The Crown of Wild Olive
the three relations it bears to Place, Time, and Kind.
71. (1.) It gives claim to the return of equivalent wealth in any
_Place_. Its use in this function is to save carriage, so that parting
with a bushel of corn in London, we may receive an order for a bushel of
corn at the Antipodes, or elsewhere. To be perfect in this use, the
substance of currency must be to the maximum portable, credible, and
intelligible. Its non-acceptance or discredit results always from some
form of ignorance or dishonour: so far as such interruptions rise out
of differences in denomination, there is no ground for their continuance
among civilized nations. It may be convenient in one country to use
chiefly copper for coinage, in another silver, and in another
gold,--reckoning accordingly in centimes, francs, or zecchins: but that
a franc should be different in weight and value from a shilling, and a
zwanziger vary from both, is wanton loss of commercial power.
72. (2.) It gives claim to the return of equivalent wealth at any
_Time_. In this second use, currency is the exponent of accumulation: it
renders the laying-up of store at the command of individuals unlimitedly
possible;--whereas, but for its intervention, all gathering would be
confined within certain limits by the bulk of property, or by its decay,
or the difficulty of its guardianship. "I will pull down my barns and
build greater," cannot be a daily saying; and all material investment is
enlargement of care. The national currency transfers the guardianship of
the store to many; and preserves to the original producer the right of
re-entering on its possession at any future period.
73. (3.) It gives claim (practical, though not legal) to the return of
equivalent wealth in any _Kind_. It is a transferable right, not merely
to this or that, but to anything; and its power in this function is
proportioned to the range of choice. If you give a child an apple or a
toy, you give him a determinate pleasure, but if you give him a penny,
an indeterminate one, proportioned to the range of selection offered by
the shops in the village. The power of the world's currency is similarly
in proportion to the openness of the world's fair, and, commonly,
enhanced by the brilliancy of external aspect, rather than solidity of
its wares.
74. We have said that the currency consists of orders for equivalent
goods. If equivalent, their quality must be guaranteed. The kinds of
goods chosen for specific claim must, therefore, be capable of test,
while, also, that a store may be kept in hand to meet the call of the
currency, smallness of bulk, with great relative value, is desirable;
and indestructibility, over at least a certain period, essential.
Such indestructibility, and facility of being tested, are united in
gold; its intrinsic value is great, and its imaginary value greater; so
that, partly through indolence, partly through necessity and want of
organization, most nations have agreed to take gold for the only basis
of their currencies;--with this grave disadvantage, that its portability
enabling the metal to become an active part of the medium of exchange,
the stream of the currency itself becomes opaque with gold--half
currency and half commodity, in unison of functions which partly
neutralize, partly enhance each other's force.
75. They partly neutralize, since in so far as the gold is commodity, it
is bad currency, because liable to sale; and in so far as it is
currency, it is bad commodity, because its exchange value interferes
with its practical use. Especially its employment in the higher branches
of the arts becomes unsafe on account of its liability to be melted down
for exchange.
Again. They partly enhance, since in so far as the gold has acknowledged
intrinsic value, it is good currency, because everywhere acceptable; and
in so far as it has legal exchangeable value, its worth as a commodity
is increased. We want no gold in the form of dust or crystal; but we
seek for it coined, because in that form it will pay baker and butcher.
And this worth in exchange not only absorbs a large quantity in that
use,[35] but greatly increases the effect on the imagination of the
quantity used in the arts. Thus, in brief, the force of the functions is
increased, but their precision blunted, by their unison.
76. These inconveniences, however, attach to gold as a basis of currency
on account of its portability and preciousness. But a far greater
inconvenience attaches to it as the only legal basis of currency.
Imagine gold to be only attainable in masses weighing several pounds
each, and its value, like that of malachite or marble, proportioned to
its largeness of bulk;--it could not then get itself confused with the
currency in daily use, but it might still remain as its basis; and this
second inconvenience would still affect it, namely, that its
significance as an expression of debt varies, as that of every other
article would, with the popular estimate of its desirableness, and with
the quantity offered in the market. My power of obtaining other goods
for gold depends always on the strength of public passion for gold, and
on the limitation of its quantity, so that when either of two things
happen--that the world esteems gold less, or finds it more easily--_my
right of claim is in that degree effaced_; and it has been even gravely
maintained that a discovery of a mountain of gold would cancel the
National Debt; in other words, that men may be paid for what costs much
in what costs nothing. Now, it is true that there is little chance of
sudden convulsion in this respect; the world will not so rapidly
increase in wisdom as to despise gold on a sudden; and perhaps may [for
a little time] desire it more eagerly the more easily it is obtained;
nevertheless, the right of debt ought not to rest on a basis of
imagination; nor should the frame of a national currency vibrate with
every miser's panic, and every merchant's imprudence.
