sheds, and warehouses for the storing of the deposits; and, let them -be guarded ever so carefully, their value or purchasing power would, -after a time, rapidly diminish from natural and unavoidable causes. - -The value of most commodities, even in a perfect condition, furthermore -differs so much by reasons of mere locality, that there could be no -possible uniformity in the value of the receipt for the deposit of -one and the same article, issued by banks in different places, to -serve as currency; the value or purchasing power of a ton of coal, -or a fat ox, being one thing at the mouth of a coal-mine or on a -prairie stock-farm, and quite a different thing ten, twenty, or a -hundred miles distant. But in the case of gold, the space needed to -store up what represents a vast value is very small, while the value -or purchasing power of gold not only is, but is certain to remain, -on the average, very constant all the world over. [16] - - - - - - - -CHAPTER IX. - -WAR WITH THE CANNIBALS, AND WHAT CAME OF IT. - - -But more serious matters than the making and issuing of money -soon claimed the attention of the people of the island. It will -be remembered that Friday was first brought to the island by the -cannibals, for the purpose of being cooked and eaten, and that he -was rescued from this fate by the valor of Robinson Crusoe, as was -subsequently also Friday's father and others of his countrymen. But -the cannibals, although then repulsed, did not at the same time lose -their appetites, or the remembrance of the good cheer that had escaped -them; and meat becoming scarce in their own country, they projected -a grand invasion of the island, with the intent of capturing and -cooking Friday, if he was still there, or, in default of Friday, any -body and every body they might happen to catch. The islanders all at -once, therefore, found themselves precipitated into a terrible war, -and were obliged to struggle not only for their homes, but for their -individual existence. - -The Government was active and energetic, but to carry on the war a -vast expenditure of commodities was necessary; and as the Government -of the island--in common with all other governments--never had, -or could have, any commodities or money to buy commodities with, -other than what it obtained through loans and taxes, the people, -one and all, were called upon to help. There was, however, some fear -that if the calls for help were put in the form of taxes, the fires -of patriotism might not burn as brightly as was desirable, and it was -therefore deemed expedient to say little about taxes at the outset, -and rely mainly on loans, to be repaid after the war was over. - -The people, on their side, responded most cheerfully. Some gave one -thing and some another. Some gave service as soldiers, laborers, and -artificers; others contributed timber for canoes, cloth for tents, -iron for spear-heads and guns, corn and flour, hay, medicines, and -money--in short, all sorts of useful things, the results of previous -labor and economy on the part of the individual contributors. In -return, the contributors received back from the Government a promise, -expressed on paper, to repay the commodities borrowed, or their value -in money. These promises were of two kinds. In one the promise was -made definite as to the time of its fulfillment, and the amount or -value of the promise carried interest. These were called bonds. In -the other, the promise, although definite, specified no particular -time for making it good, and its amount or value was not subject to -interest. These latter, from the circumstance that they were written -on blue paper, were popularly termed "bluebacks." When the people got -the bonds, they put them carefully away, for the sake of the interest -that would accumulate upon them; but when they got the bluebacks, -they were at first at a loss to know what to do with them. They were -in some respects unlike any thing they had ever seen before; and yet -there was a very close resemblance between them and the certificates of -deposits of gold in the public repository, which they had now been in -the habit for some time of using as currency. And as the one promised, -on the part of the Government, to pay money equally with the other, -there seemed to the public to be no good reason why one should not -be used as the representative and equivalent of money as readily as -the other. - -The real difference was, that their former currency, composed of -tickets or certificates given in exchange for a deposit of actual -gold, represented an actual accumulation of an equivalent of every -thing desirable which labor could produce all the world over; while, -on the other hand, the promises to pay which the island authorities -issued in ex- change for the commodities loaned them by the people, -and subsequently used up in fighting the cannibals, represented an -actual destruction of almost every thing useful and desirable in place -of accumulation. The people, however, did not see this; and by reason -of not seeing it they continued to accept and regard the promises -to pay, which represented loss and destruction, as the same thing as -money, and naturally also as wealth; and as the creation and issue of -this sort of money or wealth increased as destruction increased, they -finally, one and all, came to the conclusion that the more and faster -they destroyed, the richer they should all be; and that, by a happy -series of accidents, they had at last solved that great problem which -the world had so long been anxious about--namely, "of how to eat your -cake and at the same time keep it." And, as a further illustration of -the extent to which this idea acquired a hold upon the public mind, -it may be mentioned that some of the most popular books which were -published about this time on the island had the following suggestive -titles: "A National Debt a National Blessing;" "Don't Pay as you Go, -a sure Way to Get Rich;" "Pulling at your Boot-straps the best Way -to Rise in the World," and the like. - -Undoubtedly one great reason which encouraged the people of the -island in their delusion was the circumstance that the Government -promises to pay, although they had ceased to represent accumulation, -or a definite equivalent of any thing in particular, did not thereby -cease to be instrumentalities for effecting exchanges; but, on -the contrary, continued to constitute great labor-saving machines, -performing a work precisely similar in character to that performed -by a ship or a locomotive--namely, the removal of obstacles between -the producer and consumer. But, in becoming a representative of a -debt to be paid in place of representing a means of paying a debt, -the new currency lost at once the really most important quality of -good money; inasmuch as it ceased to be a common equivalent, or in -itself an object of value in exchange, and therefore became incapable -of properly discharging the function of a standard, or measure, -for estimating the comparative value of other things; resembling, -in this deficiency, a ship without a rudder, or a locomotive without -a track to run on. The removal of a rudder from a ship, or the taking -up the track in front of a locomotive does not impair the capacity of -the one for cargo, or the power of the other for pulling. But if it -is attempted to use a ship or a locomotive under such circumstances -for the purposes for which they were constructed--i.e., as agencies -for effecting and facilitating exchanges--the result of their work -will be so uncertain and hazardous that the owners of the things -to be exchanged would require large insurance against the possible -action of the exchanging agencies. And so it was with this blueback -currency of the island, which, ceasing to represent or be convertible -on demand into a constant quantity of any commodity, ceased to be a -constant equivalent or measure of value of any thing. - - - -If the news came one day that the cannibals had been repulsed, a given -number of the bluebacks would buy a bushel of wheat. If the news came -the next day that the black troops, although they had fought nobly, -had been driven back, and that there was some prospect that every -body, sooner or later, would be cooked and eaten, then the same number -of bluebacks bought only half the quantity of wheat. Consequently, -every body, in selling commodities representing expenditure of time -and labor, added to the price of the same, in order to insure himself -against the fluctuations of the purchasing power of the currency he -received; or, in other words, to make sure that what he received should -remain, for a greater or less length of time, the equivalent of what -he gave. But as no one could tell what the cannibals were likely to do -from day to day, and therefore what were to be the fluctuations in the -purchasing power of the currency, every body in selling any thing felt -that he incurred a risk, in addition to the risks usually attendant -upon ordinary buying and selling. And as the data for estimating these -risks were just as uncertain as the data for estimating the results -of dice-throwing, every body guessed at the amount of insurance -needed, or, what is the same thing, bet on the purchasing power -of the currency at future periods. An abnormal gambling character, -therefore, necessarily became a part of every business transaction, -and worked to the great detriment of all that class of people on the -islands, who had only labor to sell, which loses its entire value -for the time, if not bought at the moment it is offered for sale, -and the selling price of which, when once established, can only be -changed with difficulty. And as this was a very important matter in -the financial history of the island, it is desirable to illustrate -it by relating the details of what actually happened: - -The people on the island clothed themselves largely in cloth made -in foreign countries; and as the island currency was non-exportable, -the cloth was paid for by exporting gold, or commodities which could -readily be exchanged in other countries for gold. The cloth thus -purchased with gold was made up into clothing by the "ready-made" -clothing dealers in the cities, and sold in this form for currency, -to smaller or retail dealers on a credit of from three to six or nine -months. Had the currency involved in this transaction throughout been -gold, or certificates representing deposits of gold, the credit price -of the ready-made clothing would have been the cash price, with a -small amount additional to represent interest on the credit-time, -and a possible risk of non-payment; and the seller would never for -one moment have taken into consideration the question whether the -currency, or representation of money in which he was to be paid, -three, six, or nine months afterward, would have the same value or -purchasing power that it had on the day the debt was contracted. He -might have doubted whether his customer would pay him at all, but he -never would as to the quality of that which he was entitled to receive -as payment. But as the currency involved in so much of the transaction -as occurred after the cloth was made into clothing was neither gold nor -any thing which represented gold, nor any other valuable commodity, -and therefore, like a ship without a rudder, or a locomotive without -a track, was sure to be unreliable as an exchanging instrumentality, -the seller knew to a certainty that what he was to receive in payment -of his goods, three, six, or nine months afterward, would not have -the same value or purchasing power that it had on the day the debt -was contracted. It might be greater, it might be less; but the seller -never bet on the former contingency, or allowed for it by deducting -any thing from the time price of his goods, for to do so would be to -discard in anticipation a possible incidental profit. But he always, -as a matter of safety, felt obliged to bet on the latter contingency, -and then cover the bet by adding correspondingly to the price of -every thing he sold on credit. When, by reason of the disturbed -condition of things, the purchasing power of the currency fluctuated -greatly in brief intervals, the seller on all his time sales bet in -favor of great risks, and bet differently every day, and added ten, -fifteen, twenty, or even thirty per cent. to his prices over and -above the general aggregate representing cost, profit, interest, -and ordinary risk, in order to make sure of receiving currency of -sufficient purchasing value to enable him to buy back as much gold -as he was obliged to give for the cloth originally. - -When, on the other hand, the fluctuations in the purchasing power of -the currency became limited, the insurance percentage added to price -became also limited, and followed a somewhat general rule. Thus, when -a clothing-dealer sold goods on three months' credit, for currency -whose purchasing power was so much less than gold that it took one -hundred and fifteen of currency to buy one hundred in gold, he added -five per cent. to his sale price, or he bet that the depreciation of -currency at the end of three months would be indicated by one hundred -and twenty for gold; while for a credit longer than three months he -bet that the risk of depreciation would be greater, and added, to -cover this risk, an average of ten per cent. to his price. If now, -at the end of three months, it required one hundred and twenty-five -in currency to buy one hundred in gold, the dealer lost five per -cent. through the payment of his debt. But if, on the other hand, -the fluctuation of the purchasing power of the currency was the -other way, and it required at the end of the three months only -one hundred and ten of currency to buy a hundred in gold, he made -ten per cent. over and above his ordinary and legitimate profit, -while an equivalent burden or loss fell on the consumers. [17] As -the dealers were shrewd, the result of this betting and insurance -was rarely loss, and so constantly profit, that some dealers after a -while came to regard the obtaining of this species of profit as the -main thing for which all business was instituted; while others, more -clear-headed and discerning, concluded that the wisest and easiest way -to get rich was to bet directly on the varying quantity of currency -which it would take from day to day to buy the same quantity of gold, -or other valuable commodities, instead of attempting to do the same -thing indirectly, through the agency of stores, stocks of goods, -clerks, books, credits, and the like. The last, accordingly, wound -up their business, and, in the language of the day, "went on to the -street," and made their living by selling on time what they did not -possess, and buying on time what they never expected to receive, and -reckoning profit or loss according to the difference in prices growing -out of the fluctuations of the currency between the day of buying or -selling, and the day of receiving or delivering. In short, as with -the magic fiddle in the fairy tale, which, when played upon, made -every body dance, no matter whether in the brambles or on the plain, -so the use on the island of a currency which continually fluctuated -in purchasing power, because it was not a constant equivalent of any -thing, made every body gamble that could; some because they liked to, -and others because they had to, to protect themselves from losses. The -masses who could not conveniently gamble tried to protect themselves -by asking high prices in return for their services, or by giving -less in proportion to what they received; [18] but, in the long run, -they learned by hard experience that they were not as well off as -they expected to be; and that if one effect of an overabundant, -non-equivalent-to-any-thing currency was to stimulate production, -another and greater effect of it was to unequally distribute the -results of production, transferring from those who had little to those -who had much, and thus making the rich richer, and the poor poorer. - - - - - - - -CHAPTER X. - -AFTER THE WAR. - - -At last the war ended. The cannibals were utterly repulsed; -and the islanders no longer laid awake nights for fear of being -roasted and eaten. A vast amount of every thing useful had, however, -been necessarily destroyed; and it would seem as if this admitted -fact would have made the people of the island feel poor. But, -very curiously, it did not. The promises to pay for the commodities -destroyed had all been preserved. They were regarded by almost every -body as money; and if money, then, of course, as every body knew, -they were wealth, and wealth so great and superabundant that the -one thing especially necessary to do was to devise plans for using -it. Every body, therefore, devised plans; those who had no money more -especially devising plans for those who had. All sorts of schemes were -accordingly entered upon; railroads to carry people to the isothermals -and every other place where they didn't want to go; and oil-wells on -Cheat and Al(l)gon(e)quin rivers, and patented inventions for making -substitutes for tea and coffee, being especially recommended as -permanent investments. John Law, Lemuel Gulliver, Baron Munchausen, -Sir John Mandeville, Juan Ferdinand Mendez-Pinto, and Sindbad the -Sailor, all came to town, and were chronicled in the newspapers as -having registered at the principal hotels. - -Great and commendable industry was also displayed in replacing -the things destroyed by the war, so that, for a time, the societary -circulation became more brisk than ever; while some who had up to this -time regarded war as a misfortune and national calamity, now felt that -they had made a mistake; and others who had known all the time that -war was a blessing, seriously thought of proposing another war as a -means of increasing national prosperity. [19] The large and constant -investment of the results of labor and economy in enterprises which -never could by any possibility give back any adequate return, was, as -every body saw, the next best thing to war; and on the advice of the -most Christian newspapers, very many of the best people made haste to -make such use of their little savings; although, as agriculturists, -they were perfectly well aware that to plant seed wheat or corn in -soils where it would not come up, or, coming up, bear no fruit, was -always very bad business, and did not encourage the sower to hire -much additional labor the next year. - -Another idea which about this time had become very popular on the -island was, that while it was a very desirable thing to sell as much as -possible of the products of the island to people in other countries, -it was not desirable to buy any thing from foreigners in return, and -that it was wise to put all possible obstructions in the way of any -ill-informed persons who desired to make such exchanges. But as no -one can long continue to buy unless he proportionally sells, or sell -unless he proportionally buys, the foreign commerce of the island soon -came to a stand-still; and what also notably helped to this result -was, that the necessity of insuring all exchanges made through the -medium of the unstable currency of the island caused all the island -products to cost from five to ten or fifteen per cent. more than they -otherwise would, and more than they would cost the foreigners to buy -elsewhere. [20] But as every industrious community (especially if it -calls in the aid of the forces of nature through machinery) produces -more than it consumes; and as the islanders were both industrious and -ingenious, it oddly enough happened that the community became sorely -troubled by an accumulation of useful things, which the manufacturers -would not part with, because they were unwilling to sell at a loss, -and which the foreigners would not buy because they could buy cheaper -elsewhere, and pay in their own products for what they bought. Then -the manufacturers stopped producing, and next the laborers, by lack of -employment, being unable to buy a full share of the existing abundance, -in turn diminished their consumption; so that for a time it seemed as -though the island would get into the condition of those unfortunate -people who die of their own fatness. - -In this way the times gradually "got out of joint." Gradually -the people on the island came to realize that much which they had -considered as wealth was not wealth, and that many influences, before -little regarded, were powerfully acting to make and keep them poor. All -were satisfied that the currency which they were using was one prime -cause of their difficulties, but in precisely what manner the currency -exerted an influence few agreed. All were of one mind, that they ought -to talk about it continually; and they accordingly did so, those who -knew the least talking the most. Some thought that the honest thing -to do, and because honest the best, was for the Government of the -island to redeem its promises to pay on demand as rapidly as possible; -that where they had borrowed a canoe of one man, cloth of another, -spears of a third, or money of a fourth, they should return them, -and not keep promising and never doing. But even these did not agree -as to the manner of thus paying. Some thought it was best to return -the canoes, the iron, the cloth, and the money from day to day as the -Government gradually acquired them. Others thought that a better way -would be to accumulate each separate thing in a separate warehouse, -and then when the warehouses had, after some years, become full, -open the doors, and return every man what had been borrowed of him -all at once. But, as before pointed out, the Government never had, -or could have, any canoes, cloth, iron, or money, except such as -it obtained from the people; and, therefore, payment on the part of -the Government was really the same thing as payment on the part of -the people. But payment of debts is something to which many people -are constitutionally opposed; and this scheme accordingly found -many opponents, who alleged that, if it were carried out, it would -deprive them of money, and consequently of instrumentalities for -making their exchanges; while the real trouble with many of this -class of people was, that they hadn't any thing useful, the products -of their own industry, to exchange, and therefore could get no money, -unless they went to work, or, what was preferable, acquired it from -somebody without consideration. - -Besides the persons referred to, who either openly or by their -indecision opposed fiscal reform, there were various other classes -of obstructives. There were those, for example, who, during the -war, were always friends of peace, dressed in broad-brimmed hats -and drab coats, and were at any time ready to compromise with the -cannibals, on condition that the latter should be satisfied with -roasting and eating only the old men, the babies, and an occasional -mother-in-law. All such, as a part of their peace policy, opposed -the original issue and circulation of the bluebacks as something -arbitrary, illegal, and unnecessary. When, however, the cannibals -were driven away, these "friends of peace in time of war" at once -changed their Quaker garb; became "friends of war in time of peace;" -declared earnestly for the enlarged issue and continued use of the -bluebacks, and, as a pretext for so doing, were willing, if necessary, -to have another war, or, at least, an annual scare. During the war, -these friends of peace were called "copper-heads;" and after the -war, their copper-headism, although disguised, was substantially the -same thing. For it was apparent that opposition to the issue of the -bluebacks, as manifested by the advocates of peace during the war, -and opposition to their payment and withdrawal after the war, were only -different manifestations of hostility to the Government and to the war -itself: inasmuch as failure on the part of the Government to observe -its promises, made under such circumstances of extreme peril, would -manifestly put it in bad repute, and prevent it from ever resorting -to similar measures in like emergencies. [21] The really intelligent -and patriotic men of the island at once saw through this duplicity -and repudiation, advocated under pretense of extreme solicitude for -the wants of trade. They remembered the old couplet: - - - "When the devil was sick, the devil a monk would be; - When the devil got well, the devil a monk was he;" [22] - - -and thereafter designated the opponents of paying the bluebacks, as -inflated, or elongated, copper-heads, by which name they were ever -after known in history. - -There were also many well-meaning citizens, who sincerely desired -to have the balloon of inflation come down, but strenuously objected -to have this result effected by any diminution of the volume of gas -contained in it. All the first-cousins of the man who waited for -the river to run by before crossing were certain the balloon would -come down, if people would only be patient, keep a sharp lookout, -and wait. But to this it was objected, that if people were obliged -to consume a large part of their time in watching the balloon, to -avoid having their heads smashed by its swayings and fluctuations, -there would ultimately be a scarcity of victuals and drink; and that, -rendered desperate with watching, and want of employment, food, -and clothing, those interested would finally insist on pulling open -the valves, and letting the whole volume of gas escape at once. Some -proposed to imitate the example of "Peter the Headstrong" in fighting -the Yankees, and bring down the balloon by proclamation; while others -professed to have great faith in family prayer. Eminent patriotic -constitutional lawyers maintained that the military necessity that -authorized and created the bluebacks must necessarily limit their -duration solely to the period of their military necessity; and that -their continued re-issue and use after the repulse of the cannibals -was but a prolongation of the war--not against the enemy, but against -their own people. The astute elongated copper-head lawyers held, on the -other hand, that an instrument of military necessity, once created, -remains such an instrumentality for continued use for all time; -and, therefore, that a bullet or shell, once lawfully employed for -effecting destruction in time of war, could legitimately be reissued -or reshot in time of peace, without matter as to whom it might hit or -what property it might destroy; and that, in fact, to go on reloading -and refiring these instruments, and thereby killing and destroying, -were not crimes, but high acts of patriotism. This theory, however, -alarmed some timid people, who said that one shell or one bullet thus -re-used indefinitely might destroy all the property, or kill all the -people on the island; and they rather regretted, in view of such a -construction, that they did not at once succumb to the cannibals, -whose appetites, in time, might have become cloyed, or whose diet -might have been changed through indigestion or moral suasion. - -In the period of doubt and perplexity which thus came to the community, -those fond of precedents carefully searched the old chronicles and -records of other nations for lessons of experience; and, among various -things which profited them greatly, they found, among the chronicles -of the learned Spanish historian, Fray Antonio Agapida, the following -account of what the veteran soldier, Don Inigo Lopez de Mendoza, -Count de Tendilla, did, when, besieged by the Moors in the town of -Alhama, he had also serious financial difficulties to contend with: - -"It happened," says Agapida, "that this Catholic cavalier, at one -time, was destitute of gold and silver wherewith to pay the wages -of his troops; and the soldiers murmured greatly, seeing that they -had not the means of purchasing necessities from the people of the -town. In this dilemma, what does this most sagacious commander? He -takes me a number of little morsels of paper, on the which he -inscribes various sums, large and small, according to the nature of -the case, and signs me them with his own hand and name. These did he -give to the soldiery, in earnest of their pay. 