Financial Legislation in Principle and in History 5 



ceed, for it has already been demonstrated that the circulating 

 medium of the country consists in the guaranties accompanying 

 private business contracts. Those guaranties are there and must 

 be there to do the work. They can not be excluded, except by 

 stopping the work of circulation altogether, or at least by stop- 

 ping the creation of the congeries of contracts which is necessary 

 to uphold the structure of business. In order to carry on busi- 

 ness without such contracts, it would be necessary that every par- 

 ticular 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 con- 

 tracts, or, in other words, to an abolition of all thought or respon- 

 sibility on the part of the people. But there is nothing too absurd 

 for the imagination of scheme makers. Fortunately, in the United 

 States, where government money circulates, it has been impos- 

 sible to prevent dealing in deposits or entirely to exclude the use 

 of bank notes. 



The government is not a producer of industrial values, in the 

 ordinary sense of the word. It is not to be denied that govern- 

 ment does produce the values of security, of the administration 

 of justice, of public recreation ; it also does produce some indus- 

 trial values in the shape of lighthouse protection, regulation of 

 rivers, building of roads, and sometimes the building or owner- 

 ship of canals and of railroads, and even of theaters ; but one can 

 readily see that these undertakings will not be pushed forward at 

 periods which will correspond to the fluctuations in private busi- 

 ness. In fact, public works are often carried on in periods of 

 depression, in order to give work to laboring men. However 

 beneficial such charitable activities may be, it is not perhaps to 

 the benefit of commerce that attempts should be made to expand 

 the circulation at a moment when the healthy action of the organ- 

 ism of business requires contraction. Moreover, the product 

 which the government elaborates is not sold in the market for 

 goods ; it is apparently given away. Payment comes in the form 

 of taxation. If the government apparently pays for these gOod 

 things with paper money, the paper money must be redeemed 

 some time or other bv means of taxation. Ordinary business 



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