The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-12-14
HoardIng Gold.

HOardIpg Gold.
From ne ~ Y. Tribune.
The amount of currency in circulation to-
day, with gold at l40, is considerably less than
it was two years ago when gold stood at 12s,
and somewhat more than it was four years
ago, in the darkest hours Of our war, when
gold stood at 200. These figures alone refute
the theory that in this country the price of
gold is determined mainly by the volume OF
the currency. In England, during the wars
with Napoleon, there were times when, under
a very considerable expansion Of the currency,
gold bore no premium-but, on Napoleon's re-
turn from Blba, 1t leaped in a few days from
a nominal premium of three or four per cent. up
TO premium of 37-nearly as high as it ever
attained under the operation of the "Berlin
Decree" and the "Orders in Council, sus-
pending all commerce between Great Britain
and Europe; within few days after Napo-
Icons defeat at Waterloo, it fell as suddenly
to a nominal premium OF three or four per cent.
No man can doubt that, without the addition of
dollar to our currency, If q rebellion of ten
States should again break out, gold would
mount again to the neighborhood of 300.
These facts show that the volume of currency
is at least a subordinate cause of the premium
Oh &Olu, ana LQaL Lne dll-COuLTOlllug luuu6uO6
is the decline in the credit of the Government,
as represented by the value of our Govern
ment bonds. The legal-tender currency, or de-
mand promises of the Government, stand in
the same relation to its bonds as the promis-
sorry notes Of an individual do to his bonds.
Both are on the same security, and rise and
fall by the operation of the same causes. Ifan
individual, owing more than he could pay, and
whose notes and bonds were, therefore, selling
at discount, should commence by taking up
his short notes and paying them or consoli-
dating them into long loans, all would approve
his policy. And so far we have approved Mr..
MeCuloch's policy of taking up all promises of
the Government payable on demand. But if
in addition he should accumulate mass of
gold, one-third as much as would be required
to pay his demand notes, and, instead of buy
ing them up at the cheapest rate, should allow
them still to go to protest, and sell at heavy
discount, and if demonstrated with, should
say 'this gold helps my credit more in my
hands than it would if paid my debts with
it," he would be accounted fnanoier of
strange order Mr.. McCulloch stands in the
position OF the insolvent who, being unable to
pay in full, boards all his income, puts it into
a magnificent purse, and when his creditors
demand payment, shakes his money in their
faces and says-"True, my notes are at
discount of forty per cent, but see what a
pile of money l have to pay them with if
chose. If should pay you, you'd run my
paper down from thirty to sixty or seventy
per cent. discount" Undoubtedly, a reserve
of specie is needed in connection with our
finances, but this is needed not so much in
the hands of the Government as of the COM
munity-the banks. This might very easily
be effected by requiring the banks to deposit
with the Government bonds to the gold value
of certain sum exceeding their circulation,
and to keep on hand reserve the gold value
of which would bear a certain definite ratio to
their deposits and discounts. This would
place the national banking business on a
| gold basis, cause the banks who are the
proper representatives of the business oommu-
nifty, and who are solvent, to have larger
gold reserve, and thus strengthen the business
of the country, to which, and not to the Gov
ernment, the gold of the country belongs.
Every step in the policy of boarding gold has
been attended by rise in price. Every heavy
disbursement of gold has been attended by a
fall in price. And yet the Secretary keeps
locked up about one hundred and eleven mil
lions of dollars, which is probably about half
of all the gold in the country, and at least
sixty or seventy millions more than he needs
to supply any contingencies of accruing gold
interest. None of this gold, as thus boarded,
is security for any part of our currency. 1t
gives no aid or stability to our banking system
or to the business community; it is utterly in
capable of being utilized, and only enables the
Secretary to say to his creditors, who are buy
ing and selling his notes at discount which
increases as his hoard increases, "Behold how
solvent am How dare you sell my notes al
a discount II l catch you doing the thing
too outrageously, I'll come down upon you
when you least expect it, and pay off some o.
these debts of mine -