Edward Kellogg
A New Monetary System


The laboring classes of all civilized nations have been, and are, as a body, poor.  Nearly all wealth is the production of labor;  therefore, laborers would have possessed it, had not something intervened to prevent this natural result.  Even in our own country, where the reward of labor is greater than in most others, some cause is operating with continual and growing effect to separate production from the producer.  The wrong is evident, but neither statesmen nor philanthropists have traced it to its true source;  and hence they have not been able to project any plan sufficient for its removal.

The design of the present volume is to show the true cause; and to illustrate its operation so plainly and variously, that any ordinary mind may easily perceive how it has produced and continued this unnatural oppression of laborers.  It will also be shown, with equal clearness, that a simple and effectual remedy can be applied to the removal of the evil.  A good government must have some system by which it can secure the distribution of property according to the earnings of labor, and at the same time strictly preserve the rights of property :  and no government, whether republican or not, that fails in these particulars, can insure the freedom and happiness of the people and become permanent.  The plan proposed to secure this distribution is obviously safe and certain;  and it contemplates no agrarian or other similar distribution of property, nor any interference in contracts between laborers and capitalists, or in the usual course of business.  Fulfilling these requirements, it can hardly fail to recommend itself to all thinking men.  Therefore, it is confidently believed that when the plan shall become generally known, it will be quickly put into operation, and thus save the producers of this nation from the oppression, degradation and misery which have befallen the laboring classes of all other countries.

A New Monetary System

All civilized nations enact certain fundamental laws.  These are governing powers, and subsequent laws are intended to carry them out into practical use.  The most important fundamental law in any nation is that which institutes money;  for money governs the distribution of property, and thus affects in a thousand ways the relations of man to man.  If wrongly instituted, it cannot be rightly governed by any subsequent laws;  and the wrong distribution of property consequent upon it must corrupt society in all its branches.  The evils engendered can never be remedied except by altering the fundamental law.  Changes in the Subsequent laws, so long as they are founded on a wrong base, can only result in the exchange of one evil for another.  The proposition that wrong premises will produce wrong conclusions is often stated, yet it is seldom fully understood and properly appreciated.  We will therefore, by means of one or two simple illustrations, show the governing power of a fundamental principle. — A good house cannot be built except upon a good foundation.  The mason-work above may be laid of the best material and by the best workmen;  but if the foundation be not sound, and sink at each corner from five to twenty inches, although the house should not fall, yet this movement of the foundation will distort the floors, ceilings, roof and rooms from their proper shape;  and no propping or patching up of floors, ceilings, roof or rooms will ever make the house a good one.  It will be directly the opposite, it will be a poor one; and as the foundation continues to move, will constantly need repairs.  A valuable machine cannot be invented except upon true mechanical principles.  Let a man invent a machine founded upon a false principle.  Every part of it may be well made of the best material, and when finished it may present a plausible appearance, yet it either will not work at all or it will work imperfectly, and can never be good until it is founded on true mechanical principles.  The stability of a house shows the character of its foundation;  the results produced by a machine show the worth or worthlessness of the principle on which it was invented;  and with equal certainty the centralization of property in a nation shows the character of its monetary laws.  If great wrongs prevail while there is a general conformity to laws apparently designed to secure justice, there must be, in spite of appearances, some defective law or institution, which is a sufficient cause of those wrongs.  The general evils naturally and inevitably flowing from it are easily seen, like the parts of the building above ground, and like the wheels of the machine that are open to view, while the great radical defect in the groundwork may be so hidden from public sight as to attract comparatively little attention.

One of the chief objects for which governments are constituted, is to insure the protection of the rights of property.  The security of these rights is essential to the welfare of a people.  Their infringement is the cause of nearly all legal procedures.  Such crimes as theft, gambling, fraud in business, bribery in courts of law, etc., consist in unjustly obtaining property without rendering an equivalent.  To obtain labor without rendering a fair equivalent, is also a violation of the rights of property.

