Harper's Weekly Editorials on Carl Schurz/An Indefinite Dollar
The speech of Secretary Schurz at Cincinnati was an admirably comprehensive treatment of the pending financial question, and would serve as an excellent manual for all voters, whatever the result in Ohio or elsewhere. It is the advantage of an orator in a campaign like this that he can state principles which are always true and valuable. There is no subject more important in every country than the finances, and there is none upon which there is a more general want of knowledge. Indeed, there is a common feeling that there are no principles upon the subject, and that nobody really knows any thing about it. But the discussion of this year ought to correct that error. One or two cardinal and indisputable facts, indeed, ought to persuade those who say that all financial discussion is moonshine, to distrust their own skepticism. Thus, nobody who can read and has read history will deny that in barbaric times and countries exchanges are made, if at all, by barter. He will not deny that gradually money comes into use both as a measure of value and a medium of exchange. He will agree that certain metals only, and mainly gold, have been universally used for money. Now he will hardly argue that this is a chance. He will not deny that there must be a reason for all this. But when he has admitted that, he has admitted substantially that there are laws that regulate the matter. He has mastered, without knowing it, the A B C of finance, as Professor Newcomb calls it.
It is not hard for an intelligent man to apply some of these simplest principles to what seem to be and are usually called very complex and mysterious subjects. There was probably many such a man in Ohio before the election who would not read Mr. Schurz's speech because he did not believe he could understand it. But see how simply Mr. Schurz applies the principle that by the common consent of civilization a certain metal is the final measure of value. This is so because people have found by experience that they must have such a measure, and that each a measure must have certain qualities. All these have been found in gold more fully than in any other substance, and consequently gold is the universal standard. Now Mr. Schurz tested “fiat” money by this simple fact. He showed to those who really suppose that a currency composed of paper printed by the government, and “with all the wealth of the country behind it,” would be a convenient and certain currency, how totally mistaken they are. In the first place, the more dollars there are, the smaller is their purchasing power, so that the fiat money would constantly depreciate as to the commodities to be bought, until it would take a wheelbarrow load of dollars to buy what could be carried home in the waistcoat pocket. In the second place, we are a commercial nation. Our imports and exports will be soon counted by thousands of millions of dollars. But all that we sell and buy abroad must be paid and settled for on a gold basis. Hence the prices of our agricultural staples at home are determined by the foreign market, in which fiat money would be worth as much as shreds of brown paper. It is plain, therefore, that the flat dollar itself, like the greenback, would be quoted at its value in gold, which is the real standard of value in the commercial world. The first effect of a “fiat” currency would be to banish gold from the country, and with its expulsion to introduce that uncertainty and fluctuation which are felt first by labor and productive industry. A paper dollar “based in some indefinite way upon an indefinite something” is not a dollar to satisfy men who intend to deal upon the principle of value received.