ABSTRACT
In the first instance it seems that the question should be resolved by the principles that govern the organization of agrarian, manufacturing and commercial industries. Is the issue of banknotes a public service? Is it a private service that should be the subject of a natural and necessary monopoly? Is it a private service suitable for indefinite competition? In the first case it should be accorded to the State. In the second case it should be conceded to the company that made the best bid. In the third case it cannot be considered as a social or economic monopoly and should be left to free banks because then it is within the realm of the principle of laisser-faire, laisser-passer. Credit in general, and short-term credit in particular, has no characteristic of public service; it is incontestably a private one. The need for the fruits of fixed and circulating capital for manufacturing a product is not felt by the community or the State as a whole, but only and especially by any [340] individual who feels the need for the product in question. However, buying commercial paper from entrepreneurs for banknotes by discount should not be monopolized by a coalition because if the issue of banknotes is free, a competing banker may always present himself besides the allied bankers. So it seems that we can only pronounce ourselves in favour of liberty for of issuing banks. Nevertheless, a certain difficulty presents itself here, originating from one special effect of the issue of banknotes, namely depreciation of money, which means that, all products’ prices will rise.
