Lyman E De Wolf.

Money; its uses and abuses, coinage, national bonds, curency, and banking, illustrated and explained online

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the value of things that degrees, minutes, seconds, etc., do with
regard to angles, or as scales do to geographical maps, or to
plans of any kind.

" In all these inventions there is some denominative taken for the

In angles, it is the degree ; in geography, it is the mile ; in
plans, foot and yard ; in money, it is the pound, livre, florin, etc.

" The degree has no determinate length, so neither has that part
of the scale, upon plans or majjs which marks the unit ; the use-
fulness of all these being solely confined to the marking of

" Jnst so, the unit in money can have no invariable determinate
proportion to any part of value ; that is to say, it cannot be fixed
in perpetuity to any particular quantity of gold and silver, or any
other commodity.

" The value of commodities depending upon circumstances
relative to themselves, their value ought to be considered as
changing with respect to one another only ; consequently, any
thing which troubles or perplexes the ascertaining these changes
of . proportion by the means of a general determinate and
invariable scale, must be hurtful to trade ; and this is the infal-
liable consequence of every rise in the price of money or coin.

" Money, as has been said, is an ideal scale of equal parts. If
it be demanded, what ought to be the standard value of one part,
I answer by putting another question : What is the standard
length of a degree, a minute, or a second ? None ; and there is
no necessity of any other than what, by convention, mankind
think fit to give.


« The first step being perfectly arbitrary, people may adjust
one or more of these parts to a precise quantity of the precious
metals ; and so soon as this is done, and that money becomes
realized, as it were in gold and silver, then it acquires a new
definition; it then becomes the price as well as the measure of

" It does not follow from this adjusting of the metal to the
scale of value, that they themselves should become the scale."

A florin banco has a more determinate value than a pound of
fine gold or silver ; this bank money stands invariable like a rock
in the sea. — Sir James Stewart's Political Economy, B. 3, chap.
1, Vol. I, 4th Ed. p. 226.

The distinction then betwesn the term money as denoting
prices, in keeping books of account, in making promissory notes,
bills of exchange, national bonds, currency, and all instruments
denoting commercial value as used in carrying on business ; and
the ter^n money, as applied to coin or legal tender money, used in
making payment, is a radical one, and is the key for unlocking
some of the most difiicult problems which financial science

It is easy to run the eye over a journal and note at a glance
several hundred entries of sums debited for goods sold, varying
from ten to five hundred dollars, and by the use of this mental
language, or ideal money, thus fixed in the mind, in a few
moments to determine accurately the whole sum.

If, however, the exact amount of coin denoted by the several
entries thus made were placed before the accountant, he might
not be able to determine accurately the several denominations of
coin and their value, and if he could, it might take the accountant
hours, and even weeks, to examine and count the coin.

Coins may be changed every month, and even every week, but
so long as they do not infringe upon or change this ideal money
or money of account, no serious derangement in the method of
estimating prices or values would occur. But the least change
in the denominational value of this money unit, numeral or ideal
language of prices, will take half a century, at least, to accustom
the people to such an alteration in their mental modes of estimat-
ing values. These facts are well illustrated in the colonial moneys
of account of the United States and Canada. There never was a
coin out of which these moneys of account originated. In the
more retired portions of the United States there are now, or


there were a few years since, many persons to be found who
continue to use these colonial moneys of account of pounds, shil-
lings and pence, as they were wont to do in colonial times before
separation from Great Britain.

The term or unit pound in the several Colonies named, are given
in the following table as expressed in our present money of ac-
count — that it may be seen what changes may be made, in the
modes of estimating, through the agency of a deranged money
of account, and what will be the effect of such changes on the
people's interest, will be more fully shown Avhen we come to treat
upon that subject or the causes which pi-oduce a deranged money
of account: —

£1. New England and Virginia, is equal to $333 or 6s. to the Dollar.