Property is almost entirely the product of labor, for even food of spontaneous growth in the seas or on the land cannot be gathered without labor.  Labor has effected every improvement in our country;  it has built our cities;  cleared, fenced, and improved our farms;  constructed our ships, railroads and canals.  In short, every comfort of life is the fruit of past or present labor.  If anyone is in doubt whether labor is the actual producer of the wealth, let him consider what would be the situation of this or any other civilized nation, if the laborers should cease their toil for the brief term of five years, letting the earth for that period bring forth only her spontaneous productions.  Let man neither sow nor reap, let manufacturing cease, commerce be suspended, and what would be the condition of our country at the end of the five years ?  Would not a large proportion of the people have sunk into their graves from starvation;  and would not many who were living be almost naked like the barbarians ?  If the earth should open her chasms and spew out pure and malleable gold and silver, as plenty as the rocks in the mountains, it would afford no relief.  But if she should cast out wheat, corn and vegetables, beef, pork, mutton, poultry, besides garments, houses, furniture and so forth, the people would be supplied with the means of subsistence.  In such a case we might do without the labor of man.  But if we had all the gold and silver money and all the paper obligations that have been made from the creation of the world to the present day, they would not be the least substitute for the productions of labor;  and yet our laws make these legal instruments in the hands of the few to trample in the dust the rights of the laborer, on whom we depend for every morsel of food that we eat, for the clothing we wear, the houses we live in, and in fact for every comfort and luxury of life.

A moderate amount of labor readily produces an abundant supply of necessaries and comforts for man, but the present distribution of these products is such, that a large number of those who labor much more than their share in the production, receive a very small proportion of the products, while the larger proportion accumulates in the possession of those who are employed neither in producing nor in distributing them.  The greater portion of the human family toil day by day for a scanty subsistence, and are destitute of the time and means for social and intellectual culture.  The industrious poor, as a class, do not obtain even a competence.  Their destitution often induces them to trespass against existing laws, to obtain a small proportion of that, which, under just laws, would be abundantly awarded to them as a fair compensation for their labor.  All candid men will acknowledge this truth, that the wealth is not distributed in accordance with either the physical or the mental usefulness of those who obtain it.  Opposed to the masses who live in toil and poverty, is a small proportion of the human race, surrounded by all the appliances of luxury, and living in comparative idleness, while their abundant means of social and intellectual culture are too often neglected, or rendered useless by indolence and self-indulgence.  These extremes of wealth and poverty, of luxury and want, of idleness and labor, are great, somewhat in proportion to the antiquity of a nation, or the length of time that its monetary law, or system, has been in operation.

The wealth of this nation, like the wealth of other nations, is rapidly accumulating in the hands of a comparatively few persons in our large cities.  Still it is indisputable that cities are great consumers of wealth, while they are comparatively small producers.  The labor of the country furnishes nearly the whole support of the cities.  The rewards of labor paid by the cities and the country respectively to each other, to be justly reciprocal, ought to be in proportion to the services rendered to each other; but the immensely greater amount of wealth flowing to the cities, and the less to the country;  is clearly opposed to this just reciprocity.  This will be more apparent by supposing the large Atlantic cities to be cut off from all interchanges with the country.  In a short time their citizens would be destitute of food, fuel, and clothing, for exchanges of their productions among themselves would do very little toward supplying their wants;  while the people of the country and the small manufacturing towns, if they had a just medium by which they could exchange their productions with each other, would have an abundant and vastly more bountiful supply than at present of nearly every necessary and luxury of life.  They would save for their own use nearly the whole difference between what they now produce for the large cities, and what these cities produce for the country.  But even in these cities, where a great part of the national wealth is owned, a majority of the people toil for a scanty subsistence, and thousands of miserable poor are dependent on public charity.

In all probability, four thousand of the most wealthy citizens of the city of New York own a greater amount of real and personal property than the whole remainder of its inhabitants.  Their wealth is vested in real estate in the city and country, in bank, railroad, State, and other stocks, loans of money, etc.  Allow five persons to form a family, and the four thousand men and their families would form a population of twenty thousand, or two and a half percent on eight hundred thousand, the present population of the city.  Upon this estimate — and a little observation and reflection will show that it is not an extravagant one — two and a half percent of the population are worth as much as the remaining ninety-seven and a half percent.  Take the disproportion of wealth on a greater amount of population.  We may reasonably estimate that a hundred and fifty thousand of the wealthiest men in the United States own as much real and personal property as the whole remainder of the nation.  Allowing five persons in a family, these hundred and fifty thousand men, with their families, make a population of seven hundred and fifty thousand, or two and a half percent on thirty millions, the present population of the country.  This calculation will make two and a half percent of the population own as great an amount of wealth as the remaining ninety-seven and a half percent.  Our government professes to establish laws for the benefit of the whole people;  and such laws, if justly administered, should secure to every individual a fair equivalent for his labor;  yet probably half the wealth of the nation is accumulated in the possession of but about two and a half percent of the population, who, to say the most, have not done more labor toward the production of the wealth than the average of the ninety-seven and a half percent, among whom is distributed the other half of the wealth.

