Part II, 10. The Value of Money

THE VALUE OF MONEY

One of the powers bestowed on the federal government by the Constitution is that of
regulating the value of money. “Congress shall have power to coin money,
regulate the value thereof, and of foreign coin,” &c. Has any reader a clear conception of the meaning of this phrase? The meaning commonly attached to the word
value, both by lexicographers and political economists, as well as by men generally, without reference to dictionaries or books of political economy, is the relation which one thing bears to another, as an exchangeable commodity. This is the so commonly received opinion, that it has been reduced to the form of one of those familiar rhymes, into which a large portion of the popular wisdom is condensed.

The worth of a thing

Is what it will bring.

The worth or value of a dollar, according to this definition, is fixed by the amount of exchangeable commodities which may be procured for it. Thus, if you can buy of a man a day’s labour for a dollar, a day’s labour is one measure of its value. If you can buy with it eight loaves of bread, those eight loaves of bread are another measure of its value. When the Constitution therefore declares that Congress shall have power to regulate the value of money, is it to be understood that it has the power to say how much labour, or how much bread, shall be given for a coin of silver or gold bearing a certain stamp? We cannot believe that it ever entered into the minds of the people of the United States, or of the framers of the Constitution, to bestow on government such an enormous and terrible power, which could not possibly be exercised, in any case, or to any degree, without the most inconceivable arbitrariness and injustice. Our Restraining Law, and the project of that more infamous law introduced into the Senate of this state by Mr. Maison, were both written with a pencil of light, compared with that clause in the Constitution, if it confers any such absolute and despotick power on Congress. The common sense of every reader will at once reject the idea, as too monstrously at variance with the natural and unalienable rights of man to be entertained for a moment.

What then does the expression,
regulate the value of money, mean? If we draw our conclusion from what Congress has done on the subject of money, we shall suppose it means the power of regulating the relative exchangeable values of different coins, one with another; a gold coin, bearing a certain stamp, and containing a certain number of grains of pure gold, shall always be deemed to be worth, as a tender in payment of debts, as much as a certain number of silver coins, bearing a given stamp, and containing a given number of grains of pure silver. In other words, ten silver dollars shall at all times be equivalent to one gold eagle, and one gold eagle to ten silver dollars.

But even in this limited sense of the phrase “regulating the value of money,” Congress cannot possibly exercise the power without being guilty of injustice, for gold and silver do not, in fact, bear any certain and unchangeable relative value. A grain of gold, considered merely as a merchantable commodity, will at one time purchase a greater quantity of silver than at another. Silver is sometimes relatively dearer than gold, and sometimes relatively cheaper; and Congress, therefore, when it gives to the debtor his option as to which he will make payment in, by any invariable standard of relative value, gives him the power of defrauding his creditor. The errour is the same in principle, though not as extensively injurious to the community as if they should exercise, in its fullest latitude, the power conferred by the terms of the Constitution, and declare how much of every mentionable commodity should be exchangeable for a given number of coined grains of silver or gold. Congress, it seems to us, would best discharge its power “to coin money and fix the value thereof,” by simply establishing, for the convenience of traffick, and the deciding of disputes, a unit of value; in other words, by simply declaring that a certain number of grains of pure silver should constitute the dollar; and leave all other divisions and ramifications of currency to adjust themselves by that standard. We threw out a brief hint on this subject in our last number; and have been induced to make these further observations by having our attention drawn to it by a correspondent, whose note we here subjoin:

MR. PLAINDEALER: I have been an attentive reader of your paper since it first had existence, and I freely confess that I have been much edified in the perusal of your articles on free trade, as applicable to banking, &c. But in your last number, the views you express on coining, strike me as being decidedly bad. What benefit could possibly accrue to the community, were every man to manufacture his own money, after his own capricious ideas? Without some standard to regulate the matter, we would have a currency composed of gold, silver, brass, lead, iron, and, in fact, of every thing under heaven, of the value of which no two people could be found to agree, and which would give rise to interminable disputes. As well might you recommend that instead of adhering to plain English, in their converse with each other, men should use unintelligible sounds to express their meaning; and certainly to me the one plan appears as feasible as the other.

But, sir, I remain open to conviction, and if you think this worth replying to, I should be pleased to hear your views at length on the subject.

Our correspondent shall hear our views at length on the subject; but not now. Our columns are preoccupied, and besides, this is a topick which does not require instant pressing. It is enough for present purposes to suggest it as theme for reflection; and we shall be mistaken if the result of meditation be not to convince many an intelligent mind that the free trade principle is susceptible of a far more extended application than they had perhaps dreamed before.

The analogous case which our correspondent has furnished us is very appropriate, but he must excuse us if we choose to consider it an analogism sustaining our views rather than his own. The laws of language are not established by Congress or any other body of delegated powers. Words, it is true, are sometimes
coined by Congress, but they do not pass very current, and are generally soon rejected by common consent. What is it then sustains the language in its purity, fixes the meaning of words, and enables us to give to expression a precise and unchangeable import? Every man is at full liberty to be as unintelligible as he pleases. He may reject alike the authority of Johnson and Webster, and fabricate a new language for himself. What restrains him from doing so? The necessities of social intercourse: the mutual advantage which all men find in promoting the general convenience. The necessities of commercial intercourse, and the mutual advantage which all men would find in promoting the general convenience in matters of traffick, would lead, we think, to as certain and desirable results in regard to money, as in regard to language.

If the laws of trade are adequate to the perfect regulation of the matter, no one, we think, certainly no one animated by the genuine principles of democracy, will hesitate to acknowledge that it were better to deny the right of regulating it to the government. Whatever unnecessarily strengthens government, weakens the people; and whatever tends to narrow the powers of government to the execution of the fewest and simplest functions, increases, in the same degree, the strength and dignity of the people.