as coin or bullion, without qualification or condition, throughout civilization, but a piece of paper representing the value of that amount of coin or bullion considered simply as paper, whether covered by writing or impressed by an engraved block, is without intrinsic value. That is, for example, twenty-nine grammes, 448·025 grains, of fine gold, whether in bullion or coined into a hundred-franc piece, can readily be exchanged throughout Europe and almost as readily throughout America for an approximately similar amount of commodities; but a piece of paper known as a National Bank of Belgium one-hundred-franc note can be exchanged for commodities to this value only among peoples who feel confident that it can readily be exchanged again in return for commodities to the value of one hundred francs, and such peoples in great numbers do not exist outside the kingdom of Belgium, because other than the Belgian people are not generally familiar with the language in which the note is printed, and therefore do not understand the value of the units of value in which the note is expressed, and they are not sufficiently familiar with the Belgian banking system to know that the note is secure—that is, that twenty-nine grammes, 448·025 grains, of fine gold, can readily be obtained for it. The extent to which a paper representative of value, which in itself has no intrinsic value as a commodity, will circulate is therefore at present determined by the number of people who believe that it can readily be exchanged for coin or bullion to the value expressed by it. Essential to this belief are confidence in the honesty and ability of the issuer. Therefore, when a people among whom paper representatives of money of a particular issue have been freely circulating begin to lose confidence in their ability to readily exchange them for the coin for which they call, there arises a tendency to exchange commodities and services only for coin. As this tendency increases, as the lack of confidence in the paper grows, there is soon reached a time when the exchange of commodities and services is greatly diminished, because there is only sufficient coin in existence to effect a small fraction of the normal value of exchanges.
But, as measures of value in the last analysis are measures of human effort as determined by its results, it is obvious that, were every paper representative of value so secured that the holder thereof might be certain that at any time he could obtain in exchange for it the result of human effort to the measure of the value called for by it, in a form acceptable to him, such paper representatives of value would obtain free and general circulation among all people believing in their security. The more extended the territory throughout which, and the greater the number of people among whom, such a currency would circulate, the less
