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Title: A Speech on the Principles of Finance
Author: Woodhull, Victoria C. (Victoria Claflin)
Language: English
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                                A SPEECH
                       THE PRINCIPLES OF FINANCE,


                         VICTORIA C. WOODHULL,

                              DELIVERED AT

                    COOPER INSTITUTE, NEW YORK CITY,

                       THURSDAY, AUGUST 3, 1871.

                               NEW YORK:
             WOODHULL, CLAFLIN & CO., No. 41 BROAD STREET.

                       THE PRINCIPLES OF FINANCE.


To the careful student of history, there is a very great deal more to be
considered than the mere political facts that stand as landmarks along
the path of progress which the nations have traversed since the plains
of Iran poured forth their hosts westward. These facts are the mere
externals that adorn the pages of historic lore, and embellish the
memories of the great men who have lived in and moved the world at
various times in various nations, or which clothe the lives of tyrants
and usurpers with their just reward.

The superficial student of history cares only for the _results_ of the
evolution of nations—for the _fact_ that Sesostris was the greatest of
Egyptian kings; or that Semiramis rose by her military sagacity from the
rank of a mean official’s wife to be, first, the Queen of Ninas, and
afterward, to be the Assyrian Queen, who should march an army of three
millions men across the Indus to conquer the Indian King. Running down
the course of events, he traces the rise and fall of nations—after
Assyria then Egypt, next Persia, Greece, Rome and then the Dark Ages,
out of whose womb was evolved modern Europe; and, lastly, the birth,
development, struggle and recovery of the most remarkable nation which
has yet arisen in the world.

Behind these facts, which are but results, lie the real motor powers of
history; and they are deeper, broader and more important than is that
which _they_ evolve. There is an external and an internal phase to
everything existent in the world. Up to _this_ generation the external
has apparently borne the more prominent part in determining what should
be next. But _now_ the analytic age has begun, wherein facts do not
suffice; wherein new systems, new theories, new philosophies and even
new religions are constructed, not by an examination of the _errors_ of
what has been, but by the _discovery_ and _application_ of the
principles, the powers, which underlie those errors.

Heretofore there has been no inquiry made by the rulers of the people
into the general principles of government. It was sufficient that there
was a government maintained, the governors caring for little but the
power to compel the people to do their bidding. But it is beginning to
dawn upon the minds of those who have something more than a selfish
interest in humanity that there _is a science_ of government; aye, even
that there is a science of society: and such minds are endeavoring by
the deepest researches to discover the principles of these sciences.

In our government, the principle of individual rights is theoretically
held, though in its application government still interferes with those
rights. The legitimate functions of a government, based upon the rights
of every individual over whom its power is exercised, are limited to the
_duties_ that will best _subserve_ and _protect_ the interests of
individuals. The proper understanding and practice of these functions is
the most important thing for a people to arrive at, but, having arrived
at this as the basis of all the relations of the people, the scientific
construction of the various departments of the complete superstructure
which is to cover all the public interests of all the people, as well as
to maintain their private interests intact, can be begun.

After the general principles of government are properly formulated in
Constitutions and vitality given them by laws, a correct, a scientific
financial system stands _next_ in importance. If a country have a true
system of _government_, and do not have a true system of _finance_, it
can never attain to any _permanent_ prosperity. Literally speaking,
finance is a _part_ of government; since, in organizing it, means for
its support are among the first considerations. Hence it is plain, if
there are principles of government, so must there also be principles of

It has never been pretended, so far as I know, even by the profoundest
political economists, who are sticklers for the gold standard, that any
financial systems the world has ever known were developed by the
scientific application of self-evident truths, which is the nature of

The various systems of which use has been made were simply
_experimental_, devised for _politic_ reasons, as the _best_ methods to
meet the exigencies of the times in which they were required. Instance
the Greenback, the necessity for which was such as to shake the nation
to its very centre, and to fill the minds of all patriots with a dread

If there have been no scientific money systems in vogue, and it now
comes out that the world has arrived at that degree of advancement
wherein _policy_ should give way to _principles_, even in finance, there
can be nothing gained by going back to review the errors, failures and
fallacies of the past. Nothing valuable can be gained by wading through
the almost innumerable statistics which have accumulated to a
sufficiently great extent to bewilder the most comprehensive intellects.
Having for ten years been deeply engaged in studying the principles of
government, I learned that no system of government could be perfect
unless its financial department was perfected; therefore I have
frequently endeavored to solve the financial problems which statistics
propose, but _invariably_ failed to learn anything that even promised to
look well as a basis for a new and improved system, to say nothing of
its promises in operation.

The conclusion was inevitable, that there have been _no_ acknowledged or
even known, fundamental principles of finance operating in _any_ of the
many systems of the many nations, and that the so-called money of the
world _is not now, nor ever was_, money, in the scientific sense of that

All the statistics, failures and errors of the past, with which the
history of money abounds, being of no value, must be utterly ignored in
any inquiry which proposes to predicate a natural and scientific money,
as distinguished from arbitrary inventions, devised to meet the various
exigencies of nations in their growth, prime and decay. And _any_ person
who proposes to teach finance, or a new system, by arraying before you
the evidences of the past, contained in figures amounting to billions of
dollars, simply proposes to try _another experiment_, to _culminate_ in
another failure.

Therefore I shall present no principals, per cents. and compounded
amounts, except, perhaps, as examples to illustrate the mathematical
impossibilities of the fallacious theories by which financiers have
attempted to dazzle the world, but who have only succeeded in
accumulating in the hands of a very select few that which by an exact
justice should belong to, and be distributed among, the people

In order to intelligently discuss and arrive at legitimate conclusions
regarding the question of money, it should be _first_ determined just
what is to be involved in the discussion; for around this, as around all
other general things, there has been such a mass of rubbish and
extraneous matter aggregated that the main question is always in danger
of being lost sight of, unless this be first removed and the real issue
left clearly exposed.