'How!' you will say, -'are soldiers to be paid with scraps of paper?' 'Even so,' I answer, -'and well paid, too, as I will presently make manifest; for the good -count issued a proclamation ordering the inhabitants of Alhama to -take these morsels of paper for the full amount thereon inscribed, -promising to redeem them at a future time with silver and gold, and -threatening severe punishment to all who should refuse. The people, -having full confidence in his word, and trusting that he would be as -willing to perform the one promise as he certainly was able to perform -the other, took these curious morsels of paper without hesitation -or demur. Thus, by a subtile and most miraculous kind of alchemy, -did this Catholic cavalier turn worthless paper into precious gold, -and make his late impoverished garrison abound in money!' - -"It is but just to add," continues the historian, "that the Count de -Tendilla redeemed his promises, like a loyal knight; and this miracle, -as it appeared in the eyes of Agapida, is the first instance on record -of paper money." [23] - -It may be also remarked that the island antiquarians did not find -any chronicle of any other soldier who imitated Count de Tendilla in -issuing "little morsels of paper" to serve as money, and subsequently -did not imitate him in promptly redeeming his promises, who found -it easy to obtain again the confidence of the soldiers or the people -when he again got into similar difficulties. [24] - - - - - - - -CHAPTER XI. - -THE NEW MILLENNIUM. - - -At last there arose a sect of philosophers (calling themselves Friends -of Humanity) who felt confident of settling all difficulties, and -who also aspired to the government of the island. - -Their chief had the reputation of being an ogre. He had served in the -war against the cannibals, looked exceedingly fierce, and therefore was -accounted brave; he talked loud and with great assurance, and therefore -he was accounted wise; he had acquired great riches without ever doing -any thing useful, and therefore he was accounted skilled in business. - -His principal associates and counselors were two. The first was a -great orator, who had spent most of his life as a missionary among an -uneducated people who never had any property, and, of course, made -no exchanges; and in this most excellent and practical school had -learned all that could be acquired on this complicated subject. The -second was a great athlete, who had performed for many years in -the national circus, and had acquired great reputation by carrying -weighty packages on both shoulders, labeled "domestic industry," -but which in reality contained only pig-iron. About these two "every -one that was in distress, every one that was in debt, and every one -that was discontented gathered themselves," so that they soon had a -large body of disciples. - -The first thing they did was to abuse poor old Robinson Crusoe, because -he had advised his people, in his life-time, to make their money of -gold (which can be only produced by labor, and not by hocus-pocus); -and their currency of something that represented gold, and this, too, -when he must have known that gold "was the machinery and relic of old -despotisms;" [25] and they made no account whatever of the fact that he -was the father of his country and lived in a cave. Next they declared -that all the opinions heretofore accepted on this subject by the rest -of mankind were fallacious; that nature had done its best to make the -island an isolated community; that legislation had pretty effectually -supplemented whatever in this respect nature had left deficient; -and, therefore, that the wants of the island, in respect to money, -currency, and every thing else, were so exceptional and peculiar -that the accumulated experience of all the rest of the world could -not be to them either applicable or instructive. All agreed that the -pernicious theory taught by Robinson Crusoe, Friday, and other men -of by-gone days and other countries--that money, to be good, ought to -be a universally desirable commodity, and the equivalent of that for -which it is exchanged--was the real source of all financial trouble; -for was it not clear, that, if such were the case, those only could -ever have money who, like the bloated wheat-holders, pig-holders, -cattle-holders, house-holders, or bond-holders, had through labor -previously come into possession of some desirable things, which they -could give in exchange as an equivalent for money? while the true -end of all financial reform, and the key to the terrible problem -of poverty, was obviously to devise and bring into use that kind -of money which those who had no wheat, pigs, cattle, houses, bonds, -or other commodities, and were not able or disposed to acquire any -through an exchange of their services, could have without difficulty, -and in abundance. "We mean, therefore," said the orator-philosopher, -speaking for himself and his colleague Friends of Humanity, "to have -more democracy and less aristocracy in the money market; more money -in every body's reach, and less for the petted few." [26] In short, -the patient having become very sick and attenuated by reason of the -low (fiscal) diet upon which he had been fed, the doctors now proposed -to resuscitate him by administering a still thinner gruel. - -All also agreed that the word "money" was a bad name, and that the -public would obtain a much clearer idea of the great problems at issue -if more intelligible and scientific terms embodying definitions were -used. One philosopher accordingly proposed that, as they intended to -sprout it everywhere, they should go back to the Biblical designation, -and call it the "root," at the same time remarking that "the Lord -showed what he thought of money by the kind of people he gave it -to." Another proposed to call it "the instrument of association" -(Carey); a third, the "sign of transmission, of which the material -shall be of native growth" (John Law, 1705); a fourth, "a sense -of value as compared with commodities" ("British Tracts on Money," -1795-1810); a fifth, "a standard neither gold nor silver, but something -set up in the imagination to be regulated by public opinion" (ibid.). - -As to what money, under the reform system, was, or should be, was -also a question in respect to which there was not at first an entire -agreement. One idea which found some favor, was, that money ought to be -only a token, representative of services rendered at some indefinite -time or place (possibly forgotten or disputed by its recipient), and -"for which the holder has not received the equivalent to which he is -inherently entitled under the system of division of labor." [27] The -best money, therefore, according to the philosophers of this idea, -was an evidence that some one person owed some other person; and, -consequently, the more debt, the more money; and the more money, -the more wealth, unless it is to be supposed (as is not reasonable) -that this sort of money was not to have the first attribute of all -other money--namely, purchasing power. - -Moreover, although the philosophers did not exactly say so, the -inference was also legitimate, that in a community using merely "token" -or "remembrance" money, the surest way to get rich would be to get -in debt, and the best way of carrying on an enlightened system of -trade and commerce, to exchange commodities, the results of time and -labor, for evidences of debt without interest. It is needless to say -that these teachings and inferences tended to greatly strengthen the -people on the island in the opinion they before entertained, that the -currency they already had--namely, evidences of destruction--was the -"best currency the world ever saw." - -The three leaders among the philosophers were not, however, men who -were going to be contented with any half-way measures. Had they not -put their hands to the plow of reform? and were they, after so doing, -to allow the plow to stick fast in the furrow? They accordingly -appealed first to authority, and then to untutored reason. - -The following are some of the authorities to which great weight -was given: - - - "Commerce and population, which are the riches and power of the - state, depend on the quantity and management of money."--John Law, - Memoir to the Duke of Orleans, 1705. - - "Does, or does not, our duty to ourselves and the world at - large demand that we maintain permanently a non-exportable - circulation? Such is the question which now agitates the nation, - and must at no distant day absorb all others. The affirmative of - this question is also in perfect harmony with the practice and - experience of leading nations, and in harmony with the teachings of - sound economic science."--Letter of Henry C. Carey to Congressman - Moses W. Field, of Detroit, September, 1875. Consult also Governor - William Kieft, "On the Use of Wampum Money in New Amsterdam" - (large folio, scarce and rare), 1659. - - "Long familiarity with the practice of giving security for loans, - and of paying them back at a fixed date, has blinded us to the - national advantages of loans without security and payable at any - date."--Karl Marx, Secrétaire, Organisation de l'Internationale. - - -But the thing which the philosophers relied on more than any thing -else to sustain their views before the people was a judicial decision -recently made in a neighboring country, by its highest court, before -whom the question as to what constituted money was officially brought -for determination. This decision, expressed in the very peculiar -language of the country, was as follows: "What we do assert is, -that Congress has power to enact that the Government promises to -pay money shall be, for the time being, equivalent in value to -the representative of value determined by the coinage acts, or to -multiples thereof." All of which, translated into the language of -the island, meant that Government has the power to make a promise -to pay, containing an acknowledgment in itself that the promise -has not been paid, a full satisfaction that the promise has been -paid. That this decision, furthermore, covered no new points of -law, was indirectly conceded by the learned judges, inasmuch as, in -giving their opinions, they cited, as precedents worthy of being ever -remembered, the decisions of that eminent old-time jurist, Cade (Jack), -who ordained that "seven half-penny loaves should be sold for a penny;" -and that "the three-hooped pot shall have ten hoops." The same court -also strengthened its position by saying that "it is hardly correct -to speak of a standard of value. The Constitution does not speak -of it. Value is an ideal thing. The coinage acts fix its unit as a -dollar; but the gold and silver thing we call a dollar is in no sense -the standard of a dollar. It is a representative of it. There might -never have been a piece of money of the denomination of a dollar." [28] - -[Note.--This last remark of the learned court embodied a great -discovery; for how can there be a representative without something to -represent? In the case of Peter Schlemihl, there was a man without -a shadow; but here we have a shadow without any substance to make -it. A gold dollar is not a specific and mechanically formed coin; -but 25.8 grains of standard gold is a dollar. Did the court mean -that these grains of gold may never have existed, and yet have -representatives?--Author.] - -The moment this decision was received, all the philosophers got -down their dictionaries, and searched for the meaning of the -word "ideal." As was anticipated, its definition was found to be -"visionary;" "existing in fancy or imagination only" (Webster); and -from this time forth there was no longer any doubt in the minds of the -reformers of the truth and strength of the position they occupied. For, -to descend to reasoning, were not two intricate questions definitely -settled by the highest of human tribunals? 