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94 for the decreases or increases in the purchasing power of the dollar.

7. The Essentials of a Gold Standard

Before proceeding to the second question of §6, we may pause here to point out that the abolition of gold coin would make no material change in the processes by which gold flows into and out of circulation. Gold would, just as at present, be brought by the gold miner to the Mint or the Assay Office or other Government depository, and he would, just as at present, receive paper tokens, or yellowbacks, in return. The only difference would be that he would not always deposit the same amount of gold to get a dollar of yellowbacks. This sale of gold to the Government for yellowbacks, i.e. this unrestricted deposit, is the essence of unrestricted coinage or, as it is usually called, "free coinage." It is thus that gold gets into circulation through its representative, the yellowback.

Moreover, to turn from inflow to outflow, gold would, just as at present, be taken out of the Government vaults by jewelers or gold exporters and they would, just as at present, surrender yellowbacks for that gold. The only difference would be that they would not always get the same quantity of gold for a dollar in yellowbacks; the same certificate would be worth different amounts of gold at different times. Every dollar of gold whose corresponding yellowback was thus taken out of circulation, just as at present, would disappear into the arts or foreign circulation. The process would therefore be virtually a flow of gold dollars from the circulation into the arts or abroad. Such exchange is the unrestricted "redemption" of the certificates.