Most of the confusion which follows the attempts to solve the money
question arises out of the fact that the _same_ words in the mouths of
_different_ people do not mean the _same_ things, or that _different_
words are used by _different_ people to mean the _same_ thing. If there
are two words in common use to represent similar objects, but which,
upon close analysis, _do not_ represent precisely the same thing, it is
better that _one_ of them be discarded. It is necessary, therefore, to
settle, prior to the beginning of this argument, _precisely_ what the
several terms _do_ mean which are prominently in use in connection with
the money question. It is, perhaps, near the truth to say that this
settlement is the argument. Very few persons have any well-defined
comprehension of what is the _real_ significance of the terms _gold_,
_money_, _currency_, _intrinsic value_ and _wealth_. If these words are
analyzed, what do they scientifically represent?

Gold is a product of the earth only to be originally obtained by labor
and expense, and both practically and scientifically bears like
relations _to_ labor that all other things do which are produced _by_
labor; and none other. But there has been an importance attached to gold
which has not been accorded to _any other_ product of labor. It has been
coined and called money, because it was coined, and by custom and common
acceptance made an _arbitrary_ standard of value, which _none_ of its
qualities warrant when subjected to analysis, as will be shortly shown.

Gold bears the same relation to _real_ money that a religious theory
bears to _real_ religion, which theory, when comprehended by the
intellect of the people, loses its value as a substitute for real
religion; but which, until comprehension comes, it is better to have
than to have none at all. So also with gold. It has in _theory_ been
considered as _money_; but when a _true_ money comes to be comprehended,
it will lose its value as a substitute therefor, and sink to its proper
sphere among the other products of labor.

It is altogether probable that gold was the very best substitute for
money during that part of the world’s evolution wherein people were
guided and controlled by policy and before principles were recognized as
that which should govern, let their action lead where it might. As the
world is now beginning to act from _principle_, for the sake of the
_truth_, so also must they now begin to formulate the principle of money
for the sake of the principle.

Wealth is whatever is produced by labor which adds to the _comforts_,
the _happiness_ or the _life_ of man; and everything that does this,
either directly or indirectly, has intrinsic value—that is, has the
capacity to bless mankind.

Wealth may, and should, be divided into two kinds, namely, _permanent_
wealth and _transitory_ wealth.

Permanent wealth consists of all those products of labor which are not
themselves _transferable_ into life, comfort or happiness, but which may
at all times be _exchanged_ for that which is thus transferable into
that which can be used to continue life. Gold, silver and precious
stones are among the best illustrations there are of permanent wealth.

Transitory wealth consists of all those products of labor of which
direct use is made to maintain life or to add to its comforts and
happiness, and which, _by_ such process, are absorbed _into_ and become
_a part of_ the life of humanity. Transitory wealth, it will be seen, is
much the more important of the two, since, if people only possessed
permanent wealth, their life could not be continued an hour by it,
unless there were a possibility of exchanging it for the necessities of

It would seem that _all_ kinds of wealth are intrinsically valuable,
since its various kinds may be either _directly_ used to maintain life
or may be _exchanged_ for those which will maintain life. Wealth and
intrinsic value, then, mean the same thing.

But what does the term _money_ mean: or has it no necessary significance
in the inquiry?

There was a time when there was no such _thing_ or _word_ as money; but
at that time there was life to continue, for which wealth was necessary.
It seems that _wealth_ had existence before _money_ was thought of.
Wealth is substance, of which money is the principle or representative,
but which, in itself, has no intrinsic value.

Money is an invention made to _represent_ wealth, or value, in order
that its various kinds may be exchanged with facility, or that they may
be exchanged without the absolute and direct and immediate receipt and
delivery of one product of labor for another product of labor. All the
products of labor may be exchanged _directly_, and without the use of
any representative or go-between, which for the time being stands
representative of the one or the other, but _not so well_ at all times
and under all circumstances. Money is _anything_ which stands
representative of any product of labor; that is, that can be made use of
to facilitate the exchange of any of the results of labor, which are
wealth. A representative of anything cannot be the thing itself,
therefore, if money is a representative of wealth it is not itself
wealth. Were A, B and C to at all times exchange their products between
themselves by _direct transfer_, they would have _no use_ for money;
they would exchange—deliver and receive—_actual_ values. But when A
desires from B some of his products, himself not having on hand any of
his products which B desires, he receives from B his value and gives him
his representative of value—his note—promising that at a future time he
will deliver B the _actual_ value which he desires.

_Currency_ is only a _form_ of money, the same as _gold_ is only a form
of wealth; and in the same manner that gold is wealth, is currency
money. Money being the principle of representation in exchange,
everything of which use is made to facilitate exchange in the form of
representative value is money. Anything which can be transferred from
one party to another, anything that is negotiable which is not actual
value of itself, is money. This includes not only all currency, bank
notes, but also bills of exchange, the ledger and bonds. These are _all_
representatives of wealth, _all_ demands for payment at a future time of
a certain specified sum, and consequently are money. It is quite evident
that, with the terms _wealth_ and _money_, we have all the necessary
distinctions which should enter into the abstract question of finance.
All other terms are but names for separate kinds or forms of these
terms, to be made use of when they respectively arise in making

Now, every one must at once concede that that which best represents all
of the products of labor will also best _exchange_ them, and is
therefore the _best_ money. It is _equally clear_ that gold in _no way_
represents _any_ labor but that which produces it. If gold were a true
representative of the results of _all_ other labor, except that which
produces it, would it not also be apparent that _such_ labor must be
_equal_ to _all_ other labor. Were gold a thousand times more valuable
than it is held to be, it would not _even then_ be able to represent all
other values. Therefore, gold is a _false_ standard of value, a _false_
representative of wealth.

Many people think and speak as if gold would be of no use to this
country if it were to come into disuse as _money_; that we should
entirely lose it as _wealth_; the very reverse is really true, since we
should have just the same quantity of gold that we _now_ have, to be
used for the _same_ purposes for which it is now required, to wit: to
export to other countries in exchange for imports.

