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Premium And Discount

Premium And Discount image
Parent Issue
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-Wh en gold is at 50 per cent. premium, we frequently bear partías eay that a paper dollar is only Wprth 50 cents, and that it deprecintes t'o an equal arnount with the rise of gold; Thia a popular error, and alises frorti the eonfounding of' premium with discount. Fifty per cent. taken frora nn nrticlo is much greater the nddition of that amöunt. If we adH, 50 per cent. to 10 it malies it 15, or ene third more ; if we deduct 50 por cent, it reduces it to 5, or one half. 8o a paper dollar, when gold is worth 50 per cent premium, is worth 66K cents, instead t.f 50; and when gold is at 60, it is worth Gl'í cents instead of 40. The folloWiofZ is a simple -,vay of showing this : Five gold dollars at 160 are equal to eiglit paper dollars at 100; henee each paper dollar is fust liveeighths of tho other, or 62 cents, Tb ose who cóntend that a puper dollar is worth only forty-five conts when gold is at tifty-five per cent. prsmium, can easily discover their error by asking themselves what would b the worth oí' a "paper dollar wben gold is worth a hundred per cent., or when it takes two paper dollars to buy one of gold. The worth o) the paper dollar, it is plain, would be just fifty cents. - Aceording to the theory of those who ooDtend that premium and discount mean the same thing, the paper dollar would be worth nothing at all. The valueof a paper dollar may be ascertained at any time by adding the pvice of the premium in gold to 100 and clividing the aam into 100. For instance, if gold is at a premium of 50 divide 150 into 100 and it will give 68% as the value of a paper dollar, ur a discount on paper of 33K. Discount ceases at one hundred per cent., for take one hundred from one hundred and nothing remains ; but premium is unlimited, and may inerease to any conceivable arneunt. ,


Old News
Michigan Argus