Perrysburg journal. (Perrysburg, Wood Co., O. [Ohio]) 186?-1965, 1875-11-12
what "FalthY Docs For Currency.


Faith and credit are pretty much the
same thing. Faith is state of mind.
Giving credit to man Is putting faith in
his ability and willingness to keep his
promise to pay Thus credit fllflls some
of the functions of currency, inasmuch as
It delays the demand for a certain part OF
the existing circulating medium, and so
enables that part TO pass from hand 10
hand and satisfy other debts before it is
needed TO satisfy this particular debt. If
A sells u SlO0worlh OF goods and requires
payment In cash, B must hand over 300
In currcncy But III he takes BIS mote,
due in ninety days, the 500 that would
otherwise be paid at once may pass from
I} to &, Cto ID, ETC.. and settle n hundred
accounts before uses 1t, OF its equiva-
lent 10 pay A. When credit Is so COM
mon and thus serves, in many cases, as
currency, 1t is not strange that many peo.
pie should confuse the two, just as one
school Of economists coniuses credit and
capital, and imagine that permanent
currency may be got by simply using
credit as Its basis. 1t is important,
however, to remember that credit
exists simply because 1t is not permanent.
If BIS note were never to be paid a would
never take IL. If the United States should
uuHOunNG luNN EIttDUuChS MtlG liCNtI
10 be redeemed, the precarious credit they
have now would utterly disappear, and
they would he worthless, except for curl.
osities. The Confederate "graybaclSs"
became valuelcss simply because they
will never be redeemed The credit they
ask is an eternal one. But eternal credit
cannot exist. Giving credit TO a man is
believing that he willpay whathe promises
to pay. If he declares that he will never
do so, this belief, this credit, of course
vanishes.
1t should never be forgotten that credit
merely postpones the use Of money. II
does not obviate its use. For this reason,
then, credit can never take the place of
money absolutely
Credit is necessarily limited in time.
Permanent credit is an absurdity. Tor
this reason then permanent currency
cannot be created out of mere credit.
A note is the sign of credit. 1t is a
promise to pay money. Its passage from
Il to A shows that A has faith in BIS
ability to pay it on maturity. There are
two elements in this transaction, one tangi-
ble, the other intangible. The first is the
note, the second is the state of mind which
induces A to receive IT, The latter is the
more important. For If it exists, A may
NdhO ~ oPOhIh PlOliiloO ihotSu0 VI mo
written one. But whether the promise Is
spoken or written by an individual, or
printed by bank or nation, the state of
mind must exist in order to allow the
promise to fulfill, even for an instant, the
functions of currency. And this mental
state is wholly dependent upon the sup
posed chance Of the ultimate redemption
of the note. Thus, persons who believe
that bit of Government paper, redeema-
BILE, if at all, only in other paper that is
redeemablc only in it, can circulate as a
permanent currency practically say that
BIS note will buy AS goods when A
save with another, and will never redeem
the second except with the first This
reductio al GJsurdum effectually dispoGs
Of the fallacy that credit or " faith can
be utilized as the permanent basis of cur
rency.-Ohicdgo Tribune.