Let those who doubt whether two and a half percent of the population own half the property of the nation select in their own neighborhood, or in a village containing, say, four thousand inhabitants, the twenty most wealthy men, and see if the twenty are not worth as much as all the rest.  Or, if the village contain ten thousand inhabitants, take the fifty most wealthy men, and see if they are not worth as much as all the rest.  Allowing the families of the fifty men to average five persons each, they would amount to two hundred and fifty individuals — just two and a half percent of the population.  If it be found that the fifty men and their families own one-half of the property, then see if they have contributed more labor physically, intellectually, or morally for the general benefit, than the rest of the villagers.  We do not now speak of what their wealth may have if done inspiring others to make improvements, but of the improvements that the fifty men and their families have effected by their personal labor.  If they have not accomplished as much as all the rest of their townsmen, and yet own half the wealth of the town, some wrong to the majority of the people has been done.  Not that these men have not acted in as good faith, or with as upright intentions as other citizens;  or that others would not be equally glad to accumulate wealth in the same manner;  but we ask how it occurs that the comparatively few have so large a proportion ?  They have not earned it, for they could not have performed the labor of building half the town, nor of providing half its inhabitants with food and clothing;  nor could they have given half the instruction in the various trades and in the school education of the villagers.  And if they have not done one-half the labor, why is it that they possess one-half the property ?  Why is it, too, that we see one industrious man rise from poverty to wealth, apparently because his business is prosperous, and another man, who is equally diligent in an equally useful employment, remaining with a mere subsistence ?

These facts are sometimes attributed to the ignorance and extravagance of the laboring classes.  But if all our people were learned in Greek and Latin, as well as in other languages and in the sciences, the ground must continue to be tilled, and railroads, houses, and so forth, built by labor.  Not all the education, nor all the money in the world, would make these improvements without the physical labor;  and it ought to secure to those who perform it a just and much larger share than it at present does of all the comforts of life.  Many good scholars and industrious and intelligent men are poor, while very indifferent scholars and rather ignorant men have often accumulated fortunes.  The ignorance of the laboring classes does not account for their poverty.  Nor does want of economy better account for it.  What opportunity has the laborer to be extravagant, when the price of his day’s work would hardly pay that day’s board and lodging in a comfortable house in our cities ?  Do the factory operatives in England, France and Germany live extravagantly, or the seamstresses in London and New York ?  They earn three, four or five times more products than they actually consume, and these go into the possession of that class of persons who live comfortably or luxuriously without performing much, if any, productive labor, or advancing the moral and intellectual well-being of society.  The wealthy men of a nation are not usually those whose genius makes, improvements in the mechanical arts, or who, by any species of labor, contribute much to actual production.  Their attention is generally directed to the accumulation of wealth by indirect means, which do not require labor.[1]

The injustice of the present distribution of products is still more conspicuous, when we consider that present labor is indispensable to human existence.  Although all discoveries, inventions, and improvements, made by all previous labor, are transmitted, free of expense, to successors, yet the property, thus improved and inherited, cannot give support without present labor.  The spontaneous productions of the earth cannot supply one-twentieth part of the population with food.  Clothing can last but a few years, and buildings, unless repaired, must decay.  Therefore, each generation must in the main provide its own means of subsistence.  If a generation enact laws through which one-third of the succeeding generation can live in luxury without labor, then the labor of the other two-thirds, besides supplying their own necessities, must also supply the wants of the first third.  Although the idle rich man inherits wealth, yet he owes his present support to the labor of others.  Others must raise the grain that he consumes, manufacture cloth for his use, build his house, etc.  If one-third of a generation own all the property, they have the means of supplying their wants by labor upon their own possessions;  but the two-thirds who have no property, have not even the means of preserving their lives, unless the one-third allow them the use of property on which to expend their labor.

