Synopsis by Conspiracy Nation
(Based on *Coin's Financial School* by William Harvey (1895))

*Credit  money*  is  a  title  to  commodity  money  (e.g., gold,
silver).  In the exchange value between commodity money  and  all
other  property,  credit  money  does  not  add  anything  --  it
facilitates -- makes convenient the transaction of business.

Three  lines  of  credits  are  built up on primary or redemption
money (gold and/or silver):

  (1) Credit money  --  paper  bills  and  all forms of token
  money -- all redeemable in primary money.
  (2) Checks, drafts, bills of exchange, and other  forms  of
  like paper, payable on demand.
  (3)  Notes,  bonds,  accounts,  and  other forms of credit,
  payable at a particular day  in  the future (debt), or upon
  the happening of some contingency.

Thus we have *three* categories of credit  built  up  on  primary

Over-confidence  causes  an  expansion  in categories two (2) and
three (3).  A man finds he  can easily float $5,000 in debts and,
since times are good, he increases his debts  to  $10,000.   This
expansion  becomes contagious.  Cities, counties, corporations --
all increase their  debts.   When  demonetization  of silver took
place (1873), the supply of primary money was  reduced  by  about
one-half,  and  the half that was demonetized became credit money
(category (1),  above).   At  this  point  there  was very little
supply of primary money (gold) compared to (1) credit money,  (2)
checks,  drafts,  etc.,  payable on demand, and (3) notes, bonds,
etc., payable in the future.

It is practical to maintain  a purely greenback system.  The only
theory, however, on which  a  purely  greenback  or  paper  money
system  might be maintained would be to do away with a redemption
money entirely.   You  cannot  have  both  without the redemptive
principle applying.  The  money  with  its  own  intrinsic  value
(e.g.,  gold,  silver)  becomes  the most preferable.  You cannot
maintain  two  kinds  of  money  at  a  parity,  when  one  has a
commercial value and the other has none,  except  by  making  one
redeemable in the other.

But you might have a purely paper money.  Limit it in quantity by
fixing  the  amount at so much *per capita*.  Maintain the volume
at that as population  increased,  and  from time to time provide
for what had been destroyed.  The fact that  it  was  limited  in
quantity would give it a value.

The  objection to the greenback system is this:  So long as there
was confidence in the  government,  it  would  be a sound, stable
money.  But as soon as confidence in the government was shaken it
would depreciate in exchangeable value.

[CN:  Put differently, to prop up the  greenback,  confidence  in
the  government  must be maintained, no matter what.  Our current
paper money is sort of  a  greenback  system:  what is now called
"the dollar" is not redeemable for,  e.g.,  gold  and/or  silver.
>From   "greenback   system"  follows,  *ipso  facto*,  that  "the
government can do no wrong."]

When the danger became imminent  that the government was not able
to enforce the greenback's legal tender character, the greenback,
having no commercial value, would become more or less worthless.

Combined capital all  over  the  world  have  been  using  (1895)
professors  of  political  economy  to  instruct the minds of the
young to a belief in the gold  standard.  This is not hard to do,
as these students, being young, their minds  are  easily  molded.
The error is planted deep and strong.  But the gold standard, now
(1895)  fitted to a shivering world, is squeezing the life out of
it.  The workers of  the  country,  the backbone of the republic,
are delivering over their property to their creditors, and  going
into beggary.  This is the test proof of the "beneficence" of the
gold standard.

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