"Can't move 'em with a cold thing like economics": On Pound's Cantos 18 and 19

Ezra Pound's Canto 18 begins with Kublai Khan, the first emperor of the Yuan Dynasty, who undertook and indeed had the power to complete the coining of money, that is, the establishment of a new currency system.¹ Despite the use of the word "coin," the reason that Pound pays attention to such a historical figure as Kublai is that he was among the first to issue "paper" money; "They take bast of the mulberry-tree, / That is a skin between the wood and the bark, / And of this they make paper" (DXC, p. 80). Apart from the physical production and printing of paper, however, the basic and more essential prerequisite for the issue of paper money—and for its successful circulation and distribution—is to make paper money as good as gold or silver, or at least as copper; is, as Pound emphasizes, to "mark it" "half a tornesel," "a half-groat of silver," or "for a great sheet, a gold bezant." This is why Pound calls Kublai's invention of paper money "the secret of alchemy" (p. 80). Unlike, indeed, gold or silver coin, whose value is determined by its inherent (metallic) value, paper money never really has any natural or built-in value: it is just a flat paper, it is not a commodity. But gold or silver itself is a useful commodity (in terms of wealth).

What, then, is first required for paper money to function as money, as a medium of exchange, is "the certificates of value,"² that is, a secured belief system in which paper money, although it cannot itself be a commodity (or the thing itself), can surely be thought to represent a commodity and its value (or to be the representative of a thing). All of which is just to say that paper money must be, as Hugh Kenner points out, "not a commodity but a measure."³ For this reason, "They [Kublai's papers] are written on by officials, / And smeared with the great khan's seal in vermilion" (DXC, p. 80). The issuing of paper money is the act of the sovereign power, and is entirely dependent on the signature or inscription of Khan's authority. And the stable and fixed correspondence between paper money and commodity may be implicitly assumed to last as long as Kublai stays in power; "His postmen go sewed up and sealed up, / Their coats buttoned behind and then sealed, / In this way from the voyage's one end to its other" (p. 80).

It is therefore no longer a cunning trick to attempt to exchange paper (or fiat) money for objects of permanent value. In other words, it becomes possible to lay down the principle that paper money, having not a shred of what gold-standard advocates call intrinsic value, will have real value equal to that of gold or silver. At the same time, however, the money acquired by selling objects must be again immediately exchanged for other kinds of objects: "The Indian merchants arriving / Must give up their jewels, and take this money / In paper, / (That trade runs, in bezants, to 400,000 the year) / And the nobles must buy their pearls" (DXC, p. 80; emphasis added). This trade is necessary because, in Pound's view, as we have seen, paper money is not a commodity but instead "a measure" or "a title" that "allow[s] us to compare pigs and shoes for purposes of exchange" and is "exchangeable at will against any commodities offered on the market" respectively.⁴ It would thus be fatuous to insist that to save paper money is the same as to save gold or silver, and also that to save paper money is indeed to save valuable objects.

In a paper-money economy (like Kublai's), no players such as misers, hoarders, or money collectors would exist. In this respect, then, the principal—and truly the sole—function of paper money is to facilitate commodity exchange (or circulation) in order to allow more possibilities for the satisfaction of needs...