Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1896-08-26

keep on hand coin sufficient to redeem
all notes which may be presedted for
payment. Whenever the issuer fails
to redeem all notes which may be
presented for payment convertibility
ceases, although he may yet have
sufficient assets with which to ulti-
mately redeem his notes.
There are two motives for the issue
of paper money as substitute for
metallic money. These are it's con-
venience and the fact that it is sup
posed to be cheap. There can be no
doubt about It's convenience Men
everywhere prefer paper so long DIS it
is readily convertible into coin. For
this reason paper money will no doubt
continue to be used in spite of the i'm
projections of all of the systems which
have yet been invented, and the dis
asters which have in the past followed
it's use. In discussing it's cheapness
we need to distinguish between cheap
ness to the one who issues it and cheap
ness to the community. 1t is ques-
tionable whether it would be cheaper
to private person or to corporation
to issue convert BILE paper money and
keep on hand the whole amount of
the issue in coin, or to use the coin
itself. This question could only be
decided by striking a balance between
the cost of issuing and continuing in
circulation the paper and the loss re-
upon the coin when in circulation.
We may apply the same test to the
case of the government, bearing in
mind that any gain or loss to the
government means gain or loss to the
whole community. When paper
money is issued and only a fractional
part of the amount issued is kept on
hand applicable to its conversion, the
issuer gains an amount equal to the
interest on the difference between the
amount of the paper issue and the
same kept on hand to insure convert
Utility. All this is upon the sup
position that there is no ultimate
breaking down of the system, in
which case the loss entailed upon the
community usually far outweighs any
gain realized by reason of the cheap
ness of the paper.
What we have said on this point in
regard to convertible paper money is
equally applicable to the case of incon-
vertible paper money.
AS to the actual gain or loss to the
United States from the use of paper
money Walker says: Il apprehend
there are few thoughtful and intelli-
gent Americans who will not accede
to the statement of Prof. Perry
There can be no hesitation In affirm
ing that the expense OF maintaining a
gold aud silver money for all the
wants of the whole country might
have been met many times over from
the losses resulting from this bank
paper system"
Ii any monetary system could be
devised which should establish a
paper money always and everywhere
convertible into the coin of which it
is representative and the quality Of
this paper be SO regulated as to con-
form to the demands of business and
be strictly controlled by the natural
laws OF trade, such "a. system would
no doubt be more economical than
strictly metallic system. 1t would
substitute d cheaper for dearer
system. But so far as we know no
system has ever been devised which
did not at some time break down,
bringing disaster to business, either
temporary or permanent, and Otter
times involving incalculable losses.
The conclusion of this subjest is
offered to future time
S. NJ