The advocate., 1892-02-24
WHAT CONSTITUTES coon MONFYI

Gle editor or bnaG Journal Tears 20 give ms fetd"
erB any views opposed to his own upon the QueS-
ton Of moDey.-EDTTORl
To the Editor of the American Banker:
In your Issue of January 80, 1892, in
the course of an editorial under the cap
tlon "What constitutes good money" you
say:
We think we can demonstrate in the
light Of past and present experience that
the one essential element which must enter
into good money, is the confidence of the
people who accept it in exchange for goods,
labor, or any other thing of value. By way
Of illustration taking the various forms of
currency Issued by the United States to day
we find that BAG millions Of notes common
ly called "greenbscks" freely pass from
hand to hand, although il is well known
that 246 millions of these could not be re-
deemt in coin by the government if the
whole were presented to-day for payment;
again about 40 millions, more or less, Of
National bank currency have but about six
millions of lawful money deposited in the
United States treasury for their redemption,
80 that in these two issues alone we have
over 400 millions of uncovered paper money
freely circulating throughout the land, with
out dollar in the treasury now for their re-
demption, yet equal in purchasing power
dollar for dollar to any gold dollar piece
bearing the government imprint. Further
than this there are in circulation also silver
certificates to the amount of say 300 million
dollars more secured by the deposit of sill
YER coins worth actually, if melted, only
about 70 cents on each dollar piece. Is it
10 be supposed for an instant that these
various forms Of money would be accepted
at current rates of purchasing power, were
it not for the confidence of the public in the
ability of the issuing party ultimately to re
deem the entire issue at full par value. The |
reverse of this proposition is proved by the |
facts of the financial history Of this country,
which show the varying rates below par at
which currency issued by state banks before
tho war circulated; the heavy discount vary |
ing from say u per cent. to 80 per cent. at |
which United States legal tender notes
were accepted by the people during the late |
war, when the black shadows of doubt as to |
the ultimate result Of the mighty struggle |
overcast the clear sky of confidence, and |
how for thirteen long years after the close
Of this struggle lack of faith in the ability
Of the nation to redeem it's large and vari-
GUS promises to pay lessened the purchasing
power of paper money, and held this below
the par Of gold. How often do we sec the
like Of this illustrated in the case of run
by depositors upon a sound bank when sus
picion has been aroused through some idle
or malicious rumor as to its condition, and
by the opposite case where q rotten and dis
honest institution suddenly closes its doors
owing millions to con6ding creditors.
Will you kindly allow me a little Of
your valuable space in which to offer a
few criticisms upon the foregoing state
ments.
In the first place coincidence" Is not
an intrinsic quality Of money or indeed
Of any other substance. Nor does 1t in
here or appertaln to money. Confidence
is an emotion or phase of the human
mind. But 1t is not an original, or In
herent attribute Of mind, but purely the
result of education, even as the con-
science Is mental comparison of actions
contemplated, or already performed,
with the standard Of right and wrong to
which one has been educated. Itfollows,
therefore, that the possession, or lack of
confidence, being the result of education,
Is not prinG fdetG evidence Of fact, as
one may possess confidence when 1t does