I entirely sympathize with your disposal of the Evening Post’s attempt to belittle the function of money as a medium of exchange; but do you go far enough when you content yourself with saying that a standard of value is highly desirable? Is it not absolutely necessary? Is money possible without it? If no standard is definitely adopted, and then if paper money is issued, does not the first commodity that the first note is exchanged for immediately become a standard of value? Is not the second holder of the note governed in making his next purchase by what he parted with in his previous sale? Of course it is a very poor standard that is thus arrived at, and one that must come in conflict with other standards adopted in the same indefinite way by other exchanges occurring independently but almost simultaneously with the first one above supposed. But so do gold and silver coins come in conflict now. Doesn’t it all show that the idea of a standard is inseparable from money? Moreover, there is no danger in a standard. The whole trouble disappears with the abolition of the basis privilege.(80 ¶ 2)

It will occur that in emphasizing one argument there is such need of passing others by with seeming unconcern that to some minds other truths seem slighted,—truths which also need emphasizing perhaps in an equal, or it may be, for useful practical reasons, in a superior degree. The News aims at illustrating one thing at a time, but it is both receptive and grateful to those correspondents who intelligently extend its work and indicate useful subjects for discussion, giving their best thought thereon. A Boston reader, speaking of the standard of value, states an undeniable truth to the effect that without a thing or things of value to which paper money can be referred and which can ultimately be got for it, such money would be untrustworthy or worthless. The News in a past article was discussing primary commerce and the transition to indirect exchange. No agreed standard for valuation is needed while mere barter is the rule; but it is indispensable as soon as circulating notes are issued. The vice of the greenback theory is that the notes do not call for anything in particular, and so, if their volume be doubled, their purchasing power must apparently decline one-half. A note properly based on gold, silver, wheat, cotton, or other commodity has a tangible security behind it. The one thing may be better than the other, but the principle is there in all. It is, however, a notable truth that the standard for valuation can be nothing better than an empirical one. Like mathematical quantities, value has no independent existence, but, unlike mathematical quantities, value has not even existence as a quality of one object. It cannot be compared to a measure of length, which possesses the quality of extension in itself. Gold is assumed to vary little in relation to other things, and they to vary much in relation to gold. Nobody can know how much gold does vary in the relation. The notable steadiness is in the amount of labor which will produce a given quantity and the length of time which it will last. The basis of the assumed steadiness of gold is thus found. But if the standard for use in making valuations be confessedly empirical and value an elusive quality not of things separately, but of things in relation, there is a countervailing difference between a standard of length and a standard of value, which results in disposing of the objection that the standard is empirical. Why would it be a serious objection to a yardstick if it were longer or shorter from day to day? Because thus the customer would get more or less cloth than was intended. But why is that? Because the function of the yardstick is to measure for delivery as great a length of cloth as its own length. But now let us visit a bank or insurance office. We want a loan of circulating notes or a policy of insurance. The property offered as security is valued. Assume that gold is taken as the standard, and that the loan or the policy is for $600 on a valuation of $1000. It is no matter in these cases if the standard varies, provided it does not vary to exceed the margin between the valuation and the obligation. The property pledged is merely security for the loan, or, in the case of insurance, the premium paid is a per cent. of the amount insured. The margin between the valuation and the loan is established to make the loan abundantly safe. The policy is safely written through the same expedient. The empirical standard of value has a needful compensation about it which the yardstick or other measure neither has nor needs,—viz., the valuing goods does not deliver them. It is provisional. In case of default in paying back the loan, the goods are sold and the same money borrowed is paid back, but the residue goes to the borrower. It is therefore an efficient compensation for the lack of an invariable standard of value that the actual standard in any case is simply used as a means of estimating limits within which loans are safe. All danger is avoided by giving the borrower the familiar right in case of foreclosure. It is sometimes a fine thing to discover distinctions, but it is frequently a finer thing to discover whether or not the distinctions affect the question.(80 ¶ 4)

It is manifest that a medium of exchange is absolutely necessary to all trade beyond barter. A standard of value is highly desirable, but perhaps this is as much as can be safely asserted on that question.(80 ¶ 6)