Financial Legislation and its Limitations. 5 



noticed that the changes in the vohime of currency effected by 

 this artificial manipulation could not take place until after the 

 price of gold had fluctuated ; consequently some divergence in the 

 value of the circulating medium would occur before means could 

 be taken to restore the disturbed parity between the paper money 

 and the gold. The remedy is based upon the hypothesis of a 

 disease. 



§4. But the whole fallacy of the proposition lies in the simple ^ govem- 



r , . , -1 1 ,• ™ent issue, 



fact that It expresses an attempt to supplant a private by a public from its inor- 

 circulation. This, in the nature of things, can never succeed, Mnnot^supp!/ 

 for it is demonstrable that the circulating medium consists in *''? p'^*^.^ °^ ^ 



_ ^ private issue 



the guaranties accompanying private business contracts. Those of credit, 

 guaranties are there and must be there to do the work. They 

 cannot be excluded, except by stopping the work of circulation 

 altogether, or at least by stopping the creation of the congeries of 

 ■contracts which is necessary to uphold the structure of business. 

 In order to carry on business without such contracts, it would be 

 necessary that every particular act of production, down to the 

 smallest, should be directed from a central bureau. Such a state 

 of affairs would amount to a prohibition laid upon private 

 arrangement and private contracts, or in other words, to an 

 abolition of all thought or responsibility on the part of the 

 people. There is nothing too absurd for the imagination of 

 scheme-makers. Fortunately, in the United States, where gov- 

 ernment money circulates, it has been impossible to prevent deal- 

 ing in deposits or entirely to exclude the use of bank notes. 



The government is not properly a producer of industrial values, 

 in the ordinary sense of the word. It is not to be denied that it 

 does assure the values of security, of the administration of 

 justice, of public recreation. It also does subvention some quasi- 

 industrial values in the shape of light-house protection, regula- 

 tion of rivers, building of highways, and sometimes the building 

 or ownership of canals and of railroads, and even of theaters ; 

 but one can readily perceive that these undertakings will not be 

 pushed forward at periods which will correspond with rising 

 waves in private business. Indeed, public works are avowedly 

 carried on in periods of depression in order to give work to 



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