The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1879-08-08
FRIDAY MORNING, AUGUST s.
The A B c of Finance.
The Money Question Made Clear.
IN. Y. Tribune.l
CAN RESUMPTION BE MAINTAINED?

CAN RESUMPTION BE MAINTAINED?
The notes of the United States are as good as
gold: can they be kept so? Those who said
that resumption was not possible now say that
it will fail. With strange faith in human
folly, they ask men to believe that all the ills
which were to flow from resumption are yet to
come from its failure. But what is this which
is to fail? 1t is the payment of all notes that
are offered for payment As long as that goes
on, those notes which men do not offer, but
cho ose to hold, will be as good as gold. Thus
far, few holders offer the notes, and the means
of the Government grow larger. Before pay
ment can fail, there must first be great
change in the minds of men as to the holding
and use of the notes. and next, great eXhaus-
ton of the means which the Government holds
Before sensible men believe that the Missis-
sippi is going to run dry, they must know some
cause for the failure of the rains and springs
which have kept it full enough to float many
vessels. Silver coins and doubts about their
effect will be spoken of hereafter, and it will
be seen that the Treasury has full power to
avoid any danger that can come from that
quarter. The present question is simple:
Can the Treasury continue to get gold enough
to pay every note for which the holder may
ask gold?
The Treasury is like lake in deep valley,
to which waters from thousand springs flow
because they can go nowhere else The mines
pour out millions of gold each year. Accord
ing to Wells, Fargo & Co., who move nearly
all the gold that is produced, $37, 672,4S0 was
the yield of that metal in 1878. Less than 3d.
000, 200 yearly finds use in the arts and for Or
nament. The loss and wear are insignificant
because SO little gold is in daily handling. The
Pacific States and the Territories have. more
than they can use; these are ponds that are al
ways full to the brim. Somewhere the gold must
go to get used. All that flows to the East must
60 ~ into use as coin or(2) into private boards
or 81 into the banks, or (D into the Treasury,
or (5) out of the country. The people of this
country will not use coin largely SO long as they
can get good notes. That has been the Nation
oil character for century, and it is..not chang
ing, and could change but slowly. Nor do the
people hoard much. That is another fact OF
the National character, and such traits last
long. The people are too practical to hide
many idle talents in napkin. Their long IA
miliarity with banks, savings-banks, and other
places of deposit and loan, has formed fixed
habits. aea
The banks themselves will not take the risk
of holding, and the cost of guarding and NOV
ing specie, so long as they can keep in place of
it notes on which the gold can be drawn at
will This has been proved this year to the sur
prise of many who had expected great drain
OF gold from the Treasury into the banks. But
they have put their gold into the Treasury and
taken out large notes instead. Under the law
they Can use the notes in place of gold; can pay
their own notes with United States notes; and
can refuse, as the banks in the chief cities do,
to keep special accounts to be paid in coin on
ly. All who want gold can get it from the
Government, and all the banks save themselves
the risk and trouble Of keeping it by making
the Treasury their store-house
So long as exports of goods greatly exceed
imports, gold does not go abroad. The goods
sold by us more than pay for goods bought by
us, SO that, if gold goes either way, it must
come to us in payment. The excess of goods
sold was $264 ,636 ,602 during the year just
closed, which far exceeds any sum due for in
terest, for freights, or spent abroad by travel
lers. Interest due abroad on the public debt has
been cut down to less than $50, 000,0 600 yearly;
interest on the other debt has been greatly re-
duced, and larger amount OF foreign capital
is invested here each year, when the people pay
their debts and the land prospers. We sell
more than we buy abroad, because the cost of
raising wheat and corn, cotton and tobacco, and
of producing cattle, provisions and petroleum,
is lower here than in other countries A change
in the relative cost OF producing such staples
in different countries cannot be quickly made;
SO great change as to- overcome the vast ex-
cess of exports can hardly occur for many
years.
Gold has no other outlet, then, and runs into
the Treasury just as water from rains and
springs gathers in a closed lake. There is no
other place in the country where it can be kept
in large amount, without risk or cost to the
owner, and yet be used by him at will in the
form of notes. He who holds a note owns part
of the reserve in the Treasury; can use it any
day at will; and yet has no risk in guarding or
hiding it. Hence great number of such notes
will at all times be used SO long as the law per-
mits, and would be used if the notes were not
legal-tender. People need them, and would
pass them and take them, just as they need
and use receipts for wheat in a warehouse.
There is no reason to believe that any smaller
amount of notes would now be wanted if they
were not legal-tender, nor is there any reason
to believe that the amount needed and kept in
use will grow smaller as long as the Treasury
keeps faith with the people.
The means of the Treasury for paying notes
offered have increased in the six months since
resumption began, and still increase. 1t had
then, and has now, larger ratio of cash in
hand to notes afloat than the Bank of England
deems perfectly safe. In strictest theory the
cash balance available July /, was $14S,473,-
563.29; in reality it was much larger. This, to
protect $346, 681 ,016 in notes. of which about
"a, 400, 900 were then in the Treasury, not rep
resented by outstanding ceftlhcateS. More
over, the banks are obliged to keep on hand
about one-third of the United States notes re-
naming as their reserve, unless they hold gold,
which they choose not to do. Virtually, the
Treasury has growing stock of over $160, 000,-
600 in specie to protect about $200,000,000 in
notes not now in the Treasury nor required by
the banks. But if at any time it should need
more gold, It has power in the Resumption Act
to borrow any needed sum. The actual sale of
more than 500, 100000 of four per cent. bonds
within the single month of April proves that it
can borrow, if need should arise, gold enough
to pay every note remaining. But as long as it
keeps faith, it will have no cause to borrow.
The people will not fail to pay their notes
unless they are false to themselves. If party
hostile to the public faith should gain control,
there would be fear. Holders might then
want gold in place of notes. The danger
would come, not in naked proposal to repu-
diate, but in some scheme to stop redemption of
notes, or to cut down revenues below the neces-
stiles of the Government SO that its cash should
be exhausted, or to make such change in the |
state of foreign trade that imports should ex- |
coed exports or to pay out for claims or public |
works more money than comes in through tax
alton. If the Treasury leaks-if it pays out |
more than it takes in-its cash will be drained |
away. All wanton expenditure means hos |
tlity to resumption as we'll as loss to taxpayers.
But against that danger, the barrier is the |
honesty and good sense of the people.
A Railroad Legend.
Then there was narrated a weird story that 1 |