14 ' THE NEBRASKA INDEPENDENT may 28.. isos.
SCIENTIFIC MONEY
Mr. Patoa'a Address Before th 8liffiTx
Leagaa f Auckland, Nw Zealand
Many of the single taxers avoid the
money question or treat it of no par
ticular moment; as something of a
private nature, with which govern
ment ought not to concern itself. But
some of them realize that taxes are
paid in legal tender coined money
and in nothing else; and they give the
money question the attention it de
serves. The following is an address deliv
ered by James S. Paton, now of River
side. Cal.. . before the Single Tax
"league of Auckland, New Zealand, in
October, 1901; and It is now being
circulated by the Financial Reform
-league of Inglewood, N. Z. which goes
to show that the money question is a
.live one even in progressive New Zea
land, the country without strikes. Mr.
Paton said:
Mr. Chairman, Ladies and Gentle
men: My subject tonight is "A Per
fect Money System." Ricardo said:
"a perfect money will always have
, the same value." He held that a per
' feet system of money was impossible,
and his reason was: "That as all
commodities fluctuate in value, a sys
tem of money based upon a commodity
must also fluctuate in value."
IIi3 reason is good as far as It goes;
but it only proves that a system of
" money based on a commodity must be
- Imperfect, and in that I agree with
him. : ' ' "
'" The ideal system ; that students of
- the money question are looking for
must be based upon a natural law that
will force it to expand and contract
automatically with the expansion or
.'contraction of commerce. For, as tho
value of money depends upon supply
and demand, and as a perfect money
, must always have the same value, an
increased demand must be accompa
" riled by an increased supply in exact
ratio to the increased demand; other-
wise, .the value of money. must fluc
tuate,7 and the money be Imperfect.
Cne function of money is to measure
values," consequently it should always
be of the same value, just as a meas
ure of length, such as a yard must
possess the' quality of length, and to
e an honest measure, must always be
of the same length. As it is a duty of
government to regulate weights and
measures, it is the duty of govern-
" inpnt to reeulate the value of money
tL a measure of values.
Del Mar says: Value is not a
thing, nor an attribute of things; it
is a relation; a numerical relation,
which appears in exchange." Now, if
that is true, and also that the value of
1 money depends upon the relation of
' the whole volume of money, to tho
. whole amount of good3 and services
it is required to exchange; It fol
l lows that the value of a perfect money
must be regulated, not by -regulating
' i the quantity of the material in a
; piece of money, nor by arbitrarily lim
iting the quantity issued; but by reg
. ulating its relation to the wealth it is
required to exchange.
The rate of interest indicates the
relation of the volume of money o
the volume of trade. When more
goods than usual have been produced,
it requires more money than usual to
exchange them at the usual prices,
and if more money isa not forthcom
ing, interest will rise until .the fall in
prices makes it possible' for the
amount of money in circulation to ex
:hange the goods oifered for sale and
Jemanded by buyers.
If the increased production of goods
were accompanied by- an increased
supply of money, the increase in the
currency being in exact ratio to, the
increase in production, interest would
not vary nor prices, fall.
Now, suppose that the government,
Instead of trying to regulate the value
of. money by simply fixing the weight
. and fineness of tffe metal contained in
" the coins, or by. limiting the amount
of notes issued, W3 to issue as much
money as was demanded at a fixed
rate of interest, in that case the in
creased demand would be accompanied
by an increased supply.
- I propose that
1. The government, issue paper
money and loan it to the people.
. 2. Loans on real estate not to ex
ceed the value of permanent improve
ments. 3. The. rate of interest to be the
lowest rate current; at' the time the
system is adopted.
4. The rate of interest so estab
lished to be permanent ,
5. All demands backed by good se
curity to be supplied.
6. No restrictions to be placed up
on private parties or private banks in
regard to amount of interest charged
by them.
: . 7. The "free coinage" of both gold
and silver must be abolished.
I am in favor of a paper currency,
but it Is not essential to my plan,
farther than that if gold and t silver
were used, and the government could
not supply the demand in coin, it
would have to issue enough notes to
make up the deficiency. But if the
value of money depends upon the
number and - denomination of ths
pieces in circulation, and their rela
tion to the volume of trade which I
believe; and most writers on the sub
ject admit why not use the cheapest
and most convenient material ? Al
though I consider paper the best ma
terial for making all money, except
small change, no kind of money can
be good unless people have confidence
in. it, and are willing to accept it.
