Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-06-01

central banking Institutions Of the
principal nations of the world to at
tend a conference, the purpose of
which will be to study questions relat-
ing to paper money which have arisen
as a result Of the war. The federal
reserve board, which stands at the
head of the American banking system,
has received such an invitation and
probably will participate. Such a con-
ference as this is deemed necessary at
this time because of the tangled con-
dition into which the paper currency
systems of the world have been thrust
by the business abnormalities of the
war and the post-armistice period.
Money Is an invention. designed for
the convenience of mankind, just as
much as the cotton gin or the printing
press are inventions. In fact, there
is less actual value to money of any
kind than to'a mechanical invention.
Metal money, such as gold, silver,
and copper, has more real value than
paper money, but not much more.
These metals have beauty and strength
but they cannot be eaten o worn.
They are valuable as money because
all people have agreed to consider them
so. They were selected because of
their convenience in handling.
Paper money merely is another step.
A paper dollar has very little actual
value, but the American people have
agreed that they will pretend that it
has a fixed value and so it passes for
the equivalent for that amount. Money
of all kinds constitutes a striking ex-
ample of what people can do by gov
eminent. First the people agree that
gold shall have a definite value, then
they agree that a bit of paper which
promises the payment of the gold shall
have an equal value, and the scheme
works. Paper money in this country is
taken in preference to gold because it
is easier to handle.
But the scheme works only so long
as, confidence exists in the ability of
the central bank. or the government, to
come forward with the actual gold
when it is demanded. And the gold
itself only has value so long as the
nation in which 1t circulates has goods
which can be purchased with gold or
paper promises to pay gold.
There is an old legend of a man no
starved to death on a mountain of
gold. In terms of gold he was the
wealth was worthless because there
was nothing to spend it for. These
facts must be understood thoroughly
to make possible a comprehension Of
how money systems work. In modern
times there never has been a complete
absence Of food and clothes as in the
case of the nan who starved to death.
But in the past few years there has
been an abundance of gold in the Unit
ed States and q relative scarcity of
things of real value. The result has
been an increase in prices. That
means the gold has not been worth so
much.
The American paper money system
now is working better than any in the
world. The bulk of our paper currency
and it is based to a large extent on
things of value rather than on gold.
This is a recognition of the fact that
gold. after all. is IN artificial value.
What a Paper Bill represents
The crisp note you get in your pay
envelope may seem to come out of no.
As a matter of fact what you hold in
your hand is merely a token for a bale
of hay, a bale of cotton. n bushel of
potatoes or a pair of silk stockings.
This is how it happens:
John is a shoe dealer. He orders
from a shoe manufacturer 5000
worth of shoes. He must pay the man
ufacturer Mt once. so he goes to his
bank and borrows $1,000 on his note
which is secured by the shoes. Now
the bank has made many similar loans
to other dealers. in all kinds of things.
taking notes secured by the goods
themselves. II finds itself ont of
money. Therefore the bank gathers
up all these notes, which u from 30