In addition to this evil of greatly centralized wealth, all civilized nations are every few years visited with great revulsions in trade.  Outstanding debts become unsafe, and many debtors bankrupt.  There is usually an apparent overstock of goods and products, for which there is no ready market;  houses will not sell or rent;  manufactured goods lie in the stores and cannot be sold for the cost of making;  and therefore laborers are out of employment, for why should more be produced to decrease still further the ruinous prices at which those already in market must be sold ?  At such periods, in our cities, one house is filled with families, one in each room from cellar to garret, and the adjoining house stands empty for want of tenants able to pay the rent.  Goods are piled up in stores without sales, while great numbers of the laboring community are ragged and are begging from door to door for old clothes to shield themselves and their families from the piercing cold, and for the crumbs that fall from the tables of the rich to keep them from starving.  When people look about to ascertain the cause of these things, seeing houses and stores untenanted, and great quantities of agricultural products and manufactured goods on hand for which there appears to be no market, they generally come to the conclusion that over-production and over-trading have caused these calamities.  If this be really the case, public measures should be taken to avert such disasters, by preventing an excess of labor.  Is it not strange that at the times when the amount of surplus production is a subject of national lamentation, the people who produce by their labor the very things which they need for their own use and comfort, are the ones who are often destitute of them;  while a few capitalists who do little or nothing toward the production and distribution, are supplied with all the comforts and luxuries of life at half, or less than half their usual price ?  But a surplus of cotton has never remained because no one needed it.  In 1844, nearly sixty thousand citizens of New York received the aid of public charity.  All these needed additional cotton clothing.  At least one-half the population of the whole country would have made a yearly purchase of five dollars worth of additional cotton clothing, if they could have spared the means from their earnings.  In one year ten millions of persons would have consumed $50,000,000 worth of cotton clothing, in addition to the previous quantity.  Cotton would then have maintained a good price, and the crops would have been consumed.  If, during the years included between 1837 and 1844, the laborers in the city of New York and its vicinity, whose occupation was the building of houses, had been furnished with the work which they would have been willing to perform, they would have built a house for nearly every poor family in the city.  If the unemployed laborers in the districts where the materials for building, bricks, mortar, timber, boards, nails, etc., are usually prepared, had been set at work, the materials might have been furnished, and the buildings erected and paid for by labor.  The laborers, too, would have been much happier, for they begged for work without obtaining it, and many were dependent on public charity.

It is plain that there can be no real over-production unless a large surplus remains after all the people have been fully supplied with the necessaries and comforts of life.  The public cannot over-trade by distributing each year’s productions among those who really need them to use.  Too high prices cannot be paid for labor, unless the laborers in general actually gain more than their equitable share of the year’s productions.  Neither can there be an over-stock of laborers so long as thousands are suffering for want of the very articles these laborers would gladly produce, if they could be employed.  There cannot be too many houses, when they would be filled with tenants able to pay the rent if work could be obtained.  We must look for the real cause of these calamities, not in over-production, but in the power that governs the distribution of the products.

But, taking another view of the subject, it may be said that we are a free people, and many suppose we enjoy all the rights that a government can confer.  Every one employs himself in labor, trade, speculation, or otherwise, according to his own choice;  sells his labor or products at such prices as he can obtain, and buys the labor and products of others at prices that he agrees to pay.  Our government is also deemed beneficent because poor-houses and schools[2] are provided for the needy.  If a farmer or a mechanic should be told that our laws oppressed him, probably he would say, that he worked at what he pleased, and sold either his labor or its products to whom he pleased, and had no law suits, and therefore, the laws did not in the least infringe his rights, and would not those of any other man who was upright in his dealings.  The laboring classes make their own bargains with capitalists, and one another;  and all are equally protected in the property which they lawfully acquire.  Why then do not laborers get all they are justly entitled to receive ?  Looking at the matter in this light, it wears an appearance of freedom and equal justice;  yet results prove the existence of some radical wrong lying below this surface view.  For we all know that wealth is produced by labor, and that the people of the country send the best products of their incessant toil to supply the luxuries of the wealthy in cities;  and that the laborers in these cities build splendid mansions for the opulent, and poor tenements for themselves, most of which are also owned by capitalists, and rented to their occupants.  True, all this labor is paid for by capitalists according to their agreements with laborers;  yet, notwithstanding these voluntary agreements according to the law of supply and demand, the wealth of the nation continues to accumulate in large fortunes in the hands of a comparatively few non-producers, leaving a very large number of its actual producers in poverty.  These are facts that stand out to public view, and cannot be denied.  Freedom of contract, choice of location and occupation, and protection of property, are manifestly proper and right, and ought to be enjoyed by every people;  yet we see they fail, and entirely fail, to secure any equitable distribution of property, and any adequate compensation for labor.  They fail for the same reason that good materials and workmanship on a bad foundation fail to make a good house.  Their foundation is unsound and variable, perverting their natural good tendencies, and engendering defects corresponding with their wrong basis.  A bad foundation for a house affects the edifice above, and the few individuals who are interested in its building and use.  A machine not founded on true mechanical principles, affects the few who own it, and those interested in its working.  But a national standard of value like money, which forms the foundation of contracts, and regulates the award of property, thus greatly modifying and limiting all minor rights of freedom of contract, location and occupation, and which a whole nation is compelled to use, must, if it be variable and uncertain, affect injuriously the interests of every individual, family and association, as far as the money circulates.