" New York and North Carolina, to 250or8s " "

" Pennsylvania aad Middle States, 266 or 7b. 6d. "

" South Carolina, 427 or 4s. 8d. "

The French inhabitants of Lower Canada furnish a remarkable
instance of the tenacity with which people cling to their moneys
of account. These French Canadians continue to express their
prices and make all their estimates of coin, and all other vahxes,
in their old money of account by livres, sous and deniers,
although the coin from whence the mental idea originated has
passed out of use in that portion of the country for nearly a cen-
tury. These people, too, are surrounded by a population and are
under laws and customs where another money of account of an
entirely different character is in use. The Canadians of English
descent also use a money of account — ideal or mental money,
although it is in pounds, shillings and pence, differing materially
from that of the mother country. The following table will
exhibit the manner in which the various coins are estimated in
the moneys of account in the British provinces of North America :


British Guinea,

" Sovereign,
American Eagle,
British Crov/n,

American Dollar,
French Crown,
" Five Franck.

Nova Scotia


Canada. |
















Upper Canada.

Prince Edward's

Marline's British Colonies, page 229, and appendix 53, Col well,
page 57.

In the British Islands the units of the moneys of account are
as follows : —

Jamaica, £1 sterling equals £1 Ss. or 78. to the Dollar.

Barbadoes, " " 17 or 6s. " "

, Windward Islands, " 1 15 or 8s. " "

Leeward Islands, " 2 or 9s. " "


Facts of this character might be multiplied indefinitely from
the history of every age and nation, but these alone are amply
sufficient to show that men do not measure values m a civihzed
state of society, whatever may have been their practice m bar-
barous times by means of gold and silver coins, or by their
substitutes of paper money or bank notes, but their estimates are
made by the ideal or mental image fixed in the mind by constant
use of the language of prices. The same mental habit is manifest
in the use of figures, numerals, or the denominations of weights,
measures in distances, and in time. This mental habit and its
uses may be tested by the attempt to form an idea of space or
weight, quantity, time, or value in gross, without the aid of these
arbitrary, mental subdivisions. Or it may be better illustrated,
perhaps, by attempting to form an idea of values in the money of
account of a nation, other than that in which a person has been
educated. For instance, let an American attempt to estimate the
value of a large number of separate parcels of goods, lands,
grain or other property, in large amounts, in the money of
account of Great Britain or France — or to increase and compli-
cate the matter still more, let him attempt to make the estimate
of vakie and quantity — the value in pounds, shillings, and pence,
and the quantity of grain, together with its price, under the cental
system, by hundreds of pounds, and their fractional or decimal
parts of a hundred, instead of by dollars, and by bushels. When
this experiment has been fully tried and solved it will give some
idea of the value and use of ideal or mental moneys and measur-
ments as fixed in the mmd by the use of these various denomina-
tional units of value, by every day estimate of value, weights,
distances, etc.

If, however, these facts do not furnish convincing proofs that
it is by this mental or ideal money that estimates of value are
made, or if it is claimed that it is the coin or metal which
lurnishes the measurement, or accurate estimate, and not the
mental idea, how will these materialistic reasoners account for
the fact of values being estimated for centuries in the moneys of
account in the case of the bank moneys of Venice, Genoa, Am-
sterdam, etc. — as is shown in the chapters where these banks are
treated of— or how will they otherwise account for the estimates
of value in pounds, shillings, and pence. In the case of children
born in England, and who became men, during the specie sus-
pension—this was declared by act of parliament in 1798, though it


