Money, like other articles of commerce, has for hundreds of years had
its fields for the production of the raw products, its manufacturing
establishments, its markets and exchange centres, its sellers and
buyers, its wholesale and retail dealers, and its brokers and
commission merchants. Out of this trade in actual coin has grown a
trade in paper notes, which are really only promises to pay coin, and
out of this latter trade has grown up during recent years a still
further enormous trade in securities representing all kinds of
property. Very often these securities are based solely upon the credit
of the names attached to them, so that our modern system of borrowing
and loaning money is really a system of borrowing and loaning credit.
When our government borrows $100,000,000, as it did a few years ago,
it gives "its bond" that the money will be paid. When States, or
cities, or railroads, or other corporations borrow money they issue
bonds guaranteeing payment at a particular time. When an individual
borrows money he gives his "bond" in the form of a promissory note.
These bonds pass from hand to hand and have a fairly constant value
in the money market. They really represent the money trade to a much
larger extent than does actual coin, so that the borrowing or loaning
of money really means, to a very large extent, simply the borrowing or
loaning of credit. If we borrow a $10 gold piece we borrow money; if
we borrow a $10 bill or an indorser's name for the back of our note we
simply borrow credit--in the one instance the credit of the United
States and in the other the credit of the man who indorses our paper.