And it is no small part of the calamity and disgrace of an inconvertible currency that it leads to large and incessant violation of contracts. Every stipulated sum which has to be paid with such notes is one thing to-day and another thing to-morrow. The essence of honour and good faith in contracts, as well as of trustworthy trade, is to give the thing covenanted; but in the place of that stipulated value the nominal paper dollar specified is given, as if that was the payment agreed upon. But what does the unhappy receiver discover? That he has been defrauded that the paper dollar he gets will not buy as much as the dollar he stipulated that prices have gone up in every store and that he is injured in purse and property. In raising prices storekeepers are impelled by necessity. Real prices are not altered; the sellers ask for more dollars, but as every dollar is worth less, the larger number of dollars now brings them only the same value, when it becomes their turn to buy goods with them. Every creditor who is paid in the paper dollar encounters these raised prices, and finds that a portion of his property has been confiscated.*
These public misfortunes are summed up in the fact that no one is able to say what a dollar is. A dollar becomes a word whose meaning no one knows: it must be sought from the price of gold in paper dollars. The dollar has a new meaning on each succeeding day: it is one thing to-day, another to-morrow: is it possible for a currency, whose one and only function is to enable to buy with certainty as much as was sold, to possess a greater vice.
It might be a wonder that such a dollar should have any value that any one should be willing to give his goods for it. The reason for its having value is that the paper has written upon it a promise that the United States will give a dollar - plainly a metallic dollar - for it, and it is this belief that at some time the United States will make good their word which induces the public to attach value to the greenback. The public faith is pledged; the responsibility thence arising on the Government for all the evils which the paper dollar inflicts on society thus becomes only too clear.
* Some of the details 01 the injuries wrought by an inconvertible currency are given with great vigour in a very able fnd admirable" Address delivered at Omaha by Professor A. L. Perry, of Williams College" They will be found in the Appendix.
5. The usual defence pleaded for inconvertible bank notes is necessity, the political distress of the hour. The State is in urgent want of means, the limits of taxation have been reached. What else can a government do under such circumstances but procure what it imperiously requires with promises to pay at some future time? It may be so. On this principle national debts may be justified. The State, in its day of need, obtains wealth from the country on credit, and consumes it; in return, it gives an annuity to the lenders. In such a transaction there is one injury - the destruction of the wealth borrowed; but the injury occurs once only, and then it ends. Not so with inconvertible notes. In common with a national debt, an issue of inconvertible bank notes obtains and consumes a country's wealth without payment; but a mischief in addition is set to work which never stops. As long as an inconvertible cur-rency lasts, it never ceases to harass trade and every commercial dealing between man and man. The harm is renewed day after day, week after week, year after year; and all the while the State is gaining from all this disorder nothing proportionate to the mischief created. There is no counterbalancing advantage to the Government to compensate the loss which the country suffers. The Government created the inconvertible note as a tax on which it saves interest, and gathered the tax once for all; but a bad, unsound, untrustworthy currency persecutes society at every turn and brings loss on all but gamblers. It poisons every sale as the days roll on, every exchange; and what is human life but making and exchanging?
The moral which these facts teach is clear. Overwhelming necessity may excuse the original imposition of so easy but so vicious a tax, but the pressure once over, not an hour should be lost by any legislature who has any knowledge of the nature and working of money, to arrest the plague and sweep away inconvertible paper.
But, reply many persons in every country, most of all in the United States, trade rises or falls with the abundance or scarcity of money. Plenty of money means lively business buyers abound. What can they do with their money but buy with it? It will walk into every store, every shop. Borrowers, when money is plentiful, will find it easy then to obtain the means for carrying on an expanding trade. Is it not notorious that liberty to issue cheapens discount, because it enables a banker, at no cost to himself, to place means of buying in the hands of his friends? There cannot be too much money - who ever heard of such a thing? It is easy to speak of inflation, but it remains true all the same, that the man who has bank-notes in his pocket, be they inflated or not, can buy, and that the banker can shower these notes upon him at less than six cents a-piece. That such fallacies should be uttered in the nineteenth century is astonishing. First of all, such language does not know that currency is only a tool, that money is not the thing which really buys, but only an instrument used in buying. It is the property with which money is itself bought that buys. Buying is only exchanging goods, absolutely nothing else; to sell for money is only double barter in the place of single barter. Money does not, directly, produce a single particle of wealth, nor create any additional power of buying which would not exist without it; it only places wealth in different hands. An issuing banker or Government may by the help of a piece of paper take property out of one man's disposal and put it in another's; but without the bank-note, that property would be exchanged, that is, would buy and sell, just the same. Money cannot create increase of trade, unless, if coin, it is obtained as a gift from the miners, then of course the country which receives the present could with it get more wealth from some other nation; but if the gift is in coin and remains coin, then the nation, though getting it for nothing, would not be one particle the richer, supposing that already its currency was full. With respect to bank-notes, their action is to procure property from one section of the public and transfer it to another. If the notes are irredeemable, the issuer, if a Government, has acquired and consumed a portion of the nation's wealth - there is less property for trade, less for exchanging. If the issuer is a private banker, he and his friend to whom he lends it on discount have taken away property from the holders of the bank-notes, and employ it for their own purposes. With that property, of course, they can and do trade; but if it had been left with the public, the goods of which it consists would have been exchanged, would have been bought and sold just the same. There is no increase of wealth or of trade for the whole country. No motive can be derived from the language here examined for inflicting on a nation the intolerable mischief of gambling and uncertainty imported into every commercial transaction by a tool of exchange corrupted by incessant fluctuations of value. At all times and in every place, there is one paramount quality of a currency that can do its work, that it shall be able to buy goods worth those that have been sold.