Suppose our imports to amount to a thousand millions dollars per annum,
and that we export cotton, corn and pork to that amount, what use would
we have for gold except to loan other countries, and could we not _loan_
it as _gold_, taking their representatives of value for it equally as
well as though it were coined into money, having the seal and stamp of
the government? It is well known that we do not export gold to Europe as
so many American dollars, but as so much gold, by weight of a certain
degree of fineness, the stamp of the government attesting to that

Again: Suppose that we had no cotton, corn or pork to give in exchange
for our imports, and that we produced a thousand millions dollars’ worth
of gold per annum, should we not be _equally_ well conditioned to trade
with Europe?

It is seen that the real character and qualities of gold are the same as
are those of any other product of labor, which we can exchange direct,
for other products of labor which we want more than we do the gold. If
at any time the balance of trade is _against_ us, and we have _no_
cotton, corn, pork, gold or _anything else_ to make it good, we must
then make it good by our representatives of value—our bonds—to be
converted when we shall have these products. This process has been
actually going on ever since we began to export bonds, either national,
state, county, city, railroad or bonds of other incorporated companies.

Now, is it not _perfectly_ evident that we have not only produced by
labor what we have exported, which we have been pleased to denominate
merchandise, but also that we have produced all the gold that has been
exported; and in this connection is it not just as much an article of
merchandise as is either cotton or corn? Gold cannot at _one_ and the
_same_ time be both _money_ and _merchandise_. If _gold_ is money, so
also is _wheat_, _cotton_ and _corn_ money, since they perform the same
_services_ and possess the same _qualities_ as merchandise that gold

To be perfectly clear in our conclusions, money must be resolved into
its _uses_ and entirely divested of all its _fictitious_ and
_irrelevant_ relations. The fact that money is that thing which is made
use of to exchange real values must be the initial starting-point, of
which sight must never be lost until it is _definitely_ settled what
will _best_ perform this service. Anything which can be made use of for
_any other purpose whatever_, is _not_ the _best_ thing to be made use
of as money; because the demand for such a thing for such other purposes
destroys its positive value as money by causing fluctuations in its
exchanging power.

It is a grave financial error for this country to endeavor to return to
gold as money. All the practices under the gold standard have been
positive and ample refutations of the arbitrary value accorded to gold.
A _dollar_ in gold can only exchange a _dollar_ in value in any other
substance; and the practice of issuing a greater amount of bank notes
than the bank has gold dollars to redeem them by, is a _legalized_
system to _rob_ the people; since it is _evident_ that a bank having
three hundred thousand dollars in notes in circulation, and only one
hundred thousand dollars in gold in its vaults, can redeem but
_one-third_ of its circulation if it be all presented at once for
redemption. All the other securities of a bank, such as its discounts,
personal property and real estate, may become of no value, or may be
placed out of reach of the holders of its circulation, so that the only
_real_ security for its circulation is what it may have in gold in its
vaults. Beside, what right has a bank to receive legal interest on three
times the amount of its real security? Is not this a most _transparent_
method of _swindling_ the people? Hence I assert that the use of gold as
money _always_ results disastrously to the producers of wealth, and
_always_ beneficially to those who are permitted to absorb all their

Another unanswerable reason why gold cannot answer the requirements of
money is found in the _degrees of value_ which belong to different
products of labor, and which are _universally_ determined by the
sacrifice required to produce them. That is to say, all other things
being equal, the _relative_ value of products is determined by the
_time_ and _labor_ required to produce them. The increase in the value
of manufactured material is in _exact_ proportion to the _time_ required
and _wealth_ consumed in their manufacture. The value of gold is
determined in _precisely_ the same manner; and it is simply foolishness
to assert that the value of gold never changes, or that it has the same
purchasing power at all times.

Suppose there should be immense fields of gold suddenly developed all
over the country, so that it would become as common and plentiful as
iron or coal, would it not decrease in value in comparison with other
products? That is to say, would an ounce of gold then possess as great a
proportionate value to other products as it now does? No one will
pretend it. Then gold is just as much the subject of fluctuation as is
any other product of labor, and for _just the same_ reasons—demand and
supply—which are the great arbitrators of values in all parts of the

Everybody knows that for a certain quantity of gold a certain quantity
of cotton may be obtained, and for a certain quantity of corn, a horse.
The fact that the horse is obtainable by the corn does not convert the
corn into money, neither does gold any more than the corn become money
because the cotton is obtained thereby. The gold for the time is equal
in value to the cotton, and so is the corn to the horse. Now, what is
required of money is this: Suppose the gold, cotton, corn and the horse
to be of equal value, a person possessing an amount of money
representing the value of either of the four can, at his discretion,
purchase whichever he may choose; since the money would equally
represent the gold, cotton, corn and the horse. Anything that may be
used for money that will not do the same thing for any variety of the
products of labor, values being equal, is not money in any sense of that

Incidentally in this connection, because it has an indirect bearing upon
the question under consideration, I wish to call attention to a mistake
that has been productive of more financial ills and consequent injustice
to a large proportion of the people, who are the wealth producers, than
any other single cause, and that is the fundamental error of making
land, wealth, which it is no more entitled to be, scientifically, than
gold is to be called money. Wealth is that which is produced. Land
exists. All improvements made upon land are wealth; _but the land
proper, never_.

In this almost fatal mistake—almost fatal to the humanitarian interests
of the so-called common people—which is fundamental in its nature, is
found the _basis_ upon which rest the vast disparities in the
distributions of wealth, and which gives to certain favored individuals
the means of realizing vast fortunes without ever resorting to the
production of wealth, or of even accumulating it by trafficking in the
different kinds of wealth.

There are numerous examples of this manner of becoming possessed of
riches. People acquire title to lands which, by favorable location, come
into great demand and consequently rise in value from _one dollar per
acre to hundreds of thousands of dollars per acre_. By what principle of
_equity_ and _right_ should _any_ person be entitled to such vast
increases in capital invested in land, when it is entirely attributable
to the movements of the community which produce it, and in no single
particular to the individual? To be so entitled is for the individual to
possess advantages over others to which no just communal government
should for a moment consent—is to have the right to appropriate to self
the results of labor which belong in common to all the people. Such
results are against _all_ principles of equity and justice, and is one
of the _greatest_, if not _the_ greatest error of the present, regarding
the equities of property, and is the foundation and prophecy of all
other kinds of monopoly.

