Railroad Illinois Central........47, 136 | Taxation Proposed Reduction of..... 372 Memphis and Charleston.. 361 in the United Kingdom

Wool Trade Under the New Tariff.. 374 24 World-girdle......

Wycliffites, or England in the Fif
teenth Century...

THE

MERCHANTS' MAGAZINE

AND

COMMERCIAL REVIEW.

JULY, 1 8 6 6.

PRICE WITH AND WITHOUT VALUE.

C. H. CARROLL.

I AM glad of the reappearance of your old contributor, Richard Sulley, in the pages of the MERCHANTS' MAGAZINE. In former times I have been indebted to him for good ideas in Political Economy, and I find much to approve in his article in the May issue, just received, which is courteous in criticism of the article on the Balance of Trade contributed by me to the February number. I think I shall be able to convince him of the correctness of the principle to which he objects, that money cheapened by mining, being capital, is profitably exported, when in natural excess, in exchange for other capital; and is thus a source of national wealth, like everything else cheaply produced for foreign commerce-that is to say, -over and above the home demand. I ought to have said it is national wealth, as well as the source of it. Money is a simple commodity governed by the same law of value and exchange as all other commodities and all other capital.

In the present stage of political economy there is an unaccountable tendency among thinkers to look beyond the facts experience has established (which constitute true science) into the regions of speculation and obscurity for truth that lies at our feet. It seems to be given over, at present, to metaphysical abstractions and scholastic subtilties that appall practical minds, and render the science of little or no use in the conduct of government or of the business of life. points of great national inexplicity have been most thoroughly obfuscated By this sort of treatment two namely, money and value; and Mr. Sulley, I think, has not altogether escaped the occult influence of such teaching.

He says: "The opinion that money (gold and silver) is capital, and that we get value for it when it is exported in the usual course of trade,

VOL. LV.-NO. I.

1

is not peculiar to Mr. Carroll, although it has been incidentally combatted in the pages of the MERCHANTS' MAGAZINE. Nevertheless all the claim it has to be considered capital, arises from its powers of saving labor by facilitating exchanges; but paper money, where it has value, is just as good as gold; and the only reason why gold is preferred for exportation is because its value is intrinsic, and therefore universal, while that of paper money is only imputed, and therefore local.”

This argument is founded upon the abstration that money is merely a medium of exchange, and everything professing the quality of a medium of exchange is money: hence paper, stamped or issued by government, or by corporations, is money. On this theory overvalued tokens are money and wealth, because money is wealth, and the Spartans were as rich with their iron currency as if they had earned and possessed its weight in gold But money is no such abstraction. It is not merely a medium of exchange, but also an object of exchange, the product of labor and capital, from which it derives its attribute of value, and by reason of which it is the equivalent of other products of labor and capital. Without this equivalence there is no money, and with it a thing is not money, unless it is acknowledged and accepted as such in absolute payment of intrinsic value, by the commercial world.

Money was discovered or invented in the unknown past: its use and its meaning were established before the records of history, and the common sense of mankind determines what is money to day with more accuracy than the most profound disquisitions of the most learned political economists. Indeed these learned men acknowledge the corruption of the word, and concede the argument to common sense, when they use the term real money. What is not real money? Why, spurious money—no money at all. And such is a currency of debt, which expels money, and is an incubus upon the capital of the country. It pays nothing, but requires continually to be paid in money or in other capital, and when this requirement becomes urgent, its issues assume the position of preferred creditors, take possession of the money and floating capital of the public, to the extent of their requirement, and plunge other debtors into in solvency and ruin. There is nothing of this nature in money.

But," Mr. Sulley says, "paper money where it has value is just as good as gold." Let me assure him there is no place where it has value. The element of value does not exist in a paper currency, nor in any other description of debt whatever. The value to which all debt relates is the property appropriated to pay it. There cannot be two values embracing one and the same thing; one in an estate and another in the deed of conveyance which certifies its ownership, or in the instrument of mortgage upon it. The term "paper money "is a ridiculous sophism; there can be no such thing. The dollar, which in this country the maker of the paper promises to pay, is 23.22 grains of pure gold; the gold is the money, not the paper; and the value is in the gold, not in the paper. Gold being acknowledged and accepted as a common equivalent of other values all the world over, an equivalent of gold in other capital is capable of discharging an obligation to pay gold. The notion that there is the value of a dollar in a memorandum of a contract-a written promise to pay a dollar-is the delusion upon which rests the whole scheme of factitious credit miscalled "paper money." The amount of bank notes,

as such, is of no consequence in the consideration of this question. The bank, having no value to lend, lends promises to pay dollars of value which have no existence, and whether it inscribes this factitious credit on a piece of loose paper for circulation, or on a book of account to be circulated by check, makes not the slightest difference in principle or effect. Hence deposits in bank, subject to check at sight, are currency as completely as bank notes deposited in one's pocket. Naturally, the same proportion of currency as of capital will be at rest, in the long run, waiting demand somewhere.

In what is called the credit system, the currency is based on commercial notes, by which the trade of the country, that with a currency of money would be a cash system, is forced through debt and credit. Under the credit system the same value in raw material, or in the process of manufacture, is frequently sold several times over on credit. The amount of needless debt thus created can scarcely be conjectured; but the daily settlements at the Clearing Houses show that it is enormous. Does Mr. Sulley, or does any one, imagine that this vast debt, whether needless or otherwise, is value to be added to the inventory of the property of the country? This would be necessary, on principle, if there were value in a paper or debt currency. I do not understand the significance of the term "imputed value," unless it means spurious value. It seems to me there must be either value or no value in every thing. Debt circulates in its evidences, not for the value it is, but for the value it promises.

Mr. Sulley appears to have overlooked, or perhaps does not remember, an explication of this thing called "paper money," showing the fallacy of the notion that it is as good as gold, that, without reference, I am sure I have furnished in some one or more of my contributions to this Magazine. Let me repeat the idea in another example. It happens that the aggregate price of the property of this country, and doubtless of other countries, is always about twenty-five times the sum of the currency. Let the volume of currency vary as it may, the price of the whole property in due time rises and falls accordingly, not equally, but in the aggregate. Things in the most immediate request rise first, and in the greatest proportion. If one thing does not advance in due proportion, something else advances more than the due proportion, and thus the currency is duly employed and the average completed. The circulating capital is in the ratio, approximately, of 10 to 1; the fixed capital 10 to 1; and the unproductive and enjoyable wealth, which is not capital, is as 5 to 1 of the currency, making 25 to 1 in all, as before mentioned. This is an approxi mate calculation that is, perhaps, as nearly correct as an estimate of the kind can be made. At all events, it is sufficiently accurate for my acquire

ment.

In the last census year, 1860, the currency of this country, including California, amounted to about $640,000,000; consisting of say $436,000,000 net liabilities of banks, payable on demand, i. e., notes and deposits and balances due to other banks, deducting specie reserves, $4,000,000 of counterfeit currency, and $200,000,000 of money in and out of bank and free of hoards. Had this currency been money exclu sively the wealth of the country would have been in money value as stated in the census, $16,000,000,000, divided as follows: