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small coin always being liable to a greater loss, and always selling as bullion, which is invariably cheaper than coin. 3. It would operate as a check to the over issues of bank credits, by putting the great mass of the specie of the country into circulation, through the expenditures of government; so that the only means by which banks could obtain it, would be by confining their issues, and abstracting a portion of their paper from circulation. Experience sanctions this plan. When the India trade was a mania, and it continued a mania until it broke down all concerned in it—the expedient of coining half dollars, saved the country from a total drain of its specie. Before that crisis, the peril of being left without a single dime, was great—since then, the exportation of the half-dollar to Europe, has commenced and progressed to a ruinous extent | The same remedy, a reduction of the denomination, is suggested by experience as the most efficient. It will be perceived, that in these positions, we differ radically from the disciples of a popular writer, in all his new light principles. We belong to the old school of political economists: he belongs to the new ; and on him the onus is imposed of showing us to be wrong. After all, however, he will perhaps agree with us in this, that a nation never need concern itself about its specie, gold or silver, that is only careful to preserve a PREponderANCE of INDUSTRY over other countries; for it is very hard, if not impossible, to prevent gold and silver from finding their level—which is industry and labour. Specie follows the footsteps of industry as its shadow, and THAT country never will
BE wanting IN gold or silver, that is superior to its neighbour in skill, application, and labour—but until our manufactures get a foothold, and take root, we ought to be frugal in our expenditures, and politic in our laws. Gold and silver bullion are articles of trade, as well as measures of value, but the first quality has caused them to be confounded by some writers, with mere commodities. But this is an error—gold and silver bullion, can never be ranked in the same class with merchandise, no more than the coin into which they are transmuted. A bar of silver, or gold, may be made a measure of value, as well as a guinea, an eagle, a doubloon, or any other coin; but it never can be reduced into the mere object of labour, to which their preciousness bears no proportion. These are the only metals which serve as the true measure of property, in its present immense accumulation: this is their chief value, after their faculty of commanding industry, and commodities, of which they are the representatives. e
Much controversy has been thrown away upon the question, of the possible existence, of a perfect standard of value. This discussion is more curious than useful, for discussion cannot create such a standard, if it exists not, and labour and commerce will never pause in their career, to learn the decision of the argument. It is sufficient for all the purposes of industry and trade, that there exist standard values, under the form of a silver dollar, a golden eagle, or any other denomination of coin, not liable to depreciation and loss. A better, or more perfect standard of value, cannot be desired. - * * * Prices have no connection with the standard of value; for prices depend on the circumstances of supply and demand, quality, quantity, &c. and the greater or less abundance of money that is floating in circulation ; but the standard of value resides in the unalterable preciousness of the gold and the silver. Some have thought diamonds the best standard—but have not supported their opinion by conclusive reasoning. In the simple ages of barter and trade, by exchanging kind for kind, a bushel of wheat for a yard of cloth, for example, the standard of value was of little consequence, and therefore disregarded; the operations of trade being so very limited and circumscribed, that the variation of quantities was made to answer every purpose. But for extended operations, a standard of value is indispensable, and has never been known to be wanting since the first era of commerce and civilization.
The great difference between the precious metals and paper currency will be perceived in this, that whilst bank bills can never become a standard of value, they may be often made use of as a measure of value: but as a standard they are utterly worthless; being constantly liable to depreciation, expansion, contraction, and every mode of incertitude and fluctuation.
The standard of value in France and England is gold only: silver being deemed too variable and uncertain. Of course, the legal tender in those countries is gold; which also constitutes their measure of value. A pound of gold is unalterable—whether augmented into thousands, or reduced to fractions of the lowest denomination. Hence the standard of value.
But can this standard exist in a country where paper credits are hourly confounded with gold and silver; and whose government through a committee in both branches of congress, express a preference for bank bills over specie, as a standard of value? The thing is impossible. Where paper, or an elastic cord, is substituted for the standard of value, there can exist no standard. Laws which disturb and trifle with property in this manner, are worse than fraud, force or despotism; for they plunder under the cloak of justice; and distribute labour on the sheer and naked principle of aristocracy and power; and as effectually place industry at the mercy of caprice, rapacity, and avarice, as if the producers were the mere villains of the feudal barons of old. . . . ... A standard of value, however, does exist, and can be applied to the distribution of property; but it does not exist, and is not applied, under the paper credit system of this country. Hence our poverty on the one hand, and riches on the other—hence pauperism, wretchedness and want.
CHAPTER XI. -
INTEREST is the price paid by a borrower for the use of a stated loan of LABour, on money belonging to another. Thus interest is a proportional amount of labour paid for the use of the labour of another. This per centage varies in different countries, and under different circumstances. In England interest is from three to five per cent.; in Denmark four per cent.; in Spain still lower; in France five; in Rome, at the time of Trajan, it was six, but afterwards fell to four. In this state, our legal interest is six, but money can be had for five to four; and sometimes rises from eight to to twelve. The causes that regulate interest, and the principles that ought in justice to measure and control it, are important, as well as interesting considerations. Too little attention has been bestowed upon the power of the capitalist over the borrower, in this question; which seldom permits him to respect justice, or to practise moderation. We shall here discuss that neglected feature of the subject, and endeavour to ascertain on what principle interest ought in justice to be regulated. The following points are of importance in producing this effect: 1st. The surplus amount of capital seeking to obtain interest. 2d. The greater or less number of the capitalists, who desire to lend. 3d. The demand for borrowing. '