[PDF]Absolute Money

ABSOLUTE MONEY:


A NEW SYSTEM OF


NATIONAL FINANCE,


UNDER A


CO-OPERATIVE GOVERNMENT.


BY
BRITTON A. HILL,


AUTHOR OF “LIBERTY AND LAW."


ST. LOUIS:
SOULE, THOMAS. & WENTWORTH.
1875.


ABSOLUTE MONEY:


anew system of
NATIONAL FINANCE
under a


CO-OPERATIVE GOVERNMENT


by
Britton A. Hill,
author of Liberty and Law.


St. Louis:
Soule, Thomas & Wentworth.
1875.


entered according to act of congress, in the year one thousand eight hundred and
seventy-five,

by Soule, Thomas & Wentworth,

in the office of the Librarian of Congress, at Washington.

Powell & Maynard, printers, St. Louis.


wnw.yamaguchy.com


Preface


About two years ago I published a work, Liberty and Law under Federative
Government now out of print, in which I purposed to point out such defects in
our federal and state governments, in their representation and legislation, as
had made themselves especially prominent during the history of our exis-
tence as a nation. One of these defects, and probably the one that touches
men most closely, I conceived to be the lack of a true and scientific money
system; and consequently I proposed to substitute for our irrational medley
of bond money, legal tender money, national bank money, and gold and
silver money—an absolute National Money, irredeemable in metallic coins
or interest-bearing bonds, but convertible into all the commodities of the
nation, by making it the exclusive legal tender money of this country. The
whole plan of my work compelled me to treat this subject in a very
condensed form; too condensed, perhaps, for general comprehension. This
and the fact, that the appearance of my book was closely followed by the
great financial crisis which I had foreshadowed in it, and the causes of which
I had explained, brought me many verbal and written requests to elaborate
that money scheme more at length, and remove the various objections that
had been raised against it. The result is the present work, which will be, I
trust, explicit enough to make any mistake regarding its scope and purpose
impossible. But as this age is not one for voluminous books, and as espe-
cially in works of finance, it is necessary to cultivate the utmost possible
condensation, in order to secure even a limited number of readers, I have
left out everything that did not strictly pertain to the main point in issue, or
illustrate the various phases of my system. On the other hand, I have
endeavored to represent the chief features of that system from every stand-
point, historical and critical, that seemed to me calculated to throw
additional light upon it. If I have been at all successful in this, may I not
hope that my work will receive the careful attention of our prominent
financiers, and of the members in Congress to whom the establishment of a
national money system has been entrusted by the constitution ?

Nearly one hundred years have now elapsed since the people of these
United States were joined together into one grand nation by the bond of the
Union. Various attempts have been made since by unscrupulous dema-
gogues to loosen that bond, and we all remember how very near the last
attempt came of being successful. Even apart from its financial merits,
therefore, it seems to me that my money system ought to recommend itself
to the people of the United States as the strongest safeguard against any
renewed attempt to dissolve the Union. With a large national debt, such as
we have now, the danger of disunion increases constantly; since the parties
in favor of dismembering the Union can urge the powerful plea, that they
would thus escape the payment of their share of the national debt and the
oppressive taxation entailed by its interest account. But a conversion of that
debt into a national circulating medium would make a separation of the


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Union next to impossible. Producing a just co-operative financial system,
every citizen would be interested in upholding the national unity and
integrity, since their breaking up would plunge every one into poverty and
bankruptcy. Many years ago one of the foremost of German patriots and
philosophers John G. Fichte —the first of his age who foresaw and foretold
the unification of the German states under the leadership of Prussia— urged
the adoption of a money system similar to that proposed by me, mainly
upon this ground, that it would cement a united German Empire closer
together than any other measure could effect; and the renowned Minister of
Prussia, to whom he dedicated his work, Von Struensee, far from dismissing
the scheme contemptuously, as the impracticable dream of an idealist, gave
it his careful consideration, and expressed to its author his high appreciation
of the work. The proposition, indeed, is very simple: A nation requires a
national money. It must be a separate sovereign financial body just as well
as it is a separate sovereign political body amongst the nations of the earth.
It cannot afford to be dependent upon foreign countries for its money
medium of interchange; nor can it afford to be dependent upon the money
monopolists amongst its own citizens. Omnipotent in executing its own
laws, in calling forth armies, in building fleets and providing in infinite ways
for the public welfare; ought a government to be impotent in that one
matter of creating an absolute money, "without which it can execute none of
those prerogatives.

