The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1935-02-27

diSting u sh s
money" from xSE
other kinds of
currency. Good "aASsz
usage suggests Lewis Haney
that we call med!~ of exchange
currency" and limiS the term
money to that part of the total
currency which circulates, as fol-
lows:
Currency CAL media of ex-
change)
Cd Money generally accept
able, and circulates freely0
90 Other currency circulation
limited by credit standing Of
issuer.
One difference is that currency
which is not money (such as
checkS) is just promise to pay
money, and is no better than the
money in which it is payable.
Another differe nee is that
money once issued, may remain
In circulation regardless of bust
ness requirements; while other
currency, often being more de-
pendent upon business credit, may
increase or decrease according to
business conditions.
It is highly important to un-
derstand the relation between
currency and credit, so I will
classify the various kinds on that
basis:
/. STANDARD money" is money
composed of some standard sub
stance (such as gold, which
gives it its value. Thus a gold
standard dollar" is worth the
gold it contains-no more and no
less. No credit is involved.
We now have no standard
money in the United States.
2. Representative money" con-
SistS of certificates" represent
ing a specified amount of some
monetary material, such as gold
or silver. A piece Of representa-
tive money is a warehouse re-
ceipt, payable on demand, dollar
for dollar, in the specified ma
terial.
We have today both gold and
silver certificates" but the gold
certificates are miSnamed, since
they are no longer payable in
gold, and the silver certificates"
merely represent "silver dollars"
which contain much less silver
than a dollar will buy.
3. Convertible Credit M on e y.
This is currency which can be
converted into standard money.
It is "redeemable" in gold, silver,
etc. Such currency may include:
(a) "TOken Coins" pennies,
AickelS, dimes, etc. which con-
tain only small amount of value
in metal, but can be converted
into standard money at their face
value.
(b) ''NOteS" issued by some in.
Stitution Of generally known credit
standing, such as the government
or a bank, which must keep SOL
vent and maintain prudent re.
demption funds. The chief forms
today are Federal Reserve notes
and national bank notes. But
neither is now convertible into
anything, and their value is main
tanned merely by custom or con.
fidence in eventual convertibility.
4. Deposit currency" consists
of orders drawn on deposit &C
counts in banks. called checks ana
drafts, which serve as an i'm
portant medium of exchange.
They are payable in money, and
in that sense are convertible.
Their value depends upon the
credit of the individual who signs,
the condition of his bank, and
the money in which they are paid.
AS they do not circulate, they are
not money" but form Of credit
currency.
5. IncOnvertibIe credit currency.
This consists of currency which
has no value in itself, and is not
convertible into anything which
has. It is "irredeemable." Its
value rests upon credit.
The most common type of such
currency is found in the note is
sues of a government which is in
solvent, and therefore unable to
redeem it's currency. The green
backs" of our Civil War period are
an illustration. An inSolvent gov
eminent may issue inconvertible
notes for manipulative purposes.
The chief currencies now in cir
culation in this country are, in
order of amounts:
Federal Reserve NOtes.-These
are obligations Of the United
States backed by a 40'pe cent re-
serve of so-called gold certificates.
(See aboveo
National Bank NOteS.-Obliga-
lions of banks (whose chief assets
are Government bonds, secured
by Government bonds.
Silver Certificates.-Secured by
silver dollars containing about A
cents worth of silver to the dollar.
TaNaN1