WCP1611

[1]

July 15: 1879

My dear Sir

Pray forgive me, if I say to you what I say to every pupil and to every person with whom I discuss on P: E¹ — I cannot myself use, nor accept from others as a basis of discussion in this region; the word represent. For me it has no meaning here, nor, as far as I [have] ever been able to discover, has it for any other person. It is a metaphorical word, loaded with ambigu [2] ity and obscurity. Let us deal with the realities which underlie it.

You will not therefore,⁴ I hope, be angry if I say that I do not understand your first page, in which the word so largely figures.

I fear you have not grasped the nature of money. It is simply a tool — absolutely nothing more, constructed to get over the difficulties of single barter: without it, most exchanges would have stuck fast.

It is a kind of cart, transferring ownership, as a wheeled cart transfers weights.

It acts by double barter. A hat is bartered against a sovereign, because the cost of making a sovereign is equal to the cost of [3] of making a hat. The hatter then barters the sovereign for an umbrella, and then the exchange is completed: a hat has been exchanged for an umbrella —

Money, as Aristotle pointed out, does its work by means of being a commodity: it is the gold of the sovereign which is the tool.

Money adds no wealth whatever to a country, for it has to be purchased with an equal amount of goods: but it is most useful for the service which it renders, precisely as a cart.

Money lies wholly outside your discussion: it has no part in it.

In a civilised country, actual money is very little used — only [4] for cash payments, which are relatively few in amount. Very few persons indeed possess much property in money — banks have a certain amount. They are kind of store-houses for it.—

Bank-notes, cheques, bills, bonds, &c. are not money: in themselves they are only pieces of paper. Leaving foreign nations out of account: if they were all suddenly burnt, the nation would not be one shilling the poorer. Some w^d be richer, others poorer; that w^d be all. These paper tools are tickets entitling to demand money: but the money is very little called for: and the same money might settle multitudes of them in one day. [5] Foreign nations may owe a great deal of money to England. But what does that mean? That England sent away goods at a preceding time, and has not yet received the equivalent return of goods. Clearly in such cases, after a long period, the trade may bear the cost of goods on one side only: nevertheless it is nothing but the old tale at last, goods for goods. Hence you say truly, that under such conditions "goods may come to us without a corresponding quantity of our goods — now making — being taken in exchange." Foreigners are paying their debts — that is all. You say that this is "the essence of your whole argument from the beginning." but [6] this is only an unfinished state of things completing itself. This is not trade — except the antecedent despatch of goods from us be taken into account. I never for an instant denied the existence of such, protective, one-sided despatch of goods. I am as familiar with it as with my A.B:C. —

No doubt — it is well known that "American and other securities are much less largely held than a few years back": the Americans &c are paying their debts with goods: and this is one reason of our imports exceeding exports.

I do not deny that protected countries may send us at times [7] their protected goods. These are palpable irregularities. They may arise from many causes. Our manufacturing state may be troubled — workmen on strike, refusing to work energetically — or, as occasionally & often in America, some very clever new machinery has been invented — or the foreigners under discussion may sell us their goods at a great loss — and so on.

But, I repeat, protection is permanently inconceivable unless it is needed to keep our goods out — and that is irresistibly conclusive that ours are cheaper. I agree here [8] with Lowe.² Were it otherwise, the protection laws w^d be a heap of dead letters — not needed.

English goods could not offer, because the fact that the foreign goods are sold here demonstrates that they are the cheaper.

This correspondence is surely unfit for publication. The thought never crossed my brain: it is too desultory and irregular. If I c^d find time I should be quite willing to go over the ground in a more regular and formal manner.

Y^s very faith^y | B Price³ [signature]