increase of money might ease him in his rent, by lessening the intrinsic value of the specific sum which he had agreed to pay. The same may be said to the merchant, shopkeeper, &c. While all commodities keep the same proportion of value in respect to one another, no one reaps any advantage by the raising of the price in respect of money, of his particular commodity. The complaints of particular persons arise, not from a deficiency of money, of counters in circulation; but from their own want of property, want of skill, address, or opportunity of getting more money; or perhaps only for want of frugality, in spending more than their income or proper share. 20. MONEY AND WEALTH' BY JOHN WITHERSPOON There are many persons who cry, "We must have more paper for a circulating medium, as there is such a scarcity of gold and silver." It is argued, "When I go about from day to day, and cannot collect what is due me, when my creditors are calling upon me and I cannot satisfy them, is not the only explanation the scarcity of money everywhere?" What shall be said to satisfy these persons? I must tell them plainly, it is their poverty, or the nation's poverty and not a want of gold and silver, and if there were an hundred times as much gold and silver in circulation as there is, their poverty and difficulties would be just the same. If these persons read the scriptures they may there learn that in Solomon's time the silver was plentiful as stones in Jerusalem; probably they will think that all the people in Jerusalem at that time must have lived like princes, but they must be told, it was added as a necessary consequence that it was nothing accounted of in the days of Solomon. 21. A REFUTATION2 BY BENJAMIN FRANKLIN As to plenty of money being a benefit to trade and manufactures, we apprehend everyone conversant therein must know that the coin, by which we generally understand money, of every respective state, is by no means the mover of the intercourse or tradings of the world in general. We may say that coins, in general, can no otherwise be 1 Adapted from Works, IV, 230. (Philadelphia: William W. Woodward, 1802.) Adapted from The Principles of Trade (1774), in Franklin's Works, II, 394-95. Written jointly and anonymously by Franklin and George Whatley. useful than as the common measure between man and man, as serving to barter against, or exchange for, all kinds of commodities. Certain it is, that coins cannot be ranked amongst those which are only of real use. Let us therefore suppose pieces of coin to be counters, and, to simplify the matter still more, suppose every manufacturer to have of these counters any sum whatever; will it follow that any sort of manufacture shall be industriously attended to, or more work done than when no more counters than just enough to barter for the real wants of meat, drink, and clothes, etc., can be procured by labor? Surely no. It must be the desire of supplying our wants, which excites industry as above hinted; that alone sets trade going, and that only can procure plenty of manufactures. That the welfare of any state depends upon its keeping all its gold and silver, either in bullion or in coin, must be founded on a very narrow principle indeed. All republics we know of wisely think otherwise. Spain, the grand source of silver, has of late years very justly allowed the free exportation of it, silver paying a duty, as in Great Britain lead and tin do; nor prior to this permission could the penal laws in Spain hinder its being exported; for it was a commodity which that kingdom was under a necessity of giving as an equivalent for what was furnished to them by other countries. Could Spain and Portugal have succeeded in executing their foolish laws of "hedging in the cuckoo," as Locke called it, and have kept at home all their gold and silver, those metals would, by this time, have been of little more value than so much lead or iron. Their plenty would have lessened their value. We see the folly of these edicts. 22. A PRACTICAL BUSINESS VIEW TODAY' The great inflow of gold to the United States at the present time is embarrassing. This country does not need gold and does not particularly want gold. We already have such an excess of the metal, and the credit conditions and money rates generally are so easy, that we are confronted with the unusual problem of not knowing just how to employ our unexpectedly large resources in this particular field. The turnabout from the conditions of last fall has been so sudden and so radical that business men and bankers in this country are for the moment at a loss to know just how to act under present circumstances. It is almost like an individual who, having struggled along I 1 Adapted from an editorial in Moody's Magazine, March, 1915. with tremendous liabilities and having hung on the edge of bankruptcy for an indefinite period, suddenly finds himself burdened with an over-surplus of riches and with such a large amount of capital to set actively at work that his new problems are almost as difficult to handle as were those in his former condition. 23. MONEY AND THE SUPPLY OF CAPITAL' BY CHARLES J. BULLOCK A review of the currency history of America reveals the following facts: first, that a strong movement in favor of cheap money has existed continuously in this country from the earliest period of colonization; and secondly, that the persistence of such an agitation has been due, more than to any other single cause, to the constant spread of settlements westward over large areas that have long remained thinly populated. With the growth of numbers, the rise of manufacturing and commercial industries, and the increase of wealth, the desire for a cheap currency has gradually diminished; but this has no sooner taken place in the more populous states than the old phenomena have reappeared in newly settled districts, while any localities that have remained sparsely peopled and devoted chiefly to agricultural pursuits have always furnished a favorable field for the old propaganda. Back of all the strivings for an inexpensive medium of exchange, each generation of