64 Colorado College StuDiES. 



have we that when the crop-season is past the excess of 

 notes will be redeemed and disappear ? The apparent answer 

 is that with slackening of business the currency will be 

 redundant, bank reserves will be overstocked, and the banks 

 will have no profitable use for the excess of notes, so that 

 redemptions will exceed reissues till the whole redundancy 

 is withdrawn. But this is only an apparent answer. The 

 redundancy after the crop season is not identical with the 

 preceding increase of notes; it may be far less; it usually 

 would be far less in the United States. The growth of use 

 for money at crop-moving time is in this country a mere 

 wave in an ascending slope, a slope ascending so rapidly 

 that we seldom add less than 20 millions a year to our 

 stock of money, and sometimes 100 millions; the use is 

 never, except through unusual business depression, so 

 low after the wave as before it. Almost always, there- 

 fore, if we provided elasticity by means of bank notes 

 unattended by special appliances for forcing their sub- 

 sequent withdrawal, and if the elasticity were wholly 

 by bank notes and no increase of coin shared in it, the re- 

 dundancy of money after the crop-season would be less 

 than the increase of notes during the crop-season. Con- 

 ceding that notes equivalent to the whole redundancy were 

 redeemed and retired, what mative would the banks have 

 for retiring the rest of the recently added notes? Reserves 

 have sunk to their normal size, for that is what the disap- 

 pearance of redundancy means; the banks have no more 

 money than they want to use. As fast as notes are re- 

 deemed, it is then the bank's interest to reissue them, i. e. 

 to use the notes in place of the money paid out in redeem- 

 ing them. There is thus a part of the recently added 

 note-supply that will remain in circulation. This process 

 would be repeated at each maximum of business, and ac- 

 cordingly, without svich special devices as will presently 

 be mentioned, an elasticity provided by bank notes alone 

 would cause an increase of the bank note currency from 

 year to year. 



But it may be that a part of the increase of money at 

 crop-moving time is in coin. By taking the effect of the 



