ADDITIONS TO THE SECOND EDITION. THE SECRETARY OF THE TREASURY ON THE MONETARY SITUATION MONEY. N every age the most valued possession has necessarily been the money of the race, the standard of value, the universal equivalent. At an early stage cowries and wampum served as money. As man rose in the scale, with increased transactions, copper, from the wider range of its uses, became his most valued possession, consequently his money. For the same reason, with his continued advance, copper gave place to silver, and silver to gold, with nations whose exchanges, from the extent of their productions, are on a very large scale. As every form of life that has existed still exists, copper is still the money of races on a comparatively low plane; silver with races highly civilized, but whose transactions, large in the aggregate, are inconsiderable in ratio to their numbers; and gold with all the great commercial nations of the world. In the substitution of one metal for another as money the rule of convenience was alone followed, precisely as it has been in the substitution of the railway for the ordinary earth-road, of ships driven by steam instead of wind, and of power for hand looms. Every one throughout history has sought to convert his products into the article in most general request, into money, or into promises to pay money, certain of being able, by direct exchange, to obtain anything of which he might stand in need. Such article became money by common preference, in which neither governments nor concert had more to do than with the selection of articles of food or clothing. The qualities fitting a metal to serve as money are a high relative value; a capacity of subdivision without impairing its value; of resisting the action of the elements; of receiving, no matter how minute the piece, an impress denoting the weight of pure metal it contains, consequently its value; and a uniformity in value through long periods of time due to a uniformity in the cost of its production, and in the demand therefor based upon a sense of beauty as well as use. Gold would not make a good tool or railroad bar, but were it in sufficient abundance it would be in the greatest demand for structures, furniture, and domestic utensils, as well as in the arts. As it is not abundant, it is chiefly used for decoration or ornaments for which a high price is paid, as for other choice articles, food, drink, or clothing. Diamonds which have a high relative value, due chiefly to their rarity and use as ornaments, are for obvious reasons unfit to serve as money. The greater its relative value the better fitted, other things being equal, is an article to serve as such. It is plain that without some article for which a supreme preference was felt, and which consequently became the universal equivalent and the solvent of all transactions, man could never have risen above that condition in which all exchanges are in kind, a condition alike incompatible with progress or wealth. The capacity of an article to serve as reserves adds to its value over and above that due to it from the demand for it in the arts. Unlike other articles of merchandise, money has two functions, one, like that of iron, in the arts and industries of life; the other as reserves by means of which one may, in small compass, safely treasure up his accumulations for future use, certain that under all conditions they will retain the value at which they were received. Unlike metallic money articles of food may have no value unless consumers can be presently found. Of two kinds of wood, each equally well adapted to certain uses, the most durable would have the preference as to price. Of the value of an article fitted to serve as money it would be fruitless to inquire the proportion due to its use in the arts and that due to its use as the money, or reserves, of individuals or society. The proportion, however, of the amount used as money or reserves is regularly decreasing from the steady increase in the use of instruments or symbols by which the greater part of the exchanges of society are now carried on. FUNCTION OF GOVERNMENTS IN THE MATTER OF METALLIC MONEY. As it is inconvenient, or impossible, for individuals to determine the degree of fineness, or weight, of any piece of metal serving as money, one of the most obvious and important duties of governments is, by assay, to determine such fineness, and to impose upon each piece issued evidence of the weight of pure metal it contains, to be ready alike for present or future use. It is a duty akin to that of providing standards of extension or weight. The action of a government no more affects the value of the metal subject to it than does the provision of weights and measures affect the value of articles measured thereby. When a metal used as money is to be used in the arts, it is usually in the form of coin or stamped bars, the amount used being thereby easily determined. Coinage established, all contracts are assumed to be payable in the unit, or its multiples, which, by agreement of the parties thereto, as well as by the action of the government, become legal tender between them. METALLIC MONEY OF THE UNITED STATES. Gold Coins. The coinage of the eagle, having a value of $10, was authorized by the act of April 2, 1792. Its weight was 270 grains; its fineness, 91623 grains. The weight was changed by the act of June 28, 1834, to 258 grains; the fineness to 899.225 grains. By the act of January 18, 1837, the fineness was changed to 900 grains. The act of April 2, 1792, also authorized the coinage of the half and quarter eagles of proportional weight and fineness. Double eagles and coins of one dollar were authorized by the act of March 3, 1849; the three-dollar piece by the act of February 21, 1853. All the coins were to be of the standard weight and fineness. Silver Coins. The silver dollar was authorized by the act of April 2, 1792. Its weight was 416 grains; fineness, 892.4. The weight was changed by the act of January 18, 1837, to 4121⁄2 grains; its fineness to 900 grains. By the act of 1792 the ratio was 1 of gold to 15 of silver. By the act of 1837 the ratio established was I to 16. By the ratio of 1792 gold was undervalued, and was not used as money. The object of the act of 1834 changing the ratio was to bring gold into use. As by it silver was undervalued the small amount coined went out of use, being more valuable for export as merchandise than as money. By the act of February 12, 1873, the coinage of silver was discontinued, to be restored by the act of February 28, 1878, at the ratio of 1 to 16. By the act of November 1, 1893, the coinage of silver dollars was discontinued. |