4 W. G. Langivorthy Taylor 



and, in our country, a great many different forms of money were 

 invented in order to avoid the appearance of an over-issue of any 

 one kind. This was as truly a means of deceiving the public as 

 many resorted to by promoters of private schemes. 



One of the greatest disadvantages of government money issues 

 is that, in the present state of public knowledge on such matters, 

 they cater to a popular misconception as to the nature of the cir- 

 culating medium, namely, the idea that if anything can be made 

 to work as a circulating medium it must also be a successful and 

 trustworthy standard of -value. The public is quite willing to be 

 deceived as to the circumstances in which the function of a cir- 

 culating medium may be separated from that of a store of value. 

 However, that disadvantage may be gradually remedied ,by 

 education. 



Another disadvantage, perhaps greater, is inelasticity of gov- 

 ernment issue. Even where banks are compelled to put up bonds 

 as a guaranty for their circulation, there is visually some provision 

 for expanding or contracting the currency, even though that may 

 take place slowly. Where the government establishes a state 

 bank and merely interferes in its operation through appointment 

 of its officers, as in France and Germany, the circulation may be 

 highly elastic ; but where the government issues paper money to 

 pay for supplies and services to the government, taking back the 

 paper money again simply in payment of taxes or of certain kinds 

 of taxes, there is no possibility of expanding and contracting it 

 according to the needs of business. It has been, indeed, proposed 

 that the currency should be systematically contracted and ex- 

 panded according to the price of gold, but it will be noticed that 

 the changes in the volume of currency effected by this artificial 

 manipulation could not take place until after the price of gold 

 had fluctuated ; consequently some fluctuation 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. 



But the whole fallacy of the proposition lies in the simple fact 

 that we have here an attempt to supplant a private circulation by 

 a public circulation. This, in the nature of things, can never suc- 



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