Year: 1879

Professor Francis Walker, one of the abest


of American political economists, has been


talking to the people of Boston on the evils


OF "a political currency" In lecture de-
livered before the Lowell Institute Tuesday
evening he examined the question of paper
money, and while acknowledging that under
favorable conditions and for time it may
perform the three functions of money as
medium of exchange, denominator of value,
and standard of deferred payments, he con-
sidered its great liability to abuse, and asked
his audience to judge whether its successful
working depends upon an exercise of pru-
dence, virtue and self-control which are with
in what is fairly to be expected of men in
masses.


The single and obvious liability to abuse
in the case of government issue of paper
money is that of over-issue. 1t was this as
pect of the case that was chiefly considered
by Professor Walker. The liability to over
issue, he contended, arises out of the fire.
quently recurring fiscal exigencies of govern
ment, REINFORCED by popular passion for a
money of diminishing value as the means of
scaling down debts, encouraging trade and
undertaking great works of construction or
public improvements. All the selfish inter-
ests that make themselves felt, all the pas
sions of the hour and the appetites that
clamor for indulgence, are on the side of ex-
pansion. There is steady pressure On. that
side, which now and then rises to furious i'm
pulses against the barrier which withstands
initiation. How far is it wise to call into be-
ing forces which are or ought to be kept from
becoming in the highest degree mischievous
by being constantly watched and unremit-
tingly opposed? Nor does the liability to
over issue diminish with the lapse of time.
The issue of government paper money in
moderation does not form political habit
which becomes security against abuse. On
the contrary, the longer the regime of paper
money lasts the greater the danger, for the
popular mind becomes accustomed to it, and
the tear OF it is lost, until some exigency of
the Treasury or furious impulse from the
debtor class carries the government over the
line of safety. From this danger people re-.
ceiving inconvertible paper money into cir
culation never can escape. When once over
issue takes place the tendency is strong to
break all bounds. An appetite for further
issues is created in the Treasury and the
people, and that appetite acquires violence
by indulgence. The fact is incontestible; the
reason is obvious. To metallic money the
formula OF supply and demand applies. De-
mand creates supply; supply satisfies de-
mand. When country has enough of me-
tallc money it refuses 10 receive more into
circulation; it rejects the excess. Exporta-
tion takes place till the stock is drawn down
to the actual needs of commerce. But paper
money cannot be exported. Prices in paper
rising prices always excite speculation, fore
stalling the market and engrossing the stock
buyer, requiring more and more money, paper
money becomes continually scarcer the more
volumineus the issue.


This is the drift of Professor Walkers ar
gument, and he points out as illustrations,
the experience Of all nations who have per-
mitted themselves to use this dangerous ex-
pedient, an experience through which this
country has just passed. We carried paper
initiation so far as to make commerce highly
speculative, throwing trade more and more
into the hands of the reckless and incompe-
tent dealers, exciting to neglect of small saw
ings, and to extravaganza in personal expen-
diture. The injury soon spread through the
entire community. Thrift was obliterated !;
steady industry discouraged; and public mo-
rality suffered through the opportunities
afforded for Legitimate gains, and through
the loss by labor of its just reward. Is it
wise in us to continue to subject ourselves to
this temptation, having had so sore expert
ence of the evils resulting from it, and know
ing how easily nations succumb when the
temptation is put before them?