The Pamphlet Collection of Sir Robert Stout: Volume 71
The Principles of a National Numerary Currency
The Principles of a National Numerary Currency.
It is necessary now to examine the economic principles of a "national currency," under the "numeral and symbolic system."
The basis on which these principles rest are—(1) That the value of the integers of money depends on their numbers, that is, that the unit of money is all money, therefore, that its value depends upon its volume, and not on the material of which it may be made; (2) On specific limitation and regulation of the issue by the State; (3) On the monopoly by the State of the fabrication and issue of money—to guard against counterfeiting—that at present paper is the most convenient material for money; (4) On the State Note being the sole and exclusive legal tender, and stamped on its face:—
By Decree of the Parliament of New Zealand. No.
£1—£5—£10—£20 (or convenient amounts). 5/-, 10/—.
Sole Legal Tender in New Zealand.
(5) And that ingots, foreign coins, gold and silver and copper (except as tokens for change), should be simply merchandise, and used for the arts and foreign service.
In examining these principles the arguments of the highest authorities in all times, and historical facts, will be put forward, and the issues on these will be found to depend on two main points, viz: (1) Should the control of the currency belong to the State (the people) as its exclusive prerogative, or should the control be relegated to capitalists and bankers to regulate as at present in their own interests? (2) Should the basis of the currency be "Metallic and page 14 Intrinsic"—the value of which as erroneously laid down depends on an unknowable cost of production, which is and always has been a constantly fluctuating measure of value, and necessarily susceptible to the monopoly and control of holders of bullion, capitalists, and bankers—Or should the basis of the currency be "Numerical and Symbolic," the value of which depends on numbers, on legal limitation and regulation, as an institution of law and controlled by the State, and which must necessarily be an unfluctuating measure of value, past, present, and future?
On this Del Mar says: "The legal conception of money which had died away with the Western Empire (Roman) had been partly recovered through the influence of the Italian Renaissance and of the Civil Law." Thus Covarruvias and others of the Budelian essayists—men of the greatest learning and highest repute—very pointedly affirm that it is the prerogative of the State to create it, and that the denominational value of its component pieces is whatever the State (which also created the denominations) may choose to make them. These opinions were to be found wherever the light of the Civil Law had penetrated, but nowhere else—the people knew nothing of them. It is true that Charlemagne (and Philip le Bel) had insisted upon the exclusive right of the Grown to regulate money, and that it was a right whose exercise was essential to the safety of the Stat, but apart from that his system was based on conquest and plunder, and the slavery of the conquered races in their own mines, and although the coinage of his vast plunder raised prices and caused great ephemeral prosperity, he and his system died together.
Doubtless, but for the conquest and plunder of America, the feudal and vulgar conception of money would have died away, and the conviction forced upon the popular mind—which was already entertained by the learned—"that money was not merely a thing to be immediately bargained for other things," but an institution of law designed to equitably measure commodities and services both past, present, and prospective.
But the conquest and plunder of the New World changed all this, precisely as the conquest of Spain twenty centuries before had buried out of view the refined monetary institutions of the Roman Common-wealth, and not only arrested the re-growth of the classical conception of money, but it developed the feudal conception into a form even more monstrous than that into which feudalism had moulded it. The feudal conception of money was that of an "actual thing" (a coin or coins) designed to measure an imaginary thing called "value." The legal conception of money was that of an institution of law designed to equitably measure the exchangeable relations of commodities and services—past, present, and prospective. The conception of money which has grown up since the English Mint Act of 1666, and French Mint Act, 1679—free coinage—is that of two different things designed to measure one relation, called value. The two things embraced in the confused conception of money which those acts are responsible for are—I.—A commodity whose value conforms to an unknowable cost of page 15 production, and—II.—A series of coins, notes, etc., the value of each of which is in inverse ratio to their aggregate number—and which can therefore have no relation to their cost of production.
It is upon these same Acts that rests the whole school of political economy which falsely argues that money is, and must be a commodity, and ignorantly assumes that this commodity has been, and is being, and must be valued at the average cost of its current production; assumptions that are repudiated by history and belied both by the operations of miners, and the every day transactions of commerce.
