Chapter 10
B. It is only too certain. Whether I am a philosopher or a legislator, whether I reason or act upon the principle that money is wealth, I always arrive at one conclusion, or one result:--universal war. It is well that you pointed out the consequences before beginning a discussion upon it; otherwise, I should never have had the courage to follow you to the end of your economical dissertation, for, to tell you the truth, it is not much to my taste.
F. What do you mean? I was just thinking of it when you heard me grumbling against money! I was lamenting that my countrymen have not the courage to study what it is so important that they should know.
B. And yet the consequences are frightful.
F. The consequences! As yet I have only mentioned one. I might have told you of others still more fatal.
B. Yon make my hair stand on end! What other evils can have been caused to mankind by this confusion between money and wealth?
F. It would take me a long time to enumerate them. This doctrine is one of a very numerous family. The eldest, whose acquaintance we have just made, is called the _prohibitive system_; the next, the _colonial system_; the third, _hatred of capital_; the Benjamin, _paper money_.
B. What! does paper money proceed from the same error?
F. Yes, directly. When legislators, after having ruined men by war and taxes, persevere in their idea, they say to themselves, "If the people suffer, it is because there is not money enough. We must make some." And as it is not easy to multiply the precious metals, especially when the pretended resources of prohibition have been exhausted, they add, "We will make fictitious money, nothing is more easy, and then every citizen will have his pocket-book full of it, and they will all be rich."
B. In fact, this proceeding is more expeditious than the other, and then it does not lead to foreign war.
F. No, but it leads to civil war.
B. You are a grumbler. Make haste and dive to the bottom of the question. I am quite impatient, for the first time, to know if money (or its sign) is wealth.
F. You will grant that men do not satisfy any of their wants immediately with crown pieces. If they are hungry, they want bread; if naked, clothing; if they are ill, they must have remedies; if they are cold, they want shelter and fuel; if they would learn, they must have books; if they would travel, they must have conveyances--and so on. The riches of a country consist in the abundance and proper distribution of all these things. Hence you may perceive and rejoice at the falseness of this gloomy maxim of Bacon's, "_What one people gains, another necessarily loses_:" a maxim expressed in a still more discouraging manner by Montaigne, in these words: "_The profit of one is the loss of another._" When Shem, Ham, and Japhet divided amongst themselves the vast solitudes of this earth, they surely might each of them build, drain, sow, reap, and obtain improved lodging, food and clothing, and better instruction, perfect and enrich themselves--in short, increase their enjoyments, without causing a necessary diminution in the corresponding enjoyments of their brothers. It is the same with two nations.
B. There is no doubt that two nations, the same as two men, unconnected with each other, may, by working more, and working better, prosper at the same time, without injuring each other. It is not this which is denied by the axioms of Montaigne and Bacon. They only mean to say, that in the transactions which take place between two nations or two men, if one gains, the other must lose. And this is self-evident, as exchange adds nothing by itself to the mass of those useful things of which you were speaking; for if, after the exchange, one of the parties is found to have gained something, the other will, of course, be found to have lost something.
F. You have formed a very incomplete, nay a false idea of exchange. If Shem is located upon a plain which is fertile in corn, Japhet upon a slope adapted for growing the vine, Ham upon a rich pasturage,--the distinction of their occupations, far from hurting any of them, might cause all three to prosper more. It must be so, in fact, for the distribution of labour, introduced by exchange, will have the effect of increasing the mass of corn, wine, and meat, which is produced, and which is to be shared. How can it be otherwise, if you allow liberty in these transactions? From the moment that any one of the brothers should perceive that labour in company, as it were, was a permanent loss, compared to solitary labour, he would cease to exchange. Exchange brings with it its claim to our gratitude. The fact of its being accomplished, proves that it is a good thing.
B. But Bacon's axiom is true in the case of gold and silver. If we admit that at a certain moment there exists in the world a given quantity, it is perfectly clear that one purse cannot be filled without another being emptied.
F. And if gold is considered to be riches, the natural conclusion is, that displacements of fortune take place among men, but no general progress. It is just what I said when I began. If, on the contrary, you look upon an abundance of useful things, fit for satisfying our wants and our tastes, as true riches, you will see that simultaneous prosperity is possible. Cash serves only to facilitate the transmission of these useful things from one to another, which may be done equally well with an ounce of rare metal like gold, with a pound of more abundant material as silver, or with a hundred-weight of still more abundant metal, as copper. According to that, if the French had at their disposal as much again of all these useful things, France would be twice as rich, although the quantity of cash remained the same; but it would not be the same if there were double the cash, for in that case the amount of useful things would not increase.
