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