The present rates of interest on money enable the owners of property to demand an undue proportion of the products of labor for the use of property, and laborers are compelled to make their agreements with them under these circumstances.  Undoubtedly both parties are governed by their own interests in making their agreements;  but the circumstances under which contracts are made, render them very unjust toward laborers.  Suppose one of the contracting parties to be in water, where he must drown unless he receive assistance from the other party who is on the land.  Although the drowning man might be well aware that his friend on shore was practising a very grievous extortion, yet, under the circumstances, he would be glad to make any possible agreement, to be rescued.  The monetary laws of nations have depressed the producing classes to a similar state of dependence upon capitalists, and they are similarly obliged to make their contracts with them under great disadvantages.  A very large proportion of the people are actually wronged out of their property, and the earnings of their labor, by the operation of the laws, although their contracts are voluntarily made, and honestly fulfilled.  Neither of the contracting parties may know that either is injured by the laws, although both may be sensible that justice is really not done them.

In all ages and nations, philanthropic men have endeavored to devise some means of securing to labor a better compensation.  Labor-saving machines have been invented;  associations have been formed for the purpose of producing with less labor, the earnings being equitably distributed, according to the work performed.  But these benevolent efforts have failed of any general success.  The reason is this :  no individuals, nor associations of individuals, can withdraw their labor or their products from the influence of the national laws which regulate distribution.  The great disparity in the conditions of the rich and poor is the natural result of unjust laws, and, therefore, this disparity must continue so long as these laws are in force.  If, however, a father should so dispose of his property, that all his children, except one, should be compelled to work twelve or fourteen hours a day for a mere subsistence, while one son should receive an immense fortune, which would supply him with every luxury without toil, the injustice and injury to both parties would call forth the censure of every right thinking person.  A government is no more justifiable in legislating so as to produce these results, than a father is justifiable in a similar treatment of his children.  Governments are established to protect the just rights of the governed, as much as a father holds his position to protect the just rights of each child.

Present laborers, who produce present products, should receive a very large proportion of them, and capitalists who do not labor, should receive a correspondingly small proportion.  How shall this change in the reward of labor and capital be effected ?  Shall laws be made to determine the prices of various kinds of labor, and thus prevent the laborer and employer from making contracts upon their own terms ?  This would be impracticable, and, if practicable, not desirable.  Each man should be at liberty to make his own contracts.  There is no need of interference with this liberty, in order to prevent capital from taking too large a proportion of the products of labor.

The unfair distribution of wealth is caused by an unjust legal standard of distribution.  Distribution is regulated and effected by the standard of value, which is money.  Money, as will be hereafter shown, exercises astonishing power throughout every department of business and industrial occupation.  When monetary laws shall be made equitable, present labor will naturally receive a just proportion of present products, and capital will likewise receive a just reward for its use.

The necessity for the exchange of commodities is generally acknowledged.  Few, however, even among thinking men, are aware how indispensable these exchanges are to the subsistence and comfort of the human family.  Men are social beings, and mutually dependent.  To appreciate this important truth, we must consider the inability of each man to provide for the numerous wants of his nature;  and the ignorance and discomfort to which each would be exposed, were he not benefited by the labor of others.  If every man could build his own house, furnish his own food and clothing, and make all the instruments and utensils that he needs to use :  if the materials for all these things were placed upon every acre of land, and every man, woman and child, were endowed with sufficient skill and strength to produce them, there might be no need of an exchange of commodities.

