Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1890-08-24
VALUES AND CURRENCY.

An address on the source ana scope OF
legislation, by Mr.. JAS c. Carter, of New
York, contains the following paragraph on
the ability to legislate with regard to cur
rency, which is being quoted with approval
by the Eastern press:
Wise legislation seeks to accomplish in the
realm of the law only what it sees in the do
main of business and finance. A hundred vain
efforts have almost taught ignorant minds that
Governments cannot by legislation make that
to be money which would not otherwise be
such; but it can and should afix its mark and
authorization upon the metals which society
has by usage adopted as money. and certify
the quality which each coin contains. In Law,
as well as in economy, the mark will be re-
spected. If it is affixed to the genuine product
of public habit and custom, but will be rejected
with the like contempt in either case, if placed
upon some spurious creation.
While the underlying principle is indis-
putable, that legislative power cannot give
that value as currency which has no value
In public estimation, the conclusion which
seems to be indicated, that currency legisla-
tion can employ nothing but gold and silver,
is simply closing the eyes to existing facts.
1t does not take in all that can be seen sin
the domain of business and finance" An
intelligent observation must recognize that
for years the strongest banking system the
world ever saw has been founded on
the basis of Government credit.
The lesson that can be drawn
from the success Of the ma
tional banking system is that security
or property for which there is general de-
mand, and of the value of which there is
universal conviction, can be made the
foundation for credit system, by which ex-
changes can be made to the amonnt of thou
sands of millions on a minimum of coin
reserve. 1t does not indicate that we can
get along without gold or silver; but it
equally refutes the idea that the Govern
ment is undertaking the impossible when it
bases, either upon its own credit or some
other equally acceptable security, system
of credit currency to circulate at par with
coin.
1t is interesting in connection with this
subject to notice the object which is repre-
sented by Mr.. Dwight II. Olmstead as
aimed at by his proposed reform for simpli-
fying and facilitating the transfer and mort
gaging of real estate. He believes that
doing away with unnecessary forms will
make it possible for owners of real estate to
convert it into money with the same facility
as personal assets are converted, and to bor-
row money on it as readily as on rail-
road bonds, The results of such a
policy are stated by an Eastern paper
in the following significant words:
$50 turn the value of land into the chan
nels of trade means, as Mr.. Olmstead says,
enormous wealth to our commercial cities
and prosperity to the cultivators of the soil,
lower rent to the tenant, and higher wages
to the workman"
No one will dispute the value of Mr..
Olmstead's proposition; but it can hardly
escape attention that if these results are de-
clared by high authority to be secured by
turning the value of land into the channels
of trade, they will be attained more com.
pletely by providing a standard for real
estate mortgages and permitting them, when
within fixed proportion of the legitimate
value of land, to be used as basis for bank
ing circulation in place of the United States
bonds. Yet the very class of opinion which
accepts Mr.. olmstead's propositions as COM
mendsble, attack the idea of real estate
securities for a banking basis because it has
been made the means of initiating values.
This is about as logical as it would be to
condemn all banking because the uuregu-
lated kind has produced wildcat banking.
The proposition is for system which shall
exclude all bonds except those which are
based on solid values; and criticisms based
on the example of experiments which ad-
mitted inflated values are beside the mark.
The nation is confronted with the proba-
bility that in a comparatively short time the
present basis of banking will be taken away
by the retirement of Government bonds. In
need one of unquestioned value and univer-
sal acceptability. No value has more univer-
sal foundation than that of mortgages which
are based on uninfated prices for real estate.
Under these circumstances it is certainly
worth while to give patient hearing to
propositions which aim at the prescription
of frst-class standard for real estate mort
cages and using them in place OF Govern
ment bonds. There is no doubt that il the
standard could be properly kept up the use
of real estate securities in banking would
not only perpetuate the advantages of the
national banking system, but would do
away with many of the abuses of the mort
gage system, by which borrowers are feeced
on the one hand and investors are swindled
an fhs other