Money Mischief_ Episodes in Monetary History - Milton Friedman [110]
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* These illustrative numbers are chosen to correspond with the identification of money as currency and are realistic for currency. For broader aggregates, such as the U.S. M2, cash balance holdings are much larger. In the United States currently, they are about nine months of national income.
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* As it happens, for most of the post-World War II period these further effects have roughly balanced in the United States, so that M2, as currently defined, has ranged around nine months, mostly in response to changes in the cost of holding cash balances.
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* In practice, the situation is more complex because of the need to allow for tax effects.
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* The helicopter example, and the rest of this section, is based on Friedman (1969, chap. 1).
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* Again, I should warn that this is a reasonable number only for money defined as currency or base money. In recent years, base money velocity has been around 15 or 20, decidedly higher than earlier. For a definition like the current U.S M2, velocity is much lower, about 1.3 a year.
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* Much of the rest of this section is from Friedman (1974).
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* This conclusion is largely from Friedman (1987).
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* I am indebted for helpful comments on earlier drafts to Michael D. Bordo, Conrad Braun, Phillip Cagan, Joe Cobb, Harold Hough, David Laidler, Hugh Rockoff, and, as always and especially, Anna J. Schwartz. In addition, David D. Friedman and an anonymous referee on behalf of the Journal of Political Economy made a number of very helpful suggestions for revision.
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* According to Paul M. O'Leary (1960, p. 390), "The first person to use the word 'crime' was George M. Weston, the secretary of the U.S. Monetary Commission of 1876...[i]n his special report, attached to the full report of the commission" published in 1877. Barnett (1964, p. 180) attributes the first use of the full phrase "the crime of 1873" to Senator Henry M. Teller of Colorado on July 10, 1890.
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* The act stated that "bullion so brought [to be coined at the legal rates] shall be assayed and coined as speedily as may be after the receipt thereof, and that free of expense to the person or persons by whom the same shall have been brought" (Jastram 1981, p. 63). Hence, coinage was free in a dual sense—open to all in unlimited amount, and without charge.
The provision that no charge should be made for coinage is exceptional. Typically, a small charge, called seignorage, is made for the cost of coining. However, the so-called seignorage charge has sometimes been manipulated and used for purposes other than to cover the cost of coinage—as by ancient seignors (lords) for revenue, or by President Franklin Delano Roosevelt as a device for pegging the price of silver (chapter 7).
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* The continuing decimals (.2929 ..., .3939...) arise because one ounce troy equals 480 grains. Given that a dollar was defined as equivalent to 371.25 grains of pure silver or 24.75 grains of fine gold, one ounce of silver was worth 480 divided by 371.25 or $1.2929..., and one ounce of gold was worth 480 divided by 24.75, or $19.3939...
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* For precision, the "law" must be stated far more specifically, as Rolnick and Weber (1986) point out.
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* †While the ratio is described as 16 to 1, that is an approximation. In the 1834 act, the weight of the gold dollar was set at 23.2 grains of pure gold, which gave a gold-silver ratio trivially higher than 16 to 1. The act was amended in 1837 to make the weight equal to 23.22, which gave a ratio trivially below 16 to 1. The reason for the change was to make the percentage of alloy in the minted coin equal to precisely 10 percent. A good source for the early coinage laws of the United States is National Executive Silver Committee (1890). See also U.S. Commission on the Role of Gold (1982, vol. 1, chap. 2).
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* A fascinating detail about the greenbacks: Salmon P. Chase was Secretary of the Treasury when the first greenbacks were issued in 1862. Eight years later he was