1st. That the representative -of a thing may be (and if those in authority say so, shall be) -equivalent to the thing itself. 2d. That value is an ideal thing, -and therefore imagination, which creates all ideal things, can -create value. - -It followed, of course, that to have and enjoy any thing and -every thing, it is only necessary to create and use its symbol or -representative; and to pay for value received, it is only necessary -to imagine a corresponding and equivalent value, and pass it over -in exchange and settlement. On these conclusions of law and reason, -then, it was decided by the three leaders of the philosophers and -their friends, who had control of the Government, that the future -money of the state should be based. The former inscription on the -currency in use, "promise to pay," they were clear, was entirely -unnecessary; for why promise money when the store on hand of money -was to be made practically unlimited, or, at least, always equal to -the wants of every body who desired to have it, whether he traded or -not? Mathematical calculations were also made by a scientist, which -proved that the amount of labor which would be actually saved to the -community, and made available for other purposes, by using something -as money which cost little or no labor to produce, in place of gold -or commodities which represented much labor, would be so great as -to require the immediate enactment of a law prohibiting any one from -working over six hours per day, in order to guard against the evil of -too great abundance. The same scientist had previously been so carried -away by his demonstrations of the utility of a new stove which saved -half the fuel, that he had recommended the purchase of two stoves in -order to save the whole. - -With few exceptions, to be hereafter noted, the whole population of -the island were jubilant, and proceeded as rapidly as circumstances -would permit to adjust all their commercial transactions to the -new basis. But joy at the prospect of the coming millennium did not -extinguish feelings of gratitude in the hearts of the people, and -they resolved to send ample testimonials to all, in foreign lands, -to whom they had been indebted for wisdom. - -To each of the judges who had so intelligently defined value they -accordingly voted an ideal castle and estate, possession of the -same conferring nobility upon their owner, with the title of "Baron -Ideality," to which, by special patent, the recipient was authorized -to use (if he pleased) the prefix of "damn." - -To the most notable advocate, in foreign lands, of the idea of -non-exportable money a gift of one million of "instruments of -association," represented by ideal currency, was voted. But as -this currency, both by law and the fitness of things, could not be -exported from the island, it became impossible to pay this gift, -and in its place a letter was written explaining the circumstances, -and requesting that the resolution to pay might be accepted as a -"sign of transmission." - -To the eminent financier who defined money, "as a sense of value -in reference to currency as compared with commodities," there was -sent a plaster image of the "What Is It;" while to his colleague, -who had given the opinion that "the less costly the material out of -which money was made, the better for the community which uses it," was -sent a large box, containing contributions of the most worthless things -every body could think of, with a polite note requesting the recipient -to make his choice out of the collection of what seemed to him best -adapted as a token, and forward a detailed report of his experience -in attempting to use it as a representative of unrequited service. - -Pending the slow preparations of the Government of the island to -provide the requisite laws for the issue and use of the new money, -various enlightened individuals attempted to anticipate official -legislative action by putting into practical operation, on their own -account, the principles involved in the new fiscal system. The first -of these who thus acted was a secretary for the interior part of the -island, whose chief business was to supply the heathen--for whom, -it will be remembered, Robinson Crusoe took up contributions--with -beef. There had been a suspicion for some time past hanging over this -official that the heathen did not get all the beef that they were -entitled to; but the suspicion probably had no further foundation -than the inability of the heathen to make the sense of completion -harmonize with the sign of transmission. To satisfy the heathen, -and at the same time effectually clear up his character, the official -in question now hastened to have prepared a large number of pictures -of fine, fat cattle, which he dispatched by a Quaker to the heathen, -with a request that they would kill and eat, and be satisfied, adding -in a postscript that they would do well to begin to learn economy -by saving the skins. As the Quaker never came back, it was deemed -reasonably certain that, at least, the first part of the request had -been complied with. - -The managers of the Island Provident Society also promptly determined -to develop and apply the ideal system in their sphere of usefulness -to the full extent that circumstances permitted. Thus a large part of -the business of this old and respected society was the distribution of -clothing to the destitute; and, as is always the case when times are -hard, the extent of the demands made upon it for aid tended to exceed -the means of supply contributed by the charitable. The managers, -however, knew that it never would answer in using the ideal system -to subserve the work of charity, to put the locally needy on the -same footing as the heathen, and in answer to appeals for raiment -distribute to them elaborate pictures of fine clothing, cut from -the fashion-plates; for there was this essential difference in the -situations, that the needy were at their doors, while the heathen -were a great way off. They, therefore, hit upon this happy mean: they -employed a competent artist, with a full supply of paints and brushes, -and when any destitute person applied for clothing, they painted upon -his person every thing he desired in way of clothing of the finest -and most fashionable patterns, from top-boots to collars, and from -blue swallow-tailed coats to embroidered neck-ties, with jewelry and -fancy buttons to match. Of course, the first man who appeared in public -thus arrayed created a profound sensation. But the idea was so novel, -and had obviously so many advantages over the old way of clothing -one's self, that the supremacy of the ideal over the real was at once -greatly strengthened. For example--and here was one of the greatest -merits of the new system--it not only symbolized, but practically -applied, the views of the most advanced financial philosophers; -favored (as the orator-philosopher wished) "more democracy and less -aristocracy in the clothes market;" and encouraged the use of the -least costly material out of which the community could make clothes; -while the painted cotton, silk, wool, and leather could be made to -look so exactly like the real articles, that it was only when the -attempt was made to exchange the representative for the real that the -difference was clearly discernible. Furthermore, every garment devised -in accordance with the new system was, in all cases, a perfect fit. The -plague of buttons was annihilated. Every man could save time enough -in dressing and undressing to enrich himself, if he only employed his -economized moments usefully. Every man might, without embarrassment, -sleep in his clothes; and if he desired to change his monkey-jacket -three hundred and sixty-five times in a year for an overcoat, or -an overcoat for a monkey-jacket, he could do it most expeditiously, -without the waste of any raw material more expensive than paint; and -thus the system, after a time, by a happy thought, got the name of the -"three-sixty-five interchangeable." Of course, this answered very well -so long as the weather continued mild and pleasant; but later in the -season, when it became cool and frosty, experience soon showed that -the warming qualities of different kinds of paint were not essentially -different; that something more than confidence was necessary to keep -out the cold; and that the temperature and circulation of the body -physical remained unaffected, whether a man painted himself sky-blue -one day and pea-green the next. [29] - -Again, two shrewd fellows, Peter von Scrapehem and Israel Double, -owned each a farm worth ten thousand dollars. Peter sold his farm -for its full value to Israel, and took a mortgage for the total -purchase-money; and Israel, in turn, sold his to Peter, and took a -mortgage also for its full value. By so doing, each of these worthy -persons clearly doubled the property in his possession, inasmuch as -while each had at the outset only ten thousand dollars' worth of real -estate, each now had ten thousand of real estate and ten thousand of -personal property; or an aggregate of forty thousand between them, -in the place of twenty thousand originally. This method of multiplying -property by multiplying titles was so easy, and the result so apparent, -that the example was very generally followed; and when the census -came to be taken, a few months afterward, all were amazed at the -enormous increase of wealth that had followed the discovery and simple -recognition of the true nature and value of titles. - -Up to this time the supply of milk on the island had been mainly -controlled by a single corporation, which, under the name of the -"Lacteal Fluid Association," owned all the cows, and, for the purpose -of facilitating supply, had long been in the habit of issuing tickets, -each good for a pint or a quart of milk, and disposing of milk to -those only who had tickets. These tickets revolved perfectly in the -closed circle of exchange between the milk-men and their customers, -satisfying all demands, and being accepted as the same thing as milk; -for the more tickets, the more milk; and no tickets, no milk. - -During the war the cannibals, in lack of any other meat, had eaten a -large number of the cows belonging to the "Lacteal Association." Many -had been also taken by the Government for the soldiers; so that -after the war was over there were really no more cows than the island -absolutely needed. All at once, the "foot-and-mouth disease" invaded -the island, and, attacking every cow belonging to the association, -rendered her unable to give milk. Then arose such a piteous cry -from every household where there were babies as carried a pang to -the stoutest hearts. There was no need of any concerted action, for -the people assembled spontaneously and demanded action. An immense -public meeting was at once organized. A highly popular and humane -man, a special friend of children, familiarly known as Uncle Dick, -was called to the chair. He was supported by a long list of leading -citizens as vice-presidents and secretaries, none of whom, however, had -had any practical acquaintance with milk since their childhood, except -in the form of punch. The chairman made an eloquent speech. He did -not know whether he was most agitated by pity or indignation--pity for -the poor babies, whose sufferings had become intolerable; indignation -at the cruelty of the chartered monopolists, who had wantonly refused -to issue more tickets at the very time when the demand for milk was -most imperative. The assembly was of one mind with the chairman, and -unanimously resolved that the Lacteal Association should immediately -increase their supply of tickets, and that, in default thereof, their -charter should be altered and amended. Unable to resist the storm -of popular indignation, the association at once complied, and every -patriotic citizen went home to the bosom of his afflicted family, -carrying an abundant supply of milk-tickets, and feeling conscious -that for once at least he had risen to the level of the occasion. - -That night the babies were all supplied with milk-tickets in the place -of milk. Milk-tickets hot, milk-tickets cold, milk-tickets sweetened, -milk-tickets plain, milk-tickets with their backs printed green, and -interchangeable with milk-tickets drawing cream skimmed from other -milk-tickets. But, strange to say, the babies, one and all, with -that same sort of instinctive perversity which induces children of a -larger growth to refuse to accept shams for reality, and be grateful -in addition, refused to take to milk-tickets. The uproar of the night -preceding was as nothing to the disturbances of the night following, -and morning dawned upon an unrefreshed and troubled population. - -As soon as the necessary arrangements could be made, another meeting -assembled. But the meeting this time was composed of babies, backed -by their mammas and nurses. There was no theory in their sentiments; -and though young in years, one and all felt that they had lived long -enough to know what their fathers apparently did not know--namely, -the difference between milk and paper. The resolutions voted were -brief, but to the point, and