Online Library of Liberty: Economics, vol. 2: Modern Economic Problems

effectively. Since the end of the World War, from various quarters has been advanced the plan of an international paper money, to be issued by some organization like a world federal reserve bank. The amount and value of the notes would be regulated in conformity with the gold standard. To monetary students this plan is not new and is theoretically sound except for the political difficulties likely to arise.

Resorted to in desperate extremities, political money has usually proved to be a costly experiment. Once the issue of political money begins to be excessive, its further limitation proves to be most difficult. A result usually unintended is the derangement of business and of the existing distribution of incomes. The rapid and unpredictable changes in prices give opportunity for speculative profits, but injure legitimate business. This incidental effect on debts and industry offers the main motive to some citizens for advocating the issue of paper money. It is peculiarly liable to be the subject of political intrigue and of popular misunderstanding. It is this danger, more than anything else, that makes political money in general a poor kind of money.

References.

Jevons, W. S., Money and the mechanism of exchange. N. Y. Appleton. 1875. Chs. VIII, XVII, XVIII.

Johnson, J. F., Money and currency. Bost. Ginn. 1905. Chs. XIII-XVI. Kemmerer, E. W., Modern currency reforms. N. Y. Macmillan. 1916. P. 541. Phillips, C. A. N. Y. Macmillan. 1916. Chs. IV, V, XII.

United States Director of the Mint, Annual reports.

Walker, F. A., Money. N. Y. Holt. Chs. VIII-XII.

White, Horace, Money and banking illustrated by American History. Bost. Ginn & Co. 1914. Bk. II, chs. III-VI.