diff options
Diffstat (limited to '40429-0.txt')
| -rw-r--r-- | 40429-0.txt | 3136 |
1 files changed, 3136 insertions, 0 deletions
diff --git a/40429-0.txt b/40429-0.txt new file mode 100644 index 0000000..b68a201 --- /dev/null +++ b/40429-0.txt @@ -0,0 +1,3136 @@ +*** START OF THE PROJECT GUTENBERG EBOOK 40429 *** + + 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. Wells + +*** END OF THE PROJECT GUTENBERG EBOOK 40429 *** |