Az
MONEY
are not the identical persons who lost by the first,
and vice versa.. Institutions, too, suffer loss, though
we can scarcely speak of justice in their case: one of
the greatest losers is usually the State in its corporate
capacity. The trifling gain made by issuing interest-
free notes instead of interest-bearing loans is far
more than set off by the higher prices which the State
has to pay for everything which it buys during a
period when its expenditure would in any case have
been abnormally large—higher prices which lead to
the contraction of debt far exceeding in magnitude
what would have been the whole cost of the commo-
dities and services obtained, if they had been paid
for at the prices prevailing before and after the period
of suspension.
Unless a halt is called the end comes with a crash.
In saying above that increases of the supply of coal
or gold would always find plenty of demand at
sufficiently reduced prices “down to a very low
limit,” we had in mind that no commodity is wanted
in indefinite quantities. However the demand may
extend, it will not extend indefinitely, and with every
commodity there is a point beyond which no more
will be required, however cheap the commodity can
be got. It would take a considerable increase in
the supply of coal to London to bring its price there
down from say 30s. to 10s. a ton, but if a further
increase of supply brought it down to 2s., it is quite
certain that a very little increase on the top of that
would bring it down to almost nothing. Nobody
wants indefinite amounts. So, too, with gold, per-
haps even more clearly: very cheap gold would
be unsuitable for currency and for ostentatious
ornament, so two of the principal sources of demand
for gold would cease to exist if gold were found in
very large quantities. So it is with notes. As long
as their increase is sufficiently slow and the total