40/42 The money use is the source of value of the paper notes. It is this which gives the economic condition for value in paper money and strictly limits the power of the government--a fact overlooked by the fiat-theorists. Business conditions remaining unchanged, the limit of possible issue without depreciation is the number of units in circulation before the paper money was issued, the saturation point of full-weight and full-value coins. Whenever governments have failed to stop at that point, paper money has depreciated. But under wise and honest control and regulation political paper money might serve the monetary function very effectively. |