It occurs to me that an objection may be raised to my argument classing
gold as wealth, and defining wealth to be that which can be made use of
to minister to life, comfort and happiness; or perhaps to the
distinction of permanent and transitory wealth. Gold, as permanent
wealth, can only minister to man through its exchange for other
valuables of which direct use can be made. It may be said that in _that_
sense gold can legitimately be money.

But if there are objectors to this argument, I beg to call their
attention to the conclusive fact that gold _can never_ be representative
of all other kinds of wealth. It is just as impossible that it should
be, as it is that a bridge _one_ hundred feet in length should span a
river _five_ hundred feet in width. It must further be remembered that
the uses for which money is required demand an invention which can be
made use of for _no other_ purpose whatever, and that money is the name
of an invention _demanded_ and made for the purpose of _facilitating_
exchanges—for making them easy, _convenient_ and _adaptable_ to _all_
conditions of _all_ persons.

Every attempt ever made to compel gold to answer the demands of money
has been a disastrous failure. So long as a country enjoys continuous
prosperity under a gold standard of value, it is all well enough. The
people make use of an expanded volume of currency in the full faith that
prosperity will continue and everything be smooth and right.

But anon a _change_ comes, the nation is precipitated into conditions
which require _more_ than its accumulations of gold to meet. _That_
being exhausted, it is _inevitable_ that representation be resorted to.
The wealth in the form of gold not being adequate, and other wealth not
having been used or accepted as money, paper representatives of it are
the _only_ resort. So it appears that when an _emergency_ arises the
people are _involuntarily_ pressed to the use of the principle of
representation, which is the _only_ scientific thing that can be called
money. So that while a paper representative of wealth is, _with
everything else_, a product of labor, it is more than that; it is the
embodiment and application of a principle, which other products of labor
are not; and all principles are fundamental; are the basis of all
permanent and all purely scientific things and truths, while wealth is
the realized product of the outworking of principles, directed and
appropriated by man for his use and convenience.

The direct inquiry can now be made as to _what_ will _best perform_ what
the people require of money; and money is that which can be used to
_represent_ real values without an absolute _transfer_ of such values.
The basis of all value of this country is our _present_ accumulated
_real_ wealth and our _capacity_ to increase it, and this accumulation
and the prospective increase may be _wholly_ represented by money and
the nation never become bankrupt.

A person may possess wealth to the amount of ten thousand dollars upon
which he may issue his representatives of value or promises to pay that
value. These representatives of value would circulate among those who
believe in the capacity and intention of the utterer to give _up_ to
them, _when_ demanded, that which they represent. Everybody by his
individual right has the authority to issue such representatives of
value, and no government has any right to prohibit their circulation;
because the people, as individuals, have the right to take or refuse
them. The issue of bank notes is upon the same principle, and so long as
the government does not in substance _indorse_ these issues, the people
have the _perfect_ right to deal in them—to receive and deliver them.

But there is an insuperable objection—one which cannot be overcome by
any governmental requirements—to these representatives being called the
real money of the people, since circumstances over which _neither_ their
utterers nor receivers can have _any_ control may render them
valueless—may make it impossible for those who uttered them to redeem
them—and their holders find themselves with _bits of paper_ representing
_nothing_; but for which they parted with real value.

So far as this condition is confined to individuals who had no other
reason for receiving them, and no other assurance of their real value
than the supposed _capacity_ and _intention_ of the uttering person or
persons, it is _strictly_ a legitimate condition; and one with which the
sufferers can find _no_ fault; since of their own free will and choice
they received the utterers assurances that his representatives were of
real value. An individual upon his personal judgment, without undue
persuasion, accepts another’s representative; if it prove _bad_ he has
_himself only_ to blame for the loss, as coming from an error of
judgment; and _no power_ or _authority_ has any right to step in to
compel the making of amends for this error. _This_ is the simple
doctrine of the _rights_ of _individuals_, with which _no third party_
has any right to interfere after the occurrence of the fact. But when
banks are organized under certain formula of law, framed by the people
or their representatives through government, the people receive and pay
out their issues—representatives of their value—_not_ because they have
special confidence in the capacity and intention of the individuals who
compose the management, _but_ because they _suppose_ the management has
conformed to _those certain forms of law_ which are _intended_ to render
them safe. In this way the government, at least indirectly, gives
_credit_ to the bank, and _currency_ to its issues, and the people
accept them _simply_ because the government has done so.

But if these banks are mismanaged either ignorantly or intentionally, or
managed by designing men, as often they are, who make use of the
governmental sanction to swindle the people, as many times they have,
_where_ can the people look for redress; _where should_ they look for
redress? The government is justly responsible to the people for all such
issues, since it did not require real security from the banks, and
government should make reparation therefor.

This is precisely our objection to _any_ and _all_ forms of bank issues.
There can be _no_ arrangement made so _perfect_ in security to her
people as to _guarantee_ them _absolutely_ against all hazard, that will
permit the banks to make the profits which they seem to think they are
entitled to make from the people. In _absolute_ security there can be
_no_ profit. Bank profits demand the circulation of more notes than they
have _real_ value to represent. Profits come only from speculating
either upon the _confidence_ or the _money_ of the people, and
government has _no_ right to _protect_ such _illegitimate_ and _unjust_

Our present system of banking is a _swindle_ upon the people, which it
is simply surprising that they endure as they have and do. For the banks
to be permitted to filch from the people twenty-four million dollars per
annum is an _outrageous villainy_ which, if comprehended by the people
in its _true light_, could not exist _another year_. ’Tis true these
banks complied with the law passed in a time of dire necessity, and that
through them the government acquired the means to conduct the war. But
did not the people themselves do even _more_ than furnish money, which
was promised to be returned; did they not freely give their _lives_,
which can never be returned, and which the government never thought of
promising to either return or guarantee, and that, too, for the pitiful
sum of thirteen dollars per month? What comparison is there between the
sacrifices made by the two classes of people, the capitalists who have
absorbed the wealth of the country and the laborers who still continue
to give life, property and vitality _to_ the country. There is
absolutely _no_ chance for a comparison; the distinction is _too_ great.

