Future Paper Money of This Country [pp. 1-25]

THE PRINCE TON RE VIE W.
kets of the world for its face value when it goes out of use as
money-is preposterous. Such government notes have precisely the same value as stay,law certificates, which they are in
fact. All other money functions or purchasing power in them
are simply derivative from this. Their value is in the main
regulated by the prospect of their redemption as respects the
fact, degree, and time of it. This was shown abundantly during and after our last war, in which their gold price fluctuated
from 38 to IOO cents on the dollar, and often several per cent
in a day, according as the fluctuating phases of the war affected
the prospect of their redemption. Would this have been possible in respect to gold and silver or their representatives?
It is a notable fact that the panicky element, always an unavoidable, tho in one sense needless, secondary aggravation of
commercial crises, which leads to the locking up of money in
hoards beyond the reach of solvent borrowers, through fear that
its possessors may not be able to command it when they want
it, is usually quieted by some device which brings into use some
temporary substitute for the regular currency, and not subject
to its legal limitations. This stops the panic by providing for
the supply of the needs of solvent borrowers irrespective of the
lawful money kept in inaccessible hoards for the time being.
Then the lawful money itself comes out of its concealment,
seeking good borrowers and profitable investment. This afterward, so far from continuing scarce, often becomes a drug.
Panics have been repeatedly arrested or prevented in London
by an order in council removing for a time the limitation
upon the issues of the Bank of England imposed by its last
charter. As soon as the merchants found the money could
be had, they did not want it. By a temporary suspension of
specie payments in this country in I857 the needed inferior currency was supplied, which dissolved the panic and restored coin
payments in six months. In I873 the "lawful money" sequestered by the panic was not specie-paying; consequently certain
"bank certificates" were devised to take their place temporarily.
These dissolved the panic, and "lawful money" soon returned
to its normal channels of circulation.
In discussing the paper money of the future it may be as,
sumed: I. That no better was ever devised than that of our
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