OF THE UNIVERSITY OF CALIFORNIA The Double Standard Money System 1 I IN the Bankers' Magazine for September 1907 reference is made to a pamphlet containing two essays, by the present writer, entitled "The Trust and The Gold Trust," as follows: "Mr. Smith regards. .. the exclusive coinage of gold as the standard of value in the United Kingdom and the British Empire as a disadvantage-if we understand him correctly-to all classes except those connected with banking and money dealings. We have, however, to add that if this policy is injurious to all other classes of society, it must, incidentally, be injurious to them, as they only prosper when others are prosperous. Hence we may entirely clear them from any selfish interest in this matter. They simply carry on their business under the direction of the laws of the country, which enjoin the principle of a monometallic standard. Mr. Smith would go further. He would desire to establish an Index Number, to be established by the Board of Trade, according to which prices would be regulated. Impossible as such a standard of value would be to work, the idea is 1 Messrs. Kegan Paul, Trench, Trubner & Co. Ltd., 1907. A attractive to many minds, and there can be no doubt that the differences in the purchasing power of money, which are constantly taking place, impose great difficulties upon trade. The system of Corn Rent, by which many transactions were regulated, provided for many years an exceedingly good basis of computation, but recent alterations in the cost of production and transport have made this basis an unstable one, and it is much to be doubted whether one more dependable can be found." In that pamphlet, and more fully and in greater detail, in another entitled "Inter-Temporary Values, or The Distribution of the Produce in Time," there is set forth and illustrated the Double Standard Money System, which differs from the existing Single Standard 1 The DOUBLE Standard Money System must not be confounded with Bimetallism, which offers only an additional and an alternate metal out of which, unrestrictedly, unlimited legal tender money may be coined on private account. Bimetallism practically DOUBLES THE METALLIC MONEY BASES OF ALL THE BANKING TRIANGLES OF ALL THE NATIONS for both national and international monetary purposes. To understand, in some degree, what the doubling of the bases of all the banking triangles of all the nations would mean to Entrepreneurs, seeking unsuccessfully to borrow Capital for the increase and expansion of solid business enterprises, and consequently to unemployed Labourers, seeking work and finding none, please see the paper read by Mr. E. H. Holden, M.P., Managing Director of the London City and Midland Bank Limited, before the Liverpool Banking Institute in December 1907, extracts from which will be found in Appendix No. VI. on pp. 191-195. See also pp. 207-209 and Table B of Appendix VI. Under the DOUBLE Standard Money System, in every inter-temporary transaction, there would be legal provision made for determining and for dividing equally, between lenders and borrowers, creditors and debtors, any variation in the exchange value of the unlimited legal tender money metal or metals at the MATURITY of the transaction, as compared with the exchange value of such money metal or metals at the INCEPTION of the transaction. The Single Standard Money System exists to-day throughout the Money System-whether monometallic with a single monetary unit, or bimetallic with a double monetary unit-in that it contemplates 1. The creation of a Department of Values as an annex to the Treasury or Board of Trade. 2. The publication by the Department of Values— (b) Monthly-of Index Numbers similar to the Index Numbers. 3. The legal distinction between contemporary and inter-temporary transactions. 4. The legal definition of what shall be deemed an inter-temporary transaction (as has been done for purposes of discussion only on pages 29 and 30 of "InterTemporary Values," and on pages 43 and 44 of "The Trust and The Gold Trust "). West, in India, and in Japan, resting, for international monetary purposes, upon Gold Monometallism exclusively; and the Single Standard Money System existed throughout the West and in India prior to 1871–73, resting, for both national and international purposes, upon Silver and Gold Bimetallism at the legally established ratio, practically, from and after 1803, of 15.5 of Silver to 1 of Gold, or at any of the other ratios of exchange mentioned in Appendix No. VI., p. 217. Under the Single Standard Money System it is decreed by law that, in every inter-temporary transaction, the settlement shall be according to the exchange value of the unlimited legal tender money metal or metals ALONE at the MATURITY of such a transaction, and not otherwise; without any reference whatever to the exchange value of the money metal or metals at the INCEPTION of the transaction. 5. The amendment of Section 6 of "The Coinage Act, 1870,"1 so that "suitable and sufficient provision may be made requiring that in every inter-temporary transaction there shall be (1) a double standard of value(a) money, and (b) some other article of physical wealth other than gold (or, in the event of the re-establishment by international agreement of the monetary conditions which existed prior to 1871-73, other than gold or silver) to be selected, agreed upon, and recorded at the inception of the transaction; requiring also that at the maturity of such a transaction there shall be (2) an equal division, between creditor and debtor, between lender and borrower, of any variation in the value of the article of physical wealth so selected, agreed upon, and recorded, in comparison with money, as determined from an Official Price Current, embracing every staple article of industry and commerce, to be published daily by the Board of Trade, in the same manner as the prices of wheat, barley, and oats are now regularly published in the London Gazette, for the purpose of regulating and determining the sum of money (speculative wealth) payable to the tithe owner under the provisions of the Tithe Commutation Laws. For determining standard value at the time of the periodic or final payment of the principal and interest due on account of national or municipal loans, the Board of Trade General Index Numbers could be used, together with money, in all such transactions; and any 1 See Appendix I., p. 145. of the Board of Trade Group Index Numbers could be used, together with money, in any transaction where the joint interests involved would thereby be more equitably represented and adjusted than by the use of any single article of physical wealth together Under the Double Standard Money System business dealings would take place, exactly as at present, between man and man direct from start to finish-from the inception of every inter-temporary transaction until its maturity. At the inception of every inter-temporary transaction, all that would be required, in addition, in any contract entered into under an amended section 6 of "The Coinage Act, 1870," would be the selecting and recording of some article of physical wealth, or an Index Number, as the REGULATOR for adjusting and distributing, between the parties to the contract, at the time of settlement, any variation in the value of the Regulator article which may take place, between the date of the inception and the date of the maturity of the contract. At the maturity of the transaction, when the settlement is about to be made, the parties to the contract would refer to the Official Price Current or the Index Numbers to note the variation in the value of the Regulator article, and by means of the simple calculations 2 shown on pages 32 to 34 of "Inter-Temporary Values," 1 "The Trust and The Gold Trust," pp. 44 and 45. 2 See Appendix II., pp 158-162. |