Page 171 - clra62_0019-(GIPE)

NOTE ON THE GRESHAM LAW
ferred to. In the case where bad coins drive out good
coins of the same metal, the good and bad coins are
both doing the same work; so the good are driven out
of circulation when there is a surplus because they are
more useful for other purposes than the bad, containing
more of the metal. When it is a question, however,
between two different metals, the coins of the different
metals may be performing quite different work. The
II driving out" process in this last case must con-
sequently be a different one, when it takes place, from
what it is in the case of bad versus good coins of the
same metal. The same with inconvertible paper versus
metal. The metal and the paper may be required for
different purposes, and, so far as that is the case, the
paper does not drive out the metal from the same cause
or in the same way, or proportions, as bad coins drive
out good coins of the same metal. Gold is actually
used Jess or more in currency in every country whether
gold or silver is the standard, or whether there is a bi-
metallic standard with silver as the overrated metal;
and gold, and sometimes silver, is also used in incon-
vertible paper countries in the same way, although the
paper is the standard money.
What is true is that the overrated metal and the in-
convertible paper in the cases supposed drive the metal
they compete with, the underrated metal, out of cir-
culation as standard money. As there can only be one
standard, the overrated metal or the inconvertible
paper, as the case may be, becomes the sole standard.
But the underrated metal is not thereby physically
driven out.of the country at all. It depends upon cir-
cumstances whether it is exported or not and how much
the export is. Three things happen (besides export, or
the chance of it).
I. The underrated metal may be hoarded. This is
largely the case, I believe, in almost all cases of incon-
vertible paper. There were, no doubt, hoards of gold
in this country in the inconvertible paper period at the
beginning of the century, in the United States during