Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-01-12
MONEY BASED ON CREDIT.

~ g ~ lion uooihS io PAOPo9oi W INN wv s~
Muscle-Shoals enterprise, Mr.. Ford has launched
into 4 general discussion of money and the basis
upon which it should be issued. He discards utter
~ the theory that a basis of gold or any other metal
is necessary or desirable. He discards the principle
OF interest. He maintains that the government
should issue money upon its own credit, and that
its own credit is ample guarantee for the security
and the exchange value Of the money issued. In
the case OF the Muscle-Shoals property, he proposes
that the government issue non-interest bearing pa
per which would really be the kind OF money that
he desires. the basis for that money to be the ac-
tual wealth represented in the property under con-
sidcration. In this way, he holds that the property
would pay for itself, the country would have the
advantage of its existence and operation. and there
would be no cost to anybody.
It seems strange that at this particular time
any man with sufficient capacity to be successful in
business in a large way as Mr.. Ford has been could
revert seriously to the old idea of an irredeemable
paper currency based in a loose and general way
upon the wealth Of the country. Many arguments
have been presented as to why this is impracticable
lust now there seems to be scarcely need for argu-
1nent.. We have before us the visible evidence of
exactly that policy: Many months ago, Russia
adopted this plan, and we have now before us the
results OF its operation. The paper money of Rus
STA is worthless. To procure with it a commodity
oi any sort requires a bulk of money about equal to
the bulk of the commodity to be purchased. A
load of hay. if there is such a thing to be had. would
be worth about a load of paper rubles of equal size.
In other words, abandoning the metal basis and is;
suing money upon the assumed wealth of the coun-
try and upon its credit. Russia has plunged itself
into depths from which it can never arise. There
can be no such thing as the redemption of the ex-
isting Russian paper money. All that is possible
is Reputation on a gigantic scale. ".
In less measure, Germany has proceeded along
the same lines. The printing presses have been
Hfr7ning out German marks until today the mark
yhich was worth some % cents when at par is
worth about one-half OF one cent. Again there is
certainty OF an enormous epudiation. Similar con-
di1ions prevail in many other European countries.
Theoretically the issuance OF money based on
commodities may be possible; practically it is not.
The moment that any government undertakes to
+. operate under that plan. that moment there is i'm
posed upon it the necessity OF deciding from time
TO time what volume OF money the country shall
have. There is always an urgent demand for more
money. and we cannot conceive a government
strong enough to resist that demand if the possibili-
I. Of meeting it were placed before it. Before long,
the American dollar would be in the position of the
worthless, and if the policy were adopted, through
out the world, before long the world would have
abandoned money altogether because of its worth
lcssness and uncertainty. and would have reverted
10 tho barter practices OF the ancients, notwith-
standing its c1u,nsiness. as the only one on which
il is safe to proceed.
The use OF gold as the standard upon which
money is based involves inconvenience and de-
fscts. 1t is by no means perfect, but it is the safest
and most practical thing that civilization has vet
devised, and it would be Jolly to abandon or weak
en- it,.