This straightforward elasticity, which made our monetary system an virtually perfect machine when labored by bankers for financing our manufacturing and trade, lent itself only too effectively to abuse by politicians, when an important warfare called for sacrifice, but the politicians found it easier to invite us to earn money out of our nation's want. The same thing occurs if the Bank of England lends money to the federal government to pay for a battleship, or to meet the salaries of its officials, or if it lends money to another borrower for some other objective. When the Bank of England makes investments or advances, it will increase the deposits that it holds, both "Public" or "Other," both on account of the British Government or of some other customer. Will probably be seen that the account is divided into two parts-the problem Department and the Banking Department. They, therefore, don't have any likelihood of pro≠fit, hut essentially subject themselves to inconvenience, and maybe loss, if they subject extra notes than arc wanted for circulation at coin prices. This argument, if it be an honest one, implies an ignorance of two issues; particularly, first, an ignorance of the fact that the paper is employed as capital to diversify business and enhance produc≠tion; and, secondly, an ignorance of the effect which a variety of trade and improve of production have upon the prices of commodities, relatively to any fixed commonplace of worth.
IV. We come now to nonetheless one other proposition, - specifically, that no possible amount of paper cash that may be put in circulation in any one nation that's open to free commerce with the rest of the world can affect the true or pure market value of gold or silver coins in that nation. We do know, however, that the English Money Market was made an instrument of struggle, and as such was very roughly handled. After all, then, their true and pure market worth as money could be fastened and limited by their worth for these other uses. For these causes, the wheat as cash could be no true or natural equivalent for any commodity that had more true or natural market value for use or consumption than the wheat. And these six hundred and usd gold price fifty-six million dollars, being, for want of redemption, some fifteen per cent, under par of specie, reduced the actual amount of cash to about five hundred and fifty-eight thousands and thousands. When as soon as the stability of costs is undermined by a lot money being printed this will likely occur even to English merchants who have stipulated for payment in English money.
And suppose that, beneath pretence of maintaining this stan≠dard of value unimpaired, the government should prohibit all other cash, and must also prohibit all substitutes and all contracts - akin to notes, checks, drafts, payments of change, and the like-by which the necessity for getting and selling the humming birds themselves - the legalized money - should be averted. Thus, though the gold basis of the foreign money methods of other international locations was not as certain and stable as that of England, it was so to a adequate level to secure that, a minimum of in times of crisis and when sufficient pressure was utilized, the precept of convertibility was allowed to work and the gold, when demanded, was surrendered to those who had claims for it and was allowed to go away the country and go to the place where it could possibly be extra usefully employed. The gold and silver coins could be good requirements - nearly as good perhaps as any that may be had-by which to measure the values of all this other property. And so our money-in which terms I include coins, notes and cheques-could only be increased in quantity-except inside the boundaries laid down by banking prudence-by bringing in additional gold from abroad to be used both in circulation or in reserves in opposition to notes or deposits.
The panic of 1873, subsequently, does nothing towards proving that solvent notes, issued for circulation as cash, - regardless of how great their amount, - should not equal in worth, dollar for dol≠lar, with coin. Traffic between man and man would have been virtually wholly achieved for cash, in≠stead of on credit; and nothing within the form of a panic would have been identified. If it ought to be said -as it continually is said - that the fact of the coins being made cash, and the additional reality of prohibitions or limitations being imposed upon all different cash, have given the coins a purchasing power far above their true and natural value as metals, the answer is that such a purchasing power is an unjust and extortionate power-a mere power of robbery - arbitrarily granted to the holders of the coins, from no mo≠tive whatever but to allow them to get extra for their coins than they're really value; or, what is the same thing, to allow them to coerce all different individuals into promoting their property to the holders of the coins for less than it is value. Anyone who had a Bank of England notice, or any number of them, may rely upon being able to turn them into English sovereigns of the acknowledged weight and fineness without query and without delay, and to ship the sovereigns to any country wherein he wanted to place them.
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