the Treasury be not canceled and destroyed, but be paid out again and returned to circulation, according to the present law, what will happen then? Then the volume of the circulating medium will have been increased by the amount of coin issued by the process described. Now, if that increased volume of currency is just sufficient to satisfy the demands of business, and no more than sufficient, the two kinds of currency out, the metallic and the paper, will continue to circulate side by side. But if that increased volume turns out to be in excess of the real requirements of business, what will then happen? Then so much of that volume as is not wanted by business will withdraw from circulation, and it will be the metallic part, for that can be used in our foreign commerce, where our paper money cannot be used, and it will be exported. The paper money, according to the universal law, that an inferior currency always crowds out the superior one, will circulate alone. Suppose, then, it appears that the paper circulation alone is in excess of the real requirements of the business of the country, what then? Then something like the amount of that excess will go to the Treasury for redemption, and the coin paid out in that redemption being over and above the volume of the circulation required by the business of the country, will again either be hoarded or go into our foreign commerce and flow out. If, then, the greenbacks so redeemed are paid out and put in circulation again by the Government, so that the whole volume of paper money out remains in excess of the requirements of business, that process will repeat itself again and again, and thus the coin reserves of the Treasury will be gradually and surely drained, without being added to the circulation of the country.
Now, our greenback high-priests will exclaim: “Does not this show that the precious metals are a very unreliable currency?”