B. The question to be decided is, whether the presence of a greater number of crowns has not the effect, precisely, of augmenting the sum of useful things?
F. What connexion can there be between these two terms? Food, clothing, houses, fuel, all come from nature and from labour, from more or less skilful labour exerted upon a more or less liberal nature.
B. You are forgetting one great force, which is--exchange. If you acknowledge that this is a force, as you have admitted that crowns facilitate it, you must also allow that they have an indirect power of production.
F. But I have added, that a small quantity of rare metal facilitates transactions as much as a large quantity of abundant metal; whence it follows, that a people is not enriched by being _forced_ to give up useful things for the sake of having more money.
B. Thus, it is your opinion that the treasures discovered in California will not increase the wealth of the world?
F. I do not believe that, on the whole, they will add much to the enjoyments, to the real satisfactions of mankind. If the Californian gold merely replaces in the world that which has been lost and destroyed, it may have its use. If it increases the amount of cash, it will depreciate it. The gold diggers will be richer than they would have been without it. But those in whose possession the gold is at the moment of its depreciation, will obtain a smaller gratification for the same amount. I cannot look upon this as an increase, but as a displacement of true riches, as I have defined them.
B. All that is very plausible. But you will not easily convince me that I am not richer (all other things being equal) if I have two crowns, than if I had only one.
F. I do not deny it.
B. And what is true of me is true of my neighbour, and of the neighbour of my neighbour, and so on, from one to another, all over the country. Therefore, if every Frenchman has more crowns, France must be more rich.
F. And here you fall into the common mistake of concluding that what affects one affects all, and thus confusing the individual with the general interest.
B. Why, what can be more conclusive? What is true of one, must be so of all! What are all, but a collection of individuals? You might as well tell me that every Frenchman could suddenly grow an inch taller, without the average height of Frenchmen being increased.
F. Your reasoning is apparently sound, I grant you, and that is why the illusion it conceals is so common. However, let us examine it a little. Ten persons were at play. For greater ease, they had adopted the plan of each taking ten counters, and against these they had placed a hundred francs under a candlestick, so that each counter corresponded to ten francs. After the game the winnings were adjusted, and the players drew from the candlestick as many ten francs as would represent the number of counters. Seeing this, one of them, a great arithmetician perhaps, but an indifferent reasoner, said--"Gentlemen, experience invariably teaches me that, at the end of the game, I find myself a gainer in proportion to the number of my counters. Have you not observed the same with regard to yourselves? Thus, what is true of me must be true of each of you, and _what is true of each must be true of all_. We should, therefore, all of us gain more, at the end of the game, if we all had more counters. Now, nothing can be easier; we have only to distribute twice the number." This was done; but when the game was finished, and they came to adjust the winnings, it was found that the thousand francs under the candlestick had not been miraculously multiplied, according to the general expectation. They had to be divided accordingly, and the only result obtained (chimerical enough) was this;--every one had, it is true, his double number of counters, but every counter, instead of corresponding to _ten_ francs, only represented _five_. Thus it was clearly shown, that what is true of each, is not always true of all.
B. I see; you are supposing a general increase of counters, without a corresponding increase of the sum placed under the candlestick.
F. And you are supposing a general increase of crowns, without a corresponding increase of things, the exchange of which is facilitated by these crowns.
B. Do you compare the crowns to counters?
F. In any other point of view, certainly not; but in the case you place before me, and which I have to argue against, I do. Remark one thing. In order that there be a general increase of crowns in a country, this country must have mines, or its commerce must be such as to give useful things in exchange for cash. Apart from these two circumstances, a universal increase is impossible, the crowns only changing hands; and in this case, although it may be very true that each one, taken individually, is richer in proportion to the number of crowns that he has, we cannot draw the inference which you drew just now, because a crown more in one purse implies necessarily a crown less in some other. It is the same as with your comparison of the middle height. If each of us grew only at the expense of others, it would be very true of each, taken individually, that he would be a taller man if he had the chance, but this would never be true of the whole taken collectively.
