THE MONETARY PROBLEM. 209 



evident. Gold, the standard of value in international exchange, 

 has for many years exceeded silver in value in greater ratio than 

 that deemed by the United States to exist between them. As it 

 has been the declared intention of the Government to keep all 

 the paper currencies issued by it of the same value as though they 

 had been issued against gold, its currency must be exchanged for 

 gold upon the request of the holders. But as the legal tenders, 

 when accepted in exchange for gold by congressional enactment, 

 must be immediately paid out again, to be again exchanged for 

 gold if the holders so request, and so on without limit, the supply 

 of gold in the Government's possession has been kept at so low an 

 ebb that it has often been feared that it would not be able to 

 maintain its intention of keeping all its issues of currency as good 

 as gold. To avert this fear, the Government has increased its in- 

 debtedness by several issues of bonds which have been exchanged 

 for gold, which the legal tenders have immediately again begun 

 to drain. It is obvious that this and other evils of the immediate 

 situation must be removed. But, without further reference to 

 them, this article must return to the discussion of an ideal system 

 of note issue. 



The experience of the United States, as referred to in the pre- 

 ceding paragraph, makes important in that discussion the reply to 

 the question — 



Should the paper representatives of value which serve as cur- 

 rency be issued directly by the Government ? 



The determination from time to time of the amount of currency 

 necessary for a nation's exchanges at all places within the territory 

 of that nation would require the services of a large number of in- 

 telligent men, thoroughly organized ; and that the currency might 

 expand and contract according to the nation's needs, a govern- 

 mental mechanism would have to be provided that is difficult of 

 conception, and its maintenance in efficiency would be more diffi- 

 cult. The losses occasioned by the errors of the offici§/ls would 

 fall directly on the Government, and therefore entirely upon the 

 whole people ; and as the issue of currency in any event must be 

 closely allied to the business of banking, if not always practically 

 an incident thereof, the maintenance of a governmental organiza- 

 tion for that purpose would impose a superfluous burden upon 

 the people, as the banking organizations are capable of the same 

 function. 



As it is the banks that, by making loans and discounts and 

 cashing checks, can the most readily get notes into circulation 

 and can profit by so doing ; as it is the banks that come directly 

 into contact with the business pulse of entire communities, it is 

 evidently proper that banks should be empowered to issue repre- 

 sentatives of value for use as currency upon such resources as 



