Norton, Seymour; Cowdrey, Robert. The Men of Money Island; or, The Primer of Finance . Chicago: F.J. Schulte & Company, 1891. [format: book], [genre: advice literature; guidebook; narrative]. Permission: Public domain
Persistent link to this document: http://lincoln.lib.niu.edu/file.php?file=norton.html

THREE was one difference between the paper and coin money which experience proved to be in favor of the paper money. The latter was more convenient to carry. As he was at work at his forge, Sledgehammer complained that the ten big silver coins that he had in his pocket were so cumbersome as to actually interfere with his work. Plowem and Eeapem made the same complaint as they worked on their farms. The annoyance, in fact, became so great that some of them got in the habit of depositing their coin pieces with Discount, taking his due-bill therefor. For every coin piece that he took in he put out a promise-to-pay: he became, in fact, a sort of private banker, receiving coin and issuing bank notes. It was paper money based upon coin, but it was "honest," for behind every paper promise was a coin piece. It could be redeemed at any moment.

But there was no profit in that sort of banking. It frequently occurred to the keen mind of Discount that if there was any use to which he could put the idle coin pieces in his possession, he could make something by being a banker. His cogitations upon the subject, although vague and indefinite

years afterward served him a good purpose. ^[1]

In course of time the complaint concerning the cumbersome character of the coin pieces became so general that it was agreed that Donothing should be employed to devise some method whereby the system could be improved. At first he received coin and entered the name of the depositor upon a book, and whenever the depositor wanted to pay a debt or purchase goods he had the credit on the book transferred to his creditor or the party from whom he purchased. ^[2]

In time, however, instead of keeping books,.Donothing would receive the coin and give therefor paper substitutes. He wrote upon little slips of paper these words: "I promise to pay the bearer one coin piece on demand," and signed them as "Agent of Money Island."

In this way, government paper money based upon coin was substituted for individual paper money based upon coin.

Although it was honest paper money, because there was the same amount of coin on hand that

there were promises to pay outstanding, it, nevertheless, depended upon the good faith and credit of the government. And the query naturally arises, why might not an absolute paper money have been issued based directly upon the credit of the government?

In this chapter it has been shown how the ten men of Money Island issued an "honest paper money based upon coin," and in the next chapter it will be shown how one of the ten men invented and practiced a system of issuing "dishonest paper money based upon coin."

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