were, substantially, as follows: - -First, that the exigencies of the times demanded more milk, and not -more milk-tickets; second, that the way to get more milk was to have -more cows; third, that the way to get more cows was to go to work -and raise them, or raise something else equally valuable, and then -with this something else buy cows; fourth, that there are certain -eternal verities against which it is useless for either babies or men -to contend. A committee was appointed to procure a mill of the gods, -to grind up those who disbelieved in the last resolution, and the -meeting then adjourned. - -This was the first indication of any thing like popular dissent -from the views of the Friends of Humanity. Others, however, -soon followed. Value having been declared to be an ideal thing, -and ideal measures of value having been substituted in the place -of the real and tangible measures formerly in use, it had been -deemed proper to substitute ideal measures of length, weight, and -capacity in the place of the foot-rules, yard-sticks, pound-weights, -and bushel-measures formerly employed. Shop-keepers, plumbers, -charcoal-men, gas corporators, and all others who had any thing to -sell accordingly provided themselves with slips of paper, upon which -were printed, respectively, "This is a foot," "This is a bushel," "This -is a pint," "This is a pound;" and the services of the arithmetic-man -were again called for, to prove how much more cloth, beer, charcoal, -gas, and all other measurable things the community would certainly -have by the saving of labor and capital contingent on the avoidance -of the necessity of further manufacturing, purchasing, and using the -old measures. - -But the new system did not work smoothly. There was no harmony of -sentiment between buyers and sellers; and what was one man's ideal -of what he should give or receive in trade was always different -from every other man's; and, before the community were well aware -of what they were about, they found themselves drifting back to -the adoption of the old system of barter, which had been tried and -abandoned in the early days of the island's history. Instead of one -price, every one who had commodities or services to sell adopted a -scale of at least four prices: "pay price," "money price," "pay as -money price," and a "trusting price;" and the seller, before fixing -his price, invariably asked his customer how he would pay. [30] -"Pay price" was barter; "money price" was payment in foreign coin; -"pay as money" was in the ideal money of the island; "trusting" was -an enhanced price, according to time. Thus, supposing a customer -wanted a knife, its price in "pay" would be a bushel of corn; in -"money price," a fifty-cent gold or silver coin; in "pay as money," -sometimes as much as he could bring in a basket, at other times as -much as he could bring in a wheelbarrow; and before the ultimate -abandonment of the use of ideal money, a cart had to be employed to -bring the money. Trade in this way became "most intricate." - -News also came, about this time, that the heathen, not being able -to stay their stomachs with the pictures of fat cattle that had been -so abundantly sent them, and considering themselves humbugged, were -preparing to declare war. To meet a threatened increased expenditure -on this account, the Government, therefore, levied new taxes; and as -the valuation of the property of the island, under the influence of -the new fiscal system, had, as before stated, enormously increased, it -was anticipated that a small rate would yield a large revenue. But as -soon as Scrapehem, Double, and their friends, who had been multiplying -their property by multiplying titles, found out that the titles were -to be valued and assessed as wealth, equally with the property which -the titles represented, they hasted to swap back, and cancel their -mortgages; and immediately half the reputed wealth of the island -disappeared. - -There were some people, it will be remembered, who did not share in -the general jubilation which welcomed the discovery and adoption of -the new monetary system. These were the stony-hearted capitalists, -meaning thereby persons who had produced by industry and frugality -more than they had consumed, and had lent out this surplus in the -form of ships, houses, horses and carts, wheelbarrows, coal, iron, -and the like, on condition that they should be repaid the value of -the several articles as expressed in money, with a portion of the -profit that might have accrued to the borrower from their using. - -There was a popular feeling that all these lenders were "bloated," the -degrees of bloat being, of course, different all the way from the man -who owned and lent a ship down to the man who owned and lent a cart, -or their equivalents in money; and that the best remedy for this -frightful disease was tapping, and tapping by tendering in payment -the ideal money, which was something very different in value from -the money understood at the time the loans were effected. Natives -of heathen lands, who had never enjoyed the light of the Gospel, -called this robbing; but many on the island who had always been -Christians regarded the matter with indifference, and treated it -as a purely sanitary measure; and Christian ministers who never -preached against such practices, but always did preach against the -sins of that ancient people, the Jews, wondered at the low tone of -morality that seemed to generally characterize society. As it appears, -however, from an examination of the ancient records of the island, -that strenuous exertions were made about this time to interest the -Government and the people in the momentous question of the reading of -the Bible in the public schools, and thus prevent public attention from -being diverted to the consideration of any such unimportant and side -issues as the nature and obligations of promises, it may be that the -low tone of morality thus referred to was more apparent than real; no -province devolving upon the historian being more difficult than that of -attempting to reconcile, after a long lapse of years, what appears to -be a series of contemporaneous but utterly incongruous circumstances. - -But, be this as it may, all who had loaned valuable commodities desired -to avoid tapping, and consequently hastened to demand repayment before -the ideal money could be extensively issued and put into circulation; -and, having once obtained payment, were very cautious how they lent -again. All this contributed, in the language of the day, to make money -very tight; but this language had, to a great extent, no meaning. The -only money that was tight was good money, and this had been gone so -long that the younger part of the population didn't even know how -it looked; while of the bad money there was a continually increasing -quantity. - -Besides good money, all real capital, timber for building ships, -factories, and houses, iron for the construction of machinery, cloth -for clothes, and grain for food, were tight; not because there was any -lack of all these useful things, but because the owners had all become -afraid that if they once loaned or parted with them they should never -receive back an equivalent. So the island, instead of being lifted up -to great prosperity, was plunged into the depths of adversity. There -was a general lack of confidence. Societary activity was abated; -production was arrested; and men desirous of being industrious had -no opportunity of following any industry. - -Gold had long disappeared from circulation. Although produced in large -quantities on the island, none of it would stay there, but flowed -off to foreign countries in a steady stream. The common explanation -of this phenomenon was, that gold had become the cheapest thing the -island produced, and was, therefore, the first thing exported. But a -majority of those who said and heard this did not clearly see that the -average purchasing power of gold the world over had not varied in any -degree; but that the price of almost every other thing produced on the -island had so varied and relatively increased, by reason of domestic -fiscal circumstances, that it was far better for the foreigner to take -pay in gold for all the commodities he sold to the island, and then, -with this gold, purchase in other countries the very things which the -island specially produced and wanted to sell. As already intimated, -the islanders found great difficulty in understanding this little -arrangement; but the foreigners understood it as by intuition, and -never failed to act upon it. [31] All of this further contributed to -turn upside down and inside out the industries of the island; and while -the Friends of Humanity continued to loudly proclaim that the issue of -more money would cure all difficulties, the people, sorely distressed, -and ready to accept relief from any quarter, began to loudly murmur, -in turn, at what seemed an unnecessary delay in making the issue; -the fact being, that although public opinion was nearly unanimous on -the subject, the regular time for the Congress of the island to meet -and enact the laws had not come round. - -At last, the long-expected day arrived, and Congress assembled. All the -special and immediate Friends of "More Money," of "Ideal Money," and of -"Humanity," were members; and hardly had the presiding officer taken -his seat before fifty men sprung for the floor, each with a resolution -demanding immediate fiscal legislation. The first resolution adopted -was, that the Government should at once supply all the money which the -wants of every body, and every trade and industry, might, could, would, -or should require; and that the money thus issued should be a legal -tender for the payment of all debts, past, present, and prospective. - -The next important question was, In what manner should the new and -unlimited supply of money be distributed? All saw at once that it would -never do to commence on a system of giving unlimited something for -unlimited nothing; and yet, if this was not done, how was it possible -for the wants of those who had nothing, and who, of course, wanted -money for this reason most imperatively, to be supplied? Besides, -to create an unlimited supply of the new money, it would be necessary -to have a good many hundreds of thousands of slips of paper with the -words, "This is a dollar," "This is ten dollars," or "This is--" -(some other amount), properly and artistically printed on them; -all of which, in turn, would require a great expenditure, not only -of ink and paper, but also of time; while the necessity of the hour -was for immediate relief, especially to trade. It was therefore -decided to leave the troublesome question of equal distribution for -a time unsettled, and endeavor to first relieve trade by doubling the -volume of the currency. And in order to do this at once, and without -cost to the Government for engraving, printing, paper, and ink, it -was therefore enacted that every one having legal-tender currency -might cut or divide the same into two equal halves or pieces, and -that each of these halves or pieces so resulting should be a legal -tender to the full amount that the whole had previously been. At first -thought, this proposition to exclude all those who had no money from -participation in the new supply seemed most palpably unfair and unjust, -but a little consideration satisfied to the contrary; for unless it -was proposed to give away the new money, it was obvious that those -only would get it who had money, and that the proportion which all -such would obtain would be in proportion to what money they already -had. It was, therefore, deemed wise to anticipate what was certain -to be the ultimate result, and distribute it in the manner indicated. - - - - - - - -CHAPTER XII. - -GETTING SOBER. - - -It was expected that this new and immense volume of currency, -poured at once on to the wheels of trade, would immediately start the -wheels. But, somehow, it didn't seem to have that effect at all. The -wheels not only would not revolve, but the friction on them seemed -to have become more persistent and chronic than ever. In fact, the -doubling the volume of the currency, instead of increasing the before -existing instrumentalities for facilitating exchanges, had really -diminished them; for all who were willing to exchange commodities -for the new currency either doubled the price of their commodities, -or gave only half the quantity for what they regarded as half of the -former money; so that with all this class the abundance of currency -was relatively the same as before. But the majority who had any thing -to sell would not accept the ideal money in exchange at all. They -did not claim, they said, to be financiers, or philosophers, or even -special friends of humanity; but they did think that they were not -such fools that they could be made to believe that the half of a -thing was equal to the whole, or that one bushel of grain could be -converted into two by putting one bushel into two half-bushel measures. - -The only really positive effect of the doubling of the volume of the -currency in the manner authorized by law was, therefore, to scale -all debts to the extent of fifty per cent., and in such a manner -that creditors were wholly unable to help themselves; for by terms -of the act every one