THE FARMER AND THE CURRENCY. u4/ 



never been made, and we, therefore, do not know exactly what 

 would happen.* 



An issue of fiat money thus carefully restricted would save 

 to the country making use of it the interest upon the value of 

 the metals displaced, and the loss of their abrasion, less the 

 cost of preparing and renewing the paper currency. It would 

 not, however, accomplish what its only advocates desire: it 

 would not make money "cheap" and easy to get. If its 

 volume were restricted to that of the other money which 

 would circulate, it would be as hard to get as other money; if 

 it were increased above that point it would depreciate and 

 cease to be good money. 



When paper money is issued in excess of the gold and 

 .silver which would circulate in its absence, tlie currency is 

 said to be "inflated." No nation, I think, wdiich has ever 

 resorted to the use of irredeemable |)aper money, has failed to 

 issue it in excess— usually very much in excess — of the gold 

 and silver previously in use. Such money when issued by 

 banks is issued to earn interest, and when issued by nations, 

 is issued to save interest.f Experience shows that so long as 

 it can be made to have the appearance or the prospect of 

 accomplishing these objects, the issues will be increased. If 

 issued, as the advocates of "fiat money " desire, as loans to the 

 people, there would hardly be any restraint on the volume. 

 As the issues increased it would depreciate. If redeemable, 

 the people would in tlie end be taxed to make good the 

 depreciation. If pure "hat" money, the loss would fall upon 

 its holders from time to time. 



But all popular demand for the issue of fiat or irredeemable 

 paper money is accompanied with the demand that it be 



*Many economists of repute are of the opinion that sometime in the future 

 all accounts will be kept in what they call "ideal money'' — that is, money 

 which has no actual existence. There are no theoretical difficulties in the way 

 of this, and it offers ver}- tangible advantages, but it does not contemplate the 

 disuse of actual money, and is not yet a " question of the day." 



fOf course government paper money has often been issued because other 

 money could not be had, even by borrowing. 



