Government and Value

GOVERNMENT AND VALUE IN. a letter. to the. London Herald of Anarchy, Mr. J. Greevz Ptsher asserts that HsovernlTIent does not, . and never can, fix· the value of gold or any other commodity'" and cannot even affect ·such vdue except by the ~light additional demand which it creates as a consumer.· It is true that government cannot fix the value of a commodity, because its influence is but one of several factors that combine to govern value. But its' power to atfece value is out. of all proportion to. the ex ten.tof its consumption. Government's consumption of com modities. is an almost· infinitesimal influen~e upon value in compari$on with its prohibitory power. One of the chief factors in the constitution of value· is,. as Mr. Fisher himself states, utility; and. as long as governments exist, utility' is largely .dependent upon· their arbitrary" decrees. When gov ern.rnentprohibits the manuf~cture and sale. of liquor,. does it not thereby reduce the value· of everything that is used in such manu.facture and sale? If government were to allow theatricalperfoqnances on Sundays, would not the value of every building that contains a theatre. rise? Have not we, here in America, just seen the McKinley bill change the value of.·nearlY every article that .the people use? If .government were to decree that all plates shall be made of ·tin, would not the value of tin rise and the value of china fall? Unques tionably .. Well, a precisely parallel thing occurs when gov, ernment decrees that all money shall be made of or issued a'gainst gold· or silver; these metals immediately take on an artificial, government-created value, because of the. new use which arbitrary power enables them to monopolize, and· all other commodities, which are at the sam~ time· forbidden to he.· put to this use, correspondingly lose value. How absurd, then, in view of these indisputable facts, 'to assert that. gov ernment can affect values only in ratio of its consumption!

And yet Mr. Fisher makes this assertion the starting ...pointof alectureto the editoro£the Herald o/Anarchy delivered in 148 IN D I V I D U ALL I B E R T Y that dogmatic, know-it-all style which only those are justified in assuming who can sustain their statements by facts and logic. Mr. Fisherreplied, in a letter to Liberty, so Mr. Tucker continued: THE central position taken by Mr. Fi~her at the start that government cannot affect the value of gold or any other com modity except by the slight additional·demand which it cre ates as a consumer he has been forced to abandon at the first onslaught. If government were to allow the opening of thea;;res on Sunday, it would not thereby become a consumer of theatres itself (at least not in the economic sense; for, in the United States, at any rate, our governors always go to the theatre as ((dead-heads"), and yet Mr. Fisher admits that in such a case the value of theatres would immediately rise very greatly. This admission is an abandonment of the po sition taken at first so confidently, and no other considera tion can make it anything else. The fact that competition would soon arise to reduce the value does not alter the fact that for a time this action of government would materially raise it, which Mr. Fisher originally declared an impossibility. But even if such a plea had any pertinence, it could be promptly destroyed by a slight extension of the hypothesis. Suppose government, in addition to allowing the theatres now existing to open on Sunday, were to prohibit the establishment of any additional theatres. Then the value would not only go up, but stay up. It is hardly necessary to argue the matter further; Mr. Fisher undoubtedly sees that he is wrong. The facts are too palpable and numerous. Why, since my com ment of a month ago on Mr~ Fisher's position, it has tran spired that the cost of making twist drills in the United States has been increased five hundred and twenty per cent.

by the McKinley bill. Government cannot affect value, in deed! In the paragraph to which Mr. Fisher's letter is a rejoinder I said that ((when government decrees that all money shall be made of or issued against gold or silver, these metals im mediately take on an artificial, government-created value, beIN D IV I D U ALL I BER T Y 149 cause of the new use which arbitrary power enables them to monopolize." Mr. Fisher .meets this by. attempting ··to belittle the restrictions placed upon the issue .of paper money, as •• if all vitally. necessary liberty. to compete. with the gold-bugs were even now aUowed. Let me ask my opponent one ques tion. Does the law of England allow citizens to form a bank for the .issue of, paper money against· any property that they may see fit to accept as security; said bank perhaps owning no spec~ewhatever; the paper Inoney not redeem.able~n spec~ee:x: cept. at the option of the bank;, the customers of the bank mutually pledging themselves to~ccept the bank's paper in lieu' of gold or silver. coin of the same face value; .the paper being redeemable only at the maturity of the mortgage notes, and then simply by a return of said notes. and a release of the mortgagedproperty,-is such an institution, I ask, allowed by the law of England? If it is, then I have only to say that the working people of England are very great fools not to take advantage of this inestimable liberty, that the editor of the Herald of Anarchy and his comrades have indeed nothirtg to complain of in the matter of finance, and that they had bet ter .turn their attention at once to the organization of such banks as that which I have just described. But I am con vinced·that Mr. Fisher win ·have to answer that these banks are"illegal in England; and in that case I tell him again that the'present value of gold is a monopoly value sustained·.by the exclusive .• monetary privilege given it by government. It may be true, as Mr. Fisher says, that just as· much gold would be used if it did not possess this monopoly. But that has nothing to do ·with the question. Take the illustration that I have already used in this discussion when I said: ulf govern ment were to decree that all plates shall be made of tin, would not the value of tin rise and the value of china fall?" Now, if the supply of tin were limited, and if hearly an the tin were. used in making plates, and if tin Had no other use·0£ great significance, it is quite conceivable that, if the decree prohibiting the use of 'china in making' plates should bewith 7 drawn, the same amount of tin might. continue to be used for the same purpose as before, and yet the value. of tin would fall tremendously in consequence of. the admitted competition of china. And ·similarly, if all property were· to··be .admitted to competition with gold in the matter of representation.in :150 INDIVIDUAL LIBERTY the currency, it is possible that the same amount of gold would still be used as money, but its value would decrease no tably,-would fall, that is to say, from its abnormal, artificial~ government-created value, to its normal, natural, open market value.

Mr. Fisher then came back with another contribution to Liberty-in fact, several of them-in which he at tacked the editor a1;1d also Mr. Alfred B. Westrup, whose «Citizens' Money" and ((The Financial Problem" he had just read. Mr. Tucker's reply, therefore, is a defense of his own position and of that of Mr. Westrup as well, and the controversy develops into a discussion of free trade in banking, of currency and government, and of the equal ization of wage and product: I KNOW of no friend of liberty who regards it as a panacea for every ill, or claims that it will make fools successful, or believes that it will make all men equal, rich, and perfectly happy. The Anarchists, it is true, believe that under liberty the laborer's wages will buy back his product, and that this will make men more nearly equal, will insure the industrious and the prudent against poverty, and will add to human hap piness. But between the fictitious claims which Mr. Fisher scouts and the real claims which the Anarchists assert it is easy to see the vast difference.