148 THE FARMER AS A BUSINESS MAN. 



government whose assets he can not touch except with the 

 consent of the owner. Of course, as we stand now, the credit 

 of the United States Government is unimpeachable, but, at the 

 close of a long war with united Europe, it might not be so. 

 Such a war, although very unlikely, is not an impossibility- 

 and its cost would be fearful. It is such contingencies that 

 financiers consider. 



2. The bank currency is the more stable. 



This, also, is true, under the present National Bank Act, and 

 would be equally true under any act which would attract the 

 assets of all the banks as security. The amount of issues would 

 be regulated by law, at a sufficiently high limit, and could not 

 be exceeded, while the obligation to redeem on demand would 

 prevent any excessive issues in any event. If too much were 

 issued, the coin would be demanded, and the notes retired 

 On the other hand, there is no instance in history of a nation 

 issuing paper money without being led into excessive issues. 

 In the times of distress which come to all nations, and which 

 we must expect, as we have already experienced them, nothing 

 will prevent a Legislature from issuing paper money rather 

 than incur the unpopularity of taxation. Our Congress has 

 done this, and another Congress, under similar stress, would 

 do the same thing, were the way once opened. Then fol- 

 low rapid fluctuations, involving loss to all, but most of all 

 to the poor, and, in the end, of necessity, contraction, whose 

 effects the present generation has so bitterly felt. 



3. The bank currency is the more "elastic" — that is, it will 

 be issued promptly and freely, without legislation, within its 

 limit, when demanded in sudden emergencies, or regularly at 

 the busiest seasons of the year, and, when the use for the excess 

 ceases, the notes will be presented in due course of business, 

 and be retired until again needed. The government, however, 

 has no machinery for doing this, for the reason that it does not 

 lend money.* It can disburse to the people only in payment 



* A certain number of our fellow-citizens ask that government should lend 

 money "directly to the people." It is assumed that the nation can borrow 

 money at from two to two and a half per cent, and should do so and lend to its 

 citizens, upon proper security, at a rate sufBcicntly higher than it pays to cover 



