8 



cost labor to get them, so that here are metals that have a real 

 value in themselves, and have the first element which is necessary 

 in money. They wear out very slowly, are very easily divisable 

 and largely distributed, are of the same quaHty and subject to very 

 few fluctuations. Our money, then, is so much gold and silver. 



Now, we shall notice that the value of money depends exactly 

 on the amount of circulation. The amount is the great thing. 

 The more money there is, the less valuable, just as in any other 

 commodity, and this brings to notice a very important matter 

 about money, little understood, that, where a nation uses gold and 

 silver, there is never any possibility of a redundancy, or stringen- 

 cy of the money market. Supposing we have got, for a time, a 

 redundancy — more money than is needed. What takes place ? 

 One of two things, probably both. In the first place, gold becomes 

 cheap, and we at once begin to use it for other things than money 

 — for ornaments, plate, and other purposes. When gold is cheap, 

 that means, that other things are dear in comparison with it. 

 This immediately leads to the sending off of gold to where it isa't 

 so cheap, for the purchase of goods, and all at once we find a 

 change from redundancy to a healthy equilibrium. So, when 

 there is a stringency, when gold becomes ^ear, it will be diverted 

 from the making of ornaments and fancy uses, and used for 

 money, and just as prices rose in the other case, just so now they 

 will fall. And so, by a law of adjustment just as beautiful as that 

 of the tides and as inevitable, there isn't any possibility of a I'e- 

 dundancy or stringency of the money market where gold and sil- 

 ver — that is, where the money of the world — are used. 



What, then, is the meaning of these panics and financial revul- 

 sions ? Are these meaningless ? By no means. We find them 

 occurring all over the world, from time to time. We find, for in- 

 stance, that a man in Amherst, say, is unable to pay his merchant ; 

 he, in turn, is unable to pay the wholesale dealer in New York or 

 Boston, and so the 'consequences extend, and finally result in a 

 panic, the influence of which may extend all over the world. But 

 how do these panics come ? They are possible onl}'^ because we 

 have put something else in the place of money — undertaken to use 

 the shadow of the thing, and make that do the work of the sub- 

 stance. That is the only reason. Financial i^anics never have oc- 



