merely transformed. They are the same gains and losses which, under our present system, are felt by the public as individuals.
The maintenance of a definite ratio of reserve to certificates compels both of them to expand or contract in unison and leaves the currents of gold between countries and between the arts and the currency substantially as they are at present.
An "indefinite" reserve system would disturb those currents somewhat, mitigating a flood of gold into the country or an ebb of gold out of it, and, if the country be a large one, affecting the value of gold.
2. Speculation in Gold
A. Preventing "Overnight" Speculation. The best "brassage" fee. In the text (Chapter IV, §10) it was briefly stated that a small fee should be charged by the Government for the deposit of gold.[1] This fee would correspond somewhat to the old "brassage" charge for coinage and may, for convenience, be so called. Its object, however, is not primarily to defray the expense of the mint office but to prevent speculation in gold, injurious to the Government.
Without some such safeguard the Government
- ↑ The weight of the gold bullion dollar, at any time, may be called the redemption-weight of gold, i.e. the weight of gold in which a gold bullion dollar certificate can be redeemed. The amount of gold which must be deposited at any time for a gold bullion dollar certificate may be called the deposit-weight of gold (corresponding to the present mint-weight). This exceeds the redemption-weight (i.e. the "dollar") by the brassage fee. If this fee be 1%, reckoned on the dollar's weight, and the dollar's weight (in pure gold) were 23.22 grains as at present, this fee would be .2322 grains. Hence the depositor of gold, in order to receive a dollar of certificates, would have to deposit not only a dollar of gold bullion (23.22 grains) but a "brassage" fee of .2322 grains besides, or 23.4522 grains in all. In other words, while the redemption-price would be $20.67 an ounce (i.e. 480 grains in an ounce ÷ 23.22 grains in a dollar) the depositor of gold would receive a deposit-price (corresponding to the present mint-price) not of $20.67 an ounce, but of 480 ÷ 23.4322 or $20.47. Under this system of terminology the dollar and the official price of gold are defined in terms of redemption, not of deposit, which latter involves the brassage fee as well.
