Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1891-01-11
Mr.. Royals Currency Schemes.
~ 1s r,Iitor of he Dspdtch:


Mr.. Royals Currency Schemes.
To DE Editor Of he D'spotch'
The brief suggestion made recently re-
.sst;n,, tba crrrepcy has caused sufficient
1iscnssion TO encourage me to treat the
subject more at large. lam frank TO confess
tbaiuntil within few years back believed
h impossible to have q sound currency thst
was not safely based upon metal. nave
changed my opinion IN that respect ana
now believe that y Dotn sale anu
" mart of paper alone. 1t may
IL IL yposs;ble.. TO confne currency in
tha old countries of Europe to coin
0boueh all of them have paper for large
n,,art ~ the,rs) because the avenues Leading
- new enterprises are almost all closed.
Rnt in this new and virgin country OF ours
xybere new industries and enterprises
spring up every day at each turn ana
corner coin furnishes an insufficient
medium of exchange: inns truth IS papa.
HE 10 every one and has been brought
Roma IN ma ali by the recent dearth
~ currency. II deems positively para
doYical that men with thousands
of dollars, worth of property are unable
10 oet money enough to pay their butchers
on6 bakers. vet such has been the case all
ovsr the limited States for the last sixty,
davs. / believe, therefore. that should
not oyerstate il il said that 10 per cent;
of the population perceive the EVIL ana
favor a system Of currency that Will enable
them to utilize their property as basis OF
II I have been most reluctantly brought
into tb;s number. but / have been unable
IN resist the logic Of events. have seen
this nation growing within the past thirty
vears from the proportions OF boy into
fhose of giant under the influence OF q
crrrencv based solely upon the credit OF
the General Government. This stubborn
fact cannot be gainsaid, and 1t ends all
theories and discussions, certainly IN my
mind.
NV conclusion, then, is that our situation
and surroundings compel US to have large
volume of currency based not on com, pI'
lie currency. OF what shall that paper
currency consist? For many purposes we
are FORTY separate nations. The institu-
t,ons the laws. the habits of our people
differ from those living under one general
government and separated from them by
an imaginary line only; and the methods or
these differ In tr-n from those OF thelr
neighbor beyond. This radical fact makes
il impossible thatwe can ever nave paper
mast exneriepce teaches US that Maine note
will bear a different value In Virginia from
what il bears in Maine and will bring with
Il ALI the evils attendant on constant ex-
changes of currency bearing different reia-
five values. The evil lies deep down IN
human nature and cannot be eradicated.
/ therefore dismiss this branch OF the sub
iect without more discussion. no make IL
subserye its purpose our paper currency
must be backed by the credit OF me General cor;
e,nDeat. | know that many persons Will
differ from me in this conclusion, and l
know equally we'll that cannot convince
them that they are wrong, so shall
mass on without more ado. In my
Indictment the only question to be discussed
is how shall this paper currency be put
out-by the Government directly or by
the national banks? And on this question
| have no hesitation at all. IL should DO
put out by the banks. The dllhculty IN
the way of the Government putting 1t out
is that there is no balance1wheel TO regu-
late the machine. The Government is
always putting out and never taking In, so
that after awhile there must be more
money than the country wants when
we have oyer-inhatIon and all the
evils that follow that. With the
banks il is different. They are gov
| erned by their private interests. When
there is demand for currency they VIII
put it out. When there Is too much cur
rency they will take it IN. They bring the
subject within the influence OF that all
Teonlating law-the law of supply and de-
mand. II seems so obvious that the banks
will regulate this subject if left. to them
4 selves that we naturally ask ourselves, Why
| is IL that we are now without sufficient
| currency? The answer is that our national
! banking law was framed in time of war
| and in contemplation of O state OF facts
entirely different from those that
| exist to-day. The burdens and restrictions
put upon them then in respect TO issuing
currency may have been wise In that statt
| of facts. but in the present state OF facts
/ thew are eminently unwise. l answer
! then. that it is the difficulties put by the
! Government in the way of the national
] banks issuing money which prevents them
from issuing all that is wanted, The
principal of these is the provision that re
| ouires the banks to back their issue Of
| currency with United States bonds and
allows them to issue only 80 per cent. ol
their face value in currency.
The second is the tax OF l per cent. or
the currency issued. These two make u
more TO the interest of the banks not &C
have their money in United States bonds
and therefore not TO issue currency. than II
is to have their money in United States
bonds and to issue currency. OF course.it
\ is right that they should be required tC
back their issue of currency with United
States bonds. Therein lies the. whole merit
of the system. But there Ii no reason
why they should not be allowed u
issue currency to the full face value o.
the bonds deposited. 1t was all righ
during the war TO put this restriction or
them, because bonds sold then much be
low par. But now when government
8 per cent. sells above par there is M
reason for it. The revenue raised from 6
tax of per cent. on the bank issue is too
trifing to be worth considering. and espe-
cially as the tax is prohibitiye in its ten
dency and kills instead of raising revenue
A sine qua non, therefore. to a health!
and abundant currency from the banks !:
permission to them TO issue currency Y
the face value of bonds deposited and thu
removal of all tax on the currency the!
may issue.
But even though this were provided TO
il is by no means certain the banks woulC
make any permanent issue OF abundan
currency as matters stand now. Their
are no bonds bearing less interest than
per cent, These sell at about 122. If
banker puts his money in there to issu.
currency on, each year as they approach
maturity they depreciate towards par. o
par is all the Government will pay. s.
that by 1907, when they are paid of, tn
banker will have lost % per cent. of his in
vestment. His profits would need to hav
been very considerable to make up 10
this.
The more / think on the subject tn
more am convinced that the suggestion
made in my previous letter contain tn
solution, and the only solution of tn
problem. They contain, however, one ele
ment of weakness. which is what mus
call the absurd preiudices of many person
against the national banks. 1t Is claime
that the plan / suggested will favor theI
in increasing the interest they get on thei
bonds over what other people get on theirs
The answer to this is that 1t would be
small tax laid by the Government upon tn
whole people to pay competent finances
institutions to furnish a sound currency
tax they could well afford to pay.
But will suggest another scheme whicl
might produce the desired result. Let tn
Government issue % per cent. bond I
the banks alone, but TO be basis of cul
rency only. Sell these tothe banks at PAL
and with the proceeds pay of the bond
now outstanding. By degrees this woul
convert the debt into a az per cent. debt
on all of which currency would be out
standing. Let the banks issue currency
the face value Of those, place no restrit
tons of any sort on the issue, and II is ey
dent that the interest received from tn
Government on the bonds, added to wha