dollar of old legal tender was now made two -for all new legal-tender purposes. In this way the people on the -island soon learned a most important elementary lesson in finance, -which was, that the only one attribute of legal tender which is -imperative and unavoidable [32] is its inherent power of canceling or -liquidating debts or of tapping creditors--and this, too, irrespective -of the endowment of the legal tender with any real or representative -value. So that a truthful designation of the act in question would -have been "An act to relieve debtors from half of their obligations, -and swindle creditors to a corresponding extent of what was due them -by the debtor's acknowledgment." - -To the credit of the people of the island it must be recorded that, -as a general rule, they were too honorable to take advantage of -the law to do so wrong and mean a thing; [33] but the knowledge -that every debtor had it in his power to so act, and the fear that -some would take advantage of their unquestionable legal privileges, -contributed still further to bring all business to a stand-still. - -There was also a curious phenomenon incident to the situation, -and pertaining to the rate of interest, which excited no little -comment and attention. Every body took it for granted that with an -unlimited supply of money a low rate of interest would prevail, and -that, however much the financiers and philosophers might disagree -about other things, this one result would be certain. An eminently -practical man in one of the public debating societies of the island -thought he had definitely, and for all time, settled the question by -authoritatively remarking that "an abundance of money does produce -enterprise, prosperity, and progress;" "that when money was plenty -interest would be lower," just as when horses and hogs are abundant, -horses and hogs would be cheap. He, for one, "put aside all these -old theories, these platitudes of finance." There was "no vitality -in them." He preferred "to take the actual results, and the actual -condition of the country, and let theory go to the dogs." [34] - -There was so much of originality and home sense in these remarks, so -much of a lordly contemning of the teachings of musty old experience, -that the friends of the orator thought him much more worthy than -ever of the executive chair formerly filled by the wise Robinson -Crusoe. But, unfortunately for the orator, he hadn't got far enough -along in his financial primer to appreciate the difference between -capital and currency; and in the simplicity of his heart imagined -that it was all the same, whether we had pictures of horses, hogs, -and money, or real horses, hogs, and money, which represent and are -accumulated by labor. So the things which he thus settled in opposition -to theory and experience wouldn't stay settled; and the islanders -in due time came to a realizing sense of the following truths: -that the more of a redundant, irredeemable paper that is issued, the -more it depreciates, and the more it is depreciated, the more there -is required of it to transact business; and that if any one borrows -depreciated money to do any thing, he has to borrow a greater nominal -amount than he would of money that was not depreciated; and that it is -on the number of nominal dollars, and not on their purchasing power, -that the rate of interest is always calculated. The invariable rise -in prices consequent on the depreciation of money (price as already -explained being the purchasing power of any commodity or service -expressed in money), furthermore stimulates borrowing for the purpose -of speculation; and the more borrowers, the more competition; and the -more the competition to obtain an article or service, the higher the -price demanded for it. - -Again, the currency of the island having been made artificially -abundant, its exchangeable value was always uncertain; and capital, -therefore, as it always does at such times, locked up its pockets, -hesitated to take risks, and, if it consented to loan at all, demanded -extra pay by reason of the increased risk or induced scarcity. [35] - -After testing all these principles experimentally for a considerable -time, the people on the island came to see that the possession of -money was the consequence rather than the cause of wealth; and that, -except under special circumstances and conditions, the rate of interest -depends on the abundance or scarcity of that part of the capital of -a community which does not consist of money; and that it can not be -permanently lowered by any increase in the quantity of money. [36] - -In this way, through the school of hard experience, the people on the -island came gradually to understand that there were certain economic -truths which had got to be accepted and lived up to in order to insure -either individual or national prosperity. They came to understand that -property is a physical actuality, the result of some form of labor; -that capital is that portion of the results of production which -can be reserved and made available for new and further production; -that money is an instrumentality for facilitating the distribution -and use of capital and the interchange of products and services; that -production alone buys production; that when one buys goods with a paper -representative or symbol of money, the goods are not paid for until -the representative is substituted by a value of some sort in labor, -or money, or some other commodity; and, finally, that a country and -its inhabitants increase in wealth or abundance by increasing their -products, rather than by inordinately multiplying machinery for the -exchange of products. They also saw that the promises to pay which they -had been using and regarding as money were debts; and that debts, as -well as all other forms of title, are but shadows of the property they -represent; and that, in endeavoring to all get rich by first creating -debts, then calling the debts money, and the money wealth, they had -been led, successively, into speculation, extravagance, idleness, -and impoverishment; and, like the dog in the fable, which let go of -the meat in crossing a stream for the sake of grasping its shadow, -they had lost much of real wealth resulting from previous industry by -trying to make the shadow of wealth supply the place of its substance. - -Coming to gradually realize, also, that one of the first requisites for -an increase of trade was that confidence should exist between the buyer -and the seller, but that such confidence never would exist so long -as the representatives of value, or other intermediate agencies made -use of for facilitating exchanges, were of an uncertain, fluctuating -character, they also came finally to the conclusion that there was no -economy in using cheap money; or, in other words, that the loss and -waste inevitably resulting from the use of poor tools (money being -a tool) was many times in excess of the interest accruing from any -increased cost of good tools. So reasoning, gold, or undoubted promises -to pay gold, gradually came once more into use as money on the island. - -There were some prophecies, and a good deal of apprehension, that -there would be difficulty experienced in obtaining sufficient gold -to serve as money or as a basis for currency, especially when it -was remembered that the influence of all that had recently happened -had been to encourage the export of all the gold that was owned -or produced on the island. But as the goldsmiths and the jewelers -never experienced any difficulty during the war with the cannibals, -or afterward, in obtaining all the gold they wanted, no matter how -scarce and valuable it was as compared with currency, and could have -had a hundred times more than they actually used, if their customers -had been willing to pay for it; so the merchants, traders, and people -at large on the island, as soon as they became satisfied that it was -economical to use gold, and determined to have it, experienced no -difficulty in obtaining an ample supply. - -One circumstance which, pending this result, tended to greatly -relieve the popular apprehension on this score, was the reading in -foreign newspapers that the people in certain comparatively poor -countries--as Oregon, Arizona, Nevada, and Washington Territory--had -no more difficulty in obtaining and retaining all the gold that they -found it desirable to use for the purpose of money, than they had in -obtaining and retaining all the wheelbarrows and steam-engines that -they desired to use in conducting their business; and laughed when -any body talked of depriving them of their gold money. - -The first step having been thus taken in the right direction, -a sequence of other proper acts occurred as naturally and with the -same favorable results as in the celebrated case of the old woman -and the kid; in which it will be remembered that as soon as the -water began to quench the fire, the fire began to burn the stick, -the stick began to beat the dog, the dog began to bite the kid, and, -as a consequence of this sequence and its concluding act, the old woman -got safely home with the kid, though at a period of the evening much -later than was desirable or proper. And so, by a succession of events, -prosperity slowly but surely came back to the island. - -As for the Friends of Humanity, who had been the authors of so much -financial and commercial disturbance and national misfortune, they -soon ceased to command attention from any one, then became objects -of laughter and derision, and finally passed out of the remembrance -of the people, who were now all too busy in restoring their fortunes -to give a thought to bygone and mortifying experiences. Some became -convinced of their errors, and made good citizens; but in the case of -the majority, the belief that the calling of things of no intrinsic -value by the name of money was equivalent to the creation of wealth, -became chronic, and finally developed into a harmless insanity. On -pleasant days they might often be seen on the corners of the streets -gathering leaves and bits of sticks and straws, and telling the -children that assembled about them that all that was necessary to -make these worthless gatherings money was to simply have confidence -that they were so. But this was asking for a simplicity of belief -that was a little too much, even for the children. - -It only remains to add that, as memorials of this eventful history, -there is still exhibited in one of the public buildings on the island -an exact model of the cave in which the venerable Robinson Crusoe -dwelt, and, what is even more interesting, the identical chest which -he brought from the ship, and which contained the pins, needles, -knives, cloth, and scissors, and the three great bags of what was -then useless, but now good and true, money. Numerous specimens of -the "ideal money" may also be seen in the same room, together with a -picture of the barber who papered his shop with it, and of the dog -which the people paraded in the streets covered with a plaster of -pitch and currency. [37] - - - - - - - -NOTES - - -[1] That the inconveniences experienced by a community attempting to -conduct its exchanges exclusively by pure and direct barter as here -depicted, are not only not imaginary, but have their exact counterpart -in the present every-day experiences of countries of great geographical -area and population, is proved by the testimony of Barth, Burton, -and other recent travelers in Eastern Africa. Thus Barth, for example, -says (see "Travels," vol. i., p. 568; vol. iii., p. 203) that he was -repeatedly prevented from buying what he absolutely needed--corn, -rice, etc.--because he did not have, and could not get, what the -people wanted in exchange; and, again (vol. ii., p. 51), he states -that so great was the difficulty of getting things in some of the -African towns which he visited, in consequence of the people having -no general medium of exchange, that his servants would often return -from their purchasing expeditions in a state of the utmost exhaustion. - -[2] "The precious metals have many qualities which fit them for use as -coin money. Their defects are their weight, their intrinsic value as -commodities."--Social Science and National Economy, by R. E. Thompson, -Philadelphia, 1875. - -"The moment it is perceived that money is nothing but a token, -it becomes evident that any token currently accepted in exchange -of useful services and products of labor will perform the proper -functions of money without regard to the material of which it is made; -and that the less costly the material out of which money is made, -the better for the community that uses it."--Money, Currency, and -Banking, by Charles Moran, New York, 1875, p. 42. - -[3] "To my mind, the great and immediate need of the day is the -issuance of more legal-tender notes, in order to impair the confidence -in them to an extent as to cause the owners of them to desire to -exchange them for other kinds of property, or man's wants--not simply -to loan out on short or long date paper, with fire-proof security, -at low or high rates of interest, which can now be done to any -extent required--but absolutely part with them for other kinds of -property."