Gold and silver coins are inconvenient
on account of their weight, and the
expense of buying gold and silver to
make money is very great; still a
sound and honest money may be made
of gold and silver; but not on . the
"free coinage" plan. A perfect sys
tem of money must be limited, and it
is absolutely necessary for the gov
ernment to have the power to issue
more money when more money is re
quired, and to stop its issue when
there is enough money in circulation;
because it . is the whole amount of
money in circulation that measures
value. It is just as necessary for the
government to regulate the value o!
money as the size of bushels or the
length of yards; and it is just as im
possible to have a perfect system of
money based on the free coinage plan
jas it is to have a perfect system of
weights and measures where weights
and measures are not regulated. Free
coinage of gold gives to the owners
i of gold the same power that a law
allowing dealers in all kinds of goods
to change the size of their weights
and measures, whenever it suited their
convenience, would give to tradesmen.
Even if paper were issued exclusively
in place of large coins, it is. not so
convenient as coin for small change,
and the use of small coins should be
continued.
I would limit the amount loaned on
real estate to somewhat less, than the
value of the permanent improvements,
because lending on the value of im
provements would encourage industry;
and I would not favor lending upon
land "values, because it would encour
age speculation in land.
Under prevailing systems the rate
cf interest depends upon the supply
and demand for money rising as
money becomes scarce, and falling as
the supply increases or the demand
diminishes. An imperfect currency
fluctuates in" value, and the fluctua
tions are accompanied by fluctuations
in tv. rates of interest. As a perfect
currency must always be of the same
value that is supply and demand
must always remain equal a perfect,
currency must be accompanied by a
f.K?'l rate cf intetfft. The rate of in
terest and the amount of money in
circulation are interdependent Limit
the amount of money in circulation
arbitrarily, an increased demand for
money in that case cannot be accom
panied by an increased supply, the
value of money increases, and the
rate of interest rises. But fix the rate
of interest arbitrarily and leave ths
amount of money free to adapt itseU
to the rate of interest, by issuing as
much money as is demanded at that
rate and maintaining the same fixed
rate money will fluctuate in quan
tity with the requirements of com
merce, but will not fluctuate in valuf.
The rate of interest adopted should
be as near as possible the current rate
because every change in the value of
money does an injustice. Every in
crease in the volume of the currency,
without a corresponding increase in
the amount of business, depreciates
the value of monev and does an injus
tice to creditors, and a contraction of
the currency docs an injustice to debt
ors. For that reason the value of
the currency should never be
changed; and as changing the rate of
interest would change the value of
money, the rate of interest should nev
er be changed. I don't mean that a
law should- be passed to prevent the
legislature from changing the rate of
interest, for such a law would be impossible;-for
any law enacted by one
tzt of men may be repealed by another
set of men. One set of law-makers
sometimes make promises and throw
the responsibility of fulfilling them on
succeeding generations; but when
people realize that the dead have not
the power to govern this world, such
laws will not be respected.. I only
want to point out that the value of
money should never be changed for
the same reason that standards of
weight or measure should never be
changed. In order that the amount
of money may be free to adapt Itself
to" the rate of interest, it is necessary
that the quantity should not be lim
ited. Another reason why the quan
tity should not be limited is that a
limited supply can be controlled and
monopolized by money-lenders; for U
the government Issues are exhausted
without supplying the demand, there
must be a scarcity of money, and
private parties could extort high rates
of interest
For the same reasons that the de
mand should be fully supplied no
money should be issued except the
loans are at the fixed rate of interest,
for as loans at a 3xed rate of Inter
est would maintain e equilibrium
between supply and, demand; any oth
er issues would destroy their equality.
Probably the greatest reform yec
adopted in New Zealand Is its loans
to settlers. It i3 a step in the right
direction; but only a step. It has
brought down the rate of Interest, and
made it harder for the money-lender 3
to control the currency.