actually existed a long period anterior to that date, and was
continued up to the year 1822 — or to take our own history, or
that of the other colonies of Great Britain, some periods of
which no coin or bank paper was in general use for a long num-
ber of years, and no coin of the denominations there used ever
existed. The earliest periods of time which this writer can
bring to his recollection are intimately connected with estimating
values by the Pennsylvania colonial money of account and
without having any coin of that denomination, 7s. 6d. to the
dollar. Values, too, were estimated in bulk or by quantity, as the
giving so many days' labor for a certain article or other service.
Two and a half bushels of wheat was the price of making a
woolen cloth coat. Two and a half bushels of wheat became
the measure of making a coat. The mode of estimating values
by the colonial money of account has not been entirely eradi-
cated after long years of practice in estimating in the money of
account formed by the use of dollars and cents.. This illustrates
the early use of metals in first forming the mental habit. The
present suspension of specie payments will very probably pro-
duce a state of financial afiairs which will last so long that the
generation which is now coming on to the stage will have no
knowledge of estimating values by any pretended use of coin.
Will it be claimed that the idea of value which these instances
furnish, receive any material aid from the legal standard coins or
that the estimate of value formed by persons under the influences
named, will be any less accurate, or less reliable, than the ideas of
value obtained through the constant and actual use of coin.
It is affirmed, then, that the use of coin will make no difierence
whatever ; that if no coin should ever again be issued from the
mint, people of every nation, unless some disturbing cause inter,
venes, would continue perpetually to estimate values in the
money of account in which they were educated the same as they
do to-day.

In a treatise, therefore, on money, to leave out ideal money, or
the money of account, is like leaving out the voice in conversa-
tion, or in vocal music, or of arithmetic, in treating of mathe-
matics. This ideal money is the very language of finance. It
is as much the numeral of value as figures are of amounts. —
It is in fact the written and unwritten language and law of val-
ues and prices expressed in all contracts, agreements, or instru-
ments or securities, used in commerce or business for the
exchange of commodities or compensation for services — and


thus becomes an essential part of the mental constitution of the
man himself The want of attention to the real agency of this
ideal money leads to indefinite ideas of the uses and power of
money. How frequently we hear it asserted that coin is the
standard measure of values the world over. Yet, if a standard,
liow is it used ? The fact is, that these coins have to be adjusted
accurately to moneys of account of every nation. Every divis-
ion and sub-division must respect and be nicely adjusted to these
mental habits of the people for whose use they are intended.
Unless these are respected it would be almost impossible to do
business. Persons speak of the " power of money," when the
power of credit is meant. A merchant inquires the price of
five hundred chests of tea, the price is named in the money of
account to which he is accustomed ; he makes the purchase and
gives his note for the amount ; money exercised no power, or any
other influence in the transaction. It was not the "power of
money,'' but of credit. The money af account enabled the
parties to understand each other, and complete the bargain. It
is the power of credit, based upon commei'cial integrity, which
transfers and re-transfers nine-tenths of the property of the
counti-y. Neither coin nor paper money made a legal tender,
are standards of value, measures of value, nor are they repre-
sentatives of value — but they are merely arbitrary and legal
standards of payment. As for coins, they are seldom used, and
much the greater share of payments is made in currency which
is not a legal tender, and, therefore, is not money.

"When it is asserted that money is a standard of value, a
measure of value, and a representative of value, what is meant ?
IIow can a mere arbitrary enactment, providing that a certaia
article or commodity of intrinsic value, or, one possessing no
intrinsic value, but given certain legal properties, or qualities, to
render it an end of the law, by way of payment, be either a
standard of value, measure of value, or a representative of
value? The origin of value is labor, intrinsic qualities, and
usefulness— the cost of production by labor. The intrinsic
qualities, which adapt it for a limited, or a more extensive use
and the extent of the demand, with the scantiness or fulness
of supply these are the real ingredients which go to make up
value. Use therefore, may correctly be said to be the only
substantial measure of value, and price in the language of the
money of account, or the ideal or mental division of value, as by


