The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface
• Introduction
• Lesson I. What Society Does For the Laborer
• Lesson II. Capital and Labor
• Lesson III. Starvation Wages
• Lesson IV. One Dollar
• Lesson V. Value Cannot Be Given By Government
• Lesson VI. The Value of Paper Money
• Lesson VII. Why Has the Greenback Any Value?
• Lesson VIII. The 3.65-BOND Plan
• Lesson IX. The Mystery of Money
• Lesson X. The Evil of a Depreciating Currency
• Lesson XI. A Few Facts
• Lesson XII. The Lessons of History
• Lesson XIII. The Public Faith
• Lesson XIV. The Cause and the Remedy
• Lesson XV. Some General Thoughts

LESSON XI.

A Few Facts

It is very common, in discussions of subjects like this, to call for "facts," many people thinking that a single fact is worth bushels of reasoning. Whether this opinion is well or ill founded, there is nothing which the advocates of inflation so carefully conceal as the well-known facts of the history of money. Wendell Phillips, for instance, is credited with saying that specie payments mean specie when you do not want it, and nothing but paper when you do. No better illustration of the wildness with which such men talk can be given than merely putting this statement alongside of facts. These facts are such as no inflationist will have the hardihood to deny, however much he may try to explain them away, and they are worthy of being carefully borne in mind.

First Fact.—For fifty years past there has not been a day when an owner of an English bank-note could not get it paid in gold, nor is it likely that such a day will be seen for five hundred years to come. Nor has there, in all probability, been a business day at the banks when one or more persons, and generally dozens or hundreds of them, did not want gold. Hardly a business day now passes in which the Bank of England does not pay out gold to the amount of tens or even hundreds of thousands of dollars, to people wanting it. Remember this when you read or hear that specie payments cannot be kept up on the limited supply of gold now available. In thus talking as if there were some great difficulty in keeping paper always redeemable, and as if a suspension every twenty years was a matter of course, people bear in mind only the experience of our comparatively weak banks, and do not look at the reason of the thing. In the fact that the Bank of England has never suspended specie payment, or thought of suspending, for a day since 1822, we have an example much more worthy of imitation. Having gone on so successfully for two entire generations, the governors of that institution would now almost as soon think of committing suicide as of suspending.

Second Fact.—Under this policy of constant adherence to specie redemption, the little island of Great Britain has maintained the commercial supremacy of the world. London has become its great monetary centre, and, in spite of her system of land tenure and other institutions which tend to the disadvantage of her poorer classes, the average laborer of England is better off than that of any other country in Europe.

Third Fact.—There is no case recorded in history of a government issuing paper money not redeemable in gold or silver, and in quantities sufficient for commerce, without that paper money depreciating. The cases of such attempts and of their failure are so numerous that a whole volume of history would be required to recount them.

Fourth Fact.—There is now twice as much paper currency per capita of our population as during the six years preceding our civil war. Between 1854 and 1861, the total bank circulation averaged between one hundred and ninety and two hundred millions. Now, including our legal tenders and national bank-notes, it is not far from six hundred millions. Without aiming at any useless refinement in numbers, we may say, in a general way, that we have now 50 per cent. more population, and three times as much paper currency, as between 1854 and 1861. Therefore, it cannot be from any want of currency that we are suffering.

If you tell these facts to an inflationist, he may denounce them vigorously, and complain that you remember them, and say they have nothing to do with present questions; but he will not dare to deny them unless he cares nothing for truth. There is, however, one deception against which you must be on your guard. The Government of England has, on several occasions, when there was a great pressure for money in London, "suspended," temporarily, a certain clause in the banking law which prohibits the Bank of England from issuing notes when its supply of specie falls below a certain limit, and a class of inflationists frequently try to deceive those of their hearers who are not acquainted with financial history by talking as if this were a suspension of specie payment. Really, this suspension is only a permission to issue notes, of which the Bank would not think of availing itself, if there were any serious danger of having to refuse their redemption.