[Liberty, June 27, 1891.]

To the Editor of Liberty:(72 ¶ 1)

In reference to your remarks upon my recent contribution to the London Herald of Anarchy, dogmatism of manner must often be adopted to avoid verbosity; it is not necessarily an assumption of infallibility.(72 ¶ 2)

The action of governments with regard to gold is not truly analogous in its economic effects to the prohibition of theatrical performances on Sunday. In the last-named case, or in any similar case which we may suppose, the effect is to diminish demand and to prolong or retard consumption. Thus, if we were prohibited from wearing shoes, boots, etc., on Sunday, or if every seventh person were prevented from using them, then boots which now wear out in six months would last seven months, and we may suppose theaters which now last seven years or seventy would then be worn out in six or sixty. The immediate effect of opening theaters on Sunday would probably be to increase their value very greatly; but eventually others would be built, and competition would reduce the previously enhanced value. The residual enhancement of value would be in the number of theaters which the market in its altered circumstances could support. There is good reason to doubt whether this would be appreciable in the cases taken of articles of considerable durability. If the government could reduce the consumption of food-stuffs, such as wheat, and simultaneously of all substitutes, by one-seventh, it would be a very different matter.(72 ¶ 3)

But in the case of gold the interference of governments in the present day has little effect in increasing consumption. They do not collect it to consume it, but simply to sell it. In this country, beyond specifying this metal as the vehicle of value in contributing to the revenue, the interference appears to be limited to a restriction of the liberty of citizens to exchange promises of delivery of gold to bearer on demand. Bank-notes (or bills, as they seem to be called in your country) may only be issued by certain bankers, and by them only in a certain complex relation to the amount of gold they hold. But this is only a restriction in form, and not in quantity, because checks, drafts, and promissory notes other than to bearer on demand are issuable in unlimited quantity, subject to certain taxes—from which the other notes are not wholly exempt—and are transferable without further tax. What has this to do with the consumption of gold? Next to nothing!(72 ¶ 4)

Now there is no legal obstacle, nothing, in fact, whatever except the inconveniences of bulk, fluctuation of value, and other inherent defects, to prevent the introduction and circulation of promises of wheat, cotton, oil, iron, or other commodity. This would not have any material effect upon the consumption, production, cost, or value of these commodities. Speculative value of futures tend on the whole to steady values and to diminish the frequency and the intensity of gluts and famines.(72 ¶ 5)

Gold and silver are not used (in the sense of being consumed) by their circulation. They are merely conveyed, transferred, and exchanged more frequently. The fact that they are so often bought by people who do not themselves require to use them is not unique. Every merchant does the same with the commodity to which he devotes his attention.^[13](72 ¶ 6)

The peculiarity is that the trade in gold is familiar to every one. The portability, divisibility, and recognizability of this substance, force it upon the attention of every one who avails himself of the services of others. The production and circulation of contracts for its future delivery are not unique. This is also done in the case of many other commodities. In both cases there is a very great convenience and economy; and in both there is a very appreciable danger. Any such writings of individualists as may in any way give the impression that the free circulation of mutual indebtedness, miscalled mutual money, will be free from this eleemnt of danger are pernicious. Freedom to incur and to exchange debts is exceedingly desirable, but rather because they will encourage, purify, and chasten the spirit of enterprise than that they will in themselves bring very noticeable economic gain.(72 ¶ 7)

Apart from the wear and tear involved, neither the government nor any one else consumes one ha’penny worth more of gold by reason of its adoption in taxation and commerce as the most usual vehicle of value. Its use for this purpose may cause the world to hold a larger stock than it otherwise would; but this is in every way a benefit, because it steadies its value. If the metal were neglected, as platinum was until recently, then famine and glut might be observed. This would greatly lower the utility of gold as an intermediate exchange commodity, and would not help us to devise a substitute. It would throw upon every trade, including those who sell their own labor, a burden of doubt and uncertainty in estimating its fluctuations. The evil that government does by collecting needless millions is immeasurably greater than by its so-called maintenance of the gold standard.(72 ¶ 8)

