PAPER PRICES 
95 
buyers become more reluctant than usual to pay on 
the nail and sellers become more desirous of immediate 
receipts. If either buyers or sellers were now given 
the power to print as much additional legal-tender 
paper money for their own use as they liked, no 
difficulty would be felt. The sellers could then give 
the buyers unlimited credit or the buyers could pay 
the sellers at once. As neither party has that power, 
they both, or rather some of each party, run to the 
banks for accommodation, i.e. to borrow, some 
buyers intending to pay at once with the borrowed 
money and some sellers intending to tide over the 
time till buyers who cannot pay at once are able 
to do so. At this point again, all difficulty would 
be absent if the banks had the power of printing as 
much legal-tender inconvertible paper as they liked. 
They would print, and as business would continue 
“good,” they would be able to lend large quantities 
at a low rate without fear that the borrowers would 
be unable to repay. Thus, whether the manufacture 
of the paper money was entrusted to the traders or 
the banks, the boom would go on until the currency 
became discredited by its excessive increase as 
described above p. 70. As things are, where there 
is a currency limited in some way to an amount 
which can exist without loss of value, the demand 
for accommodation rises sharply, the banks see that 
they themselves will soon be in difficulties and unable 
to meet their obligations unless they choke off some 
of the would-be borrowers and encourage depositors. 
They therefore raise the rate which they charge to 
borrowers and the rate which they pay to lenders 
(depositors), while at the same time they become 
stiffer about the sect “+7 offered by borrowers. The 
bubble then bursts. he ‘producers’ find that 
their prospects are not nearly so rosy as they sup- 
posed : their expenses have risen as well as their