Synopsis by Conspiracy Nation
(Based on *Coin's Financial School* by William Harvey (1895))

The science  of  money  is  an  exact  science.   As  much  so as

The primary value of all property is its exchange value.   If  we
had  no  money,  one  kind  of  property  would  be exchanged for
another.  Money  is  a  medium  of  exchange  to  facilitate this
exchanging of property.

If there were no money,  and  we  had  to  depend  on  exchanging
property  for  property,  we  could find a subsistence, but there
would be no such  thing  as  our present civilization or anything
like it.

As stagnation and depression to business would result from having
no money, then a part of these evils  can  be  brought  about  by
having money insufficient in either QUALITY or QUANTITY.

It  was  best  to  select  something for money which was valuable
within itself.  By  stamping  it  as  money,  and making it legal
tender in the payment of all debts,  it  then  became  money  and
possessed two qualities:

  (1)  It  had  value  of  itself.  If the government went to
  pieces, it was still  valuable  property  and would have an
  exchange value;

  (2)  The  stamp  of  the  government  upon  it   became   a
  certificate of its QUALITY and QUANTITY.

It  was  considered  that  silver  and  gold  were  sufficient in
quantity for use  as  primary  money,  but  if  at any time their
combined quantity should become too small, then some other  metal
would have to be adopted and added to these two.

After a nation  has  fixed  what  its  *money*  shall be, it then
issues different  forms  of  *credit  money*  all  of  which  are
directly or indirectly redeemable in the commodity (silver and/or
gold) to which a fixed and stable value has been given.

All money may be a medium of exchange, but primary  money  *only*
is  the  measure  of  values.   Credit  money is not a measure of
values; it is a medium of exchange only.

There  are two kinds of *credit money*, as to the material out of
which they are made.  One is made on paper and embraces all forms
of government and bank notes.  The other is *token money*.  Token
money is made from some metal that does not enjoy free coinage.

Credit money of  all  kinds  circulates  by  reason  of its being
redeemable directly or indirectly in primary money.  A  piece  of
paper  money,  or  token money, is a promise of the government to
pay so much primary  money.   Hence  it is called *credit* money.
It circulates on the credit of the government, on the  confidence
of the people that the government will be able to redeem it if it
is presented.

In  issuing dollar for dollar of credit money to redemption money
(primary money), it is  not  necessary that the government should
keep the redemption money (gold and/or silver) at  all  times  in
its treasury in full amount ready to redeem all the credit money.
So  long  as  sufficient  redemption money is in the country, the
credit of the government can be  depended upon to get it.  But it
cannot strain the proportion beyond such  amount  without  making
the danger imminent, and the lack of confidence great.

If  there  is one thousand million dollars of redemption money in
the United States -- in  its  treasury,  its banks, and among its
people -- then one thousand  millions  of  credit  money  can  be
safely used and not more.

If the plan is to weaken the currency, then (a) credit  money  is
increased  *beyond*  the  supply  of  primary  money; or, (b) the
foundation is dug out  from  under  the credit money by lessening
the supply of primary money.

The currency was weakened in 1873, when Congress snuck in  a  law
demonetizing  silver  and  President Grant unwittingly signed the
law.  (See previous issue, CN  11.04.)   If the plan is to weaken
the currency, the foundation (silver) is dug out from  under  the
credit money by lessening the supply of primary money.

By  making  gold  the  *unit* and closing the mints to silver, it
lessened the demand for silver,  and its commercial value at once
began to depreciate.  The moment a new standard of money was  set
up -- only one-half in quantity to what had previously existed --
silver began to fluctuate.  It was then measured for its value in
this  new  standard  for measuring values and no longer possessed
that fixed value which  free  coinage  had  given it.  Silver had
been changed  from  primary  money  to  token  money.   With  the
demonetization  of  silver,  the balance between credit money and
primary money went out of  whack:  two-thirds of the money became
credit money; one-third was primary money.

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