Money

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Monograph

Identifikator:: 1819853969

URN:: urn:nbn:de:zbw-retromon-207464

Document type:: Monograph

Author:: Cannan, Edwin http://d-nb.info/gnd/118666916

Title:: Money

Edition:: 6. ed.

Place of publication:: [London]

Publisher:: King

Year of publication:: 1929

Scope:: XII, 120 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Further elucidations

Collection:: Economics Books

36 MONEY for the notes. The only thing that is very certain is that if a bank’s notes once get into circulation and remain in circulation for some years, the average cover required will be a very small percentage of the amount of notes outstanding, as the demand to xchange them for coin will always nearly equal the demands to exchange coin for them, and such dis- crepancies as occur will be known to be due at particular seasons, and therefore can be provided for shortly before they occur. No one ever supposed that the proportion of such “cover ” held against convertible notes directly affected their value. Their value will be the same as that of the coin into which they are convertible, whether I per cent., 50 per cent or 100 per cent. are “covered,” so long as conversion is believed to be obtainable if asked for. The effect of variation in the amount of cover on the value or purchasing power of money, is to be looked for only in its very trifling influence on the world demand for the metal of which the coin is made: the greater the cover held against notes the less is that metal economized. Legislators have very commonly believed that bankers are apt to underestimate the amount of cover which it is necessary to hold in order to secure convertibility at all times, and they have also often thought that, even when convertibility is secured, bank-notes are likely to be issued at times in excess of what is desirable in the interest of stable prices and business. They have therefore been inclined to make laws for the purpose of compelling bankers to keep more ‘‘ cover ”’ than they would do of their own volition. The more cover kept, the less profit on the issue of notes, so that such laws, when effective, tend to damp the otherwise natural desire of banks to issue as many notes as possible. In the extreme case, where 100 per cent. of cover must be kept

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