Page:Stabilizing the dollar, Fisher, 1920.djvu/313

4] Winn, and even Alfred Russel Wallace) have, it is true, seriously proposed such a discretionary system. But both experience and theory condemn it. No system yet proposed is really sound which omits the feature of redemption (nor is any system entirely sound if it omits the feature of deposit). Where paper money is vaguely assumed to "represent" commodities without any active redemption to make it good such representation is a mockery. Thus the famous, or infamous, "assignats" of the French Revolution were supposedly "based" on land but were in no way restricted thereby.

4. A Money Based on Labor

Others have suggested a plan somewhat analogous to the foregoing, the standard being a day's work of common labor.

We have as usual to consider the two fundamental operations of issue and redemption.

The plan provides for the virtual free "coinage" of such day's work into labor certificates by having the Government offer work on public roads or other public works issuing a fixed sum of money, e.g. three dollars for such day's work of common labor.

No provision for redemption is made, however. The certificates are receivable in taxes, but this does not make them convertible into day's work. The theory is that, should there be, at any time, an excess of certificates in circulation, their issue would be checked as workmen would refuse to work for the Government at the fixed price when, as a consequence of inflation, they could get more from private employers.

This system is in essence, therefore, the one-sided system described in § 3. It is as if we had free coinage or unrestricted deposit of gold for our present gold certificates without provision for redemption (although the certificates would, of course, be legal tender and receivable for taxes).