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MONEY.


Natural Law of Money.
International Bimetallism.
“Free Silver.”
Currency.


The Silver Question

— AND —


Hard Times.


BY

JOHN J. VALENTINE.





INDEX.


PAGE.

The Natural Law of Money. 7

International Bimetallism.16

‘‘Free Silver. . . ..62

Currency , . . ' .90


Thk Sii^ver Question and Hard Times.

Article of February 29, 1896.121

“ March 7, 1896.124

“ June 20, 1896.129

“ June 27, 1896.137

July 4, 1896.144

“ July II, 1896.156

“ July 18, 1896. 162

“ July 25, 1896.175

“ August I, 1896.183

“ August 8, 1896.193

“ August 15, 1896.196

“ August 22, 1896.204

“ September 5, 1896.215

“ October 3, 1896. 226

“ October 10, 1896.236

PRESS OF

H. S. CROCKER COMPANY
SAN FRANCISCO

























I.IHHAKY

tJJVJTVEasrrY of CAUFORNTTr
SA.NTA H.'.!{HAI{A


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PREFACE.


The four leading papers herein were incited by an
admirable essay on the Bond Syndicate of 1895, read
before the Berkeley Club of Oakland, at one of their
stated meetings last winter, by Mr. Nye, of the Oakland
Enquirer. The members of the Club, to whom I re¬
spectfully dedicate this little series of discourses, were
so courteous as to voluntarily accord me an unusual
allowance of time to speak upon the same subject; and,
my remarks having led to a number of questions
upon that and kindred matters, I at once decided to
forego the preparation of a paper on Franz Deak, the
Hungarian statesman, which I bad in contemplation
to serve at my turn to read before the Club, and sub¬
stitute one upon the subject of money. My studies
on this theme" expanded into four separate papers,
namely. The Natural Law of Money, International
Bimetallism, Free Silver, and Currency, and they
were listened to with such interest that I have been
asked to publish them,—the honored President of the
University of California, Prof. Martin Kellogg, having
himself suggested that it was my duty to do so.

In yielding to these requests I would have it fully
understood that I offer nothing novel or theoretical,
for there is nothing new under the sun in regard to
money, any more than there is in regard to other
things, and here, as elsewhere, we have the lessons of
experience to draw upon. I have, therefore, utilized
in my remarks the expressions of well-known writers.



4


past and present,—John Locke, Adam Smith, Lord
Liverpool, Alexander Hamilton, Thomas Jefferson,
Albert Gallatin, Daniel Webster, Wm. Jacob, Jno. Stnart
Mill, Walter Bagehot, Henry D. MacLeod, Robert Giffen,
Prof. W. A. Shaw, Prof. Alfred Marshall, Benjamin
Kidd, Prof Nicholson, Elijah Helm, William Brough,
Prof. McMaster, Prof Shaler, Mr. Schoenhof, Horace
White, Andrew D. White of Cornell, Prof. Francis A.
Walker, Prof. Taussig, Prof Farnham, Prof Perry,
Prof. Hadley, Prof Laughlin, Prof. Moses, David A.
Wells, C. F. Adams, Edward Atkinson, J. L. Greene,
R. Q. Mills, O. H. P. Belmont, Turnbull White, and
others too numerous to mention, not omitting, however,
my personal friend Louis A. Garnett, of this city, whom
I deem as well informed a man upon the subject as I
have ever come in contact with. I may add that, of the
French economists, Baisse, Levasseur, Chevalier, Parieu,
Permez, D’Avenal, the two Says, Leon and J. B., Tirard,
Beaulieu, des Essars, and more, there is not a single one
that was not, or is not, a supporter of the gold standard.

It is not for the purpose of making a pretence to
learning that I mention this formidable array of names,
but in order to give credit to these writers from whom,
as a constantly occupied business man, I have drawn,
often bodily. I think I may claim that few men have
been more steadily engaged than I during my forty-
two years of business activity, but having always
indulged a taste for reading, and been accustomed to
mark and note any item of statistical importance, or
argument which I particularly concurred in or dissented
from, it was not diflScult for me to collect the facts cited
herein and draw my own conclusions from them.


