In such a heap of gold you must allow for “wear and tear.”
The law does allow for that very thing. If the gold coin is worn away to a greater extent than ten per cent, the Government will not receive it as legal tender—nor will the metropolitan banks receive it.
But anything less than ten per cent loss in weight, the law makes good, by declaring that such coins are legal tender.
Few people stop to think of that.
Therefore, every kind of money is fiat money; that is, THE LAW MAKES IT.
Now, it must be self-evident that the value which law puts into currency SINKS, WHEN THE LAW-MAKING POWER SINKS.
If one can conceive of such a thing as the annihilation of the United States we must know that our gold coins would at once go into the scales to be weighed and priced as metal; our silver dollars would do precisely the same thing, and each of them would be worth less than 70 cents.
As for our paper money, it would be waste paper, and nothing else.
United States greenbacks would amuse the collectors of fifty years hence, just as Confederate bills do those of the present day.