Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1876-01-27
What Gives Value to Paper Money!

or that the firm which issues it 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 or anyone to whom he may
pass the check will be able to get the gold
for 1t then the check will be deprecated.
Ii 1t is certain that no one can ever get the
gold for it its value will be just that of a
pretty picture for the children to play
with, no matter how strongly it may be
declared to represent 81 900.
Now, with single exception, which
we shall consider presently, the value of
the Government paper money is deter
mined N precisely the same way with that
of mercantile paper. In itself it has no
value at all. Congress may stamp it 81
or 800, but unless it entities the owner
to claim something it is mere piece of
paper. If the owner can actually get q
gold dollar with it it is worth a gold dol
lar; Otherwise it will be more or less de-
preciated in value according to the hope
Of future payment which the holders may
entertain OF course Congress can make
everyone call it q dollar and receive it
under that name7 bat we have seen in the
first lesson that this does not give it real
value-that is, purchasing power. If any
one is compelled to take it he simply puts
UP the price Of everything he has to sell
II proportion to the depreciation OF the
paper, so that the result is the same az if
the paper passed at 8 discount.
We 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
backs, or their proposed paper dollars, are
to be issued "on 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 & Co. is the greatest in this
State, possessed of unbounded wealth, and
its operations extend over the whole
globe''
Then" you reply, d" I suppose if I
take this bill to their counter they will
pay it?''
"Pay it! Why, nc, 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,
ten or twelve years, ago, that there was not
the slightest need Of their redeeming their
bills, and they are never going to do it."
4" 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 a firm so great, power
full and wealthy as that of Mr.. Spread
need not pay"
Well, sir" you would reply, 81 don't
see what difference it makes to me how
wealthy Spreads firm is, or how we'll
their paper is secured, if 1 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 l would
rather have the bill on some smaller
house,
{" All, you know nothing about finance,
see; and I'll get you some foreign
money rather than argue further with
you
If hotel cashier should talk in this way
to you, 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 $500 100000
afoat, reading: The United States will
pay the bearer - dollars" Yet if YOU
should take one of these bills to the Gov
ernment's counter, asking that this prom
Use should be redeemed, the clerks would
laugh at you. A year CT 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 & Co. !
Now it will be a very profitable mental
exercise if the reader will ask himself
what is meant by the promise: The Unit
ed States will pay the bearer - dol !
lars" and if, also, for each theory of the /.
subject he may form, he will consider /
how it will look for banking firm to put
that same Interpretation upon its promises. /