B. Be it so: but, in the two suppositions that you have made, the increase is real, and you must allow that I am right.
F. To a certain point, gold and silver have a value. To obtain this, men consent to give useful things which have a value also. When, therefore, there are mines in a country, if that country obtains from them sufficient gold to purchase a useful thing from abroad--a locomotive, for instance--it enriches itself with all the enjoyments which a locomotive can procure, exactly as if the machine had been made at home. The question is, whether it spends more efforts in the former proceeding than in the latter? For if it did not export this gold, it would depreciate, and something worse would happen than what you see in California, for there, at least, the precious metals are used to buy useful things made elsewhere. Nevertheless, there is still a danger that they may starve on heaps of gold. What would it be if the law prohibited exportation? As to the second supposition--that of the gold which we obtain by trade; it is an advantage, or the reverse, according as the country stands more or less in need of it, compared to its wants of the useful things which must be given up in order to obtain it. It is not for the law to judge of this, but for those who are concerned in it; for if the law should start upon this principle, that gold is preferable to useful things, whatever may be their value, and if it should act effectually in this sense, it would tend to make France another California, where there would be a great deal of cash to spend, and nothing to buy. It is the very same system which is represented by Midas.
B. The gold which is imported implies that a _useful thing_ is _ex_ported, and in this respect there is a satisfaction withdrawn from the country. But is there not a corresponding benefit? And will not this gold be the source of a number of new satisfactions, by circulating from hand to hand, and inciting to labour and industry, until at length it leaves the country in its turn, and causes the importation of some useful thing?
F. Now you have come to the heart of the question. Is it true that a crown is the principle which causes the production of all the objects whose exchange it facilitates? It is very clear that a piece of five francs is only _worth_ five francs; but we are led to believe that this value has a particular character: that it is not consumed like other things, or that it is exhausted very gradually; that it renews itself, as it were, in each transaction; and that, finally this crown has been worth five francs, as many times as it has accomplished transactions--that it is of itself worth all the things for which it has been successively exchanged; and this is believed, because it is supposed that without this crown these things would never have been produced. It is said, the shoemaker would have sold fewer shoes, consequently he would have bought less of the butcher; the butcher would not have gone so often to the grocer, the grocer to the doctor, the doctor to the lawyer, and so on.
B. No one can dispute that.
F. This is the time, then, to analyse the true function of cash, independently of mines and importations. You have a crown. What does it imply in your hands? It is, as it were, the witness and proof that you have, at some time or other, performed some labour, which, instead of profiting by it, you have bestowed upon society in the person of your client. This crown testifies that you have performed a _service_ for society, and, moreover, it shows the value of it. It bears witness, besides, that you have not yet obtained from society a _real_ equivalent service, to which you have a right. To place you in a condition to exercise this right, at the time and in the manner you please, society, by means of your client, has given you an acknowledgment, a title, a privilege from the republic, a counter, a crown in fact, which only differs from executive titles by bearing its value in itself; and if you are able to read with your mind's eye the inscriptions stamped upon it you will distinctly decipher these words:--"_Pay the bearer a service equivalent to what he has rendered to society, the value received being shown, proved, and measured by that which is represented by me._" Now, you give up your crown to me. Either my title to it is gratuitous, or it is a claim. If you give it me as payment for a service, the following is the result:--your account with society for real satisfactions is regulated, balanced, and closed. You had rendered it a service for a crown, you now restore the crown for a service; as far as you are concerned, you are clear. As for me, I am just in the position in which you were just now. It is I who am now in advance to society for the service which I have just rendered it in your person. I am become its creditor for the value of the labour which I have performed for you, and which I might devote to myself. It is into my hands, then, that the title of this credit--the proof of this social debt--ought to pass. You cannot say that I am any richer; if I am entitled to receive, it is because I have given. Still less can you say that society is a crown richer, because one of its members has a crown more, and another has one less. For if you let me have this crown gratis, it is certain that I shall be so much the richer, but you will be so much the poorer for it; and the social fortune, taken in a mass, will have undergone no change, because as I have already said, this fortune consists in real services, in effective satisfactions, in useful things. You were a creditor to society, you made me a substitute to your rights, and it signifies little to society, which owes a service, whether it pays the debt to you or to me. This is discharged as soon as the bearer of the claim is paid.
B. But if we all had a great number of crowns we should obtain from society many services. Would not that be very desirable?
