The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1884-06-05
FINANCIAL AND COMMERCIAL
The Financial Situation.

OurlnB Lne past lew uOntns over bnlrty-IV0 LuA-
lions of gold has left the country and from the time
that foreign exchange reached the exporting point
business men have unanimously agreed that great
danger was at hand. With their conclusions we
find no fault, but many of the reasons advanced
are open to serious objections. In word the dan
ger lies, not in loss of good gold, but in gain Of
poor silver. Had we real silver dollar, or better
still, only one legal tender. and that gold, there
would be nothing alarming in the present export.
1t is the dishonest standard dollar which is the true
cause of danger. The old law of finance, that bad
money drives out good is true to-day as ever and
all the evils of debased currency will be fully
realized only when such currency alone remains.
The Immediate danger is slight but 1t is time to in
sst, as the abest financial papers have already
done, upon removal of the cause of that danger.
By act of Congress debts due at home can be
paid in silver treasury notes, but no Congress can
legislate outside the country. Debts due abroad
be paid in the currency of the world at its full
value and, whether gold or silver ia used the stamp
of the government does not make any CON- dollar.
Hence what be legally rendered at home in pay
ment of debt will not satisfy foreign creditor.
He will take silver dollar for SO or 8S cents but
the balance must be paid before the debtor is dis
charged. For this reason gold and silver are e-
gally par at home, and the former at its face,
alone valid abroad, the bad drives out the good.
When the gold has disappeared more silver must be
sent abroad to pay the same debt than can be de
manded at home. Then follows a confusion and
rss in prices and later all those evils which dis
honest currency inficts upon the rich and poor,
but especially upon the latter. Nor will the
gold return. How much coin was seen in the
country for years previous to 1878? During
the last five years, on the contrary, gold could be
had everywhere in payment but was usually re-
@Naa al
plentiful because we were doing a profitable bust
gold basis and the only serious flaw in the
whole financial system has been the coinage of sill
legal tender and that, dishonest coinage
The fire has hitherto smouldered on account of
wonderful resources and recent prosperity, but now
begins to burn brighter, foretelliDg the confagra
ton which must result If it is not checked strong
constitution throw OFF disease for years, but it
cannot withstand the violation of natures laws for
ever and when the end does come the result is the
more terrible The laws of finance are as stern as
those of nature and cannot be outraged with impu-
nifty.
We would emphasize, then, the statement that
danger lul ks in our silver. But many while parti
ally attributing ths evil to this insist upon the loss
of gold as the real danger to be feared. The old
mercantile theory, it may be unconsci ously. but
none the less really, still holds its sway the
tu1uuh Oh bu6S0 ln6u, dlbuOuSu long ago OAplOAOU
and exposed by economists. For years the main
object of hnanciers was to get ali the gold they
ceud into their country, and prevent as little as
possible from going out. The exchanges are still
said to be for'' or "against" us, verbal relic Of
the old feeling The popular idea about gold now,
was the universal belief then. Every one wanted
it in sight, to handle it, to hoard it, believing that
gold alone was wealth. But finally men came to
see that the best thing they wanted was money it
self except for making change; they want, not
money, but what money will buy. So with nations.
Except for making change, and as reserve for
immediate liabilities, gold is no more useful to
them than to individuals. certain stock they
need; beyond this is idle. Better far invested in
good merchandise and property of all kinds than
boarded. Hence the loss of gold in itself, up to
certain point is not to be dreaded. In SO far as it
is paying for goods, well bought the country is
richer than before; in paying old debts, it is square
ing old accounts, checking new purchases beyond
its means and preparing good foundation for prof
liable trade in the future.
Since the stock panic exchange has dropped be-
low the gold-sxp0rting point in fact about low
enough to bring in little coin. At present the
of this drop is not perfectly clear; for the
statement that a large amount of stocks and bonds
has been bought by foreign investors against which
bills drawn have increased the supply and lowered
rates. should be accepted with much doubt. This
explanation may be true in part, but it is not i'm
probable that speculative drawing may have had
to do with it.
The most unfavorable event in the business world
have to note at present the suspension of coal
mining for two weeks, policy which must injuri-
ously affect railroads like the Erie and Reading.
On the contrary the next favorable feature is the
increase of confidence in the New York banks, and
the decrease of Clearing House certificates. Al
though these certificates perfectly legitimate in
times of distrusr have recently proved their ct
fciency, expects desires them to be per-
manent. They are issued by the Clearing House.
bearing per cent interest, deposit of bills re-
ceivable with a margin of % per cent, and serve
the purpose of gold and legal tenders in the settle
ment of daily balances. From this it will be read-
ly that, taking the place of money, they
solely panic measure. The strong banks do not
need them and would not pool their assets in this
manner to hold up their weaker brethren were they
not afraid to let the latter go under in which
large losses would be suffered indirectly if not di-
rectly. We are glad to see, therefore, that the
amount is diminishing, as the necessity is passing