56 Colorado College Studies. 



The conclusion just reached has so wide a marp;in of 

 safety that it excuses the omission, for simplicity's sake, of 

 a number of corrections; some offset each other, some are 

 mere differences of degree of an element common to all the 

 years {e.g. a deduction from the probably excessive Treasury 

 estimate of gold coin in private hands), and the aggregate 

 of the corrections can scarcely swell the difference between 

 past and future sacrifice in the enlargement of the money- 

 supply so as to call for the retention of national bank 

 notes, or for the provision of any other notes to take their 

 place. If there is any need for state bank notes, it is to be 

 found elsewhere. 



II.— ELASTICITY. 



In popular discussion of the repeal of the bank-note 

 tax it is often assumed, as something near an axiom, that 

 a bank note system may readily be made " elastic," and it 

 seems to be implied that the easier it is for banks to issue 

 notes the more elastic the resulting currency will be. But 

 among economists this is so far from being a generally 

 accepted truth that some reputable writers deny the pos- 

 sibility of bank notes following the needs of trade, either in 

 expansion or contraction ( except in the same way that coin 

 would have done), so long as the bank notes are really 

 convertible, i. e. are promptly and willingly redeemed by 

 the bank. If nevertheless we grant that an expansion is 

 possible, it is reckless to assume, without careful examina- 

 tion, that the bank-note currency would contract again when 

 trade slackened. And unless it does so contract, what we 

 have is not elasticity but a wholly inelastic distensibility. 



Entering first a protest against another too easy assump- 

 tion, that elasticity is an unmixed good (for much may be 

 said for the doctrine that the evil in it exceeds the good, 

 through removing one of the barriers against speculative 

 excitement), we have to inquire what are the causes that 

 may limit a note-circulation, and whether any action of the 

 State governments upon those causes can give an increase 