--Views of Enoch Ensley, of Memphis, Tennessee, on the -National Finances, Memphis, September, 1875. - -[4] "In the midst of the public distress, one class prospered -greatly--the bankers; and, among the bankers, none could, in skill or -in luck, bear a comparison with Charles Duncombe. He had been, not many -years before, a goldsmith of very moderate wealth. He had probably, -after the fashion of his craft, plied for customers under the arcades -of the Royal Exchange, had saluted merchants with profound bows, -and had begged to be allowed the honor of keeping their cash. But so -dexterously did he now avail himself of the opportunities of profit -which the general confusion of prices gave to a money-changer, -that, at the moment when the trade of the kingdom was depressed to -the lowest point, he laid down near ninety thousand pounds for the -estate of Helmsley, in the North Riding of Yorkshire."--Macaulay's -History of England, State of the Currency in 1694-'95. - -[5] "Beyond the sea, in foreign lands, it (the greenback) -fortunately is not money; but, sir, when have we had such a long -and unbroken career of prosperity in business as since we adopted -this non-exportable currency?"--Speech of Hon. William D. Kelley, -House of Representatives, 1870. - -"I desire the dollar to be made of such material, for the purpose, -that it shall never be exported or desirable to carry out of the -country. Framing an American system of finance, I do not propose -to adapt it to the wants of any other nation."--Speech of General -B. F. Butler before the New York Board of Trade, October 14th, 1875. - -[6] "Some years since, Mademoiselle Zélie, a singer of the Théâtre -Lyrique at Paris, made a professional tour round the world, and -gave a concert in the Society Islands. In exchange for an air from -'Norma,' and a few other songs, she was to receive a third part of the -receipts. When counted, her share was found to consist of three pigs, -twenty-three turkeys, forty-four chickens, five thousand cocoa-nuts, -besides considerable quantities of bananas, lemons, and oranges. At -the Halle (market) in Paris, the prima donna remarks, in her lively -letter printed by M. Walowski, this amount of live stock and vegetables -might have brought four thousand francs, which would have been good -remuneration for five songs. In the Society Islands, however, pieces -of money were very scarce; and as mademoiselle could not consume any -considerable portion of the receipts herself, it became necessary in -the mean time to feed the pigs and poultry with the fruit."--Jevons's -Money and Mechanism of Exchange. - -[7] In 1658, it was ordered by the General Court of Massachusetts -that no man should pay taxes "in lank cattle."--Felt's Massachusetts -Currency. - -[8] This incident is related by Burton, in his "Explorations of -the Lake Regions of Central Africa" (1858-'59), as one within his -knowledge of actual occurrence. - -[9] In one of the mints there is exhibited as a curiosity a case -in which this fact is demonstrated in the most striking manner. It -contains some fifty or more very thin ribbons, or strips, of gold, -half an inch wide by three inches in length, placed in a row, -parallel to, but separated from each other by a slight interval. The -first ribbon is composed of gold of the highest standard of purity; -the second differs from the first to the extent of one per cent. of -admixture with a baser metal; while the third contains two per cent., -the fourth three per cent., and so on, until in the last ribbon, or -strip, the amount of gold and alloy is equal. The color of the first -ribbon is, in the highest sense of the term, golden or typical. The -color of the second differs from the first by a shade, which shade -in every successive ribbon changes and becomes more and more marked -as the proportion of alloy entering into its composition increases: -and so peculiar are these differences of color that it is possible -for an individual unskilled in metallurgy, but having access to the -standard, to make a comparatively accurate test of the purity of any -article of gold in his possession by a simple comparison of color. - -[10] In 1862 Mr. Eckfelt, then principal assayer at the mint in -Philadelphia, communicated to the American Philosophical Society the -result of some exceedingly curious examinations demonstrating the -very wide distribution of gold. The city of Philadelphia, he stated, -was underlaid by a bed of clay having an area of about ten square -miles, with an average depth of about fifteen feet. Specimens of this -clay--all natural deposits--taken from such localities as might furnish -a fair assay of the whole--the cellar of the market on Market Street, -near Eleventh, and from a brick-yard in the suburbs of the city--all -yielded, on careful analysis, small amounts of gold; the average -amount indicated being seven-tenths of a grain--or about three cents' -worth--of gold for every cubit foot of clay. Assuming these data to -be correct, the value of the gold, according to Mr. Eckfelt, which -lies securely buried underneath the streets and houses of Philadelphia -must therefore be equivalent to $128,000,000; or if we include all the -clay contained in the corporate limits, the amount of gold contained -in it must be equal to all that has yet been obtained from California -and Australia. - -"It is also apparent," says Mr. Eckfelt, "that every time a cart-load -of clay is hauled out of a cellar in Philadelphia, enough gold goes -with it to pay for the carting; and if the bricks which front our -houses could have brought to their surface, in the form of gold-leaf, -the amount of gold which they contain, we should have the glittering -show of two square inches on every brick." - -[11] On the Rhine, near Strasburg, a good able-bodied laborer can -earn on an average one franc seventy-five centimes per day, washing -gold from the sands of the river; but, as under most circumstances he -can earn ten sous more by working in the fields on the banks of the -river, and without so much risk of getting rheumatism, gold-washing -on the Rhine is not often adopted as a regular employment. - -[12] "And when the substitution is made" (of a silver for a paper -fractional currency), "what will be the consequence? The metal -currency will have to be considerably debased, or else every old -woman in the country will fill her stockings with it and bury it. It -will be hoarded, sir; hoarded to the extent of removing millions -from the currency of the country." The general paused, glared at a -village wrapped in rain, by which we were rattling, chewed his cigar -vigorously, and lapsed into silence.--A Newspaper Reporter's Interview -with General Butler, September, 1875. - -[13] Gold in its crude state, and uncoined, was until recently in use -as money in some parts of California, Mexico, and on the West Coast -of Africa. - -[14] Historically, bills of exchange probably originated with the -Jews of the Middle Ages, who, ever liable to persecution, adopted -a system of drafts, or written orders, upon one another, which each -agreed to honor and pay to the person named in the draft. - -[15] It was in this manner that the first bank of which we have -any record originated in 1171, namely, the Bank of the Republic of -Venice. Venice in that year was at war and needed money. The Council -of Ten, or the Government, called upon the merchants to bring in their -gold or coin into the public treasury, and gave credit on the books of -the state for the amounts so deposited; which credits carried interest -(always promptly paid) at the rate of four per cent. per annum. Soon -after the establishment of this bank one of the depositors died; and -it becoming necessary to distribute his estate among five children, -his bank-credit was divided into five portions and transferred to -five new owners. A system of transferring bank-credits was thus -introduced, and proved so useful that in a brief time the merchants -adopted it very generally as a means of paying balances in all great -business transactions. The banks of Amsterdam and of Hamburg were also -subsequently established on substantially the same basis, and are -doing business to-day successfully. The Bank of Venice did business -for five hundred years; during which period the state was prosperous, -and there were few failures among the mercantile classes. - -[16] If to any it may seem puerile and unnecessary to enter into such -explanations, it may be well to remind them that one of the schemes -for a new currency, which has of late found some earnest advocates -in the United States, is that of Josiah Warren, of Ohio, who proposed -that currency "should be issued by those men, women, and children who -perform useful service"--i. e., grow corn, mine coal, catch cod-fish, -pick up chestnuts and the like--"but by nobody else;" such results -of service being deposited in safe receptacles, and having receipts -of deposit issued against them to serve as "equitable money." A -further axiom of Mr. Warren was, "that the most disagreeable labor" -(not the most useful) "is entitled to the highest compensation;" and, -therefore, inferentially entitled to issue the most money. A specimen -of this equitable money before the writer reads as follows: - - - The most disagreeable labor is entitled to the highest - compensation. - - $1.00 - - Cincinnati, Ohio. - - Due to Bearer, - EIGHT HOURS' LABOR, - In Shoe-making, or a Hundred Pounds of Corn. - - William Morton. - - No. --, F---- Street. - - Time is Wealth. - - -Of course, to make this money equitable, and its issue, as claimed, -"the satisfactory solution of the great problem of labor and capital," -there must be some presupposed equitable relation between eight hours -of shoe-making and a hundred pounds of corn. But one hundred pounds of -corn in Illinois are the result of only a quarter as much labor as a -hundred pounds in New England; and what comparison is there between -eight hours' work of a skilled mechanic and that of a mere cobbler -in making shoes? or of the man who performs a disagreeable, slavish -piece of work, and of the genius who invents or makes a machine that -makes this disagreeable work unnecessary? - -E. D. Linton, of Boston, one of Warren's most eminent disciples, -improves on Warren's ideas, and proposes that the United States -Government should prepare and issue a currency, which should read -as follows: - - - The United States will pay One Dollar to Bearer, on demand, in ---- - bushels of Illinois Fall Wheat, at United States No. 1 Store-house, - No. 12 River Street, Chicago, Ill. - - This note is receivable for all debts due the United States. - - -And the same inferentially in respect to pigs, coal, shoes, and -the services of doctors, lawyers, and cooks. So, then, if the note -is not to be on its face a lie, and the promise is to be actually -performed on demand, the necessity will be absolute on the part of -the Government of the United States to have store-houses for wheat at -Chicago, pig-pens at Peoria, coal-mines or dépôts at Pottsville, and -trained professionals ready on call to plead a case, preach a sermon, -cure a cold, and cook a dinner; and all of these last must take their -pay in pigs if required. But as a pig has one value at Peoria, and -another value at almost every other place, the dollar's worth of pig -which the United States would pay might be a whole pig in one place, -a half in another, and possibly only the snout in another. - -[17] Although, to all who have investigated the subject, the -evidence is conclusive that an irredeemable fluctuating paper money -is always made an agency for taxing with special severity all that -class of consumers who live on fixed incomes, salaries, and wages, -it has, nevertheless, always been a somewhat difficult matter to find -illustrations of the fact so clear and simple as carry conviction by -presentation that it does thus act to the classes most interested. With -a view of obtaining such an illustration, application was made some -months since to an eminent American merchant, whose large and varied -experience abundantly qualified him to discuss the subject; and the -result of the application may be thus stated: - -Q. In buying in gold and selling in currency, what addition do you -make to your selling price, in the way of insurance, that the currency -received will be sufficient--plus profit, interest, etc.