5


The subject in all its bearings is one to which I have
given some attention for more than thirty years, con¬
siderable of it since the discussion began in the seven¬
ties which ended in the passage of the Bland-Allison
Act,—and which, in intervals of leisure since the
passage of the so-called Sherman Act of July 14th,
1890, I have investigated with persistent, studious care.
I came to its consideration with every possible motive
for advocating the so-called cause of silver, but what¬
ever may be thought of the influence of money on prices,
or the feasibility of international bimetallism, however
debatable that theory may be, or other monetary pro¬
jects, it is an assured fact that the records of history
and of economic science absolutely preclude the possi¬
bility of the concurrent circulation of gold and silver
as legal tender under the independent, unlimited free
coinage of both metals at a ratio of sixteen parts of
silver to one part of gold, or at any ratio appreciably
different from the commercial value of the metals,—and
that under unlimited free coinage of silver by the
United States alone the purchasing power of each coin
would be confined to its bullion value, whatever that
might be, from time to time.

A Layman.

San Francisco, Cal.,

August 18, 1896.


PREFACE TO SECOND EDITION.


The first edition of this little book having been
exhausted, a second is asked for, and in presenting it
to an enlarged circle of readers it seems proper, in




6


deference to such able and rational writers as Prof.
J. S. Nicholson of Edinburgh, Mr. Elijah Helm of
Manchester, and Prof. Francis A. Walker of Boston,
to explain that the bimetallism, joint metallism or
symmetallism advocated by them, or by Prof. Alfred
Marshall, or such eminent Englishmen as, for example,
Sir Samuel Montagu, are wholly different propositions
from that now advanced by the Populistic free silver
propagandists in the United States of America. See
page 215.

On page 88 of the first edition, in first line on
standard of value, the word “ quality ” was erroneously
printed for quantity.

John J. Valentine.

San Francisco, Cal.,

September 5, 1896.


PREFACE TO THIRD EDITION.

The second edition of Money having been exhausted,
and a third being called for, I have improved a little
time and opportunity during the intervening month to
include some additional touches that had been omitted
before simply through the stress of other duties, official
and private, and also to add the concluding two papers,
which furnish their own explanation.

John J. Valentine.

San Francisco, Cai,.,

October 3, 1896.




THE NATURAL LAW OF MONEY.


HE late Walter Bagehot remarked that the United



1 States was a country for exemplifying by experi¬
ments on a large scale the old truths of political
economy. The people were indifferent to experience
gained elsewhere, while they were protected by their
magnificent resources from the most serious conse¬
quences of mistakes in their own practices that in old
countries would be supremely disastrous. They were
thus constantly renewing old experiments under favor¬
able conditions, and confirming, if not enlarging, the
knowledge of the principles of political economy. The
latest experiment of this kind is the silver legislation
of which we have all heard so much.

It is not my design or expectation to present any¬
thing new or original in the consideration of this ques¬
tion, but simply some of the laws and established facts
that govern it; and, in doing this, I have frequently
utilized, without giving credit, the exact phraseology of
the best writers upon the subject.

Of all things in the world, money, which can least
bear tampering with or anything but scientific treat¬
ment, is being made in this country the bone of noisy
contention, instigated partly by the influence of mining
interests which ardently desire to raise the price of
silver, and the adherents of a soft-money heresy who
hope to create abundant money out of metal of some
kind if they cannot have inconvertible paper.


8


The natural law of money is, in general, the law of
civilization, viz, evolution: beginning, it may be, with
the barter of a horse for a cow, a sheep for a hog, a goat
for a dog; after that, the use of pebbles or shells as the
representatives of value in the exchange of different
commodities ; next iron ; then copper, bronze or brass ;
then silver ; and finally gold, and obligations expressed
on paper,—showing throughout a law of displacement,
the inferior by the superior, or the survival of the
fittest—gold—as the standard money—money of ulti¬
mate redemption, that metal having demonstrated to
the world of commerce its superior utility, efficiency
and refinement as the best basis and medium for the
interchange of commodities, as well as for discharging
the terms of time obligations.

Aristotle, on the origin and definition of money,
says :

“ It is plain that in the first society (that is, in the
household) there was no such thing as barter, but that
it took place when the commtinity became enlarged;
for the former had all things in common, while the
latter, being separated, must exchange with each other
according to their needs, just as many barbarous tribes
now subsist by barter, for these merely exchange one
useful thing for another, as, for example, giving and
receiving winejfor grain, and other things in like man¬
ner. From this it came about logically that as the
machinery for bringing in what was wanted, and of
sending out a surplus, was inconvenient, the use of
money was devised as a matter of necessity. For not
all the necessaries of life are easy of carriage; where¬
fore, to effect their exchanges, men contrived something
to give and take among themselves that which^ being


9


valuable in itself^ had the advantage of being easily
passed from hand to hand for the needs of life, such as
iron or silver, or something else of that kind, of which
they first determined merely the size and weight, but
eventually put a stamp on it in order to save the trouble
of weighings and this stamp became the sign of its value?'
Aristotle's Politics^ 1-9.

