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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Document type:: Monograph

Structure type:: Chapter

Title:: Part III. The recent historical example

Collection:: Economics Books

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

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