order and the resulting value, the increasing mortgage-value of urban land is one practical example of private absorption of surplus effort, and as it expresses itself indirectly in bank assets and credit, has the same effect as private coinage. At the same time, in spite of our generous validation of credit in terms of nonexistent gold, our estimate of total value, even when expressed as flamboyant “gold” bonds or as more discreet “gold” currency, falls far short, under orderly government, of being a sufficient expression of our basic assets.[1] It is not because we over-estimate these assets that we suffer from inflation: it is because we so under-estimate them that issue after issue of certificates of value, expressed in terms of gold, is feasible, with spasmodic interruptions, when the international holders of the world’s meager gold supply bring us sharply to heel. The result is that a few grow a great deal richer and the rest of us, if not actually a little poorer, at any rate unnecessarily insecure, and indecently grateful for the few crumbs that fall from the table. And the mischief wrought is not vicious. It is aimless. Total effort is checked; and the pitiful margin of value is badly divided.
Just as in the days of the most simple community, when goods and services were exchangeable for goods and services, so today bills-of-lading and warehouse receipts are valid tokens of exchangeable wealth, and if we ceased all effort, would go on being so till everything was consumed. But lacking autocratic compulsion, the vital need of democracy is extra-effort. How can we encourage this except by providing that our inducement shall be guaranteed by some token that is a negotiable subdivision of total national basic value—not a mathematically unenforcible title to a share in a stock of gold which we do not own, or a deferred title to magnificent sums of gold, which do not exist, based on the optimism of some amateur Secretary of the Treasury, or the dubious credit, expressed in gold, of some pyramiding captain of finance, endorsed first by his own bank, next by a friendly subsidiary, and later quite innocently by the Federal Reserve Bank which, as the representative of the victims themselves, is wrestling in good faith,
- ↑ Compare “Volume of Currency,” page 304 et seq.
