n 



MONEY CONSIDERED AS OUR IN- 

 DUSTRIAL TOOL. 



HON. W. C. FLAGG, PRESIDENT OF THE } 



NATIONAL AGRICULTURAL CONGRESS V 



OF THE UNITED STATES. } 



Dear Sir : I feel much flattered by your kind 

 invitation to attend ftie annual session of your 

 Congress which will appropriately meet, this 

 year, at Philadelphia, the centre of so much that 

 is attractive and interesting to the people of all 

 civilized nations. If my engagements will per- 

 mit I will endeavor to avail myself of the time 

 and the opportunity to be present, and listen to 

 the discussions on the many interesting topics 

 embraced in the programme of proceedings, 

 which you were good enough to send me. Hav- 

 ing learned, by several years of practical experi- 

 ence, the business of farming, in early life, I 

 always take a special interest in every plan con- 

 certed by the agricultural classes to promote 

 their material, moral and social condition, cut 

 off and isolated as the individuals of the farming 

 community necessarily are, from many of the 

 advantages enjoyed by the dwellers in cities. 



Turning to a question of great individual and 

 national importance, the currency, or money 

 question, I feel tempted by the gratifying recep- 

 tion which my paper on that subject received at 

 the hands of the Illinois Farmers Association, 

 last year, to offer some remarks for the consid- 

 eration of the National Congress, on a branch of 

 the science of money that has not, until quite 

 recently, received clear and demonstrative elu- 

 cidations. I refer to what may be called the 

 fundamental principles of money itself what 

 money actually is, what exact services it per- 

 forms, and how it performs them. When we are 

 told that "money is a medium of exchange" 

 that it is "some material which society agrees to 

 accept and use to effect the exchange of com- 

 modities, or the products of labor," we are not 

 much wiser for the definition. Such general ex- 

 planations of the principles or uses of money do 

 not carry us back to the foundation of the sub- 

 ject, or to what is fundamental, and I have ven- 

 'tured to question the correctness of some of the 

 received expressions and theories. I have even 

 ventured to give a new direction to thought, 

 and to claim that money must be regarded main- 

 ly, if not wholly, in the light of a tool; used, not 

 to effect or facilitate exchanges, but to abolish 

 them, and render exchanges, of commodities, 

 which means barter, unnecessary. 



I must here anticipate, as it were, my subject, 

 in order to prepare the minds of those i address, 

 for what is to follow, and point out what is now 

 an accepted principle in monetary science, name- 

 ly capital, and not money considered by itself, is 

 the motive power that sets labor in motion, and 

 distributes its products to consumers and ulti- 

 mate buyers. Money, in fact, forms only a very 

 insignificant part of the capital employed in 



these innumerable processes. In Great Britian, 

 it has been found, by analyses of bankers ac- 

 counts, that money (metallic and paper together) 

 is used in carrying on the industries of the peo- 

 ple to the extent of barely three per cent., and 

 the experience of bankers in America shows that 

 not above five per ceut of money is so employed. 

 But whatever may be the exact proportion be- 

 tween money, in its capacity of capital, and of 

 other things representing capital, it is necessary 

 to a clear understanding of the subject to bear 

 in mind this well drawn distinction, which will 

 become more apparent when we get a clear view 

 of the offices performed by money in its other 

 and much more important characteristic of a 

 tool or measure of value. 



I will now proceed to quote some of the postu- 

 lates of monetary science, published by me in a 

 London journal last spring, which I have cor- 

 rected and extended in a manuscript work en- 

 titled " The Principles of Monetary Science Con- 

 sidered," which I propose to publish on my re- 

 turn to London. 



POSTULATES AND PRINCIPLES OF MONETARY 

 SCIENCE. 



i. Money is something that all the members of 

 a community, or nation, by universal agreement^ 

 are willing to accept in exchange for their labor 

 or for such things as they possess and desire to 

 sell, in order to purchase with the avails, other 

 things which they do not possess or produce. 



II. All civilized nations (ancient and modern) 

 have adopted gold and silver, or one of these 

 metals, out of which to fabricate their money, 

 or the chief part of it the preference for these 

 metals having, no doubt, arisen from their com- 

 parative freedom from fluctuations in value, and 

 their superior fitness for coining. Hence, gold 

 and silver coins, or the coins of one of these 

 metals, constitute the true money of every civ- 

 ilized nation. 



in. Money derives its trading, or purchasing 

 power, and ability to circulate, as currency, and 

 to circulate and distribute commodities, from 

 the market value of the material of which it is 

 made. 



iv. Money abolishes barter, or the exchange 

 of labor, and the products of labor in specified 

 quantities. 



v. Money, in its denominations as coin, sped- 

 f ying a given, or measured quantity of metal, 

 constitutes a tool or measure of the value of 

 labor, and of all commodities, gold and siver in- 

 cluded. It also metes out capital in the loan- 

 improperly called the " money market," in spec- 

 ified sums as so many dollars or pounds. 



vi. The stamp of the state, or the impress of 

 a denomination on a coin, is the warranty of the 

 state that such coin contains a specific weight of 

 metal of given fineness, but adds nothing to its 

 market value, for a shilling cannot be made to 

 circulate for a sovereign, or a dollar, nor the 

 latter for the former, by merely exchanging the 