It seems to me that if either class is entitled to superior
consideration—to receive millions of the people’s money—it is the common
people who so freely offered their _lives_ to save their country,
instead of those who simply _loaned_ their money at enormous rates of
interest, with the certain knowledge that it would be repaid. The
present claims are too preposterous, and deceptive, and too unjust to be
long continued.

All bank notes in their ultimate effects are frauds upon the people, and
their continuation as a circulating medium is only possible because that
part of the people who suffer from them have not yet risen into a proper
understanding of the question. The time is, however, near at hand when
those who have reveled in the result, of the wear and tear of the
muscle, and the sweat of the brow, of the common laborer, will be
compelled to produce honestly and equitably everything they would enjoy.

The substitute for all kinds of bank notes as the money for the people
should be a _purely people’s money_—a _national currency_ whose basis of
value would be the accumulated wealth of the country, and also its
capacity for regularly increasing such wealth. Is there any reliance to
be placed in a currency issued by an individual or a number of
individuals through an incorporated bank, based upon his or their
wealth, which is at all times liable to pass into the hands of other
individuals? Yes, there is a presumptive reliance—an indefinite
security—but the security is not perfect. In comparison with this
security place that of a currency issued by the government, based upon
the _entire_ wealth of the _whole_ country, which, no matter how much it
might be changed about among the different persons comprising the nation
by various contingencies, could never depart from the country; which
fact would render it safe under any and all contingencies that could
possibly arise, excepting alone the entire destruction of the country
and its government by a foreign power; which contingency is not
sufficiently imminent to cause any present alarm.

A national currency _thus_ based would have not only _all the gold_ of
the country as a basis, but also _all other kinds of wealth_. Is it not
perfectly plain that such a money would be just so much better than
common bank notes, with a one-third gold basis, as the total amount of
the wealth of the country is greater than such amount of gold? It would
be in the most complete sense the people’s money. It would be a system
of mutual banking wherein every individual of the country would have an
interest, instead of there being a vast number of mutual banking
institutions, such as has been proposed by a person of profound
financial ideas.

As before stated, my objection to all systems of individual banking is
that the _basis_ of their issues is at all times _liable_ to pass from
the possession of such individuals; whereas, in a national currency—the
_money_ of the people, _themselves_ in the aggregate the basis and
security—there could be _no such_ liability; since, if _parts_ of the
security pass from original to secondary hands, it is _still_ the basis
of the currency, and could never be transferred beyond the jurisdiction
of security by the operations of designing or incapable persons. By no
possibility could there ever a loss occur to the holder of such a
currency, except it be destroyed in his hands.

Undoubtedly the _greenback_ was the _nearest_ approach to a _real_ money
that any people of the earth ever made. We have only to observe how
_admirably_ it has answered nearly all the purposes for which people
require money, to be convinced that it has the very best—the most
secure—basis that it is possible for a money to have. It stands
representative of the capacity and willingness of the government—the
representative of all the people—to pay.

But it is one of the most _difficult_ of things for the people to
divorce their minds from the idea that gold is the only possible, real
money. Yet the _facts_ attaching to the greenback stand out in bold and
indisputable relief, perfectly and entirely dispelling all basis for the
idea. Because the greenback was the _first_ step toward a real money
that the country ever took, which left gold entirely out of the
question, the impression still remains with the people that a _return_
must be made to a gold basis; never stopping to observe how vastly
superior the wealth basis is to what the gold basis would be.

Bank note currency, or a currency issued by an individual or by a class
of individuals, always carries along with itself the _idea_ and _need_
of redeemability. If, however, there is any thought among the people
that the utterers cannot meet their _promises_ of redemption, at that
_very_ time when, of _all_ others, _confidence_ is necessary to avoid
_ruin_, they rush to prove the suspected incapacity; and generally they
do prove it.

The idea of, and necessity for, redeemability, is that which _most_
requires to be _divorced_ from money. Money—real money—should never
require to be redeemed. It should always be just as valuable to retain
possession of as anything could be into which it may be converted.
Anything that requires to be redeemed in order to make it _permanently_
valuable or a representative of value is utterly unworthy the name of
money, because it does not truly represent _real_ wealth. It is that
currency of which there is doubt about the real wealth it pretends to
represent which requires to be made redeemable before it will circulate;
and _this_ fact proves _most_ conclusively that it is _not_ money in any
true sense of that term: that is to say, it is not that which requires
to be converted into substance.

It is readily perceivable that a national currency having continually
all the nation’s wealth, accumulated and prospective, as its basis,
never needs to be redeemed. This _single_ consideration is of quite
sufficient importance to _alone_ warrant its immediate adoption and use
upon the standard of wealth. The gold standard is the flimsiest
deception of which it is possible to imagine. The people’s talk of
approaching a gold standard as the ultimate of appreciation is the
_merest jeu d’esprit_. Gold is now selling at say 113. Suppose that
during the next year its price should gradually decline to par, or, in
the phraseology of the goldites, their country’s general credit should
appreciate to par, would the process of appreciation _necessarily_ stop
just at _that_ point? Why should it not just as reasonably _continue_ to
appreciate, so that in another year gold would be below the par of the
country’s credit? This simple analysis proves beyond _all_ cavil the
arbitrariness of the gold standard of value.

The credit of a country increases or diminishes without _any_ regard
whatever to its gold producing or paying capacity. It is governed by its
capacity for the _general_ production of _all_ kinds of wealth over and
above its average consumption. It is just the same with a country as it
is with an individual; the individual, to become wealthy and to have a
good credit, must not necessarily ever have _any_ gold; but he must be
able to produce or acquire more than he consumes by his general
expenses. A country must proceed by the same process to become wealthy,
and it is simply an _absurdity_ for people to talk of the _prosperity_
of the country when _high prices_ for _everything_ are induced and
fostered by a system which restricts _general_ production in order that
_special_ production may flourish. Individuals cannot get rich by
trading among themselves, _no matter if they increase the price_ of
their _wares ten per cent. every year_. Neither can all the individuals
of a country do the same thing. What is required by both is increase in
the quantity of what they trade in.

