Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-06-01
he HQSkin Letter % ' ; Rssszs
THE VALUE OF PAPER MONEY.

!. to 80 days, and takes them to the fed
eral reserve bank. The federal reserve
bank lends to the local bank and gives
it MONEY in the form of it's own federal
reserve notes. A stock of these notes
always is kept on hand, fresh from the
bureau of engraving and printing at
| Washington, which manufactures pa
per money just as wallpaper or sand
paper are manufactured.
The local bank now has these. fed
eral reserve notes and they. are paid
out wei it's counters in the routine of
the days business. Thus they get into
public circulation.
As John sells his shoes he curtails
makes payments on his note at his
local bank. The same is being done
by the other dealers. As the local
bank collects from it's borrowers, it
pays back it's loan to the federal re
serve bank. All the time these federal
reserve notes have been outstanding
the actual security for them has been
| Johns stock of shoes and the other
| goods of the other dealers. In addi-
ton the federal reserve bank has kept
in reserve against all the notes out
standing an amount of actual gold
| equal to 40 per cent of their value.
This process is going on constantly
all over the United States, the loans
being made and repaid over and over
again. When business is brisk more
money is borrowed, and when dull less
money. These notes are issued only
| when the briskness of business creates
O demand, and they are paid back
when things get dull. Thus there is
always enough currency to meet busi-
ness demands, and never too much.
This is what economists call an elastic
currency, and the United States now
has the most elastic currency in the
world. There are II federal reserve
banks and about $4,000 local banks.
These so-called member banks all
have the right to borrow notes and
put them into circulation
Another form of paper currency in
the United States is the national bank
note. 1t is not elastic. A national
bank takes an amount of government
bonds which it owns to the treasury
at Washington and deposits them
there. Then it may take in exchange
for them circulating money notes
which are called national bank notes.
These are printed at the bureau of
printing and engraving for the national
banks and shipped to them. They then
issue them over their counters in the
course of the days business.
Different Kinds of Bills
Also there are between three and
four hundred million dollars in green
backs outstanding. These have no ac-
tual security behind them excepting
the promise of the United States to
redeem them on demand. But this
promise is considered so good that a
gIs3nback dollar is considered to have
just as much value as any other kind.
These are printed at Washington also,
but only enough to renew old, worn
out or mutilated notes. No new
greenbacks. that is, no additional
amounts, have been issued since the
civil war.
Gold certificates and silver c%ertifi-
Gates are issued by the treasury
through the government payrolls, at
the paying %tellers' windows at the
treasury. and in payments of interest
on the public debt. These are a con-
yen:ence form of currency. For
every one in circulation there is
either a silver doll1 or a gold dollar
ut the treasury ready for the holder
of the note whenever he demands it.
As the use of the federal reserve
note increases the national bank notes
VIII go out or use. Also the treasury
notes ard the gold and silver c~ertifi-
Gates will likely cease to be used.
This smooth working system of
getting paper money into circulation
and keeping it up to par is confined
now to the Emitted States. Other
countries all over the world have de-
! preciated currency. They have issued
so many notes with so small a quantity
of either gold or goods behind them
that their people have lost confidence
In the value of the bits of paper.