344 THE QUESTIONS OF THE DAY. 



sentative money to the place of redemption, so that it never 

 is certain to be at all times the best money. 



Sometimes national or bank notes are known not to be 

 redeemable according to their face at the time, and yet it is 

 believed in regard to them that they will sometime be re- 

 deemed. That was the case with United States "greenbacks" 

 for many years after 1861, and is the case with regard to the 

 notes of many 'other countries to-day. Such notes may still 

 be good money, or they may not. If no more are issued than 

 would represent the metallic money which would have circu- 

 lated had no paper money been issued,* it is the opinion of 

 most economists that they would circulate as freely as if 

 actually redeemable, and be "good money" in the sense of 

 being able to buy as much as the coin wiiich they represent. 

 As no such experiment has ever been made, however, we do 

 not actually know this; no nation refuses to redeem its paper 

 money if it can help it, and no nation, once started in the prac- 

 tice of issuing currency not actually redeemable on demand, 

 has ever yet refrained from issuing very much more than the 

 coin which would have circulated in the absence of paper 

 money. When this happens the paper money still circulates, 

 but not at its face value. It is said to be "inflated." It ceases 

 to be even good national money. It is received at some lower 

 value, which is fixed partly by the general opinion as to tlie 

 probability of its ultimate redemption, but more especially by 

 the amount of excess issues. The larger the issue the greater 

 the depreciation. I shall discuss this further in connection 

 with the functions of money other than as a medium of 

 exchange. A familiar instance of excessive issue is our green- 

 back and national bank circulation issued during the Civil 

 War. Probably few doubted the ultimate redemption, in coin, 

 of all pa])er money there issued, by the United States, but at 



* Under ordinary circumstances, when nothing impedes the natural flow 

 of undepreciated money, there will always he present sufficient to make the 

 exchanges, just as there will he food to eat and clothes to wear. As the people 

 need it, somehow they will get it. There will he something for sale, and those 

 who wish to huy will send money to pay for it. 