But all men are, in many, in most things, dependent on the labor of their fellow men.  For example, take the farmer, who is acknowledged to be the least dependent of men, and see for how many things even he is indebted to the labor of others.  He must have implements for the cultivation of his farm, a plough, harrow, shovel, hoe, sickle, cradle, scythes, a fan, or fanning-mill, and a cart or wagon.  The farmer is dependent on the miner for the iron ore;  on the collier to dig the coal;  on the furnace-worker to smelt the iron;  and on the forger and the smith to make his iron and steel instruments.  He is dependent on the wagon-maker for his wagon;  on the machinist for his fanning-mill;  on the carpenter for his house;  on the nail-maker for nails;  on the glass-manufacturer for glass;  on the stone-cutter and the mason for mason-work;  on the brick-maker for bricks;  on the cooper for barrels, tubs, and pails;  on the saw-maker for a saw, and on the rolling-mill to roll out the iron or steel for it;  on the tin-plate-worker for kitchen utensils;  on the moulder and caster of iron for iron pots;  on the miner of copper, and on the copper and brass founder for brass and copper kettles;  on the pump-maker for a pump, etc., etc.  He is dependent on the needle-maker, the pin-maker, the button-maker, the silk grower, the tanner, the shoe-maker, the hatter, the saddle and harness-maker, the cabinet-maker, and the type-maker, type-setter, and printer.  Not one of these artisans, in attending to his particular employment, produces his food and clothing; and all would be destitute of them, unless supplied with them by the labor of others.  The farmer raises all his food, except salt, tea, coffee, sugar, molasses, spices and the like;  these, and the ships to transport them, must be furnished by others.  These wants call into employment ship-carpenters, sailors, compass-makers, surveyors, chart-makers, etc.  The farmer must raise wool, cotton, hemp, or flax, or else be dependent on others for clothing.  If the farmer, who is the least dependent of men, receives from others so many supplies, how is it with the hatter and the shoe-maker ?  The former makes an article to cover the head, the latter one to cover the feet;  and all the additional supplies of both must be furnished by the labor of others.  Artisans, too, depend upon each other for the different parts of their work;  the cotton manufacturer must be assisted by others to carry forward his manufacture.  Many articles, such as watch-springs, are useless unless they are combined with other parts.  It is, then, of paramount importance that no obstacles be thrown in the way of a ready exchange of commodities.

A certain quantity of one kind of produce is worth as much as a certain quantity of another kind; and all civilized nations have adopted some medium by means of which all kinds of produce may be more easily exchanged than by direct barter.  We hear it sometimes asserted that there is no need of a medium of exchange.  But the articles of trade could not be divided and distributed to supply the numerous wants of a people without a representative of value through which the distribution could be made.  For example, a man brings to market five hundred bushels of wheat.  The purchaser tenders corn in payment;  and they agree that seven hundred and fifty bushels of corn are worth as much as five hundred bushels of wheat.  The seller can use but a small portion of the corn, and finds a purchaser, with whom he exchanges the surplus for hams.  He disposes of the hams for hats and shoes.  If he endeavor to divide the hats and shoes, and exchange them for the articles that he needs, he may spend two years before he can return to his farm to raise a second crop of wheat.  Yet he is fairly dealt with.  All those with whom he exchanges, give him, as nearly as possible, an equivalent of actual value for the actual value that they receive;  and all the articles are such as all need.  In fact, all trade is simply a barter of one useful thing for another.  A person who produces more of an article than he needs for his own use, exchanges his surplus for the surplus articles of others.  If the farmer had sold the wheat for money, the money would have been a tender for any other article that he wished to purchase.

The value and prices of all products are estimated by money, the legal standard of value.  In making out a bill, the articles sold are set down at the prices agreed upon, extended and footed up, and they amount to so much money.  How could contracts for various articles be made, and bills of them be made out and summed up, without money ?  Should it be said that a pint of Indian corn was equal to four rows of pins, and a pound of cotton to twenty needles;  and, if so, must there not be a description of the quality of the pins and needles, as well as of the cotton and corn ?  If it should be said that ten pounds of sugar were of equal value with a boy’s cap, would it not be necessary to describe the quality of the sugar, as wen as the material, workmanship, and size of the cap, in order to make the contract just ?  A standard of value is manifestly indispensable to a just and convenient exchange of commodities.

Monetary laws are the most important that are enacted; for, by these laws, money is made the tender for debts and the medium of exchange for products.  All individuals are compelled to found their contracts for the necessaries of life upon the standard fixed by law.  However good the intentions of the parties, their contracts will partake of the evil of the monetary laws upon which they are founded, and every law that goes to support the fulfilment of the contracts will partake of the same evil.  We have laws to prohibit the fulfilment of contracts made upon certain acknowledged unjust principles.

Contracts made in gambling are void in law.  In gambling, each player stakes a certain sum, and all agree that the winner shall take the whole.  This contract would be perfectly fair or just, if the first or fundamental principle were just.  But the principle upon which gambling is founded is, that what one gains, others lose for no production is made by gambling, and no equivalent is given to losers for their money.  The laws make money the foundation for all business contracts.  The value of this foundation is unjust and continually varying, so that parties in fulfilling their contracts are compelled to give either more or less than a just equivalent for their purchases.  The results of all contracts are as varying and unjust as their foundation.  The continual fluctuations in the value of money make a sort of gambling system of all trade.

