Financial Legislation in Principle and in History 7 



eminent paper money is the total misapprehension as to the 

 organic origin of money. This mistake is unavoidable, since the 

 perception of the truth in this matter requires no ordinary ability 

 and education. It is a point, like excessive protection, on which,, 

 perforce, we must resign ourselves, to wait for the growth of pub- 

 lic opinion. It is popularly supposed that money "represents"' 

 present goods, and that it acts as a circulating medium for this 

 reason. Hence the whole brood of propositions that have been 

 made and attempted to be enforced, from early times, to "coin all 

 the production of the country into money."' It has been looked 

 upon by several party conventions in the United States, as a self- 

 evident proposition, that the money of the country represented 

 its produce, and that, therefore, the value of the produce should 

 be coined in order to circulate it. It was not supposed that a 

 proposition of that sort needed the slightest discussion ; it was 

 not supposed necessary to stop for a moment to be more precise 

 about the word "represent." This is a point that even students 

 of political economy have not squarely met. The recent develop- 

 ment, however, of the theory of subjective values enables us to 

 make the deduction that money does not represent the present 

 goods, but represents future goods, and consequently the infla- 

 tionist's argument, so far as it is grounded on a false quantity 

 theory and neglects the natural, organic genesis of credit in unex- 

 ecuted contracts, falls to the ground. 



Another objection to government money is that, while there is 

 a gain in payment of interest, the usual depreciation of it puts 

 upon the shoulders of the government, when the day of reckon- 

 ing arrives, a burden far out of proportion to the values received. 

 For instance, it is estimated that the United States has paid sev- 

 eral times what the civil war cost, on account solely of the depre- 

 ciation of the paper money issued. Private parties lose on any 

 money which they happen to hoard, not only the depreciation, but 

 also the high interest that they are compelled to pay if it is bor- 

 rowed, in order to make up to the creditor, who expects to be paid 

 in such money, for the depreciation of his principal. Creditors 

 lose in so far as they have not foreseen the extent of the depre- 

 ciation. Curiously, when paper money begins to depreciate, the 



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