The Acts of 1666 and 1679, while they reserved to the state the unimportant and expensive privilege of fabricating coins, robbed it of that most essential of all prerogatives the right to emit the coins and stop their emission. As the law stands, anybody may hand metal into the mints, and demand coins for it, anybody may emit these coins and so swell the volume of money and measure of value, anybody may melt these coins and so curtail the measure of value, and anybody may again and again take this same metal to the mints, and alternately monetise and demonetise it until the end of time without loss or expense or fear of punishment. "Over the measures of length, of weight, of liquid volume, etc., Governments exercise the most jealous supervision; in each case they prescribe an accurate and specific standard which they guard from alteration. But over the measure of value, which is far more important than all the others combined, they renounced all supervision whatever from the moment when they adopted the English Mint Law of 1666, and French, 1679. When they adopted what is known as 'free coinage,' under this practice, the unit of value—which is not one coin, but all coins and notes circulating within a given State—is subject to the hazards of mining, the legislation of foreign States, and the operations of intriguants and capitalists and bankers who may alter it whenever it suits their purposes. Free coinage does not deserve the name of a policy, it is too idiotic."—Del Mar.
The science of "numerary money system" is thus alluded to by Aristotle:—"Nomisma (money) by itself is a mere device which has value only by nomos (law) and not by nature, and so that a change of convention between those who use it is sufficient to deprive it of value and its power to satisfy our wants. By virtue of voluntary convention nomisma (money) has become the medium of exchange; we call it nomisma because its efficacy is due not to nature, but to nomos (law) and because it is always in our power to control it."
Socrates, Zeno, Solon, Plato and other great teachers of philosophy and politics also wrote on this subject, and Plato recommended this monetary system for his "ideal Republic."
On the question of control of the currency by the State, there is no diversity of opinion by modern economists, Adam Smith, Mill, Ricardo, McCullock, etc., etc., all advocate state control, but whether that control shall conduce to the public good, or be a mere palliative of the baneful effects of the present monetary system depends more on whether the basis of the currency be on the "metallic or intrinsic" system, or based on the "numerary or symbolic" system, about which there is great diversity of opinion and much ignorance.page 16
Del Mar is the only writer who has cleared up the reason why this error on money took such deep root among the economists generally—he says: "The orthodox principles of political economy, at least so far as money is concerned, and upon these stand nearly all the rest, are discordant and confused. The most eminent and practical men of to-day differ concerning its elementary principles (money) as much as the same class of men did a hundred years ago—for example: 'The French Coinage Committee of 1790, headed by Desrotours having defined money as portions of the precious metals to which the state gave weight, stamp and denomination,' the great Mirabeau observed that 'the writer of this definition lacks learning—in former times there were moneys of copper, pasteboard, and paper from the bark of trees, while to-day in some countries shells are used for money. The true definition of money is in the Roman law, and especially in Aristotle, one of the profoundest teachers of the human race—after these authorities it is not worth while to invent a new definition in order to introduce another error into the world.'"
A century later, in 1881, at the International Monetary Conference, M. Permez, a Belgian delegate and formerly Minister of Interior, said, "That money is merchandise, weighed and verified by the State. Its value varies with the supply and demand for gold and silver." . . . On the contrary, replied Signor Seismit Doda and Count Rusconi, the Italian delegates, and both ex-Ministers of State, "Money implies numbers, and the value of its integers varies with the numbers of them."
These radical differences of opinion still exist, and are repeated by the most illustrious men of affairs—jurists and statesmen. Del Mar alone has solved the reason for these differences, by proving the fact that the value of gold and silver are not governed by their cost of production like other commodities; that the vast accumulation of past ages was obtained by conquest and slavery, and the value reckoned on the slavery and blood of perished races. Alexander's conquests, the Punic wars, Cæsar's conquests in Gaul, the expeditions of Columbus, Cortes, Alvarado, and Pizarro in America, those of the Portuguese in Japan and Brazil, were truly, if not avowedly, for plunder of gold and silver, and in which 100,000,000 of these conquered races perished, or were enslaved for the cruelties and lingering death in the mines.
The production of gold and silver upon a commercial basis only began with the era of free mining in 1849 in California, and after-wards in 1851 in Australia; and from statistics it is shown that, under such economical conditions, gold and silver have cost five times their value in cost of production in labour alone. It must be perceived that if the value of coins docs not, in point of fact, conform to the cost of producing the material of which they were made—which cannot be the case if the latter were produced at a loss—then their value must be due to some other cause; and numerous arguments and reference to history show that money did not and could not consist of any less number of coins or notes than the whole number; their nature being such that they could not be used, nor page 17 could their value be fixed without reference to one another—in other words, that the unit of money was all money, and, therefore, that its value depended upon its volume.
