Front Page Titles (by Subject) Interest-bearing Documents. - Money and the Mechanism of Exchange
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Interest-bearing Documents. - William Stanley Jevons, Money and the Mechanism of Exchange 
Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
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It is extraordinary that few writers on currency have remarked the deep difference between commercial documents which bear interest and those which do not. On this point turns the possibility of their forming representative money. For it is an essential characteristic of coin that it yields no profit by keeping it in the pocket or the safe. I may be obliged to keep money ready to pay debts, but in the mean time I lose the interest which I might receive by investing the sum in the funds, in bills, bonds, or even as a bank deposit. Hence money must be considered as a commodity which, as Chevalier says, is in a constant state of supply and demand. Every one is always trying to part with it in a profitable purchase, and keeps as little in hand as possible. The same is even more true of bank-notes, cheques, circular notes, bills at sight, and a few other kinds of documents, all of which are payable on demand at any moment, so that no amount of interest can be assigned to them. Except so far as the payment may be doubtful, or the possession of the documents may involve the holder in legal difficulties, these documents have the characteristics of coin, and the amount held is kept down to the lowest convenient figure. Interest-bearing documents, on the contrary, are held in as large quantities as possible, because the longer they are held the more interest accrues. It is the principal business of every banker to hold a portfolio full of good bills, which really represent the investment of capital in industry. Government bonds, or bonds issued by public companies and corporations, do not differ from commercial bills except in the fact that they have very long, or even interminable, usance, and that the interest is paid at definite intervals. Such bonds represent the sinking of capital in fixed undertakings, and are therefore held as property by individual investors. They may be bought and sold for money, but are not money themselves. They rather necessitate than replace the use of money, since currency must have been paid at the first investment, and is repaid by degrees at the periodical terms fixed.
A number of schemists have urged from time to time, that, in addition to our ordinary currency, there ought to be an interest-bearing currency. The first small issue of the French assignats bore interest, and about twelve years ago the United States government tried a similar experiment, which was soon discontinued. Persons have proposed to coin the whole National Debt into money, so that instead of some 160 millions of metallic and paper currency we might have more nearly a thousand millions. Mr. E. Hill has published a form of bank-note entitling the holder to one hundred pounds on demand, and to interest at the rate of 3 1/3 per cent. up to the time when it is presented, the amount of interest being tabularly stated on the form. It is obviously impossible, however, that any government should issue such notes, because whenever the current rate of interest rose above 3 1/3, and the value of the note accordingly fell below par, a profit would be made by presenting the notes for payment. Thus the government issuing such notes would have to keep a large quantity of coin in reserve to meet them, and would at the same time be paying interest on the whole of the notes. Thus there would be a loss of interest upon the whole reserve of coin.
The English government has rendered the National Debt as transferable as possible by authorizing, in terms of the Act of 33 and 34 Victoria, chapter 71, the issue of stock certificates. These certificates resemble the bonds of the United States and other governments. They have coupons for the payment of interest, and when not filled up with a name are transferable by delivery like bank notes. They are issued in exchange for Three Per Cent Annuities for even sums of not less than £50 and not more than £1000; and if the right to an annuity could be passed from one person to another as currency, these certificates would allow of its being done. But it is understood that a comparatively small amount of such certificates has ever been applied for. They are, I believe, used to some extent by bankers and others, who have to hold sums of money invested in the funds for short periods, and can save the cost of transfers by the use of certificates. The public at large are found to prefer the old method of registering their stock in the books of the Bank of England.