Yours respectfully,

J. Greevz Fisher.

78 Harrogate Road, Leeds, England.

Dogmatism can be justified only by the event. In its use not only does nothing succeed like success, but nothing succeeds but success. And nothing fails like failure. If Mr. Fisher, in addressing the Anarchists upon finance as if they were babies and he a giant, shall succeed in making his assumed superiority felt as a reality, he will not only be forgiven for his dogmatism, but highly respected for his knowledge and power; but if it shall appear that the ignorance and weakness are on his side rather than upon theirs, he will be covered not only with confusion by his error, but with ridicule by the collapse of his pretension. It is only just, however, to say that a comparison of his letter to Liberty with his letter to the Herald of Anarchy shows progress in the direction of modesty.(72 ¶ 9)

Already Mr. Fisher’s pride has been followed by a fall. The central position taken by him at the start that government cannot affect the value of gold or any other commodity except by the slight additional demand which it creates as a consumer he has been forced to abandon at the first onslaught. If government were to allow the opening of theaters on Sunday, it would not thereby become a consumer of theaters (at least not in the economic sense; for, in the United States at any rate, our governors always go to the theater as dead-heads), and yet Mr. Fisher admits that in such a case the value of theaters would immediately rise very greatly. This admission is an abandonment of the position taken at first so confidently, and no other consideration can make it anything else. The fact that competition would soon arise to reduce the value does not alter the fact that for a time this action of government would materially raise it, which Mr. Fisher originally declared an impossibility. But even if such a plea had any pertinence, it could be promptly destroyed by a slight extension of the hypothesis. Suppose government, in addition to allowing the theaters now existing to open on Sunday, were to prohibit the establishment of any additional theaters. Then the value would not only go up, but stay up. It is hardly necessary to argue the matter further; Mr. Fisher undoubtedly sees that he is wrong. The facts are too palpable and numerous. Why, since my comment of a month ago on Mr. Fisher’s position, it has transpired that the cost of making twist drills in the United States has been increased five hundred and twenty percent by the McKinley bill. Government cannot affect value, indeed!(72 ¶ 10)

In the paragraph to which Mr. Fisher’s letter is a rejoinder I said that when government decrees that all money shall be made or issued against gold or silver, these metals immediately take on an artificial, government-created value, because of the new use which arbitrary power enables them to monopolize. Mr. Fisher meets this by attempting to belittle the restrictions placed upon the issue of paper money, as if all vitally necessary liberty to compete with the gold-bugs were even now allowed. Let me ask my opponent one question. Does the law of England allow citizens to form a bank for the issue of paper money against any property that they may see fit to accept as security; the paper money not redeemable in specie except at the option of the bank; the customers of the bank mutually pledging themselves to accept the bank’s paper in lieu of gold or silver coin of the same face value; the paper being redeemable only at the maturity of the mortgage notes, and then simply by a return of said notes and a release of the mortgaged property,—is such an institution, I ask, allowed by the law of England? If it is, then I have only to say that the working people of England are very great fools not to take advantage of this inestimable liberty, that the editor of the Herald of Anarchy and his comrades have indeed nothing to complain of in the matter of finance, and that they had better turn their attention at once to the organization of such banks as that which I have just described. But I am convinced that Mr. Fisher will have to answer that these banks are illegal in England; and in that case I tell him again that the present value of gold is a monopoly value sustained by the exclusive monetary privilege given it by government. It may be true, as Mr. Fisher says, that just as much gold would be used if it did not possess this monopoly. But that has nothing to do with the question. Take the illustration that I have already used in this discussion when I said: If government were to decree that all plates be made of tin, would not the value of tin rise and the value of china fall? Now, if the supply of tin were limited, and if nearly all the tin were used in making plates, and if tin had no other use of great significance, it is quite conceivable that, if the decree prohibiting the use of china in making plates should be withdrawn, the same amount of tin might continue to be used for the same purpose as before, and yet the value of tin would fall tremendously in consequence of the admitted competition of china. And similarly, if all property were to be admitted to competition with gold in the matter of representation in the currency, it is possible that the same amount of gold would still be used as money, but its value would decrease notably,—would fall, that is to say, from its abnormal, artificial, government-created value, to its normal, natural, open-market value.(72 ¶ 11)

72 n. 1. Division of labor originates in people making something they do not themselves want. It is further facilitated by selling this for one special commodity which is not directly wanted. ↩