For an example of the effects of variations in the value of money, suppose the bonds of the government be issued, payable in twenty years, and bearing six percent interest.  If we had no foreign market for these bonds, and the interest on money in our own country were unalterably fixed at six percent, the bonds would be worth exactly par, and would continue of the same value throughout the twenty years.  But if the interest on money should rise to nine percent, and to obtain a loan at that rate the best security were required, the government bonds would fall, and would not be good security for more than three-fourths of their par value.  If the government issue a bond at par, and, by pressure in the money market, the holder be compelled to sell it at three-fourths of its par value to meet his engagements, the government takes, or allows others to take, one-fourth of his money, for which he no more receives an equivalent than the gambler receives an equivalent when he gambles away one-fourth of his money.  The government reserves the right to coin money and regulate its value, and yet allows its value to change incessantly, and thus, by its own acts, deprives a man of a fourth of his money without rendering to him any equivalent.

Under our present monetary laws, when interest is low and money plenty, if a contract be made for the purchase of a farm, of which one-half the purchase money is to be left on mortgage for a term of years, the purchaser runs nearly as great a hazard of losing a large proportion of the money that he pays for the farm, as if he had staked the amount on the turning of dice.  For if, at the time the money becomes due, interest should be as high as it was from 1837 to 1840, it is doubtful whether the farm would sell for enough to pay one-half the purchase money remaining on mortgage.  The farmer’s loss, in this case, would be owing entirely to the change in the value of the dollar, and not to any change in the actual value of the farm; for the farm would produce as good a crop as if money had continued to bear a uniform interest of six percent.  The laws of the United States are supposed to be highly favorable to productive industry;  but the standard which regulates and effects distribution is so made as, in a great degree, to defeat its own object, and to exert a disadvantageous influence upon production.  The effects of high and varying rates of interest upon all classes of producers will be hereafter more fully exhibited.

Among political economists, the nature and regulation of money appear to have been subjects of the utmost difficulty.  We have no full account of its functions, and no satisfactory answer to the numerous and perplexing questions which arise concerning its value and regulation.  The alternate abundance and scarcity of money, and the variations of interest, are supposed to be irremediable evils.  It would seem that gold and silver coins inherently possess a mysterious power, which defies all regulation, and renders impossible a comprehensible monetary system.  It is doubtless true, that while the nature or a thing is not understood, all attempts to regulate it must prove ineffectual, and legislative bodies have hitherto instituted money in a very imperfect way.  The money of a nation, instead of being a power by which a few capitalists may monopolize the greater part of the earnings of labor, ought to be a power which should distribute products to producers, according to their labor expended in the production.

The labor-saving machines that have been invented within the last half century, have greatly facilitated production.  Improvements in implements of husbandry have materially lessened agricultural labor;  and most articles manufactured by machinery are made with less than one-fourth of the labor that was formerly required.  We should naturally suppose that these improvements would be a great relief and advantage to the laboring classes; and that they would feel grateful to those who have studied out the laws of nature and invented the machines.  Yet both the inventors of machinery, and the operatives, in general, continue to toil on in want, and many of them have neither means nor leisure to educate their children.  Increased facility in production seems to increase the number and multiply the wants of those who live in idle luxury, instead of affording the desired relief to actual producers.  Fifty years ago, the farmers raised;  carded and spun their wool;  they raised flax and spun most of their linen;  and cotton was also mostly carded and spun. by each family to supply its own wants.  Now, farmers who raise wool, cotton and flax, sell the raw materials, which often pass through a number of hands before they reach the manufacturer.  The manufactured goods again pass through several hands before they reach the consumer.  Machinery has collected the people into towns and villages to work in large factories, where they sell their labor, and buy their board and clothing.  This greatly augments the necessity for the exchange of goods — the more machinery the greater the necessity for exchanges of products — yet there has been no new invention in financial affairs, by which the exchange may be more equitably and easily made.  True, we have increased the amount of gold and silver coins, and the number or banks, banknotes, and money-brokers, but this is no more an improvement in the medium of distribution, than an increase in the number of pack-horses on the old muddy roads would be an improvement in conveying products, while it would still take the same muscular power to convey a given weight.  A railroad made and a steam-engine substituted for horses and oxen, are great improvements in the mode and means of transportation.  Though the quantity to be conveyed may be increased tenfold, railroads and steam-engines will fulfil all requirements;  whereas if we depended on an increased number of horses and oxen, want of teams and bad roads would often cause great inconvenience.  But no inconvenience of this kind could equal that experienced by the producers in consequence of the defects of our monetary system.  Just monetary laws are of more importance to the laboring classes than all the machinery that has been invented during the last fifty years.  And when the needed reformation is made, the producing classes, who will gain the benefit of all improvements, will rejoice at every advance in machinery, and the inventors will be hailed as the benefactors of man.

