“All wealth,” says Sir Thomas More, “in former times was tangible. It consisted in land, money, or chattels, which were either of real or conventional value.”
Montesinos, as Mr. Southey somewhat affectedly calls himself, answers thus:--
“Jewels, for example, and pictures, as in Holland, where indeed at one time tulip bulbs answered the same purpose.”
“That bubble,” says Sir Thomas, “was one of those contagious insanities to which communities are subject. All wealth was real, till the extent of commerce rendered a paper currency necessary; which differed from precious stones and pictures in this important point, that there was no limit to its production.”
“We regard it,” says Montesinos, “as the representative of real wealth; and, therefore, limited always to the amount of what it represents.”
“Pursue that notion,” answers the ghost, “and you will be in the dark presently. Your provincial banknotes, which constitute almost wholly the circulating medium of certain districts, pass current to-day. Tomorrow tidings may come that the house which issued them has stopt payment, and what do they represent then? You will find them the shadow of a shade.”
We scarcely know at which end to begin to disentangle this knot of absurdities. We might ask, why it should be a greater proof of insanity in men to set a high value on rare tulips than on rare stones, which are neither more useful nor more beautiful? We might ask how it can be said that there is no limit to the production of paper money, when a man is hanged if he issues any in the name of another, and is forced to cash what he issues in his own? But Mr. Southey’s error lies deeper still. “All wealth,” says he, “was tangible and real till paper currency was introduced.” Now, was there ever, since men emerged from a state of utter barbarism, an age in which there were no debts? Is not a debt, while the solvency of the debtor is undoubted, always reckoned as part of the wealth of the creditor? Yet is it tangible and real wealth? Does it cease to be wealth, because there is the security of a written acknowledgment for it? And what else is paper currency? Did Mr. Southey ever read a banknote? If he did, he would see that it is a written acknowledgment of a debt, and a promise to pay that debt. The promise may be violated, the debt may remain unpaid: those to whom it was due may suffer: but this is a risk not confined to cases of paper currency: it is a risk inseparable from the relation of debtor and creditor. Every man who sells goods for anything but ready money runs the risk of finding that what he considered as part of his wealth one day is nothing at all the next day. Mr. Southey refers to the picture-galleries of Holland. The pictures were undoubtedly real and tangible possessions. But surely it might happen that a burgomaster might owe a picture-dealer a thousand guilders for a Teniers. What in this case corresponds to our paper money is not the picture, which is tangible, but the claim of the picture-dealer on his customer for the price of the picture; and this claim is not tangible. Now, would not the picture-dealer consider this claim as part of his wealth? Would not a tradesman who knew of the claim give credit to the picture-dealer the more readily on account of the claim? The burgomaster might be ruined. If so, would not those consequences follow which, as Mr. Southey tells us, were never heard of till paper money came into use? Yesterday this claim was worth a thousand guilders. To-day what is it? The shadow of a shade.