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

38 MONEY well be under the sea in the Titanic, or under the ground in the Transvaal. Yet to such lengths of absurdity does the worship of ““ cover ”’ go that cases have been known in which the issuers of inconvertible paper actually increased the issue in order to buy cover with the addition. Little over a century ago, for example, when the then inconvertible notes of the Bank of England were depreciated, the Bank issued more in order to buy gold. Since then there have been many instances in which return to a gold standard was delayed by the effort to accumulate cover, when what was really needed was a diminution of notes. Obviously if the issuer of a paper currency which has become depre- ciated sells notes and buys gold, he lowers the value of his notes by supplying more, and raises, though doubtless not so much, the value of gold by demanding more, and thus he widens the gap between the par value and the actual value of his currency. If he wants to raise the value of his notes, he should do just the opposite, sell any gold he has and buy—and burn—notes. If the government of this country had been really anxious and determined, in spite of all opposition, to raise the paper pound to par with the gold pound immediately, they could have done it very quickly some time before 1925 by apply- ing a substantial but not overwhelming proportion of the gold held against the Currency and Bank Notes to the purchase and cancellation of notes. While increase of cover has no tendency to raise the value of an inconvertible paper currency covered but rather the contrary, it is nevertheless true that the requirement, if enforced, of 100 per cent. cover for all further additions to the amount of the paper will maintain its value. There is nothing paradoxical in this. It happens simply because the requirement deprives the issuer of all motive to increase the issue

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