Page:Stabilizing the dollar, Fisher, 1920.djvu/311

2] lay between these limits, there would be neither redemption nor "coinage."

It is scarcely worth while, as I am not advocating this plan, to go into much further detail. But it may be pointed out that, if desired, the limits to the index number may be narrowed if the Government would bear the expense in clerk hire, rent, interest, etc., involved in the broker's work of conducting his operations (just as, to-day, for an analogous reason the Government bears the expense of the Mint).

We have, so far, assumed that money, i.e. certificates, would come into being, as to-day, only by the act of "coinage," i.e. by the deposit of (warrants for) commodities and never by mere arbitrary issue to defray Government expenses, as in the case of "fiat money"; and, likewise, that money would pass out of existence only by the act of redemption, i.e. by the issue of warrants for commodities. The monetary system would then be strictly analogous to our present system, gold being replaced by a composite of commodities. It would not be a "fiat money" system.

2. The Same System Modified by the Omission of "Free Coinage"

We could, although with danger to the system, omit the "free coinage" feature, provided we permitted the issue of certificates for Government expenses and relied on such issue ceasing as soon as the resulting tendency toward redundancy brought about a demand for redemption. If, under such an arrangement, the Government should persist in overissuing paper certificates with one hand while redeeming them with the other, it would be losing through redemption what it would gain by the issue, in an "endless chain."

As to the opposite possibility, that of contraction, there would, if free coinage were not employed, be no safeguard. Nor would any be needed; for while, theoretically, the issue of certificates might be