It is not the price of what a people _have_ that constitutes their true
wealth, but it is the _quantity_ of their commodities. A barrel of flour
is possessed of no more real value if it cost twenty dollars instead of
five. It will not maintain life a day longer, let the price even be a
thousand dollars. Thus we arrive at the real basis of values—the real
wealth—and I have introduced this, precisely for the purpose of showing
the high-priced protectionists that they know nothing about _true_
values or _true_ economy, as well as to also show that there is _no_
real wealth except that which conduces to higher ends than its simple
acquisition. Wealth as an end is despotism. Wealth as a means is

But to return from this departure to the main subject. For the idea of
redeemability for money there should be substituted that of
convertibility. A real money should at _all times_ be capable of being
converted into _that_ of which it stands _representative_. And here we
arrive at the last analysis of a real money. It will be readily seen how
completely a national currency meets this requirement. It would be
representative of the productive capacity of the country, and could
always be converted into whatever portion or kind of its products might
be required; or into the products of other countries which may be
acquired by the direct exchange of our own products.

What more than this can be demanded of money; or what better thing
invented as money; or what more capable of inspiring and maintaining an
even and legitimate confidence?

National currency being the very best possible money, because it is not
only the most convenient but also the most secure, there remains
_nothing_ to be done but to _continue_ to so _acquaint the people_,
until they become _convinced_ of the rapaciousness of those systems by
which the _large_ majority are compelled to labor _all their lives_ for
the _very select few_. There is no difficulty in arriving at all the
initial points necessary to determine the amount required, how it should
be distributed and kept in circulation, or how its circulation should be
regulated. These are all practicalities of finance.

But there is _one thing_ which has never yet received consideration,
which is _absolutely necessary_ to make money meet _all_ the
requirements of money, and at the same time to maintain a _fixed_ and
_absolute_ value at all times and under all circumstances, which money
never has had. From its lacking, have come all the various financial
convulsions. And _this is_, an absolute measure of value.

Can money be measured so that the same fixedness shall attach to it that
attaches to everything else with which we have to do? Money itself has
always been considered a measure of value; and it is this false stoppage
and foundationless position that has made possible all financial
discords, irregularities and inconsistencies. Does it appear to be a
strange proposition that money should be measured? Why should not a
dollar be just as absolute as a dollar as a pound is as a pound; or as a
foot is as a foot; or as a gallon is as a gallon? A cord of wood
contains one hundred and twenty-eight solid feet, or eight cord feet. It
must _always_ be _eight_ feet in length, _four_ feet in height and
_four_ feet in width, or some other multiples of one hundred and
twenty-eight. A cord can _never_ be any more, _never_ any less than just
that measurement. And the same rule holds of everything else with which
we have to do; with quantity, time, space and motion. All these have
fixed and unvarying modes of measurement. But money, the lever by which
all these are moved, has been left to fluctuate as it would—to be moved
by every different influence, so that in _many instances_ what should
have brought contentment, peace and continuous prosperity, has
bequeathed the direct reverse.

It does not concern us that there are _more yards of cloth_ at one time
than another, provided that _yard-sticks_ are all of the same length.
But what _would_ concern us would be this: That if with increase of the
_quantity_ of cloth the _length_ of the yard-sticks should increase
proportionately; or with the _decrease_ of the quantity of flour the
_pound_ should decrease in like proportion therewith. Now this is just
what has always been true of money; its _real_ value _increases_ and
_decreases_, just in proportion as those things which it professes to
measure have increased or decreased in quantity. Instead of these things
being exchanged or converted into something measured by as _fixed_ a
_standard_ as they are, the attempt is made to measure them by
_something_ which _constantly increases_ and _decreases_ in
representative capacity. In other words, a dollar is not at all times
one and the same thing. Sometimes it is but seventy–five cents, and
sometimes a dollar and a half. That to say that seventy–five cents at
one time possess the same representative power that a dollar and a half
does at another time, which is in substance to say that money has no

Now what is desirable and indispensable is to give money a _fixed
measurement_, which shall be _just_ as absolute in its measure of the
value of money as the pound is in its measure of weight, or as the
yard-stick is in its measure of distance. There never is any more cloth,
though there be a thousand more yard-sticks. Nor is a yard-stick ever
any longer or shorter, if the quantity to be measured is increased or
decreased a thousand-fold. Now just to such a fixedness must money be
reduced before it will subserve its best purposes and uses, and the only
way this can be done is by that method which will also remove the _only
possible_ objection there can be brought against such a national
currency as is proposed. This objection is that by over-issues of
currency its value would or might be depreciated.

Let it be supposed that the country’s extremest need to meet the demands
of the greatest amount of trade is a _billion dollars_ currency. At
certain times there are greater and less demands for money, which, under
our present practices, make a dollar, to-day, worth _four per cent. per
annum_ interest, and to-morrow increase it to _ten per cent._ It must be
remembered that we are now speaking of an _irredeemable currency_, the
_representative_ of the _wealth_ of the nation: that the _government_
representing the nation has _uttered_ it, in behalf of _the people_,
upon the _soundest_ and, in reality, the _only_ sure basis of value
_any_ money _can have_—the productive power and capacity of the nation.

An over-issue is the only thing to be guarded against. The government
must be prohibited by some _absolute law_ from resorting to the process
so well known in railroad management as the “_watering process_.” And
this is to be accomplished in the following manner: This currency—this
money—must be made convertible into a national bond, bearing such a rate
of interest while in the hands of the people as shall be determined upon
as “the true measure of value”—say three or four per cent.—which
experience would necessarily determine as the true point of balance; and
the bond also convertible into currency at the option of the holder.

In other words, the people should demand that the Government issue one
thousand million dollars in bonds, bearing three per cent. interest,
payable in currency, and that it issue one thousand million dollars of
circulating medium or money to be loaned to whomsoever deposits the
bonds as collateral; all loans to be made at three per cent. per annum;
to be for six months, with two renewals of three months each, one-half
payable on each renewal. The principle underlying the time being that
all credits should be settled with each year’s products.