That the function of money was to definitely measure value, and not merely present and local value, but also past and prospective value, and value generally; and therefore money was related to equity, or to the maintenance of equitable relations between capitalists and labourers; that like other measures, the most necessary and essential characteristics of money was "specific limitation"—in other words, that to measure with precision and with justice "the whole sum of money must be fixed at some, more or less, constant ratio to the volume of exchanges;" and that equity demanded that this sum, and the regulations that governed it, should be determined, as the Roman people determined it—ex senatus consulto—by decree of the Senate; that is, with us, by the State—Parliament—and not by capitalists and bankers.
"From the evidences of fact which history presents, and the conclusions of reason, it appears at length that the value of coins as long as they remain coins is in inverse ratio to the whole sum of money in use when reduced to like denominations"—while the value of metals, of which the coins may be made, depends upon the stock-in-hand, supply and demand for the arts, mining discoveries, conquests, slavery, the power of commerce, the use of paper notes, the extension of credit system, fashion, etc. As there are practically no means of preventing the owners of coins from reducing them to metal, and as under existing laws (Coinage Act, 1666) this metal may be re-coined at pleasure—it followed that the value of the coins was regulated by two different sets of considerations, wholly opposed to one another—one relating to number, and the other relating to material—hence the radical differences of opinion on the subject between Desrotours and Mirabeau, between Bishop Berkely and Adam Smith, between Del Mar and Mr. Robert Giffen, etc., etc.
With the development of society the form of money changes from the rudimentary to the highly organised and scientific condition, from slaves and cattle to corn, from corn to metals, from metals (which are not susceptible to limitation) to coins which are susceptible to limitation, and from a limited number of coins to a limited number of symbols of any material. Numerical money symbols and also the idea that money of all kinds was symbolic, was familiar to all nations of antiquity who attained a high state of civilisation, to India, Egypt, Greece, Carthage, and Rome, and to the Chinese at the period of Sung (2257, B.C.)
"That China should have employed a 'numerical system' is no matter of wonder—the same reasons that impelled other countries to do so impelled her likewise, the only wonder is that she should have employed one so long ago as the period of Sung (B.C., 2257), and that at this period—almost the very outset of monetary history—we are brought face to face with a system whose advocacy and establishment form at the present day the objects of influential political parties in the United States and elsewhere."—Del Mar.page 18
During the progressive eras of the high civilisations of antiquity it was clearly observed and understood that the exchange of commodities and services by means of "intrinsic coins was merely indirect barter, and that no greater advantage was gained by it over direct barter than the convenience of sub-dividing the things exchanged—whilst the higher function of money—that of rendering each exchange an equitable one—was not fulfilled at all by such coins; their total volume was not amenable to control, it was subject to adventitious increase or diminution from success in war, mining discoveries, from the operations of commerce, the requirements of the arts, and the caprices of fashion, and the use of such coins to measuring value had resulted in fluctuations so enormous as for endanger the safety of the State."
The efforts made in the Western world to overcome these defects were made in Laconia and Sparta. From the "iron numeraries" of that country doubtless sprang those of the various Greek states and colonies, as well as those of Carthage and Rome, and from the common use of "numerary systems" resulted that general conception of money through-out the ancient world which is embodied in its classical names of Nomisma and Numerata (numerary), that the conception of money was inseparably connected with the forms and limitations affixed to it by law, that money was regarded as an institution of the State, of law and custom, and one that upon the withdrawal of this support would become valueless.
"These great States were never so prosperous, progressive and free as during the periods when this system was in vogue, wealth was more fairly divided, and the opportunities of life more evenly distributed, the orders of society were bound together with a common interest. With the subsequent decline and fall of these great States the system of money which had served to equitably measure the capital, labour, production and social rights of their intellectual and industrial classes underwent a change, the scientific aphorisms of money were forgotten, the Empire split into fragments, each having its obscure money system daily becoming more and more intrinsic, until in the gloom of the dark ages corn, cattle, and even slaves filled that place in the law which once had been occupied by the refined 'nummus' of the Roman Republic. From this time forward money ceased to be looked at from a comprehensive point of view, there was no such thing as a system of money, there was no attempt to ascertain, much less to regulate, the volume of money, there was no law of money, the 'unit of money' was no longer 'all money,' and therefore from the Augustan era the Roman institution of money had lost the power which it had once possessed to assist the development of the State and preserve the freedom of the people
"The law had resigned the paternity of money, 'number' had ceased to form its essence—and on these principles depend the whole 'obscure problem of price,' for on the whole volume of money alone is price susceptible of expression."