Part 02, Chapter 38 : An Indispensable Accident

[Liberty, June 28, 1884.]

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The persistent way in which Greenbackers dodge argument on the money question is very tiresome to a reasoning mortal. Let an Anarchist give a Greenbacker his idea of a good currency in the issue of which no government has any part, and it is ten to one that he will answer: Oh, that’s not money. It isn’t legal tender. Money is that thing which the supreme law of the land declares to be legal tender for debts in the country where that law is supreme.(89 ¶ 1)

Brick Pomeroy made such an answer to Stephen Pearl Andrews recently, and appeared to think that he had said something final. Now, in the first place, this definition is not correct, for that is money which performs the functions of money, no matter who issues it. But even if it were correct, of what earthly consequence could it be? Names are nothing. Who cares whether the Anarchistic currency be called money or something else? Would it make exchange easy? Would it make production active? Would it measure prices accurately? Would it distribute wealth honestly? Those are the questions to be asked concerning it; not whether it meets the arbitrary definition adopted by a given school. A system of finance capable of supplying a currency satisfying the above requirements is a solution of what is generally known as the money question; and Greenbackers may as well quit now as later trying to blind people to this fact by paltry quibbling with words.(89 ¶ 2)

But after thus rebuking Brick Pomeroy’s evasion of Mr. Andrews, something needs to be said in amendment of Mr. Andrews’s position as stated by him in an admirable article on The Nature of Money, published in the New York Truth Seker of March 8, 1884. Mr. Andrews divides the properties of money into essentials, incidentals, and accidentals. The essential properties of money, he says,—those in the absence of which it is not money whatever else it may have, and in the possession of which it is money whatever else it may lack,—are those of measuring mutual estimates in an exchange, recording a commercial transaction, and inspiring confidence in a promise which it makes. All other properties of money Mr. Andrews considers either incidental or accidental, and among the accidental properties he mentions the security or collateral which may back up and guarantee money.(89 ¶ 3)

Now as an analysis made for the purpose of arriving at a definition, this is entirely right. No exception can be taken to it. But it is seriously to be feared that nearly every person who reads it will infer that, because security or collateral is an accidental feature of money it is an unimportant and well-nigh useless one. And that is where the reader will make a great mistake. It is true that money is money, with or without security, but it cannot be a perfect or reliable money in the absence of security; nay, it cannot be a money worth considering in this age. The advance from barter to unsecured money is a much shorter and less important step logically than that from unsecured money to secured money. The rude vessel in which primitive men first managed to float upon the water very likely had all the essentials of a boat, but it was much nearer to no boat at all than it was to the stanch, swift, and sumptuous Cunarder that now speeds its way across the Atlantic in a week. It was a boat, sure enough; but not a boat in which a very timid or even moderately cautious man would care to risk his life in more than five feet of water beyond swimming distance from the shore. It had all the essentials, but it lacked a great many accidentals. Among them, for instance, a compass. A compass is not an essential of a boat, but it is an essential of satisfactory navigation. So security is not an essential of money, but it is an essential of steady production and stable commerce. A boat without a compass is almost sure to strike upon the rocks. Likewise money without security is almost sure to precipitate the people using it into general bankruptcy. When products can be had for the writing of promises and the idea gets abroad that such promises are good money whether kept or not, the promisors are very likely to stop producing; and, if the process goes on long enough, it will be found at the end that there are plenty of promises with which to buy, but that there is nothing left to be bought, and that it will require an infinite number of promises to buy an infinitesimal amount of nothing. If, however, people find that their promises will not be accepted unless accompanied by evidence of an intention and ability to keep them, and if this evidence is kept definitely before all through some system of organized credit, the promisors will actively bestir themselves to create the means of keeping their promises; and the free circulation of these promises, far from checking production, will vastly stimulate it, the result being, not bankruptcy, but universal wealth. A money thus secured is fit for civilized people. Any other money, though it have all the essentials, belongs to barbarians, and is hardly fit to buy the Indian’s dug-out.(89 ¶ 4)