dollars, pounds, shillings, is the mode of expressing or estimating
this value. The necessity, therefore, of having this denomina-
tional unit or ideal money with its several decimal or fractional
parts definitely expressed, and well understood, is all-important.
It is really a denominational subdivision of the value in a com-
modity, or of service, into equal and* distinct parts — for the
more easy comprehension of the amount, and for the greater
facility in estimating it. All the measurement of values which is
ever made, is the application of this denominational scale in the
naming of prices, and estimating the value. No coin or other
legal money is employed to express the price, or to indicate what
the purchaser or seller would give or take. A coin dollar is made
a legal equivalent for a denominational dollar's worth of wheat ;
the wheat dollar being determined by the market, and the gold
dollar after having at some period been determined to be a dollar
by the market also, the law seizes upon that point of the market,
arbitrarily determines that the gold whether it is worth it or not,
shall remain a dollar, and a legal equivalent for a market value
dollar. It has no application in the determination of the value
of the wheat or any other commodity. If it measured the wheat,
it would have to be produced and applied to the measurement.
If one man should desire to have a yard of cloth measured, he
would on this principle go to the merchant, and take his cloth,
and the merchant would give him his yard stick. The gold dollar
being arbitrarily fixed by law, and the wheat dollar by the
natural law of supply and demand, both values are designated
by the term dollar in the money of account. When a man says to
another, that horse is worth a hundred dollars, he means that the
horse value divided up into a hundred value parts is correctly
expressed by the term one hundred dollars — horse dollars. If
these horse dollars had been expressed in colonial pounds, shil-
lings, and pence, it would be equally horse pounds, shillings and
pence , but as there never was a coin of these denominations, it
can be easily seen that no coin was the horse measure, and it is
equally so in every other case. Coins are therefore, in no correct
sense measures of value, and they are not so used.

The same train of reasoning applies to the doctrine of
representatives. Coins are neither a sign nor a representative of
value — they represent no properties of value, but such as are
contained in them as metals ; they represent no properties of value
in anything else but gold, and in the uses to which they are


naturally applicable. Legal enactments cannot change these
properties, and make them what they are not, and cannot be.
By making them a legal equivalent in payment, does not m any
correct sense make them represent the articles paid for by them.
They are a legal substitute, but nothing more. That is all the
use they are made to perform in making an exchange. They do
not, and cannot perform the functions, nor represent them, as
contained in the articles for which they are exchanged. This
loose use of language may be justly attributed, either to not under-
standing the functions of a money of account, or else to paying
no attention to the denominational way values are expressed.

The term, standard of value, is equally objectionable. Any
article which possesses a certain amount of valuable qualities,
applicable to any particular uh% and to an amount, which by its
use is denominated a dollar, is a common equivalent for any
other article which has qualities to the amount of one dollar, this
value to be determined in the same manner by the use to Avhich
it is applicable, as in the first mentioned case. There is no such
thing as a common standard of value, to which all articles can
be referred, and by which they can be truly said to be measured.
When nations, therefore, make either gold or silver, or any other
commodity, a legal equivalent in payment of certain specified
amounts of value, it is only a legal equivalent for the amount of
value thus named. But the word, standard of value, is an ill-
chosen term, and as used does not convey a true idea of the
office, and the only use, which coin is made to perform by such
a law, which is simply a legal equivalent in payment — nothing
more, nothing less.

If it is necessary that quantities and qualities of commodities
should be accurately ascertained and understood, to make a just
exchange, how much more necessary is it, that the index of
value should be unerring and invariably just, and then when this
is established, that the office or use performed by such agency,
and its boundaries, should be accurately ascertained, and
understood by the people ?

Any influence, therefore, which destroys the integrity of the
language of prices or the numeral of value, will breed endless
confusion in every branch of business, and gross fraud and
injustice cannot be otherwise than the result.

