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Chapter XIV

Our Temporary Credit

 

The whole fabric of credit in the United States is a ragged network of personal good-faith and economic uncertainty. Within our borders, this uncertainty arises chiefly because of the erratic changes in our unscientific unit of value, and the incalculable ravages of secondary taxation, which suddenly and disastrously increase or diminish the vital extensions of credit. Externally, our credit system is a still more ragged network of halting ill-faith and distrust, and the distrust is not economic: it is political; for internationally we are in a zone dominated by the art of political-economy, not by the science of economics.

Internally the means of stabilizing our credit system lie at hand if we are capable of realizing the situation as it stands. Credit tokens, checks, endorsed warehouse receipts, bills-of-lading, and similar instruments, are a medium of exchange, without being anything more than a momentary measure of value and an insecure basis for deferred payment in “gold” dollars. These instruments of exchange would continue to be used exactly as they are today, where banks and merchants are willing to take a legitimate chance for the sake of facilitating exchange—an important necessary service for which they are quite properly paid. As a matter of fact it is an absolutely essential service which we cannot afford to do without. A Bank transports our goods for a certain number of days exactly as a Railroad transports them for a certain number of miles. All we have to do is to recognize the importance of this service and encourage its free competitive growth; but if we are to avoid disorder we must see that the credit instruments they deal in, within our borders, are expressed in terms of a scientific unit of value—not a so-called gold dollar.

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