[115] Das Geld, Leipzig, 1903, p. 477.
[116] Laughlin, rejoinder to Clow, "The Quantity Theory and its Critics," in Jour. of Pol. Econ., 1902.
[117] Principles of Money, passim.
[118] Cf. Social Value, pp. 132-136, and supra, ch. on "Marginal Utility and Value of Money."
[119] Strictly speaking, there is no marginal utility, but only a "subjective value in exchange," for money of the sort here discussed. See supra, the chapter on "Marginal Utility."
[120] The psychological reactions of the people in times of stress and uncertainty toward different kinds of money cannot be predicted with any certainty, and there seems to be absolutely no definite or universal law governing the matter. The present writer collected a lot of newspaper clippings at the outbreak of the present World War. From these it appears that in both Paris and Berlin there was a very great distrust of bank-notes, and an insistence by retailers, restaurants, landladies, etc., on coin. But silver, which was not standard money, seems to have been accepted without question. When hoarding is referred to in these clippings, it is invariably gold that is mentioned. A similar hoarding of gold took place during the Balkan crisis at the time of the outbreak of the war between the Balkan Allies and Turkey. Professor E. E. Agger informs me, however, that he has found some evidence that bank-notes as well as gold were hoarded in Austria, at this time.
Sometimes we have a suspension of Gresham's law, and an acceptance of all kinds of money at varying ratios. The following clipping from the Boston Herald of March 17, 1914, illustrates this: "Douglas, Ariz., March 16.—Four kinds of money are now circulating in the Mexican territory controlled by the Constitutionalists. These are United States currency, the first issues of the Constitutionalist government and of Sonora state, and 'Villa money,' or that issued by Chihuahua at the instance of the rebel military commander. United States takes precedence. Merchants in Sonora, in order to protect themselves and at the same time observe the laws requiring acceptance of the rebel currency issues, have established a sliding scale of prices. This was discovered when five merchants were arrested at Cananea by Constitutionalist secret service men, who found that for American money they could buy goods for less than half the amount exacted when payment was offered in Mexican currency. The uncertainty of the rebel campaign against Torreon is reflected in the money market. To-day Constitutionalist sold for 22 and 28 cents American on the peso. Mexican federal currency commanded from 30 to 32 cents." In the experience of travellers who have discussed the matter with the writer, there was little of this flexibility of relation between paper money and coin in Berlin, or Paris at the outbreak of the present War. Where paper was refused, it was absolutely refused, and where it was accepted, it seems to have been accepted without discount. No doubt, a fuller investigation would reveal all manner of variation in the behavior of different people in different centres, and at the same centres, at the outbreak of the War.
[121] Money and Banking, 1903 ed., pp. 58-60; 101-104.
[122] Principles of Money, p. 530.
[123] Written in December, 1914.