This, however, is only a collateral plea in favor of my money system,
which must stand or fall by its claim; that it is the only rational scheme of
finance for a co-operative government, such as ours professes to be. This
claim I have endeavored to substantiate to the best of my ability, firstly,
negatively, by showing that all other systems of money —whether of gold
and silver coins, or paper money issued on a so-called specie basis, or on
collateral interest-bearing bonds, or on real estate mortgages— are inade-
quate, productive of financial disasters and oppressive upon the people;
and secondly, affirmatively, by showing that my system of Absolute Money
is adequate for all possible contingencies, subject to no fluctuations, and the
cheapest, while at the same time the safest of all money issues.

This work is, therefore, divided into two parts: the first, mainly historical
and critical; the second, mainly affirmative and explanatory of the new
scheme. Having shown how gold and silver money proved inadequate to
conduct the business of the world at an early stage of man's commercial
history, I have proceeded to trace the various ways in which money of
account was enlisted in behalf of commerce and industry, through the
medium of credits, bills of exchange, settlements at the fairs, bank issues and
government bonds, until it culminated in our own country in the issue of a
legal tender currency during the late war. Whilst fully recognizing all the
benefits that have arisen from these various phases of money of account, it
has been my chief aim to point out their respective defects and inadequa-
cies; and, I think, I have fully and fairly demonstrated, that in all cases
where the establishment of such money has been followed by final deprecia-
tion and bankruptcy, the result has been due to the circumstance that the


4


money purported to be redeemable in another kind of money, namely, gold
and silver coins, in face of the fact that such money of account was issued
simply because there was not gold and silver enough in the world to meet
the demand for money, and that hence such redeemability in coin was an
impossibility. In fact, the only reason why paper money has hitherto failed
to realize the object of its issue, has been, that it has always been only
money of a secondary nature; gold and silver remaining the primary
money. This necessarily led to a competition between specie and paper
money, and necessarily left the victory to the former, which was always the
only legal tender recognized by law until the issue of the legal tender notes
in 1862, by the United States.

Hence my system of Apso.uteE Nationa. Money provides, that after its
adoption gold and silver shall no longer be a legal tender, and that the
money to be issued by the federal government alone, shall be clothed with
that sovereign prerogative. Under its operation there will consequently be
only one kind of money in general circulation, and a conflict between it and
metal coins will be impossible. Nor will there be any other kind of bank
currency which could interfere with its systematic operation. The whole
National Bank system will be abolished; the notes of those banks will be
withdrawn from circulation and substituted by the Absolute National Money,
which will be issued in place of the bonds held by those banks. This does
not involve any interference with, those banks as banks of deposit and
discount. It simply deprives them of the powers they previously exercised as
Banks of Issue; and this, I take it, will be of equal advantage to both parties,
the government and the National Banks. The government will save a heavy
payment of interest, the banks will be freed from keeping a reserve fund of
legal tenders, from irksome rules and regulations, from the federal tax on
their circulation and deposits, and from the danger of being called upon in
the future to redeem their notes in legal tenders or specie.

