The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-05-24
Frederick Haskin's Letter
,ss.x.l corrrx,ondepe, Arxusl
THE VALUE OF PAPER MONEY
Especial correspondenee Of The Argus.


the form of its own federal reserve
notes. A stock of these notes al
ways is kept on hand. fresh from
the bureau of engraving and print
ing at Washington which manufac-
lures paper money just as wallpa-
per and sandpaper are manufac-
tured.
The local bank now has these
federal reserve notes and they are
paid out over its counters in the
routine of the days business. Thus
they get. into public circulation.
As John sells his shoes he cur
tails-makes payments on his note
at his local bank. The same is be
, ing done by the other dealers. As
the local bank collects from its
borrowers it pays back its loan 10
the federal reserve 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 addition
/ the federal reserve bank has kept
! in reserve against all the notes
outstanding an amount of actual
gold equal to 40 per cent OF their
value
This process is going on con-
stantly all over the United States.
the loans being made and rspald
over and over again When bus
ness is brisk more money is Dor
rowed, and when dull less money.
These notes are issued only when
! the briskness of business creates a
i h1.-
when things get dull. Thus there
is always enough currency TO meet
business 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 IL 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 nation
al bank note It is not elastic 4
national bank takes an amount of
government bonds which it owes to
| the treasury at Washington and de-.
posts them there. Then it may
| take in exchange for them cirCUlat-
ing 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 N
greenbacks outstanding. These
have no actual security behind
them excepting the promise of the
| United States to redeem them on
demand. But this promise is con
sidered so good that a greenback
I 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 add
tional amounts, have been issued
since the Civil war.
! Gold certificates and silver Ger
| tif1cates are issued by the treasury
through the government payrollS.
at the paying tellers' windows at
/ the treasury, and in payments or
interest on the public debt. These
! are a convenient form of currency,
| For every one in circulation there
is either a silver dollar or gold
| dollar at the treasury ready for the
holder of the note whenever he de-
mands it.
As the use of the federal reserve
note increases the national bank
notes will go out of use. Also he
! treasury notes and the gold and sill
yer certificates will likely cease =
| be used.
This smooth working system Of
| getting paper money into clrcul2-
ton and keeping it up to par S
confined now to the United States.
/ Other countries all over the world
have deprecated money They
have issued so many notes with Sc
small a quantity Gr either gold or
goods behind them that their peo-
pie have lost confidence in the val
ue of the bits of paper. Therefore
a conference of banks of issue, that
! is central banks like the federal re-
serve banks, which have the power
Of issuing paper money. is neces-
sary This conference viii try 10
get the whole world back 10 plan
as good as the American plan.