The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1895-04-19

one article of uniform quantity which
is susceptible of easy division, we
! have fulfilled all the requirements OF
common denomination in exchange.
| The effort of every dealer to obtain as
much as possible Of this one article
| for each and every article of his
| stock, the aim of every producer to
bring to market the product requiring
| the least labor which will command a
| given quantity of this article in eX-
change, this must result in ranging
all commodities according to the cost
of replacing them upon a scale of
value, the degrees of which shall be
expressed in terms of this one article.
| This. money of mere convention, is
competent to effect.
Third-Suc money, so long as it's
popular acceptance continues, per-
forms the office of standard of de-
ferred payments, well or i'll, according
as it's amount is regulated.
"Fourth-Such money, being re-
leased from all natural conditions Of
production, with whatever advan-
tages, actual or theoretical, may be
found in that fact, becomes subject to
purely arbitrary regulations as to its
amount.
"Fifth-The danger of over-issue is
one of which never ceases to threaten
our incOnvertible paper money.
"SiXth-The moment an Over-isSue
occurs, the impulse to excess acquires
violence by Indulgence. Metallic
money, if brought to an excess runs
off; paper money cannot.
''Seventh-W the excess is small,
the effects on trade are not therefore
slight. Any depreciation, however
small, even the liability to deprecia-
ton, without its reality, is enough to
disorder exchange transactions.
''Eighth-When an incOnvertible
paper money is issued in marked eX-
cess, and hence becomes deprecated
and tiuctuating, the most disastrous
consequences, industrially, must en-
sue. If the paper be deprecated, it
will be certainly fiuctuating, and
nothing but disaster can come even
tually from fluctuating standard.
"FrOm incOnvertible we turn to con-
vertible paper money. This equals
the credit money, heretofore men
toned: it includes all forms of issues
by national banks or the general gov
eminent of paper, which by promise
can be Immediately converted into
coin. 1t is money to the buyer and
seller, though it is promise to pay,
and it's value is determined by it's
general acceptability, which in turn
grows out of the credit of the inStitu-
tiOn issuing it. A bank note, for
instance, is different from a check in
thiS-the check is form of credit
both between the holder and the
issuer and the buyer and seller; while
between the buyer and seller the bank
note is in effect final payment. The
relation with which we have to do in
this paper is that of buyer and seller,
not between holder and iSsuer. The
motive for the issue of paper money
is two-fOld. First, the greater con-
venience of paper as compared with
gold, and in still higher degree as
compared with silver. Second, it's
greater cheapness, that is, to the
issuer, since it has been ascertained
that a much larger amount of paper
can be kept in circulation than is held
,Of specie for redemption, and the
issuer of the paper derives a profit
from the interest on all notes loaned
above the coin and bullion in his pos
session. A third motive is given by
some writer's, but it is not universally
received. We give it for what it is
worth Mr.. Patterson, in his work
called The Science of Finance, says:
The grand value of note circulate
ing nowadays, at least in this country,
where economy of banking is so fully
developed, consists not so much in the
extent to which it economies specie,
as in it's power of ready expansibility
by which it can be made to neutraliZe
the overcoming fluctuations in the
supply of specie or in the monetary
requirements of the community"
In closing, he touched upon the
effect of the money supply upon trade
and industry. 1t is claimed for infla-
tion that it works good in four direc-
tions: Decreases interest, diminishes
taxation, quickens diligence and the
price of labor, and removes the bur-
dens which rest upon production. If
the imitation is of metallic money, or
it's representative, and comes slowly,
it is claimed no harm will be done.
The effect of contraction was also
shown, and he claimed that it is from