Many people seem to be opposed to innovation.  They do not consider that all improvements in the mechanical arts, or ill laws, are innovations upon former things and former laws.  The establishment of our republican government was an innovation upon monarchies.  People do believe that changes may be made for the better, for each year they assemble legislative bodies to remodel old laws, and to make new ones.  Every modification of a law is an innovation, and every new law is an innovation upon former laws.  Every moral improvement is an innovation upon the previous evil.  Those who talk against innovation are often great innovators.  They are doing, or advocating something to improve the condition of man.

The antiquity of laws and customs is not a proof of their excellence.  In all ages, and in all nations the producing classes have been ill paid for their labor.  Let us no longer recur to ancient laws and usages to uphold our unjust standard of distribution.  Our producing classes are vastly more interested in knowing how the products of their own daily labor are disposed of, than in knowing how the ancients disposed of theirs.  We cannot alter the evils of the past;  we must act for the present and the future.  Suppose a legislature enact a law which gives a certain part of their constituents great advantages over the remainder.  They discover the error, and amend the law so as to operate equally upon all.  The alteration is not an infringement of the rights of those who received undue advantages from the former law.  It only renders justice to those previously injured.  Money is as much the representative of the property of the people, as the legislature are the representatives of their constituents.  Its erroneous construction and undue power have made a few rich, and have plunged thousands into poverty.  They have sent hundreds to premature graves, starved the widow and the orphan, and given untold wealth to the miser.  They have been the cause of incalculable moral and social evils.  It is not to be understood that those who now possess the wealth are worse than others who do not possess it, or that others, if they could have obtained it, would not have appropriated it in the same manner.  But one thing is certain, that an enormous and universal wrong exists, which nothing but an entire change of our laws, respecting money, can remedy.  Money is the national standard of distribution, therefore the evils inevitable upon its present institution, are national evils, which can only be removed by the action of the general government.

A defective standard will, doubtless, appear to many an inadequate cause for the wide spread wrongs of unjust distribution; but the fact can be established by the clearest proof, and such will be adduced in the progress of the work.  It will also be shown, that a safe and just monetary system can be easily established by the government, which will so regulate the standard, that the general distribution of products will be in accordance with actual earnings.  When the farmers and mechanics, and other producers, and laborers, understand the system which is to be developed, and perceive its adequacy to secure to them a just compensation for their labor, they will as surely cause it to be put in operation, as they would send their products to Philadelphia or Boston, rather than to New York, if in the former markets they could sell them for a third more than in the latter.

The correction and due regulation of money will make no change in the present ownership of property.  The changes effected by the establishment of a sound monetary system will be gentle, immediate, gradual, sure.  Only such will ensue as will naturally result from securing to the laborer a fair compensation.  Its object will be to protect producers in their rights, and not to retaliate for past injuries.  No agrarian distribution will be necessary, but a just standard that will at once begin to regulate the distribution of products, so as to reward the labor performed, and which will in process of time distribute property in accordance with individual and general rights and interests.  Although the bearings of money upon labor may be deemed a somewhat dry subject, yet, under its present new aspect, it is believed that it will prove deeply interesting to all classes.  The patient and continuous attention of the reader is solicited to the important facts and principles now to be presented relative to the uses and abuses of money, and to the new plan to be suggested for its institution and regulation.


1 [24/*]  Labor signifies toil, which produces or distributes something actually useful;  and this is the sense in which the term is used in this volume.  When toil is directed to wrong ends, it does not deserve the name of labor.

2 [27/*]  In the various States, a tax is levied to provide schools for the children of the laboring classes.  Under existing laws, this species of charity is, doubtless, very important.  But wealth being the product of labor, the laborers should have abundant means to educate their children; and if a fund be established for the purposes of education, it should be necessary for those only who are unable or unwilling to labor.  It is unreasonable for the laws to be such as to compel the producers of wealth to ask alms of non-producers.