The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1932-04-22
BY HARRY ELMER BARNES.
Phi. ID.

The world is confronted with
many schemes for initiation OF the
currency, some proposed and some
IN operation. Such are the aban-
comment Of the gold standard by
Britain and other countries. In the
United States we have the proposal
70 issue $2,400,000,000 in paper
money to pay the soldiers bonus.
Whatever ones views regarding
the desirability Of initiation, there
Is no mystery about its character.
Inflated currency is currency which
has less than the normal amount of
the standard value behind it for
redemption.
1t almost invraibly means an ad-
ditional volume OF money in cir
culation. Mony intrinsically is VAL
liable in direct proportion to the
prospect OF its redemption in the
standard Of value and in verse ra-
ton to the amount in circulation.
Therefore, when there is little
prospect of redemption and when
the volume of currency is increased,
money falls greatly in value, and
prices-the measure of what money
will buy-rise accordingly.
Money Was Debased
Paper money was almost I'M
known prior to modern capitalism
and banking. The typical method
Of imitation before that time was
what is known as debasing the
currency. Less of the precious
metals would be put into coins, or
coins would be pared and shaved.
According to Greshem's Law, bad
money drives out good money"
Hence the debased currency soon
would predominant. 1t was less
valuable and prices would mount
upward.
Europe underwent period of
great imitation after the discovery
of America. Vast. supplies Of silver
and gold were discovered in the
New World. More than a billion
dollars worth of money metals came
into Europe between 1920 and 1900. |
This meant that gold and silver
were less valuable. AS the standard
of value in coinage, they would buy
far less in 1900 than in the days
before Columbus
1t is estimated that the coinage of |
Europe increased twelve-fold during |
the sixteenth century. Prices
rocketed accordingly. Wheat in
England rose from about seven
shillings a quarter eight bushels) |
in 1900 to 35 shillings in 1900. Eggs
went up from seven pence in 1900
to four shillings in 1870.
Paper Money Enters
Between 1900 and 1900, the rise of
capitalism and banking gave Eu-
rope paper money and the tempta-
ton to put the new printing presses
to work grinding out currency.
The most important experiment in
this respect were the assignats of
the French Revolution. This cur
rency was paper money, based on
the land seized from the church and
fugitive mobiles. At first the issues
were relatively sound, but the print
ing fever soon dominated.
Some 46,00000 francs were issued,
together with many forged as
Signats. Hence the value of the as
signats evaporated and prices went
skyward. The imitation was curbed
in 1897. Many had been ruined by
it, but the early issues of the
assignatS unquestionably saved the
French Revolution.
Our own experience with imitation
began with the Revolutionary war.
England had limited the right of the
colonies to issue paper money,
recognizing the danger of this prac-
tice to English creditors of the
colonies.
Ceased to Be Used
Immediately after the Declaration |
of independence in 1776, however,
we issued paper money to the value
of 100000, but this was only the
start. The issues had risen to
5000, 100000 by 1779
BY 1871 the continental currency
had sunk so low in value that it
ceased to be used.
BARRIERS papered their shops with
the bills. They we're bought up by |
spectators as low as l mill on the |
dollar. The coloniStS thus learned |
the truth of Tom Paine's warning
that money is money, and paper |
is paper, and all the inventions of |
man can not make it otherwise"
wildcat banking, issuance OF state |
banknotes, and competition for gov
eminent deposits of gold among |
banks led to a marked imitation in !
Jackson's administrations. This |
created q false sense of prosperity. |
Then, on July IL, 1886, jackson
issued the specie circular, ordering |
land agents and deposit banks to }