--to replace -or buy back the gold represented by the original purchase? - -A. We do but very little of that now; hardly enough to speak about. - -Q. But still you make insurance against currency fluctuations an item -in your business to be regarded to some extent? - -A. Why, yes, certainly; it won't do to overlook it entirely. - -Q. Well, then, if you have no objections, please tell me what you do -allow under existing circumstances? - -A. I have certainly no objections. We buy closely for cash; sell -largely for cash, or very short credit; and, within the comparatively -narrow limits that currency has fluctuated for the last two or three -years, add but little to our selling prices as insurance on that -account--say one to two per cent. for cash, or three months' credit; -and for a longer credit--if we give it--something additional. During -or immediately after the war, when the currency fluctuations -were more extensive, frequent, and capricious, the case was very -different. Then selling prices had to be watched very closely, and -changed very frequently--sometimes daily. My present experience, -therefore, is exceptional; and to get the information you want, -you must look further. I think I can help you to do this. We buy -regularly large quantities of a foreign product--let us suppose, -for illustration, cloth, for the large manufacturers and dealers -in ready-made clothing. We buy for gold, and we sell for gold, and -do not allow the currency or its fluctuations to enter in any way -into these transactions. But how is it with my customers? I allow -them some credit; and the amount involved being often very large, I, -of course, must know something of the way in which they manage their -business. They transform the cloth, purchased with gold, into clothing; -and then sell the clothing, in turn, to their customers--jobbers and -retailers--all over the country, for currency, on a much longer average -credit than they obtain from me for their raw material. As a matter -of safety and necessity, these wholesale dealers and manufacturers -must add to their selling prices a sufficient percentage to make -sure that the currency they are to receive at the end of three, six, -or nine months will be sufficient to buy them as much gold as they -have paid to me, or as much as will buy them another lot of cloth to -meet the further demands of their business and their customers. How -much they thus add I can not definitely say. There is no regular -rule. Every man doubtless adds all that competition will permit; and -every circumstance likely to affect the prospective price of gold is -carefully considered. Five per cent., in my opinion, on a credit of -three months would be the average minimum; and for a longer time, -a larger percentage. If competition does not allow any insurance -percentage to be added, there is a liability to a loss of capital, -which, in the long run, may be most disastrous--a circumstance that may -explain the wreck of many firms, whose managers, on the old-fashioned -basis of doing business, would have been successful. The jobbers and -the retailers, to whom the wholesale dealers and manufacturers sell, -are not so likely to take currency insurance into consideration in -fixing their selling prices; but to whatever amount the cost price of -their goods has been enhanced by the necessity of insurance against -currency fluctuations, on that same amount they estimate and add -for interest and profits; the total enhancement of prices falling -ultimately on the consumer, who, of necessity, can rarely know the -elements of the cost of the article he purchases. - -Q. So Mr. Webster, then, in his remark, which has become almost a -proverb, that "of all contrivances for cheating the laboring classes, -none has been more effectual than that which deludes them with paper -money," must have been thoroughly cognizant of the nature of such -transactions? - -A. Most undoubtedly; for such transactions are the inevitable -consequence of using as a medium of exchange a variable, irredeemable -currency. - -The illustration above given, therefore, in the place of being -imaginary, is based on the actual condition of business at the present -time--January, 1876. - -[18] In 1864, a ship was built in New York, at the time when labor -and materials, reckoned in currency, had touched their highest -prices. In 1870, another ship was built in the same place and on the -same model--like the former in every particular. It was expected that, -as wages and the cost of materials were less in 1870 than in 1864, -the cost of the latter ship would be much less than that of the former; -but the result showed that this was not the case. - -[19] When the Japanese embassy visited the United States, in 1872, -they were seriously advised to create, by some means, a national debt -as soon as they returned home, and make use of it as a basis for the -creation and issue of currency. - -[20] Machiavelli, in his "Discourses on the First Ten Books of Livy," -book ii., chap, iii., in explaining the great difference in the -relative growth of the Roman and Spartan republics, relates that -"Lycurgus, the founder of the Spartan republic, believing that -nothing could more readily destroy his laws than the admixture of -new inhabitants, did every thing possible to deter strangers from -flocking thither. Besides denying them intermarriage, citizenship, -and all other companionships (conversationi) that bring men together, -he ordered that in his republic only leather (non-exportable) money -should be used, so as to indispose all strangers to bring merchandise -into Sparta, or to exercise any kind of art or industry there, so -that the city never could increase in population." - -[21] Examination will show that the United States, for one-sixth part -of their existence as a federated nation, have been in a state of war; -and, for the future, there is no good reason for supposing that the -country is to be any more exempt from the vicissitudes of nations -than it has been in the past. With irredeemable paper, violation of -plighted faith, gold demonetized and banished, in what condition is -the nation for maintaining a great national struggle? - -[22] In a case often overlooked (Bank vs. Supervisors, 7 Wallace), -the United States Supreme Court decided that "United States notes -are engagements to pay dollars; and the dollars intended are coined -dollars of the United States." Refusal to pay such notes in coin is -clearly, therefore, repudiation. - -[23] Irving's "Conquest of Granada." - -[24] In every cabinet of rare coins in Europe there will be found -specimens of what are known as "obsidional" coins, or coins struck -in besieged places to supply the place of coined money. These coins -appear, in all instances, to have been regarded as obligations sacred -in their nature, and their repudiation a high crime against morality -and patriotism. - -[25] Speech of General B. F. Butler, United States House of -Representatives. - -[26] Letter of Wendell Phillips to the New York Legal-tender Club, -1875. - -[27] Charles Moran, New York Commercial Bulletin, October 5th; 1875. - -[28] Opinion of the United States Supreme Court, by Justice -Strong.--Wallace, 12, p. 553. - -[29] The Indians on the Atrato River (Central America), when first -visited by one of the recent inter-ocean-canal exploring parties, -were found to be unaccustomed to the use of much, if any, clothing; -but after a little intercourse with civilized man, some of the more -intelligent of the natives presented themselves with their bodies -painted in close imitation of clothes, which they claimed to be -superior in every respect to the genuine articles worn by their -visitors. - -[30] This was what actually happened in Connecticut in 1704 and -thereabouts. See "Madame Knight's Journal," quoted in Felt and -Bronson's "Histories of New England Currencies." - -[31] Whatever may have been the immediate effect of the -gold-discoveries in California and Australia, no economist of repute -now holds to the opinion that the average purchasing power of gold -all the world over is any less than it was in 1849-'50; or, in other -words, that any increase in the quantity of gold since 1849-'50 has -resulted in any present depreciation. - -[32] This is the American interpretation. The English interpretation -of "legal tender" was brought out in a debate in the House of Lords, -in June, 1811, when it was shown to mean, in its application to -Great Britain, no more than this: that in a suit between creditor -and debtor, if a judgment went against the debtor, he was allowed to -plead a tender of bank-notes in arrest of execution, but he could not -claim that the notes should be forced upon the creditor in discharge -of the debt. During the long suspension of specie payments in Great -Britain, therefore, bank-notes were never made legal tender in the -American sense. - -[33] After the Revolutionary war it was considered disgraceful to take -advantage of the legal-tender character of the depreciated Continental -or State paper money to liquidate debts with it; and the Society of -Cincinnati expelled a member for so doing. The State of Rhode Island -also, which longer than any of the other States endeavored to maintain -by law the legal-tender character and use of such money, was often -spoken of in consequence as "Rogue's" in place of "Rhode" Island. - -[34] To any who may desire to know how far imagination has been -drawn upon for this picture, reference is made to the speech of -Hon. O. P. Morton, United States Senate, "Congressional Record," -vol. ii., part i., Forty-third Congress, First Session, p. 669. - -[35] The pertinacity "with which a mind befogged on the subject -of money and currency holds on to the delusion that the making and -issue of promises to pay, and calling the same money, is equivalent -to the creation of wealth; and, vice versâ, that the cancellation -or withdrawal, by payment, of such promises is the same thing as the -destruction of wealth, and also tends to make money--in the sense of -capital--scarce, and interest high, finds many amusing illustrations, -which for educational purposes are better than arguments. - -For example, we have, first, the assumption of a leading Senator of the -United States (already referred to, and which, if not on record, would -seem incredible) that because an increased supply of horses and hogs -made available to a market make horses and hogs cheap, therefore an -increased supply of evidences that capital had been borrowed, used, and -never paid, would tend to increase the quantity and rate of interest -of loanable capital. A corresponding illustration is also to be found -in the case of the member of the Continental Congress mentioned by -Pelatiah Webster, who, when the subject of increased taxation for -the support of the war was under consideration, indignantly asked -"if he was expected to help tax the people, when they could go to -the printing-office and get money by the cart-load?" - -The experience of the Irish mob also finds an appropriate place -under this head, which made a bonfire of all the notes issued by an -obnoxious private banker that they could gather, little imagining, -as they shouted and capered with wild delight about the fire that -consumed them, that, in place of impoverishing, they were really -enriching, their enemy. - -The following story, also illustrative of the same popular fallacy, -passes current in one of the towns of Eastern Connecticut: During -the severe financial panic of 1857, an honest country farmer and -deacon, who, by virtue of being a considerable stockholder in one -of the local banks, had been placed as a figure-head on its board of -directors, was applied to by a farmer friend to help him in procuring -from the bank a small loan. Knowing that the times were hard, and -money scarce, the deacon, although desirous of obliging his friend, -did not at once commit himself, but promised to go to the bank, -and make his action contingent upon the state of affairs which he -might there find. The two friends, accordingly, went into town the -next day (which happened to be the culminating day of the crisis, -when every promise to pay issued by any bank was, in the general -distrust, gathered up and rushed in for redemption); and, while the -applicant for the loan waited outside, the director entered the bank -to reconnoitre. Passing into the directors' room, and thence behind -the counter, he said little, but, keeping his eyes wide open, did not -fail to notice the extraordinarily large packages of bills, filling -safe and drawers, which, to the annoyance and strain of the bank, -had been recently sent in for payment. Seeking no further proof of -the financial strength of his institution, he returned to the street, -and, informing his friend that every thing was all right, the latter -next entered, and confidently asked for his discount. To his great -surprise, he received the usual polite answer, that "they would be -too glad to oblige him, but that, really, they had no money." "Out -of money!" said the deacon, when the result of the application was -made known to him. "Out of money! How can they lie so, when I have -just seen the safe and drawers full of it? As a Christian man, and -an officer of the church, I can't conscientiously be a director and -stockholder any longer in such an immoral institution." And yet, if, -on returning home, the good deacon had found in his table-drawer a -number of his individual promissory-notes, signed and ready to issue, -but not issued, he would not have thought himself any richer by their -existence, but, on the contrary, would have felt much more comfortable -at such a time to know that the notes were all under double-lock -security, or, better, if he saw them vanishing into ashes. And yet, -in the case of the bank-notes, he couldn't understand why they were -not money, to be used at all times and under all circumstances! - -[36] Between the years 1860 and 1870, the United States doubled the -quantity of currency available for use by its citizens, and yet the -rate of interest was as high in the latter year as in the former. - -[37] Such were some of the uses finally made of the Continental -currency. See Sumner's "History of American Currency," p. 46. - - - - - - -End of Project Gutenberg's Robinson Crusoe's Money;, by David A. 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