CHAPTER 5

FIDUCIARY MONEY, METAL AND PAPER

§ 1. Commodity and fiduciary defined. § 2. Present monetary system
of the United States. § 3. Saturation point of fractional money. § 4.
Light-weight fractional coins. § 5. Worn coins and Gresham's law.
§ 6. A general seigniorage charge on standard money. § 7. Coinage on
governmental account. § 8. The gold-exchange standard. § 9. Nature
of governmental paper money. § 10. Irredeemable paper money. § 11.
Theories of political money.


§ 1. #Commodity and fiduciary defined#. The actual moneys in
circulation in every modern country consist of a wide variety of
pieces, differing in denomination, physical size, shape and materials,
mode of issue, source or authority of issue, and legal character.
Among these kinds, one is the standard and is a commodity-money.[1] In
such cases the coinage is free and nearly gratuitous, and the value
of the money is kept close to parity with its value as bullion by
changing bullion into coin, or coin back into bullion, whenever there
is an appreciable difference between the values in the two uses. This
adjustment is brought about by the free action of the people. The
government, having declared what is the standard money unit, and
having provided a mint to make coins, leaves it to citizens, acting
from the ordinary competitive motives, to decide when they will reduce
or increase the number of coins in circulation.