2bC 



Paper Currency. 



active seasons are followed by a season of settlements among the peo- 

 ple, and a gradual return of the currency, through the various chan- 

 nels of trade, to the money centers, for redemption at the place from 

 •which it was issued. 



The issuing of notes or paper currency by a bank, for which law 

 and custom have secured public confidence and a superior credit, in 

 exchange for the notes made by an individual, firm or corporation, 

 makes it possible to expand and contract the circulating medium with 

 facility, at a small cost ; to transact business with credits and with 

 the least possible use of metallic money. 



If we were to use only metallic money in transacting business, there 

 would be no such thing as adapting the supply to the demand. The 

 volume would be the same in spring, summer, fall and winter. Dur- 

 ing the active seasons there would be a short supply, and at other times 

 a surplus which could not be profitably used, and which would be a 

 dead weight for a part of the people to carry. . The constant use of coin 

 every time a settlement is made, reduces its weight, its value and a 

 wasting of a portion of the world's supply of the precious metals. 



At times business transactions make it necessary for men to carry 

 large sums of money on their person, and by remembering that $1,000 

 in gold weighs about three and three-fourths pounds avoirdupois, and 

 the same sum in silver weighs about fifty-nine pounds, we get some- 

 thing of an idea of how inconvenient the exclusive use of coin would be.* 



There are two kinds of paper currency : the convertible, which is 

 issued under proper restrictions, and is redeemed in coin at the will 

 of the holder ; and the inconvertible, which is generally issued by a 

 government, without there being any provision made for its conversion 



The only excuse offered for issuing inconvertible paper currency is 

 that it is for temporary need — possibly a war measure. 



This kind of " fiat " money has been tried a great many times, but I 

 have never heard of any practical good which came from its issue. I a m 

 told that there is in the Asiatic Museum at St. Petersburg, a specimen 

 of a paper currency issued by the Chinese government as early as 2697 

 B. C, and its common name was " flying money." This relic of three 

 thousand two hundred years ago, was probably written by hand, as the 

 earliest record of printing among the Mongolians was 160 A. D., when 

 the use of wooden tablets was introduced into China. This note bears 



