The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1892-12-24
The Critical Condition of Our Cur
rency.
From the New York sun.


While there is no occasion for immediate
alarm because Of the exports of gold from
this country to Europe, they call attention
10 n condition of our currency which is far
from satisfactory, and which may even Justly
he pronounced critical.
The nrofuse Federal expenditures dnring
! the last four years have reduced the stock oi
gold in the Treasury available for its own
purposes to about Stu. 900, 900. The paper
money and silver currency of the country
consists of 1916. 00O, 900 of old legal tenders,
$I20, 900, 900 coin notes issued under the act
of July, 1890, 74,0O0,000 of national bank
notes and about 800, DOC, 600 Of silver dollars
and certificates of deposit Of silver dollars.
making a total of currency other than gold
of 81 ,0f0. 0O0, 900, which At present the pub
lie accepts as equal to gold because of lis
faith thai it can get gold for it on demand.
II this statement of the case were complete.
it might indeed be said that $1,000 900 of
gold was rather slender basis upon which
to maintain II volume of $1,000 100000 Of
money only representing gold. and dependent
for lis value upon the possibility OF obtaining
gold for it II. pleasure: but 1t conld also be
said that, thus lar, the amount has proved
sufficient, and that the little losses we have
suffered by export are comparatively neon
siderable. Unfortunately, an additional ele
ment mas To De taken llltp dCcOhni. WHICH ~
that while our stock of gold is decreasing,
the volume of the paper and silver money
which it supports is increasing under the
operation of the act of July, 1890, so that
while we are exporting gold at the rate of,
say, 10000, 900 per month, we are swelling
the volume of paper and silver money at the
rate of 81, 000, 900 per month. We may go
on this way for some time longer without sap
ping public confidence and producing run
for gold upon the Treasury and the banks,
but how much longer? That is a question
for the men in authority over our finances to
consider.
There has been talk of repeating so much
of the act of July, 1890, as is now adding
81, 900, 900 per month to our paper cireula-
ton, but there is little hope of such meas
ure being adopted by the present Congress
The silver men will oppose it, and so will
all the other members of Congress whose con-
stituents desire an abundance of CURRENCY
and consequent high prices for commodities.
To overcome their opposition more time
would be required than this session OF Con.
gress affords, and it is not certain that 1t could
be done at all. The matter will have to rest
till the new Congress assemblies, which may
be next March, or may be not before next
autumn.
Since, therefore, no immediate stoppage of
the increase of or currency can be hoped
for. much less decrease of it, the only al
tentative means of preventing the relative
amount Of gold in it from becoming danger
ously small is, evidently, to add to the gold.
This fact is recognized by the Secretary OF
the Treasury in his recent report, in which
he asks for authority to increase the Treasury
reserve of gold by an amount equal to 20 per
cent. of the coin notes issued under the act
of July, 1890. As a temporary expedient. he
is selling drafts upon distant branch treasuT-
les at par for gold delivered to him in New
York, which is equivalent to paying premium
for gold equal to the premium on exchange
which is saved by the merchants and bankers
who furnish the gold. This resource will
soon be exhausted, and, indeed. will not
Weld any great amount of gold 10 the Treas
ury.
1t remains only to fall back upon the Re
sumption act of 1875 and procure gold By
selling fresh issue of Government bonds.
But this. again, is an expedient Of doubtful
value. The authority to sell the bonds gwen
by the act of 1873 was toprepare and provide
for resumption on Jan. /, 1879, and the act
clearly did not contemplate the sale of them
to meet new emergency IN 1892 or 1893.
Prudent investors wonld fight shy OF them,
or at least wonld demand Il high rate of in
terest on them.
Apart from this question of the validity of
the bonds, it is very doubtful whether gold
could be got for them to any large amount on
any terms. When Secretary Sherman sold
bonds for resumption purposes in 1877 and
1878, he had an immense supply Of gold IN
this country upon which TO draw. 1t had
been boarded during the war, and readily
came out as soon rs the resumption OF specie
payments was reasonably assured. Now.
The bonds are 10 be sold because the stock Of
gold in this country is insufficient. 1t must
therefore be sought in Europe. But Europe
has no more gold TO spare than We have.
Austria has lately been trying in vain TO
negotiate with the great European bankers n
loan of 500, 900, O00 in gold with which 10
commence gold payments under her new
currency system. What she has got thus far
has come from this country and she will mol
return it TO us.
The only hope for safety lies in the good
sense of our people and in their faith in the
ultimate adoption by the Government of the
measures needed to restore our currency To
a sound condition This, however, is not
implicitly to be relied on. A panic may be
started by INSCRIPTIONS spectators any day,
and then there will be run for gold upon
the Treasury and the banks which will compel
a suspension of gold payments and send gold
to premium.