F. You forget that in the process which I have described, and which is a picture of the reality, we only obtain services from society because we have bestowed some upon it. Whoever speaks of a _service_, speaks at the same time of a service _received_ and _returned_, for these two terms imply each other, so that the one must always be balanced by the other. It is impossible for society to render more services than it receives, and yet this is the chimera which is being pursued by means of the multiplication of coins, of paper money, &c.
B. All that appears very reasonable in theory, but in practice I cannot help thinking, when I see how things go, that if, by some fortunate circumstance, the number of crowns could be multiplied in such a way that each of us could see his little property doubled, we should all be more at our ease; we should all make more purchases, and trade would receive a powerful stimulus.
F. More purchases! and what should we buy? Doubtless, useful articles--things likely to procure for us substantial gratification--such as provisions, stuffs, houses, books, pictures. You should begin, then, by proving that all these things create themselves; you must suppose the Mint melting ingots of gold which have fallen from the moon; or that the Board of Assignats be put in action at the national printing office; for you cannot reasonably think that if the quantity of corn, cloth, ships, hats and shoes remains the same, the share of each of us can be greater, because we each go to market with a greater number of real or fictitious money. Remember the players. In the social order, the useful things are what the workers place under the candlestick, and the crowns which circulate from hand to hand are the counters. If you multiply the francs without multiplying the useful things, the only result will be, that more francs will be required for each exchange, just as the players required more counters for each deposit. You have the proof of this in what passes for gold silver, and copper. Why does the same exchange require more copper than silver, more silver than gold? Is it not because these metals are distributed in the world in different proportions? What reason have you to suppose that if gold were suddenly to become as abundant as silver, it would not require as much of one as of the other to buy a house?
B. You may be right, but I should prefer your being wrong. In the midst of the sufferings which surround us, so distressing in themselves, and so dangerous in their consequences, I have found some consolation in thinking that there was an easy method of making all the members of the community happy.
F. Even if gold and silver were true riches, it would be no easy matter to increase the amount of them in a country where there are no mines.
B. No, but it is easy to substitute something else. I agree with you that gold and silver can do but little service, except as a mere means of exchange. It is the same with paper money, bank-notes, &c. Then, if we had all of us plenty of the latter, which it is so easy to create, we might all buy a great deal, and should want for nothing. Your cruel theory dissipates hopes, illusions, if you will, whose principle is assuredly very philanthropic.
F. Yes, like all other barren dreams formed to promote universal felicity. The extreme facility of the means which you recommend is quite sufficient to expose its hollowness. Do you believe that if it were merely needful to print bank-notes in order to satisfy all our wants, our tastes and desires, that mankind would have been contented to go on till now, without having recourse to this plan? I agree with you that the discovery is tempting. It would immediately banish from the world, not only plunder, in its diversified and deplorable forms, but even labour itself, except the Board of Assignats. But we have yet to learn how assignats are to purchase houses, which no one would have built; corn, which no one would have raised; stuffs, which no one would have taken the trouble to weave.
B. One thing strikes me in your argument. You say yourself, that if there is no gain, at any rate there is no loss in multiplying the instrument of exchange, as is seen by the instance of the players, who were quits by a very mild deception. Why, then, refuse the philosopher's stone, which would teach us the secret of changing flints into gold, and, in the meantime, into paper money? Are you so blindly wedded to your logic, that you would refuse to try an experiment where there can be no risk? If you are mistaken, you are depriving the nation, as your numerous adversaries believe, of an immense advantage. If the error is on their side, no harm can result, as you yourself say, beyond the failure of a hope. The measure, excellent in their opinion, in yours is negative. Let it be tried, then, since the worst which can happen is not the realization of an evil, but the non-realization of a benefit.
F. In the first place, the failure of a hope is a very great misfortune to any people. It is also very undesirable that the Government should announce the re-imposition of several taxes on the faith of a resource which must infallibly fail. Nevertheless, your remark would deserve some consideration, if, after the issue of paper money and its depreciation, the equilibrium of values should instantly and simultaneously take place, in all things and in every part of the country. The measure would tend, as in my example of the players, to a universal mystification, upon which the best thing we could do would be to look at one another and laugh. But this is not in the course of events. The experiment has been made, and every time a despot has altered the money ...
B. Who says anything about altering the money?