It seems desirable to add the following remarks to Chapter I (Metallic Currency).: A.
This option of the debtor to select that currency whose metallic value is overrated by the law of legal tender illustrates the principle that a better currency is always driven off by one that is inferior. Thus when some little time ago silver in France possessed a higher value than that assigned to it by the relation of twenty francs being equal to one Napoleon, it became profitable to purchase silver francs with imported gold, which was converted into Napoleons or accepted in payment as being equivalent to twenty francs. This profit poured an immense quantity of gold into France, and the old premium which travellers had to pay on entering France to obtain gold coins vanished, and the currency of France was to a large degree converted into gold. Silver left her shores; for there was gain in buying silver coins with imported gold, to sell later the purchased silver at its natural value in some foreign land. Similarly with light sovereigns in England, they pass from hand to hand undetected, each holder of them assuming them to be of full weight, and each one preferring the chance of being able to pass them on to the trouble of weighing them before accepting them in payment. But there are a few who know better, and whose continuous action has great results. They are under the obligation to remit gold to foreign countries, and they are careful to select the sovereigns of full weight. The light ones remain in England, ever increased in number by the wear and tear of daily use, and it is not difficult to foresee that they might constitute so large a proportion of the metallic currency of the nation as to call for a rectification of their deficient value at the cost of the last unfortunate holders.
Adulterated coins stand on a rather different basis. They are not light coins, reduced in weight by wear and tear. They are full-weighted of their kind, but the quantity of precious metal contained in them is intentionally reduced below the amount credited to them by popular belief. The mediaeval kings who issued them gave less silver or gold in paying their debts with them than their creditors were entitled to receive upon the authorised understanding of the weight and fineness which ought to be contained in them. This was, of course, a palpable fraud in the payment of debts. But it is important to remark that, unlike light coins, they were sound money to the extent of the gold or silver of which they were composed. If a quarter of a sovereign in gold had been suppressed in the coining of it, the deficiency of weight being made up with inferior metal, it would still be a good coin for fifteen shillings, as good as the unadulterated one was for twenty. Every foreign exchange would be altered; the sovereign being estimated in every foreign currency as a coin worth fifteen shillings' worth of gold, the exchange would fall by one quarter. The fraud of the issue would have been perpetrated once for al: the plundered creditor would receive three-fourths only of what was his due; but, nevertheless, he would have had a good fifteen shillings coin. Such an adulteration is now impossible, but it is well to understand correctly the real character of what was done in the past.
B. Extract from Professor Perry's Address at Omaha, October 1, 1874.
Why worse for farmers. - An inconvertible paper money always depreciated and always variable is worse for farmers than for almost anybody else; first, on the ground of its depreciation; and second, on the ground of its variability. As the value of money goes down, of course general prices tend to rise; but, unfortunately, they do not rise equally, nor in equal times; and some prices do not rise at all. For example, manufactured goods are quickest to experience a rise of price owing to a depreciation of the currency, because as a rule manufacturers are intelligent men and know the tendency of depreciated money to depreciate more, and thus hasten to insure themselves by putting a higher price on their goods. Wages rise much more slowly than goods, and never proportion-ably, because labourers do not well understand the situation, and never act quickly enough to ensure themselves; and so they are always great sufferers from a depreciated money. Real estate rises slowly and irregularly, though at times tumultously, under such money, and never on the average so high as manufactured goods rise; while agricultural products, some parts of which are exported to foreign countries, scarcely rise in price at all. The reason for this is, that the foreign gold price of that part which is exported largely determines the home price of the whole crop. There is only one wholesale price of wheat of the same grade in New York city, whether it is for export or whether it is for home consumption. The gold price in Liverpool determines the currency price in New York just so long as any wheat is exported; and the price in New York determines the price in Chicago and Omaha. If the premium on gold, in consequence of the use of a depreciated currency, were as high as the average rise of prices arising from that depreciation, it would not be so unjust; but it never is. Gold is generally the cheapest thing a-going, so soon as an inferior currency has demonetised it and thrown it out of demand; and the whole consequence to farmers of the use of such a poor money is, that they have to pay a great deal more for all that they need to buy, and only get a very little more or nothing at all for all that they have to sell. Wheat was no higher in currency in 1873 than it was in gold in 1860; hams were not; lard was not; and salt pork was not. These are all exportable agricultural products whose current price is determined by the gold money of the world's great market. These things are what farmers sell. But harnesses, boots and shoes, hats and caps, blankets, all manner of clothing, were much higher in 1873 than they were in i860. These manufactures are what farmers have to buy.
The injustice of it.- The mischief of paper money is, that it affects different classes differently, and the largest class the most injuriously of all. It raises some prices much, other prices little and still other prices not at all. Some prices are raised quickly and pretty regularly, and other prices are raised slowly and irregularly; so that the shrewd ones always take advantage of the ignorant ones, and the dishonest ones of the honest ones. The whole trick of the thing is a trick of distribution. Some men may get rich out of it, but this is always at the expense of other men. All classes of the people are ultimately great losers in wealth and reputation from the destruction of the stable measure of value - from disturbing the meaning of the word dollar. A huge crop of defaulters and of failures and of bursted speculations and of ruined reputations are always the harvest of that sowing. But farmers always have been and always will be the greatest losers from rag-money; partly for the reason that I have just given - namely, that what they have to buy is enhanced in price by it, while what they have to sell is not enhanced in price by it; and partly also, because it takes the farmer almost a year to realise on his crops, and he cannot meanwhile insure himself against the inevitable changes in the currency. The dollar in which he calculates the expenses of his crop is almost sure not to be the dollar in which he realises the results of his crops. He cannot calculate. He cannot insure himself. He is helpless. The manufacturer who turns off his product weekly or monthly can vary his prices weekly or monthly, and save himself at least in part; but the farmer, poor man, can do no such thing. He is at the mercy of currency-tinkers. Because all our paper money is only a promise to pay, and an unfulfilled promise at that; because it is depreciated far below the solid money of the world's market; because it is variable in value from day to day and from year to year, unsettling the measure of all other values; because such money always stimulates speculation and hampers productive industry; because it corrupts public morals, undermines honesty, and makes defaulters, by destroying the stable standard of value; because it unjustly distributes the rewards of industry, and cheats by wholesale the whole farming interests; and because such money has always been followed by these results wheresoever the experiment has been tried; I do hereby invite all farmers, east and west, all grangers, north and south, and all other true men, to unite with me in raising a cry that shall pierce the dulled ears of our rulers - An Honest Cry For An Honest Dollar. Just Published.