The operation of such a system can be very easily traced. Whenever there
should be so much currency in circulation that it would be worth _less_
than four per cent., the surplus would at once be invested in the four
per cent. interest-bearing national bond; and when business should
revive and the demand for money to transact it should make money worth
_more_ than four per cent., then bonds would be converted into currency
again until the equilibrium should be re-established. And whenever the
demand should be such that all the money would be converted, and money
still be worth more than four per cent., then the government should
issue enough to produce the equilibrium.

Thus it is seen that the four per cent. or the three per cent.
interest-bearing national bond becomes the _fixed measure_ of value for
money. It would always be worth _just that amount_—_never_ any more;
_never_ any less. The gallon measure always gives just the same quantity
of molasses. The yard-stick always gives just the same quantity of
cloth. The pound weight always gives just the same quantity of sugar.
So, too, would this measure of money always give just the same amount of
real wealth, or its representative, every day, week, month or year,
whether applied to wealth in business, to bonds, or to money at
interest. An oscillation would be perpetually maintained; first,
conversion of currency into bonds; next, conversion of bonds into
currency; and whenever the supply of currency should be deficient, _then
the issue of more by the government to meet it_. Thus there would be a
_people’s_ money regulated to _financial_ equilibrium, which is the
_ultima thule_ of convenience for exchanging the products of industry.

It may be remarked, parenthetically, here, that even three per cent. per
annum interest is altogether too greatly in favor of capital. A careful
calculation of interests and general increase of the nation’s wealth
discovers that less than a two per cent. interest is required to make
the capitalist and the laborer stand upon an equality. Had I the time I
would be glad to present you some figures to show to what condition we
are tending. I will simply remark, however, if capital continue to
receive the present rates of interest for the next thirty-five years, at
the end of that time it will have absorbed all the wealth of the
country. That is to say, that interest compounded at the rate of 6 per
cent. upon the present Banking Capital will amount to a sum larger than
the present aggregate of wealth together with the same rate of increase
which has governed it during the past, added thereto. Is not this a
sufficiently alarming fact to cause people to stop and consider the
despotism into which they are rapidly merging?

Everybody who knows anything about the relations of money to the people
must prefer such a money as we have indicated to any other kind. It is
really the greenback system extended to _all uses_ for which money is
required, and to which is given a _fixed measure_ of value. All people
at present interested in national banks and high interest-paying bonds
are constitutionally opposed to such a change in our money system. This,
however, should not deter its introduction and use. The people’s welfare
is what should be consulted, and made _the test_ of all propositions
that are to become theirs to practice. National banks and all banks of
issue, with their drain upon the people to make their immense profits,
must be done away, and banks simply as depositories for the
accommodation of the people, alone exist.

The national bank and other currency would be gradually called in at the
rate of, say ten per cent. a month.

I may add in justification of this plan, that if the Government can loan
three hundred millions to the banks for nothing, it can loan to the
people for three per cent.; if at the same time it can pay three per
cent. on its bonds and in currency, instead of six per cent. and in
gold, it secures a new-found advantage.

But one of the _chief_ benefits which would come to the people from the
proposed currency would be the _interest_ which would accrue to the
government—all the people—for the use of this money. In other words,
_all_ the interest now paid to _banks of issue_ for _loans_, for the
_same_ convenience should be paid to the government. A _part_ of the
people, for the _use_ of money belonging to _all_ the people, themselves
inclusive, would pay _interest_ to the government therefor. And what
more legitimate method of governmental support than this, if by it all
other means of taxation could be annulled? The interest now paid by the
people of the country to the Banks and Capitalists would, twice over,
pay all costs of maintaining the government. A three per cent. interest
paid to the government on all loans the people required would not only
relieve the people who produce wealth of one-half the interest they now
pay, but also of all taxes of all kinds. Is not this a matter to be
looked into in the most serious manner?

With such a currency system _once_ inaugurated, the country would begin
a gradual process of general prosperity. Wealth, instead of accumulating
in a _few_ hands, would continually tend to an _equal_ distribution
among _all_ producing people. A large part of the speculative mania
would be rendered futile, and those now devoting all their time to
_hatching schemes_ by which to defraud the producing classes of their
wealth would be _compelled_ to turn producers themselves. It is
calculated that one-tenth of the male population of this country is
engaged in speculative pursuits. In other words, they ‘live and grow
fat’ from those who are engaged in production. And that is our boasted
equity, our equality.

It should be the object of all reform to make a _nearer_ approach to a
system of _complete_ justice and a _perfect_ equity. Any reform that
does not base itself upon _such_ a proposition and whose outlook is not
in this direction _is no reform_, and does not deserve the serious
attention of any. There is scarcely an idea prevalent in the community
of what true justice and equity consist. But it may be stated as
follows: _No person has any just claim to the ownership of anything
which he did not produce or which he did not acquire by an equitable
exchange of something which he did produce._ Tested by _this_ rule, the
accumulated wealth of the world is in unjust hands; it is held by those
who have a _no better title_ thereto than if they had actually stolen
it. It has been fraudulently acquired, and that is the word which best
expresses the manner of its obtainment. And one of the most effective
methods of remedying this growing evil is to attain to a true money
system—one founded in the requirements to be met and based upon that
which it is to represent—that which it is to be used to exchange.
Anything that _departs_ from these standards is _not_ scientific money.
That which _has_ these for its standards _is_ a scientific money.

Aside from all that has been said, there is a general principle rising
into the comprehension of humanity which _must of necessity_ dethrone
that which has so long been worshiped as the money god. The day for
arbitrary rule and standards is drawing to a close, whether they be
standards of materiality or spirituality; of morals or intellect; of
despotism or democracy. Gold _is_ an arbitrary money standard, and with
all others of like character _must_ fall. The tendency of the world is
_against it_, and its doom is _already_ sealed. It has been _weighed_ in
the balance and found wanting.

