GOLD vs. NATIONAL CURRENCY.
Gold or silver is necessary to settle the balance of our exchanges with foreign nations, just as bank-notes are necessary to business-men. The value of gold is unchangeable and the same in all civilized countries. It flows to all manufacturing countries that export or sell more than they import or buy ; but it flows from all agricultural countries that import or buy more than they export or sell. It represents the profit of trade or commerce, and the people who import gold grow rich, while they who export it grow poor, independent of the increase of national wealth in property.
The mere accumulation of gold, however, without investing it in labor-saving machinery, furnaces, mills, and productive property generally, would be of no more use to us than the gold of Mexico and Peru was to Spain.
For domestic purposes and home circulation our present national currency is more available than gold, and, being secured by first-mortgage bonds on our property, while the issues are regulated by the Government, there is no danger from suspension and bankruptcy.
Government bonds in the vault of the banker are worth more to him than gold, because they return him five or six per cent. interest and are still security for his banking capital or issue, which returns as much profit as if they were secured by deposits of gold.
Business-men who deal with the banks will eventually reap benefit from this, because capitalists will be able to lend their money at lower rates and extend their accommo dations. The people will also profit from the increase in the amount of capital, because it tends to make money more plentiful, and when money has a real instead of an in flated or fictitious value it can scarcely be too plentiful. When our bonds are at par, our currency will be equal to gold, and far more convenient.
Gold does not represent wealth more than real estate and certain kinds of property, since productive farms, mines, furnaces, mills, and factories, and labor-saving machinery generally, are more valuable than gold, under a wise political economy.
The issue and redemption of circulating notes, which answer a better purpose for domestic business transactions than specie, can be secured as effectually on a property as on a gold basis, provided the faith of the Government is pledged to assess fairly the wealth of the nation to support it and secure its general circulation and its final re demption, if so desired.
Private issues of notes on either a gold or property basis have less utility, and con stantly decrease in value as they recede from the point of issue, are affected by panics, fluctuations in values, and individual bankruptcy. But a national currency, secured as ours is, provides a better circulating medium than gold, or the issue of notes by private banks on the deposits of gold in their vaults.
The creation of bank-notes, therefore, from the real estate or fixed wealth of the peo ple, as a circulating medium, or money, increases the value of the real estate on which it is based, by giving the means to develop its resources, thereby changing unproductive to productive property,—the seam of coal and bed of ore into iron, and iron into rail roads and labor-saving machinery. These become more valuable than gold in ratio to cost, because, while intrinsically valuable, they enable us to increase our productiveness a hundredfold. The bank-note thus becomes the machinery by which we develop our resources, and is the first step towards the accumulation of gold, instead of a result of its possession.* The check and the bank-note stimulate circulation, giving increased value to labor and the products of labor ; and wherever these notes, properly secured, are most in use, there the inward current of gold is most firmly established.
" That such is the case is proved by the fact that for a century past the precious metals have tended most to Britain, where such notes were most in use. Their use increases rapidly in France with constant increase in the inward flow of gold. So too does it in Germany, towards which the auriferous current now sets so steadily that notes which are the representatives of money are rapidly taking the place of those irre deemable pieces of paper by which the use of coin has so long been superseded.