It shonld be borne in mind, however, that all trade is
barter, even when the precious metals are employed as
intermediaries, the latter being articles of barter also,
possessing intrinsically the same value as the things for
which they are exchanged. The whole science of money
hinges on this fact.

One commodity employed as money does not go out
of use until it is superseded by another of superior
qualifications for the service. This is the natural law
that governs the change from one kind of money to
another.

To give to coin all the elements of eflSciency that it
can possess, it is really only necessary to start it into
circulation with its full weight and fineness of precious
metal, that is, intrinsic equivalency, and its mintage or
assay stamp, and let it go where it will. For examples,
the Schlick Thaler of Bohemia; the Spanish milled
dollar; Bechtler’s gold coinage of the Carolinas; the
ingot of Moffatt & Company, and coins of Kellogg,
Hewston & Company, of San Francisco; the Utah and
Colorado gold coinages, and others. It is an advantage
of a good standard, as gold or silver, that it may be
used as a common measure of value, without altering
very much the supply and demand of the article itself,


lO


so that the exchange value of the article may be
wholly left to natural conditions. Here we have the
natural law of metallic money in all its simplicity. The
complexities are of our own making.

Debased money has entered into the experience of
every civilized nation at some period of its history, and
it is not necessary to particularize, but there are inter¬
esting chapters in Jacobs, showing conditions under
Henry VIH. and Edward VI., and Macaulay, of a later
date also, describing the imposition of brass money on
Ireland, etc.

What I have designated as the natural law of money
is inverted by the interjection of the legal-tender qual¬
ity into money of unlimited issue; and what is com¬
monly known as the Gresham Law demonstrates
itself with certainty. Simply stated, this law is the
operation of brokerage, assorting, culling, garbling,
etc.,—thus always forcing the poorest money into cir¬
culation. And this all proceeds from the delusion on
the part of men that, in some mystic or supernatural
manner, governments can permanently regulate the
value of money by conferring upon it a legal-tender
quality. If by legislative enactment Government
could exert that power, similar legislation would enable
it to regulate the value of all commodities.

About 1366 Charles V., Kiug of France, sometimes
styled Charles the Wise, observing that the coins of the
realm were in dire confusion, empowered one of his
ministers, Nicholas Oresme, a man of distinguished
attainments, a member of the French Imperial Govern¬
ment, and subsequently President of the College of


II


Navarre, to investigate and apply a remedy. As a
result, Oresme published a treatise entitled, “ A Theory
of Money,” and in this he outlined what is now called
the Gresham Law. In 1526 Sigismund I. of Poland,
to which Prussia then belonged, observing that the
coins and money of his realm were in a deplorable con¬
dition of debasement, which was and had been the
chronic condition of all Burope, selected Nicholas
Copernicus, the great astronomer, to consider the sub¬
ject ; and Copernicus, after investigation, wrote a treatise
setting forth doctrines that had been formulated one
hundred and sixty years before by Oresme for the
King of France, though there is no evidence to indicate
that he knew the conclusions arrived at by Oresme.
The doctrines of Oresme and Copernicus are sub¬
stantially identical:

1. That it is impossible for the law to regulate the
value of the coins, i. ^., the purchasing power.

2. That all the law can do is to maintain the coinage
at a fixed denomination, weight and purity.

3. That it is robbery for the law to change the
denomination, diminish the weight, or debase the purity
of the coinage.

4. That it is impossible for good, full-weighted coin
and debased coin to circulate together.

5. That the coins of gold and silver must bear the
same ratio to each other as the metals in bullion do in
the market.

In 1558 Queen Elizabeth, discovering in her realm
the same unfortunate conditions connected with the
coins that had existed in France two hundred years


12


before, and in Poland the previous generation,—espec¬
ially produced in England by the repeated debasements
that occurred under Henry VIII. and Edward VI.,—
selected Sir Thomas Gresham, one of the most eminent
men of the day, who, amongst other claims to distinc¬
tion, possesses that of having founded the Royal
Exchange of London ; and he, after a careful examina¬
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