The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-01-17
STAPLE CURRENCY.
ITS VALUE SHOULD NOT DEPEND up
ON COIN REDEMPTION.

A00Hs ABO-ASOAA meaning OF Fiat. Term
Greatly Abused by the Ignorant and vi,
cious-views of John Davis.
In iii Venice established Chamber
OF Loans called the ''Bank of Venice"
and citizens were compelled to lend it
coin at per cent interest, the lender
getting credit on the books of the bank.
The law made these credits legal ten
der for private and public debts, and they
were exempt from attachment for debt.
Soon lending to it became popular, the
paying OF interest by the bank was
stopped, and credit accounts at the bank
went to premium, so that 80 ducats in
bank equaled in value 100 ducats of the
current coin. With increase of trade
and commerce the demand for these bank
credits increased, and for 900 years this
bank passed on trial without break, pam
ic or loss to its depositors.
1t is admitted that, whatever may be
the indirect cause, the contraction of the
currency by government or by combi-
nation of money lenders Is the cause of
panics, but here there could be no con-
traction. The holder of coin deposited
1t in bank and received credit on it's
books. He never could get back his
coin. but he could always sell this cred
1T and sell it for more than it's face. Pay
ment was never made to the depositor,
but A paid his debts to B by having a
credit entered to B on the books of the
bank, the account of A being charged.
No money passed or was seen, and B
paid his creditor in the same way, the
record of the bank being the evidence
between the parties. In sense the bank
was their bookkeeper. Thus no coin was
ever paid out, and the government got
all the coin the people had to spare,
which it then paid out to meet it's obi
cations. while the people got a currency
which was safe, convenient and more
valuable than coin. These credits were,
therefore, "fat" money, and with no
other basis, yet for 600 years they were
accepted by and commanded premium
in the commercial world-the longest
continuous monetary system known to
US.
Is not this evidence that the safety and
stability of a credit currency depend
more upon the government making it
legal tender for public and private debts
than they do upon its redemption in coin?
Paper, which depends for it's value upon
coin redemption alone, can never rise in
value above coin any more than a stream
can rise above its source, and it will al
ways fall below whenever there becomes
q doubt as to its redemption in CON- The
effect Of government stamping it's fat
upon material as contradistinguished
from material having intrinsic value in
itself is illustrated when offer to pay
debt Of $40 with a lump of gold which
when coined will make $40, and also Of
fering to pay with lot of nickels to the
value of $40. My creditor at once &C.
cepts the nickels because of their availa-
blllty, because they are money and the
other is not. The will of people put
into law ennobles and gives standing
to the material which it stamps, and
money cannot be made in any other way.
It always rests upon fat. The expert
ence of the Bank of Venice with its fat
money or ''credits" proves clearly that
credit money resting upon law alone be-
came more valuable than currency rest
ing upon coin intrinsically valuable, and
this coin resting upon fat.
Now, as to redemption. All money
must be redeemed, and if it is redeema-
BILE it is not money, and swapping dol
lars is not redemption. Where the gov
eminent makes something legal ten
der for debts and merchandise and taxes,
both people and government unite in re-
deeming it, for the people do it every
time they accept it for their commodi-
ties or debts, and the government when
it accepts it for taxes. The money de-
ponds for its value upon the values it
commands, and the values it commands
depend upon the law, the law pledging
all the property of the people to its re-
demption by the people in their COM
mercial transactions with each other,
and also pledging the government to &C.
cept it for taxes. In such money neither
depreciation nor panic comes, and it en-
dures while the government endures.
IF the government will accept deposits
of coin and give for it notes which are a
legal tender for private and public debts.
it would be in the position of the Bank
Of Venice and have all the coin it needs
for paying its coin debts, but it need not
keep the coin to redeem it's notes. And
with no promises to pay the coin out for
redemption purposes the government
would never be at loss for coin. Per-
sons who acquired that coin which had
been put out by the government would
generally redeposit it to get currency
demanding premium and better adapt
ed to commercial transactions, and thus
the currency would expand, and we
would have, as Venice had, an almost
automatic system.
The above is in substance what is we'll
said by Hon. John Davis, M. c., in The
Arena.
We add that in receiving coin no dis
tnction should be made between gold
and silver, but if bimetallism should be-
come thing of the past by information
al agreement or further suicidal legisla-
ton the government could still accept
silver at its current value.
Between our blunders and indiffer-
ence to older monetary systems and the
sJ,roxu1roco on1 co1Gcbnoco ~ tho ,,,opox