Los Angeles daily herald. [volume] (Los Angeles [Calif.]) 1873-1876, 1874-01-15
Flexible Currency.

number Of years been urging WITH a
great deal of vigor and ability the pol
Icy of adopting currency which shall
be a legal tender for all demands, pub
lie and private. and interchangeable
at the option of the holder for govern
ment bonds, bearing low rate of in
Isrest.
The Journal contends that gold and
silver are really articles of merchan-
disc, and that an attempt to base
currency on them has proven fail
ure, but that if greenbacks were re-
ceivable for all dues to the govern
ment, including customs, and could
at any time be changed for interest
bearing bonds, the popular confidence
In the stability of the government,
would bring them up very nearly to
the standard of gold values. One of
the great points to be gained, is the
fexibility of the currency. Under
present regulations there are times
when there is scarcity of currency.
Taking advantage of this, unscrupu-
lous spectators by locking up all the
currency, can create panic, and SO
disturb values as to infict almost ire
parable damage on the business COM
munity. On the other hand, when
the crops have been marketed, there
Is redundancy in currency, and the
money centers are crowded with funds
that cannot be proftably loaned.
This in turn tends to excite specula-
ton, and the employment of funds in
doubtful operations that ultimately
undermine public confidence, and
bring about commercial distress. By
making greenbacks interchangeable
with government bonds, all this dam
ger is avoided. When currency is
needed for moving the crops, bonds
can be deposited and the necessary
funds secured. AS soon as the pres
sure is over, and the demand for curren-
cy falls below the supply, the excess
can be at once reduced by paying it
back to the Treasury, and receiving
bonds in exchange. There could be
no such thing as locking up currency,
and producing a stringency in the
money market when any holder of
government bonds can exchange them
for currency, and on the other hand, as
soon as there was more currency aflOat
than the business of the country
would absorb, the surplus would be
re-cenverted into bonds.
The late panic was essentially re-
suit of Over-speculation. Greenbacks
stood as firmly in the confidence of the
people as ever, and in fact appreciated
in value. The constant cry was for
more, and many of our most solvent
commercial houses, were compelled to
go down because of the scarcity of
currency. Ruinous rates of interest
were in many cases offered for curren-
ey, and government bonds were freely
offered as security for loans. If the
holders of these bonds had been al
LEVIED to exchange them for greell-
backs, the panic would doubtless have
been checked in its very inception,
and when the demand for currency
was over, it would have flowed natur-
ally back into the Treasury.
The hope of making gold the medi-
um of exchange, in the transaction of
the vast volume of the worlds bust
ness, is a fallacious one. There is not
enough of it in existence, and if there
were, it could not be handled, Or trans
ported. In all countries, the bulk Of
the business is transacted by bills Of
exchange, which are simply another
form of paper currency. Basing this
currency on the precious metals does
not really make it any more valuable
or reliable, but introduces an element
of infexibility, that enables the spec
ulator to make sport of the money
market and to raise or lower the value
Of the currency almost at will. These
views startling as they may be to those
welded to the idea of a metallic cur
rency, are gradually growing into ia
vor, and while few years ago, the
Journal was almost alone in their adj
vocacy, now they are commanding
the attention of many of the ablest
financial minds of the nation. Judge
Kelley's bill which as far as it is
worth anything, is founded on these
principles, seems to have the assent Of
a majority of the House, and so firmly
is 1t fixing itself in the minds of the
people, that we may expect soon to
see the experiment tried to the extent
at least of issuing few hundred mil
lions of interchangeable bonds, but
the entire success of such an expert
ment depends on the adoption of the
policy. The government must make
Its tokens, legal tender for all dues,
public and private. 1t must receive
them for customs as we'll as any other
taxes, and If it needs gold for the pay
ment Of interest on the public debt it
can go into the market and buy it.
BY collecting the customs in green
backs, the demand for gold in bust
ness circles Is almost extinguished.
Our foreign imports are largely paid
for by exports of produce, and the bal
ance of trade against US is met by the
EXPORT of bullion, which is as much q