77. There are two methods of avoiding this insecurity, which would have
been fallen upon long ago, if, instead of calculating the conditions of
the supply of gold, men had only considered how the world might live and
manage its affairs without gold at all.[36] One is, to base the currency
on substances of truer intrinsic value; the other, to base it on
several substances instead of one. If I can only claim gold, the
discovery of a golden mountain starves me; but if I can claim bread, the
discovery of a continent of corn-fields need not trouble me. If,
however, I wish to exchange my bread for other things, a good harvest
will for the time limit my power in this respect; but if I can claim
either bread, iron, or silk at pleasure, the standard of value has three
feet instead of one, and will be proportionately firm. Thus, ultimately,
the steadiness of currency depends upon the breadth of its base; but the
difficulty of organization increasing with this breadth, the discovery
of the condition at once safest and most convenient[37] can only be by
long analysis, which must for the present be deferred. Gold or
silver[38] may always be retained in limited use, as a luxury of coinage
and questionless standard, of one weight and alloy among all nations,
varying only in the die. The purity of coinage, when metallic, is
closely indicative of the honesty of the system of revenue, and even of
the general dignity of the State.[39]
78. Whatever the article or articles may be which the national currency
promises to pay, a premium on that article indicates bankruptcy of the
government in that proportion, the division of its assets being
restrained only by the remaining confidence of the holders of notes in
the return of prosperity to the firm. Currencies of forced acceptance,
or of unlimited issue, are merely various modes of disguising taxation,
and delaying its pressure, until it is too late to interfere with the
cause of pressure. To do away with the possibility of such disguise
would have been among the first results of a true economical science,
had any such existed; but there have been too many motives for the
concealment, so long as it could by any artifices be maintained, to
permit hitherto even the founding of such a science.
79. And indeed, it is only through evil conduct, wilfully persisted in,
that there is any embarrassment, either in the theory or working of
currency. No exchequer is ever embarrassed, nor is any financial
question difficult of solution, when people keep their practice honest,
and their heads cool. But when governments lose all office of pilotage,
protection, or scrutiny; and live only in magnificence of authorized
larceny, and polished mendacity; or when the people, choosing
Speculation (the s usually redundant in the spelling) instead of Toil,
visit no dishonesty with chastisement, that each may with impunity take
his dishonest turn;--there are no tricks of financial terminology that
will save them; all signature and mintage do but magnify the ruin they
retard; and even the riches that remain, stagnant or current, change
only from the slime of Avernus to the sand of Phlegethon--_quick_sand at
the embouchure;--land fluently recommended by recent auctioneers as
"eligible for building leases."
80. Finally, then, the power of true currency is fourfold.
(1.) Credit power. Its worth in exchange, dependent on public opinion of
the stability and honesty of the issuer.
(2.) Real worth. Supposing the gold, or whatever else the currency
expressly promises, to be required from the issuer, for all his notes;
and that the call cannot be met in full. Then the actual worth of the
document would be, and its actual worth at any moment is, therefore to
be defined as, what the division of the assets of the issuer would
produce for it.
(3.) The exchange power, of its base. Granting that we can get five
pounds in gold for our note, it remains a question how much of other
things we can get for five pounds in gold. The more of other things
exist, and the less gold, the greater this power.
(4.) The power over labour, exercised by the given quantity of the base,
or of the things to be got for it. The question in this case is, how
much work, and (question of questions!) _whose_ work, is to be had for
the food which five pounds will buy. This depends on the number of the
population, on their gifts, and on their dispositions, with which, down
to their slightest humours, and up to their strongest impulses, the
power of the currency varies.
81. Such being the main conditions of national currency, we proceed to
examine those of the total currency, under the broad definition,
"transferable acknowledgment of debt;"[40] among the many forms of
which there are in effect only two, distinctly opposed; namely, the
acknowledgments of debts which will be paid, and of debts which will
not. Documents, whether in whole or part, of bad debt, being to those of
good debt as bad money to bullion, we put for the present these forms of
imposture aside (as in analysing a metal we should wash it clear of
dross), and then range, in their exact quantities, the true currency of
the country on one side, and the store or property of the country on the
other. We place gold, and all such substances, on the side of documents,
as far as they operate by signature;--on the side of store as far as
they operate by value. Then the currency represents the quantity of debt
in the country, and the store the quantity of its possession. The
ownership of all the property is divided between the holders of currency
and holders of store, and whatever the claiming value of the currency is
at any moment, that value is to be deducted from the riches of the
store-holders.
82. Farther, as true currency represents by definition debts which will