No.
2]
EDISON-FORD
COMMODITY MONEY
63
against commercial paper-impalpable things you can't eat or wear. What's that?" The answer is that it is not commodity money at all. If Mr. Edison wished to borrow money on phonographs, and if a member bank of the Federal Reserve System presented a warehouse receipt for the phonographs to a reserve bank, and received Federal Reserve notes in return, it would receive goldThere would be no point in printing supported money. "Phonograph Dollars" across the face of each note. Nobody who held these dollars would care what Mr. Edison had in his warehouse, or what happened to the market for phonographs, or to the bank that paid out the money. For the value of the paper dollars would be determined not by phonographs but by gold. Reserve notes may now be issued that-in Mr. Edison's use of the term-are " based " on shipments of bananas that spoil on the way, or shoes that promptly go out of style, or motors that will not run; but these details do not disturb the holder of the notes, for they are payable, not in bananas, or shoes, or motors, but in gold. In short, they are not commodity money; they are gold money. By issuing even a small volume of this money, says Mr. Edison, "You will have made that much of the country's money better; you will have taken some of the load off gold." On the contrary, you will have added precisely that much to the load. And if the gold reserves become insufficient to support this additional load, either of two courses will be open: More gold can be obtained, if there is any way of obtaining more gold; or the dollar of the United States, having lost its anchor of gold, can be left to drift away, with marks and rubles, on boundless oceans of inconvertible paper. If the first course is taken, the Edison notes will not be sounder than gold notes; they will be gold notes. If the second course is taken, Edison notes will not be as sound as gold notes; they will be depreciated paper notes. Mr. Edison aims to produce a money that is not only sounder than gold money but "absolutely nonfluctuating in relative value-that is to say, in purchasing power." This second aim is of paramount importance. If Mr. Edison could provide the world with a monetary unit that would maintain its exchange value, year in and year out, he would do more to benefit human[I93]