Section I.
Paper Money And Money-Paper.
Paper money must be distinguished from other value-paper or money-paper,[899] which may also run to the possessor or holder, and not unfrequently serve as a medium of payment. In the case of these bonds or obligations,[900] their circulating capacity is a secondary matter, and the principal thing the authentication of an economic legal relation; whereas paper money is intended principally, if not exclusively, to act as money.[901] Money-paper appears in a great many different forms, but it nearly always bears interest. Its value depends in great part on the rate and certainty of its interest. On the [pg 440] other hand, the endeavor to insure a more favorable reception for paper money by the promise of interest has been exceedingly seldom successful.[902] And in reality, good prospects as to interest (Zinsaussichten) and ease of transfer from one hand to another are two qualities which lie in very different directions.[903]
The many recent writers who claim for paper money the marks of irredeemableness and forced circulation, confound the unfortunately too frequent degeneration of an institution with its real nature. They contradict, too, usage of speech, which, in countries where silver is the standard, unhesitatingly [pg 441] calls gold coins money, although they cannot be forced on any one.[904] The paper money issued by the state deserves, indeed, the appellation in the fullest measure; but starting from this point we find a number of grades in a downward direction, which may still be called money;[905] and we shall see especially that the differences between state paper money and bank notes so widely asserted are, in great measure, differences not of kind but of degree.
The idea of replacing the precious metals as a medium of circulation by a less costly material, even the ancients were acquainted with; but with the exception of the Carthaginians, they scarcely ever made any use of it except in cases of need and transitorily.[906]
Similarly, the middle ages in Europe; as in general all greater development of the credit-system—and all paper money is credit-money—has a natural growth only in the higher stages of civilization.[907][908]