to find the truth between these two. First is that of the
cost-of-production theorists, who declare that government is powerless
to influence value, or to impart value to paper by law. They deny that
there is any other basis for the value of money than the cost of the
material that is in it. Money made of paper, on a printing press, has
a cost almost negligibly small, and, therefore, they say it can have
no value. The facts that it does circulate and that it is treated as
if it had value are explained by the cost-of-production theorists as
follows: while the paper note is a mere promise to pay, with no value
in itself, it is accepted because of the hope of its redemption, just
as any private note. Depreciation, according to this view, is due
to loss of confidence; the rise toward par measures the hope of
repayment.

Taking a very different view, the extreme fiat-theorists assert that
the government has unlimited power to maintain the value of paper
money by conferring upon it the legal-tender quality. The meaning of
_fiat_ is "let there be," and the fiat-money advocates believe that
the government has but to say, "Let there be money," to impart value
to a piece of paper. The typical fiat-money advocates in the United
States were the "Greenbackers," who wished to retain the greenbacks
issued in the Civil War and to increase the amount greatly. They saw
in paper money an unlimited source of income to the government.
They proposed the payment of the national debt, the support of the
government without taxes, and the loan of money without interest to
citizens. All might live in luxury if the extreme fiat-money theorists
could realize their dreams. The depreciation that has taken place
in nearly every case where government notes have been issued, the
fiat-theorists declare to be due to a mild enforcement of the law of
legal tender. To them the fact that paper money may circulate for