23. The number of enterprises that are being undertaken by governments-national, state, and local-has been constantly increasing in recent years. Are there important social measures which must be held in abeyance because they cannot be financed? Why is it that they cannot be financed?

24. Each year an adequate proportion of the social energy of society should be devoted to the replenishment and extension of the capital supply. How is this apportionment of our productive energy, as between the creation of capital and consumptive goods, effected under a pecuniary system?

25. Does spending compete against saving?

26. Precisely what is meant by "saving"? Has saving been effected, in fact, as soon as money income has been placed in a bank or invested in securities?

27. What determines the percentage of the monetary income annually received by society that is saved and that is spent for consumptive goods? Is this apportionment necessarily worked out in the interests of long-run, general welfare?

REFERENCES FOR FURTHER READING

Holdsworth, John Thom: Money and Banking, chap. i. Johnson, Joseph French: Money and Currency, chap. i. Laughlin, J. Laurence: Principles of Money, pp. 15–22. Moulton, Harold G.: Principles of Money and Banking, Part I, Selections Nos. 4 and 5.

Scott, William A.: Money and Banking, pp. 6–13.

CHAPTER V

THE PECUNIARY SYSTEM AND ECONOMIC AND SOCIAL STANDARDS

From the very beginning of the capitalistic régime, under which, as we have seen, practically all productive and trading operations are carried on through the intermediation of currency and find expression in monetary terms, there has been a general misunderstanding of the social significance of money. Constituting a general fund of purchasing power-a veritable key to things desired-money is by many people regarded as an end in itself, the summum bonum of human endeavor; while by many more it is deemed at least a very superior form of wealth, a plentiful or scanty supply of which renders a nation rich or poor, powerful or impotent. The confusion of money with welfare has, moreover, been responsible for many illjudged movements for social reform. Indeed, so vital an influence has money been in the evolution of industrial society that Alexander Delmar, who has doubtless given more study to the origin and development of monetary systems than any other writer, suggests that the history of money is the history of civilization.

While this view is not accepted by most writers, all are nevertheless agreed that money has played a rôle of enormous importance in the affairs of men. More articles and books have been written and there has been more discussion on the subject of money than on any other in the entire realm of political economy. At the same time the various controversies have developed more extreme enthusiasm and greater bitterness of denunciation than those in any other field. In the somewhat exaggerated phraseology of Mr. Bryan, "Brother has been arrayed against brother, father against son. Warmest ties of love, acquaintance and association have been disregarded;

old leaders have been cast aside . . . and new leaders have sprung up to give direction to the cause of truth."

I. MONETARY EVALUATION AND SOCIAL IDEALS

The extraordinary importance that has been attached to money throughout the ages may be appreciated by reference to the following classical quotations. They also suggest the influence of the pecuniary calculus upon ethical standards: Make money, money, man;

Horace:

Timocles:

Milton:
Pope:

Tennyson:

Well, if so be,-if not, which way you can.

Money's the life and soul of mortal man. Who
has it not, nor has acquired it,

Is but a dead man, walking 'mongst the quick.
Money brings honor, friends, conquest, and realms.
There London's voice, 'Get money, money still,

And then let virtue follow if she will.'

But the jingling of the guinea helps the hurt that honor feels.

Paul of Tarsus: For the love of money is the root of all evil.

The perversion of social ideals that has attended the development of a pecuniary system is well expressed by Professor Davenport in the following language:

More and more, and more and more exclusively, and over an everwidening field of human effort, human interests and desires and ambitions fall under the common denominator of money. Doubtless many of the best things in life do not get bought and sold. Some of them are not exchangeable; and not all things that could be transferred are men weak enough to sell or other men strong enough to buy. Not every man has his money price. But most good things do, in greater or less degree, submit to the money appraisal. Health is easier for him who can take his ease and who has the wherewithal to pay for good foods and medicines, to travel, to employ good nursing, and to command capable physicians and efficient surgeons. And in their degree, also, love and pity and respect and place are bought and sold upon the market. It takes a goodly number of dollars to get a child safely born, and even more dollars to achieve for one's self a respectable burial. Much money is power over many things. Money is the standard of value in the sense that all values of all exchangeable things are expressed in terms of it. And this holds,

not only of all commodities and services, but of all incomes and of all capitals. The capital of a banking house, or a factory, or a railroad company is not a congeries of tangible things, but a pecuniary magnitude so many dollars. All economic comparisons are made in money terms, not in terms of subsistence, or of beauty, or of artistic merit, or of moral deserving. This same standard tends to become also the test and measure of human achievement. Men engage in business, not solely to earn a livelihood, but to win a fortune in a pecuniary sense. To win by this money test is to certify one's self tangibly and demonstrably as having scored in the most widespread and absorbing of competitions. Is one a great artist-what do his pictures sell for? Or what is the income of this leading advocate? or of that famous singer? How great are the author's royalties ? The pecuniary standard tends to be carried over into nonpecuniary fields.

It is almost past belief how far both in degree and in direction money valuations pervade all our thinking. Cheapness is prone to be synonymous with ugliness, richness with beauty, elegance with expensiveness. No one can tell for himself where the really aesthetic begins and the sheer pecuniary ends. In the field of morals, also, the so-called cash-register conscience is an actual thing. And one might go still further and note that almost all great political issues, and almost all absorbing social problems, and almost all international complications, rest upon a pecuniary basis. Our national problems are tariff, labor unions, strikes, money, trusts, banking, currency, railroads, conservation of resources, shipping, taxation. Success in elections, in the selection of senators, in the making of laws, and in the selection of judges is prone to be desired for financial ends and to be decided by pecuniary means. Diplomatic complications hinge upon trade connections, the open door, fisheries and sealeries, colonies for markets, and spheres of influence for trade. Navies are trade guardians and trade auxiliaries. Eliminate from local politics the influence of the public-service corporation, of the contractor, and of the seekers for special pecuniary privileges, and what is left of the municipal problem will be mostly the pecuniary nexus of the slum with the ballot box, of the saloon with the police system, and of saloon and slum and brothel with the city hall.1

The system of pecuniary evaluation also tends to substantial conservatism in the matter of social progress. All people who From The Economics of Enterprise, pp. 22-24.

are in possession of monetary incomes hesitate to see social institutions, upon the stability of which depends the certainty of their incomes, disarranged by either political or industrial changes. Vested interests which find their expression in pecuniary terms stand as a bar sinister to social progress. Even labor has generally been induced to resist change because change usually involves, immediately speaking, a sacrifice of wages. Shortrun pecuniary needs usually bulk larger in the laboring man's horizon than long-run gains, either to himself or to society as a whole.

Nearly everywhere, indeed, the price system tends to emphasize the short- rather than the long-run point of view. Obsolete and inefficient methods or institutions persist long after it is clear that welfare would be distinctly promoted were they supplanted by others. Natural resources are ruthlessly exploited during a few brief years, leaving to future generations a depleted national heritage-merely because it pays best to mine, or lumber, or farm without thought of the distant morrow. Human beings, also, are at times driven at an exhausting pace and at others denied the opportunity of earning a livelihood, in order that a maximum of monetary profits may result for those who, in the evolution of industrial society, have come to direct the machinery of modern production.'

II. THE CONFUSION OF MONEY WITH WEALTH

The importance that individuals in a pecuniary society necessarily attach to their monetary incomes lies at the basis of the prevailing idea that the quantity of money possessed by a nation is always of paramount importance. If the more money an individual has the wealthier he is, why is it not also true that the greater the quantity of money within a nation the richer is the nation? This belief that nations, like individuals, are well-off in proportion to the amount of their wealth or income as expressed in monetary terms lies at the basis of most of the monetary

I

For an exposition of this phase of the modern pecuniary system see chap. xxiii.