But it does not follow, that because my system of money abolishes coin
as legal tender, gold and silver will become unpurchaseable. The United
States absolute money will have the power to buy gold and silver as well as
any other commodities, and I have no doubt, that in the course of time, it
will be able to purchase these metals —which, as Benjamin Franklin justly
remarks, "are intrinsically not worth as much even as iron or lead'"— at far
lower prices than they command now, when their value has been artificially
increased by their use as sovereign money. Any bank that desires to buy
gold either for hoarding purposes or for foreign exchange, and any indi-
vidual who likes the glitter of gold, or needs gold, will always be able to
purchase it; but I believe the number of buyers will be exceedingly small. It
is much more likely that the people will hasten to exchange their coins for
government bank-notes; since the government will, of course, have to make
such exchange for all coins that bear its stamp. The mints, it is true, would
be stopped, and no further issue of American coins would be made; but
those coins that are still in circulation, will have to be redeemed by the new
government money.


I am well aware that my plan of an exclusively Legal Tender national
money will meet much opposition. It is surprising, laughable, but none the
less true, that although the business of this country has been carried on, ever
since our existence as a nation, chiefly by paper money, to redeem which in
gold and silver, has always been, and must always be, an absolute impossi-
bility, the majority of the people, nevertheless, imagine that trade is really
carried on by means of specie. It is quite safe to say, that not one thousand
in a million of dollars of our business transactions has ever been paid in gold
and silver, even when gold and silver money was the only legal tender; and
yet the people firmly believed that we had a specie basis, and a large
number of our financiers clamor now for a return to a specie basis, and have
even succeeded in persuading Congress to fix the year 1879 for the repeal
of the Legal Tender Act, and the restoration of gold and silver as the only
money recognized by law. I think I have conclusively shown in this work
that the pretence of having a specie basis is a fraud, delusion and a decep-
tion, and | challenge all critics of my scheme to point out to me how it can
be other wise. Neither the Secretary of the Treasury, nor one of the
members of Congress and senators who have spoken so loudly in favor of
that act establishing a return to specie payments in 1879, have answered the
question how it was honestly possible. For an honest specie payment
means, that the government and the National Banks now in existence
should have a specie dollar in their vaults for every dollar of their currency
issue. No man in his senses will maintain that this is practicable. But if the
government and the National Banks cannot keep on hand an amount of
specie equal to their circulation —not to mention their deposits— is not the
whole issue of that circulation, in excess of the specie on hand, a fraud and
a delusion ? If a bank has only $100,000 of coin in its vaults, and an
outstanding circulation of $300,000, is it not false to say that the $200,000
in excess are also based on specie ?

Before the passage of the Legal Tender Act, the great financial misfor-
tune of this country was, that while the people of this nation carried on their
business transactions almost exclusively by means of paper money, their
government repudiated their money, and insisted upon the exclusive
payment of gold and silver for duties and imposts. The people and their
government were thus directly at variance with each other. What was
money de facto, was not money de jure.

The passage of the Legal Tender Act was the first great step toward
establishing harmony between the people and the government, and to
proclaim officially the fact that gold and silver had been dethroned. How
effectively this step eradicated the popular belief in the prerogative of specie,
which the previous financial conduct of the government had still kept alive
and fostered, has been shown repeatedly during the last thirteen years.
There has never been a desire manifested in all those years to exchange the
legal-tender notes for specie, except for special purposes. It is true that the
price of gold and silver rose to startling figures at various times, but this was
due partly to military reverses, though chiefly to speculation and coin
gambling. The prices of other commodities neither rose nor fell as gold fluc-


6


tuated in Wall street, and hence the real holders of the national bank-notes
had no inclination and no interest to exchange their notes for gold. I
consider it, there fore, a great national calamity that now, after the idolatry
of gold has been nearly extirpated in this country, so many of our public
men should have exerted their energies to revive it. The passage of the
Legal Tender Act was the greatest blessing conferred upon the American
people since the establishment of the Union; it would be nothing less than
national suicide to repeal it now, and reinstate the despotic rule of specie.
Has not the experience of the past been sufficiently instructive to warn us of
the result which must inevitably follow a further reduction of our money
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