By' issuing notes it could retain as
revenue the interest it . receives, in
stead of simply acting as agent and
collector for the money-lenders; and
by supplying the demand at a fixed
rate it would completely break th
power of the money-lenders to extort
high rates of interest
They are trying to pass a bill to
limit the rate of interest. Such bills
have been passed in other countries
and failed to produce the desired ef
fectthe laws are either evaded .or
less money is lent than borrowers de
mand. If the rate of Interest depends
upon supply and demand, and it is de
sirable to limit the rate to five per
cent, the way to do it Is to supply the
demand at 5 per cent If three or four
per cent is considered more desirable,'
let them supply the demand at one of
those rates; but the rate once fixed
should remain unchanged.
If the government Issued notes in
unlimited quantities and loaned them
at, say, four per cent, it is evident
there could never be a scarcity of mon
ey. Every person who possessed the
required security could obtain money
at that rate, and nobody would pay
extortionate rates to money-lenders.
Private parties could get four per cent
as long as there was not too much in
circulation. When less money was re
quired in business there would be idle
money which would be offered on bet
ter terms thanHhe government loans,
and less government loans would be
called for; competition amongst pri
vate parties would prevent inflation,
and the government loans would pre
vent contraction. (Expansion could
also be preyented by the government
borrowing from the people at the
same rate that it received, but I don't
think it would be necessary.). V
The greatest objection to a paper
currency has been that the material
be'ng unlimited, and no natural way
i f limiting its issue being known, : it j
has often been issued in excessive
quantities.
With the plan I propose, the bor
rowers would really be the issuers of
the money, and its redemption would
be insured by their property pledged
as security, borrowers would receive
mtney. on better terms than before,
and the whole people vould be ben
efitted by the government receiving
a vt venue that it had earned.
Government loans to the peopl3
would increase the revenues of the
government and at the same time
lighten the burdens of the people. It
would compel no one to borrow mon
ey; but those who desired to do so,
could borrow on better terms than they
otherwise could. They would get
money at exactly what it was worth,
and the government would render
them a service worth all they paid for
it It would not be a special privilege
in any -sense.
Why does progress always accom
pany an expanding currency, and stag
nation and ruin always accompany
contraction?
One answer to the question is: That
when the currency is being inflated
nr.ces rise owing to the depreciation
of money, and although people have
more money than formerly) their in
crease in real wealth has not been in
proportion to their increase in money;
also, when the currency is contracting
it is appreciating in value, and al
though people have less money, they
may still have as much real wealth.
Although this answer is quite true,
it is not the whole truth. Real prog
ress cannot accompany a depreciating
currency, and it must always be ac
companied by an expanding currency.
Money is said to be to commerce
what blood is to the human system
it is the circulating medium that car
ries nourishment to all parts of the
state. I would compare a progressive
country to a child. A healthy , child
has as much blood as it requires; but
as it grows it requires more blood
In proportion to its size, and the
amount of blood that would keep a
child in health would not sustain the
life of a man. It is just so with com
merce. It cannot grow unless the cir-'
culating medium grows with it. It
cannot grow with a fixed amount of
money any more -than a child can
grow 'with a fixed amount of blood.
In conclusion, I believe that the sys
tem of currency that I propose would
give us a currency that will always be
rf the same value; that will expand
and contract with the requirements of
trade; that will prevent usury; that
will make it easier for the laborer to
obtain capital; that cannot be con
trolled by monopoly; that will make
a financial crisis caused by a scarcity
of money impossible; that will in
crease the revenues of the country,
and at the same time lighten the bur
dens of the people.
JAMES S. PATON.
Riverside, Cal.
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Doyle & Bergs Attorneys, Browaell Bloek,
Lineola, Neb.
NOTICE TO NON-RESIDENT DEFENDANT
AND UNKNOWN HEIRS.
