Page:Forgotten Man and Other Essays.djvu/166

158 consisted of silver without any paper, but three times as many more silver dollars as we have now. But every one knows that such a state of the currency never would exist. We should have paper "based on silver"; that is to say, the silver inflation never will be carried out. It will turn to paper inflation at the first step. Who can believe that, if the silver standard was adopted, silver would be bought and piled up dollar for dollar against the paper, and that the paper would be issued only as fast as the silver could be coined? In fact, silver would no doubt be dropped and forgotten, and we should have plain and straightforward fiat money of paper. Such ought to be faced as the only real sense and probable outcome of the present agitation for the free coinage of silver.

Limit of the Amount of Silver which could be Absorbed.

Let us, however, proceed upon the assumption that the plan proposed is sincere, and that the attempt would be made to carry it out in good faith. The circulation in the hands of the people would be paper, for they would become sick of silver and revolt against it. There would then be two thousand million dollars in paper afloat, each "dollar" being of silver and worth half a present gold one. We have now five hundred million silver dollars. At the utmost not more than another five hundred millions of silver could be absorbed into the system. That would give reserves of fifty per cent of the total currency, and that is the maximum of the demand for silver which could be created if the United States went over to the silver standard. The supply would come from all over the earth. Mr. St. John is sure that none would come from Europe, because legal tender silver there is at a higher ratio than sixteen to one. Not a nation in Europe which is now under