Page 54 of 62
[41] "Money may continually vary in value and yet be as good a measure of value as if it remained perfectly stationary. Suppose, for instance, it is reduced in value.... Before the reduction, a guinea would purchase three bushels of wheat or 6 days' labour; subsequently it would purchase only 2 bushels of wheat, or 4 days 'labour. In both cases, the relations of wheat and labour to money being given, their mutual relations can be inferred; in other words, we can ascertain that a bushel of wheat is worth 2 days 'labour. This, which is all that measuring value implies, is as readily done after the reduction as before. The excellence of a thing as a measure of value is altogether independent of its own variableness in value" (p. 11, Bailey, "Money and its Vicissitudes." London, 1837).
[42] "Le monete lequali oggi sono ideali sono le piu antiche d'ogni nazione, e tutte furono un tempo reali (the latter assertion is too sweeping), e perch erano reali con esse si contava." Galiani, "Della Moneta," l. c., p. 153 ("Coins which are ideal to-day [i. e., whose names no longer correspond to their value] are among the more ancient with every nation; at one time they were all real, and for that reason served for the purpose of counting.")
[43] The romantic A. Mller says: "According to our idea every independent sovereign has the right to name the metal money, and to give it a nominal social value, rank, standing and title (p. 276, v. II., A. H. Mller, "Die Elemente der Staatskunst," Berlin, 1809). As far as title is concerned the Hon. Hofrath is right; but he forgets the substance. How confused his "ideas" were, may be seen, e. g., from the following passage: "Everybody understands how much depends upon the right determination of the mint-price, especially in a country like England, where the government with magnificent liberality coins money gratuitously (Herr Mller seems to think that the members of the English government defray the mint expenses out of their own pockets), where it does not charge any mintage, etc., and thus if the mint-price of gold were set considerably above its market price, if instead of paying as now 3 17s. 10-1/2d. per 1 oz. of gold, it would set the price of an ounce of gold at 3 19s., all money would flow into the mint and exchanging for the silver contained there bring it into the market to be exchanged there for the cheaper gold; the latter would in the same manner be brought again to the mint and the entire coinage system would be upset" (l. c., p. 280-281). To preserve order in English coinage, Mller falls back on "disorder." While shilling and pence are mere names of certain parts of an ounce of gold represented by signs of silver and copper, he imagines that an ounce of gold is estimated in gold, silver and copper and thus confers upon the Englishmen the blessing of a triple standard of value. Silver as a measure of money, next to gold, was formally abolished only in 1816 by 56 George III., c. 68. As a matter of fact, it was legally abolished as early as 1734 by 14 George II., c. 42, and still earlier by actual practice. There were two circumstances that made A. Mller capable of a so-called higher conception of political economy: first, his wide ignorance of economic facts; second, his dilettanti-like visionary attitude toward philosophy.
[44] ", , ." (Athen. Deipn. l. IV. 49. v. 2, ed. Schweighuser, 1802.) (When Anacharsis was asked for what purpose the Greeks used money, he replied, "For reckoning.")
[45] G. Garnier, one of the early French translators of Adam Smith, conceived the queer notion of fixing a proportion between the use of money of account and that of actual money. His proportion is 10 to 1. (G. Garnier, "Histoire de la Monnaie depuis les temps de la plus haute antiquit," etc., t. 1, p. 78.)
[46] The act of Maryland in 1723 by which tobacco was made the legal standard, but its value reduced to terms of English gold money, namely one penny equal to one pound of tobacco, reminds of the "leges barbarorum," in which, inversely, certain sums of money were expressed in terms of oxen, cows, etc. In that case neither gold nor silver, but the ox and the cow were the actual material of the money of account.
[47] Thus, we read, e. g., in the "Familiar Words" of Mr. David Urquhart: "The value of gold is to be measured by itself; how can any substance be the measure of its own worth in other things? The worth of gold is to be established by its own weight, under a false denomination of that weight—and an ounce is to be worth so many pounds and fractions of pounds. This is falsifying a measure, not establishing a standard."
[48] "Money is the measure of Commerce, and of the rate of everything, and therefore ought to be kept (as all other measures) as steady and invariable as may be. But this cannot be, if your money be made of two Metals, whose proportion ... constantly varies in respect of one another." John Locke: Some Considerations on the Lowering of Interest, etc., 1691 (p. 166, p. 65 in his Works 7 ed., London, 1768, vol. III.)
[49] Locke says among other things: " ... call that a Crown now, which before ... was but a part of a Crown.... An equal quantity of Silver is always the same Value with an equal quantity of Silver.... For if the abating 1-20 of the quantity of Silver of any Coin does not lessen its Value, the abating 19-20 of the quantity of the Silver of any Coin will not abate its Value. And so a single Penny, being called a Crown, will buy as much Spice, or Silk, or any other Commodity, as a Crown-Piece, which contains 20 times as much Silver.... Now [all that may be done] is giving a less quantity of Silver the Stamp and Denomination of a greater.... But 'tis Silver and not Names that pay Debts and purchase Commodities" (l. c., p. 135-145 passim). If to raise the value of money means nothing but to give any desired name to an aliquot part of a silver coin, e. g., to call an eighth part of an ounce of silver a penny, then money may really be rated as high as you please. At the same time, Locke answered Lowndes that the rise of the market price above the mint price was due not to the rise of the value of silver, but to the lighter silver coins. Seventy-seven clipped shillings do not weigh a particle more than 62 full-weighted ones. Finally he pointed out with perfect right that, aside from the loss of weight in the circulating coin, the market price of silver bullion in England could rise to some extent above its mint price, since the export of silver bullion was allowed while that of silver coin was prohibited (l. c., p. 54-116 passim). Locke was exceedingly careful not to touch upon the burning question of public debts, and no less carefully avoided the discussion of the delicate economic question, viz., the depreciation of the currency out of proportion to its real loss of silver, as was shown by the rate of exchange and the ratio of silver bullion to silver coin. We shall return to this question in its general form in the chapter on the Medium of Circulation. Nicholas Barbon in "A Discourse Concerning Coining the New Money Lighter, in Answer to Mr. Locke's Considerations, etc.," London, 1696, tried in vain to entice Locke to difficult ground.