our people has always heard the complaint that our supply of money had been insufficient; and this cry has invariably furnished an unmistakable indication of the underlying cause of the agitation. "No complaint," wrote Adam Smith, in 1776, "is more common than that of a scarcity of money. Money, like wine, must always be scarce with those who have neither wherewithal to buy it, nor credit to borrow it. Those who have either, will seldom be in want either of the money or of the wine which they have occasion for." In the United States an enterprising and resolute people has been engaged for nearly three centuries in occupying and developing a vast area of free land. While natural resources abounded, each newly settled district has always experienced a lack of capital needed to bring the soil under cultivation, to supply means of communication, and to develop manufacturing enterprises. This want might 1 Adapted from Essays on the Monetary History of the United States, pp. 1-4. (The Macmillan Co., 1900.) have been little felt by a less progressive people; but with us it has been a real and serious obstacle, which has been removed only by the slow growth of wealth and numbers. In order to possess a sufficient supply of metallic money, a nation must convert a portion of its capital into a stock of gold and silver coins or bullion, a process that is expensive, even under the most favorable circumstances. In the United States, prior to the discovery of mines of the precious metals, gold and silver could be obtained only through exchange with foreign countries; and the acquirement and maintenance of an abundant metallic currency was made especially difficult by the poverty of our people in all sorts of capital. The difficulty was intensified still further by the sparseness of settlement and the economic isolation of households and communities, a circumstance which made the monetary circulation sluggish and increased the volume of currency required for the transaction of a given number of exchanges. The accumulated products of our industry were more often converted into other things than money. Each person usually desired to employ in production or exchange whatever gold or silver might come to him; for he had many uses for other kinds of capital and could ill afford to keep on hand a stock of money that appeared to be an idle investment. Therefore it happened that supplies of the precious metals secured in trade tended to move out of the colonies in exchange for other things that were felt to be more necessary. 24. IS MONEY A SUPERIOR KIND OF WEALTH?1 The popular answer to this question admits of no doubt. At all epochs and in all places, except among savages, money has occupied an exceptional place in the thoughts and desires of men. They regard it, if not as the only wealth, at any rate by far the most important wealth. Indeed, they appear to measure the value of all other wealth by the quantity of money that can be contained in exchange for it. To be rich is to possess either a large amount of money or the means of obtaining it in exchange for other goods. But if we ask the economists whether or not money is a superior kind of wealth, the answer will be entirely different from the popular opinion. In fact the first impetus to the growth of a scientific political economy was the protest against the popular conception of. I Adapted from Principles of Political Economy (Veditz' translation and adaptation), pp. 219-22. (London: D. C. Heath & Co.) money, regarded by the earlier economists as a mere prejudice. The science had scarcely been founded when Boisguillebert, in 1698, declared, "It is quite certain that money is not a good of itself, and that its quantity has nothing to do with the opulence of a country." Since then the economists have shown little concern about the amount of money and maintained that it is a commodity like all other commodities, and even inferior to others because it is in itself incapable of satisfying any want directly, or of affording any pleasure. It is consequently the only commodity of which we may say that its abundance or scarcity is a matter of perfect indifference. If there are few pieces of money in a country, each one will have a greater purchasing power; if there are many, the purchasing power of each will be smaller. So what does the quantity matter? These two opinions, however contradictory they seem, may easily be reconciled. The public is right from the individual point of viewthe only one which interests it; economists are right from the general or social point of view. The distinction here involved requires some explanation. Every piece of money must be regarded as a ticket or order drawn on the sum total of existing wealth, giving the bearer the right to claim a part of this wealth not exceeding the value indicated on the coin. It is clearly our individual interest to possess as many of these "orders" as possible; the more we have the richer we are. We know very well that, in themselves, these "orders" can neither satisfy hunger nor slake thirst. Long before economists had pointed out this truth, legend taught the same principle in the tale of King Midas, who died in hunger although surrounded by wealth which his own folly turned into gold. Nevertheless, we regard these "orders" as far more convenient than any other kind of wealth, and we are right in doing so. Given the present organization of society, the person who desires to obtain an object that he has not produced (and the immense majority of people are thus situated) can get it only by means of two operations: first, by exchanging the product of his labor, or his labor itself, for money; second, by exchanging this money for the object desired. These two operations are called selling and buying. The second of them, purchase, is very simple; by means of money a desired object may easily be obtained. The first process, sale, is much more difficult; an object, even of great value, cannot at all times be readily exchanged for money. Hence the possessor of money occupies a more favorable position than the possessor of any other |