Perrysburg journal. (Perrysburg, Wood Co., O. [Ohio]) 186?-1965, 1876-01-21
Mhat elves Yslu, to PAper Moneyi

what Gives Value 10 Paper Money!
You know that, practically, far the
greater part Of the business of the world
Is carried on by using paper or credit in.
stead of gold. Only an insignihcaht fracs
ton Of mercaptile pay ments are made by
actually counting out gold. II one mer,
chant has 10 pay another VI ,0O0 in gold
he simply hands him . check for the
amount, which the second merchant, per.
haps, passes over to some one else. Here
is apiece Of paper, Of no value whatever in
itself, passed from hand to hand just a.
II its value were 81 900 gold. How il
thisl Can we say with correctness that
the check has any real valueS The answer
Is clear and simple. The value docs not
reside in the check itself, but in the 23,.
900 grains (say three pounds avoirdupois)
of gold TO which the holder Of the check
is entitled, and which ne knows the bank
is able and ready to pay him. That Is all.
Ifthc bank is not bound 10 pay the check,
NO, matter how many dollars may be
marked on IT, no matter how beautiful the
engraving, it is worth nothing. IL the
check Is not payable in gold, but in green.
backs, then Il is worth not 81, 900 in gold,
but only in greenbacks. So 1t is with all
the commercial paper money of the world
which circulates in such enormous guam
titles in place Of money. Jts sole basis is
that responsible men are bound to pay IL,
and its only value depends the weight
of the gold to which il entities the holder,
no matter whether II is called pounds,
francs, or dollars.
Observe carefully that II is not sufficient
that the paper represents" so much gold
or that the firm which issues II is very
wealthy or powerful. The holder of the
paper must have an acknowledged right
to the gold which the bank is not going
To dispute. If there is any doubt whether
he himself OF anyone TO whom he may
pass the check viii be able to get the gold
for 1t then the check will be deprecated,
1t il is certain that no one can ever get the
gold for it its value will be Just that of
pretty picture for the children to play
with, no matter how strongly il may be
declared TO represent 81 900.
Now, with a single exception, which
we shall consider presently, the value Of
the Government paper money is deter.
mined IN precisely the same way with that
0 mercantile paper. In itself II has no
value at all. Congress may stamp 1t 81
or 500, but unless il entities the owner
TO claim something 1t Is a mere piece of
paper. If the owner can actually get
EOlu ublldI Nllll IL IL 10 MOIl1 kUll uOl-
lar; otherwise 1t will be more or less de-
preciated in value according TO the hope
offuture payment which the holders may
entertain. OF course Congress can make
everyone call it dollar and receive it
under that name; but VIC have seen in the
first lesson that this docs not give it real
value--that is, purchasing power. If any
one is compelled to take 1t he simply puts
up the price Of everything he has to sell
in proportion TO the depreciation of the
paper so that the result Is the same es IL
the paper passed at discount,
VIC must now point out the fallacy by
which the supporters of irredeemable
paper money often try to get round these
considerations. 1t is said that the green
bucks, OF their proposed paper dollars, are
20 be issued ION the credit of the nation"
and therefore must have value in proper,
ton to that credit, even if the nation does
not redeem them.
The word credit" is here used IN some
peculiar sense which no one can fully ex-
plain, wholly different from its CONNER
Cial sense, In the world of business
"credit" includes the ability and the OBJ
legation to pay all demands in cash as they
become due. A man or firm that can
not'do this has no credit, however excel.
lent it may be in other respects. Sup.
pose you should be travelling in distant
city, and going to the cashier of your
hotel for change he hands you ten dol
lar bill on the banking firm Of Spread,
Brothers & Co.
Are you sure this bill is good ~ you
inquire.
Good as gold, sir; the firm Of Spread,
Brothers Il Co. is the greatest in this
State, possessed of unbounded wealth, and
its operations extend over the whole
globe.n " -r4r.l EHr
s..trhen," you reply, al suppose if I
take this bill to their counter they will
pay it"'
"Pay it! Why, no, sir; you would be
hooted by the small boys in the street and
laughed at by Spreads clerks. The credit
of the firm is so excellent, and all its
debts so we'll secured by real estate and
bonds worth millions OF dollars, that both
the firm and the community concluded,
fen or twelve years ago, that there was not
the slightest need of their redeeming their
bills and they are never going 10 do it.n
Il don't understand that kind of credit,
In my State credit paper is something
which the party issuing is bound to pay
when required; and if he does not pay he
has no credit, no matter how rich he is"
"Of course twopenny firms must pay
But we claim that firm SO great, power
1ul and wealthy as that of Mr.. Spread
need not pay"
!" Well, SIR you would reply, "I don't
see what difference 1t makes to me how
wealthy Spreads firm is, or how well
their paper is secured, il ! can't get any
of their wealth in exchange for my bill. /
always thought the advantage of having
the paper OF wealthy firm was that it
was surer to be paid; but if the richer the
firm, the less the need of paying, would
rather have the bill on some smaller
house, SEQ
"Ah, you know nothing about finance,
l see; and I'll get you some foreign
mopeyrather than argue further with you"
If a hotel cashier should talk in this way
toyou, you would be little puzzled to
say whether he was joking or in earnest.
And yet great statesmen do argue in Just
that way about our greenbacks. There
are bills TO the amount of $400, 900 600
aAoat, reading; 1.-The United States will
pay the bearer - dollars" Yet if you
should take one of these bills to the Gov
ernments counter, ask ing that this prom
Use should be redeemed, the clerks would
laugh at you. A year or two since some-
one did this very thing, and the newspa.
pers speculated ON the mans sanity, while
Treasury official thought he was only
trying to make himself notorious. If a
politician tries to justify permanent non.
payment he will talk about the credit and
wealth of the nation exactly as the hotel
clerk. talked about Spread, Bros g. Co.
Now 1t will be very profitable mental
exercise if the reader will ask himself
what is meant by the promises "The Unit.
ed States will pay the bearer - dol
larsi" and if, also for each theory of the
subject he may form, he will consider
how it win look for banking firm 10 put
that same Interpretation upon its promises.
To give the reader time TO think this mat
ter over i will here close this lesson
Dtsof Hata....,H IU..lI..