Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-01-26

NHEl6 SeelIlS 10 De pItfdieII
the thought that no very
serious imitation can occur
- unless the Government re-
sorts to the direct emission of cur
rency either by the use of its own
printing presses or by those of the
Federal Reserve banks.
In administration circles, for
example, there appears to be much
opposition to the payment of the
bonus by the "greenback" method,
though not so much by employing the
present methods of financing Govern
ment deficits. In the public mind, too,
there seems to be generally accepted
distinction between the emission of
paper currency to meet the deficits of
the Federal Government and the sale
of Government obligations to the
banks.
People en- masse have a peculiar
ability to ignore what is happening
to them-to remain amazingly inert
to things taking place about them
until, perhaps too late. realization
suddenly dawns on them and rays Of
comprehension begin to break through
the clouds of indifference, fear or
temporary gain. This is a partial ex-
PLANTATION of the state OF the public
mind in the days of 1928-l929. This
too. may be an explanation of the
extraordinary lack Of resistance to
certain of the highly critical and far
reaching acts of the administration.
And this, too. may be at least
partial explanation of the generally
accepted distinction between a cur
rency imitation and this thing that
We are now experiencing.
This distinction, or rather this as
sumed distinction. raises the ques-
ton: What is currency under existing
laws and regulations? Does the cur
rency which we now have bear any
relationship to the currency as it was
several years ago?
Several Kinds of Currency.
Before the days of the New Deal
there were several kinds of currency.
That which was not redeemable could,
however, be exchanged for that which
was. Generally speaking, currency
then was a promise to pay in gold or
could be converted into a promise to
pay in gold. This kind of a currency
was an automatic check on the fiscal
policies of government, because
whenever there existed doubt of the
ability to keep the promise to pay, cur
rency was converted into gold
The gold under such circumstances
went into boarding. A continuation
OF the process could compel an aban-
donment of specie payments. This
politicians recognized as serious mat
ter-serious in terms of their own po-
litical futures. But however much this
redeemable kind of currency served
as a red light to representative gov
eminent. the essential feature of the
currency which generally we enjoyed
prior to 1882 was a promise to pay
secured by the one metal which, for
variety of substantial reasons. man
throughout the centuries OF bitter ex-
perience had learned was the most
dependable-not perfect, perhaps-but
the best standard of value.
What sort of a currency do we now
have? The Federal Reserve $40 note
of the 1884 series reads: THE United
States of America will pay to the
bearer on demand ten dollars" and
this note is legal tender for all debts,
public and private, and is redeemable
in lawful money at che United States
Treasury or at any Federal Reserve
Bank"
Substantially the same language Is
to be found on all currency. 1t Is.
therefore, promise to pay-but in
what? In gold? No, for gold certifi-
Gates have been legislated out of ex-
istence. Moreover, it would make little
difference if the currency were redeem
able in gold, because it has been made
unlawful and q punishable crime for
any one to hold gold. Even gold pre-
viously acquired has been confiscated
by the Government.
What Is Lawful Money!"
What, then, is this promise to pay
"to the bearer on demand?" Is it a
promise to pay in some other nom
perishable substance? No. The
language on the face of the note
makes it clear that it is promise
to pay in lawful money" But this
doesn't answer the question. For it
but leads one to ask, What is lawful
money!" Obviously. lawful money"
is but another promise to pay in law
full moneys Consequently the promise
to pay is but a promise to pay in the
same sort of promise to pay. What
1t all boils down to is that the piece
of paper called currency is only a
commitment to pay in another piece
of paper of the same kind.
The same is true of the silver GER
tificatts, series of 1884. They carry
the language, This certifies that there
is on deposit in the Treasury of the
United States of America one dollar
in silver payable to the bearer on
demand"