To Herman Moneka, and the unknown heirs of
Sophia Herzer, deceased, defendant :
Tou, and each of you, are hereby notified that
on the 2d day of April 903, the plaintiff filed bis
petition in the District Court of Lancaster
County, Nebraska, against Herman Moneka,
and the other unknown heirs of Sophia Herzer,
deceased, aud the State of Nebraska, alleging
that erer since the year J87f, be has been the
owner of the south half (S. Yt) of the southwest
quarter (S. W. M) of section one (1) in township
eight (8) range five 5) East in Lancaster County
Nebraska, and still is the owner and in posses
sion of said premises: that during the year 1878,
he purchased said real estate from the Chicago,
Burliugton fc Quincy Railroad Company; that
during the year 1873. he married Sophia Herzer,
now deceased, and that said Sophia Herzer was
his wife during the year 1878, when he pur
chased said real estate; that prior to the pur
chase of said real estate, in consideration of
"love and affection," he agreed with said
Sophia Herzer that she should hold the naked
legal title to said real estate, during the term
of her lifetime, with the express understand
ing, however, that prior to her death, said
Sophia Herzer would convey the legal titlo to
said real estate to the plaintiff, and that duri. g
all of the time that said Sophia Herzer should
hold said legal title that she should hold said
seal estate in trust for the p'aintitT, and plain
tiff alleges that said Sophia Herzer agreed with
the plaintiff to so hold the title to said real es
tate, and upon the conditions alleged; that
thereupon this plaintiff caused the Chicago,
Furfiugton & Quincy Kailroad Company to exe
cute a contract in writing to said Sophia Her
zer, obligating itself to convey said premises by
warranty deed to said Sophia Herzer ur-on the
payment of vhe purchase money of said real es
tate. Plaintiff alleges in 1 is petition that when he,
marr ied said Sophia Herzer sho had no prop
erty of her own oxcoptouly a small sum in rash
no part of which was used for the purpose of
Purchasing said-real estate ; that kho plaintiff,
himself, personally, paid ail of the purchase
money for said real estate to the Chicago, Bur
.ington fc Quincy Railroad Company on the 18th
day of March 18 4, and at said timo caid Rail
road Company, by warranty deed, conveyed
said premises to said Sophia Herzer, which
deed was filed for record in the office of the
Register of Deeds in Lancaster County, Ne
braska, on the Cth day of July 18S, at 1 :3 p. m.
and recorded in Book 21 of Deeds at page 216;
that said Sophia Herzer died, in Lancaster
County, Nebraska on the day of 1888,
intestate, and without issue, and that the only
heirs at law was the defendant, Herman,
Moneka, who is a brother of said Sophia Herzer,
residing in Germany, and that if there are any
other heirs of said Sophia Herzer that their
names and residences are unkn own to t he plain
tiff, and also that the name and residence of
Herman Moneka, the above named defendant
is unknown to tho p'aintiff, and that he ii not
certain that Herman Moneka is the correct
name of the brother of said Sophia Herzer, but
that he has made diligent search for Herman
Moneka, and the other unknown heirs of Her
man Moneka and he has been unable to learn
either their names or their residences, and that
they are unknown to him at this time; that he
does n know whethor the father and mother
of said Sophia Herzer are livine-, and does not
know their residences although he has made
dilisrent search to learn their names and resi
dences, but that ho has failed to learn either,
and both their names and residences are un
known to this plaintiff.
. That about three years prior to the death of
said Sophia Herzer she was insan and incapa
bln of making a conveyance of trfd premises to
this plaintiff, and that because of said insanity
and for no other reason, were said premises not
conveyed to this plainMff prior to the death of
said Sophia Herzer, and that eve- since the
year 1878, he has continuously had possession of
said real estate in an open, adverse, notorious
and peaceable manner, and that during all of
said years he has farmed the same and im
proved the same.
That ever since March 18, 1888, at the time the
Chicago, Burlington & Quincy Railroad Com
pany executed a deed to said Sophia Herzer for
said premises, ho has each year paid to the
County of Lancaster, and State of Nebraska, all
of the taxes accruing on said real estate, for
which plaintiff holds receipts.
That the State of Nebraska claims to have
some interest in said real estate which plaintiff
denies.
Plaintiff prajs for a judgment of the court
decreeing that the state of Nebraska ha s no in
tcrestof any kind whatsoever in'and to said
real estate, and decreeing also that thn above
named, Herman Moneka. and any and all un
known heirs of sophia Herzer, deceased, have
no interest of any kind whatsoever in and to
raid real estate, and that plaintiff, Franz Her
zer, be decreed to be the real owner of said real
state, and that the court will enter n decree
quieting title in him, and for such other and
further relief as to the court may seem proper.
Yon are hereby required to answer this said
petition on or before the 8th day of June 1903.
FRANK HKBZER,
Plaiatiff.
By Doyle k Berft, His Attorneys.