The interest of the common people, who should always hear every new
Christ, demands a reform in our monetary and financial systems. We are
aware, however, that there is a great deal of prejudice in their minds
in favor of “hard money,” and they must be awakened to the fact that
hard money is a myth—a play upon words—a deception practiced upon them
by those who have played the part of “the appropriators of wealth” lo!
these many years, and who would continue to filch _year_ after _year_
all that the “toiling millions” can compel nature to yield up to them.
In this process the laboring classes are the mere avenues through which
the earth pours its wealth into the coffers of the capitalists.

Some object that the very numerous and intricate methods to which resort
would be required would prove _unmanageable_, and that _corruption_
would _inevitably_ creep in and undermine its usefulness. Let such
consider our almost perfect postal system, and how _well balanced_ are
all its movements and checks, and find therein their answer. Would there
be more intricacy in the proposed system than there now is in the
present? Do not all national banks, though nominally distinct, _really_
have a common fountain head in government? Does not all their currency
come from government? Suppose all these banks, instead of being
independent institutions, were an organized system, having a common
head, as the banks of New York City virtually have in the Clearing
House, would not that be a condition so nearly related to the system
which would be required as to show its entire practicability?

Indeed, there is scarcely need that there should be a new department
inaugurated to bring such a currency home to the people. Perhaps there
never was a system operated in which there was _less_ proportionate loss
through its executive officers than in our postal system. And this is
because the _responsibility_ comes _home_ to the people. The postmaster
is _always_ a resident of the _place_ in which he officiates, and,
either with or without a civil service law, should be the _appointee_ of
the citizens whom he is to serve; and, of course, would be a person
possessing their special confidence. To such persons might the _care_ of
the public money well be intrusted; and in _all places_ except cities a
_single_ person could perform both the services of postmaster and of
United States financial agent.

Means can be easily devised to make all post offices offices for
loaning, as they now sell post office stamps and money orders.

In all that I have said my only purpose has been to endeavor to arrive
at a proper understanding of the most important feature of governmental
justice and uniform equity among all the people. All past systems have
failed to secure this. The world has constantly witnessed the proceeds
of the labors of the millions _aggregated_ in the hands of the few. This
advantage which one class has possessed over another cannot long exist
under the rapid spread of intelligence, which marks the present
generation; and it behooves _this_ people to give _due_ consideration to
_any_ scheme which proposes to lessen this advantage. And _most
especially_ does it become the duty of the people, if there be such a
thing as _principles_ of _finance_, to _find_ them out and cause them to
be practically applied.

In fine, and to resume, the idea of money must first be separated from
that of the intrinsic value of gold, or any other commodity, and
confined to the mere capacity of representing all commodities, and so of
facilitating the exchanges of wealth. This, it has been abundantly
demonstrated, can be as well, and for various reasons, better done by
strips of paper, properly stamped and signed, than by gold or any other

In the next place, these strips of paper, signed by the Government, with
the credit and wealth of the whole country, are better than individual
promises; though the issuance of individual promises should not and need
not be prohibited, as we do not now prohibit anybody from making or
receiving private notes, drafts and checks.

Again, the Government Money need not be redeemable, but only convertible
into new strips of paper when the old ones are worn out, and into
commodities when they are used in trade, and into other Government
Securities bearing interest, as I have pointed out.

Still again, money has also been held to be a correct measure of values.
This it ought to be, indeed, but has never been so, because it has never
been measured itself. Of what use would yard-sticks be, used for
measuring cloth, but which had never themselves been measured by
anything? The system which I have stated for measuring money itself is
believed to be perfect. It is not the individual dollar, relatively to
the half dollar or the hundred dollars, that has failed to be measured
or fixed; but the rate of increase relatively to other values, of _all
the Government currency afloat_. By the convertibility of any excess of
issue sinking its value below a certain standard into interest-paying
bonds, any over-issue is immediately absorbed, while a deficiency of
issue will be revealed by the fact that absolutely no bonds will be
sold. In this manner the whole operation will be self-adjusting from day
to day; the value of the aggregate of Government money will be
accurately measured and kept uniform; and any interest or temptation
which the Government might have to an over-issue would be immediately
neutralized by the absorption of such surplus into bonds, upon which the
Government itself would be paying interest; or, in other words, assuming
an unnecessary and useless burden, in the face of the people and of its
own economies. Can anything more perfect be devised? If so, let us have
it by all means; if not, let this device be adopted. A self-adjusting,
self-regulating admeasurement of the value of money would make it a true
measure of other values, and is a suggestion which, if it can be
secured, is of unequaled importance.

Another somewhat similar idea was glanced at in passing—that of a
definite method of determining scientifically the equitable rate of
interest. This I cannot stop now to explain. It will, however, only be
when we come quite down to that basis, that the full value of this
financial system will be experienced.

Finally, in its basis, this system of Government money is money issued
at the mere cost of printing and circulating; but by adjoining with it
the idea of a complete, simple and exceedingly economical means of
raising the revenue of the country, the three or four per cent. is paid
to the treasury; that is to say, by the people individually to the same
people in their collective capacity. Under this system all the various
revenue officials and tax assessors and gatherers would be dispensed
with, and a vast system of economy inaugurated, which, in a few years,
would transpose us from a borrowing to a loaning nation, making us the
financial example for all the world. This it also seems to me is another
invaluable feature of the system, all of which I, however, respectfully
submit to the decision of the people.

The interests of humanity which are involved in this question are
greater than are the interests of those who have assumed to _rule_ the
world, and who are endeavoring to _fasten_ upon the people _despotism_,
to escape from which would require the shedding of whole rivers of human
blood and the destruction of the best evidences of our civilization, for
which we have a perfect right to feel the greatest admiration.

A _timely_ understanding of the money question would guarantee precisely
the reverse of _all_ this, and cause humanity to take still _greater_
and more rapid _strides_ toward that perfect enlightenment which can
alone thoroughly recognize the common brotherhood of the human race,
toward which end all reform should be directed.


                          TRANSCRIBER’S NOTES

 1. Silently corrected obvious typographical errors and variations in
 2. Retained archaic, non-standard, and uncertain spellings as printed.
 3. Enclosed italics font in _underscores_.

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