By the intervention of money and currency, the want of value
in the medium, and the barter character of exchange has been so
far lost sight of, in the medium through which it is effected, that


at length it has come to pass that money is considered as the real
wealth, which is most to be desu-ed, and the commodity is a
drug or thing of little value, which must go begging to find
somebody who will be kind enough to give something for it, that
it may not be wasted in the hands of the manufacturer, or pro-
ducer. This confusion of ideas respecting money, and respecting
ideal moneys, or the mainner in which the estimates of value are
actually made, has been cultivated and nursed: first, by coinage,
second, by bank paper, pretended to be based on coins, or
secured by a small portion of coins, mortgages, state or national
bonds, or some other deceptive device. Here is furnished an
actual value in the coin as a commodity, but not as a coin or
money, and an apparent value in the securities. Thus, the money
power, or the legal power, which made it money, is lost sight of,
in the ostentatious display of coin" and securities, upon which the
money was supposed to be based. Although, little of these
securities or guaranties, are, or were of use to the public, when
it becomes necessary to test the value. To make the money
good, it must be rightly instituted, not liable to change. The
people too, must understand this, that they may have confidence
in it, and they must also have clear views of each and every
process or agency employed, or used, in making exchange, and
the importance and value of each.

If it is supposed, that money is only good, by the commodity
value it possesses, and not by its legal attributes, then money,
must ever remain simply a commodity, and all exchanges barter,
which is the very difficulty, which civilization has been supposed
to remove.

Again, if it be imagined, that the mode of estimating values,
is by certain definite quantities, and qualities of metal, stamped
in a certain definite form by the state — then the actual mode of
making estimates, by a money of account, or ideal money, will
be lost sight of, and the accurate ascertainment of values will be
almost impossible. If the value of all material substances
largely change by use, and if this change is frequently in inverse
directions, one article going up and the other down, how is cer-
tainty to be attained, and of what use are pretended measures
thus instituted ? ,

If, on the other hand, men estimate by the mental or ideal
money, it is necessary that there should be a point, zero or nought,
in the quality of the measure, or, which if it does not express
nought, it must not be liable to fluctuation, or change.


If it be true, as is here affirmed, that the sums written in books
of account, promissory notes, bills of exchange, National and
State bounds, money, currency, etc., in every day use, are not
indebted for their present definite meaning to coin or coinage.
Then the process through which this result is reached, and the
causes if any, which would operate to change the relative value
of the numeral of this money of account thus used, are
important to be understood.

Now, it is a fact not to be denied, that for centuries before our
adoption of the dollar unit — as the unit of our money of account,
prices were expressed, books kept, and notes given, in pounds,
shilUngs, and pence, without there being any corresponding coin
to denote this denominational unit. These denominations were
used in the same manner tLat the dollar unit, or money of
account, is used at present. These terms had one significance,
as has been shown, in Massachusetts, another in Pennsylvania
and the middle States, New York and Norfh Carolina. The
value, or power of the unit, difiered in each of these States,
but was perfectly understood in each, without corresponding
units, expressed in coins. It is no more difficult to carry in the
mind a unit of value, than an idea of a foot, a yard, a rod, mile,
acre, or a pound, ounce, or penny-weight.

Men attain a knowledge of prices, and state them, from the
constant use of these denominations, the same as they use num-
bers. It is not a mechanical, but an arithmetical process, by
which a unit taking its name from some legislative act, coin, or
some definite weight of gold, or silver, or some other denomina-
tional term — is fixed in the mind by daily use — is added, sub-
tracted, multiplied or divided, with the aid of arithmetical

The precious metals were first used, or given, in exchange for
other commodities, at a price agreed upon by the parties, at the
time of making the exchange. In time, a general price is put
upon all commodities, and by the aid of arithmethic, and the
prices thus fixed, sales are made. The price of gold and silver
then becomes as well, if not better known, than the price or value
of most other articles ; these prices are no longer subject to be
fixed by the whim, or caprice of the holder, or the purchaser ;
they are fixed by general consent, and this makes a market or
merchantable value. Governments in fixing the price of metals,
by coinage, hide this important fact from the public view. The


mint price is intended to be the average market price, at some
period. Thus the mint appears to settle the prices, when it
only follows in the wake of the market — but this price once

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Online LibraryLyman E De WolfMoney; its uses and abuses, coinage, national bonds, curency, and banking, illustrated and explained → online text (page 2 of 19)