The Washington times., 1935-03-06

VI NAoUCAASSS w
Lewis Haney cause it has
length itself. is convenient, and is
a definite distance. So 1t is with
dollar, pound, or franc.
The essentials Of good money
are as follows:
/. Money must have an OBJ
JECTIVE VALUE OF ITS OWN,
so that it can be generally rec
ognized and accepted. This
means that its value cannot be
wished into it, or be given to 1t
by some king.
In order to have the prime
quality, value, money must be linn
tied in supply by conditions which
are not arbitrarily controlled and
are not subject to manipulation.
And there must be broad and
elastic demand for it, including
an assured desire to use 1t for
monetary purposes.
Unless it has such a value OF its
own, it cannot be used to measure
other values, but will merely woo
BILE around or be manipulated by
politicians. You would not try TO
measure length with a RUBBER
band!
2. Money must have q Def
MITE value, so that 1t can
serve as a standard"
This means that its value must
be such that at any given time
all men can agree that a unit"
of it (say a dollar has an exactAV
determinahle purchasing power:
Then they can readily buy ana
sell on that basis. They can also
figure and allow for any changes
which may affect its value.
OF course, it is impossible TO
find anything that has a value
which is absolutely fixed for all
time. We can, however, use a
fixed quantity OF some materla!
which has a stable value, and
TINS have definite" quantity
of value as our standard. This
is an essential of good money.
3. Money must have STABLE
value, so that it can store up
value and serve as basis for
deferred payments.
In short, good money must
he based on some standard
material that has value
which varies as little as
possible. Then we can make
contracts in. terms Of money,
with reasonable assurance that
no change in the nature OF
the money itself will cause
losses. Then we can save
Then we can make lOng-term
investments. Then no one but
a miser will want to "hoard."
The foregoing are the three
essentials of good money: But
there are certain contributing
factors to be noted.
On the demand side, money
should be based upon a standard
material which is itself desired
for other uses, and which IS
easily recognized and homogene-
GUS. It should be convenient.
easily coined and not bulky. IL
should be divisable into small
units without losing value. IL
should be durable.
On the supply side, the stand
ard material should be scarce by
nature, and not subject to large
changes in quantity available
from year to year. This is highlF
important, being essential to the
maintenance of an objective and
stable value. The material should
be produceable, but its produc'
ton should be governed by prices
and costs, so that its value Will
always tend to vary with relation
to other values.
In these respects, silver Is a
poor money material. Not only
is it bulky. but it is produced
chiefly as a by-product OF copper
and lead, so that its supply quar-
tity is not determined by its
value, and it's cost is not known.
Obviously, paper is worse STILL
There is no limit to its supply.
There is no definite basis for its
value. We cannot count on it in
measuring values. And for stor-
ing values, or deferred payments,
it falls down completely.
Reason and experience both
show that a good monetary sys-
tenn is one that works automat-
ically. and therefore must be
based upon a definite standard
unit of a stable standard ma
terial.
Next Saturday - BimetalIism
a~H C1yVnn ~ at fIiSTn0