Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1892-12-19
SCRAMBLE FOR GOLD
Not Caused by a Need for the
Metal, but by a Desire
to Provide Against
POSSIBLE PANIC DEMAND
The Shortage of Solid Metal in the
Treasury of ANY Country
is no REASON FOR ANY ALARM.
Matthew Marshall on Current Item Of
Great Importance.
annnnn
A POSSIBLE PANIC DEMAND
is NO REASON FOR ANY ALARM,
Matthew Marshall on q Current Item Of
Great Importance.
Why so MUCH GOLD is GOING ABROAD
ESPECIAL TELEGRAM TO THE D1sPATcH.l

article for to-morrow's Sun 1t reads as
follows:
Small shipments of gold at the beginning
of last week, with threats of larger ones
toward the end of it-which, however, were
only partly fuIflled-made q great pertu-
baton in the money market and, aided by
some great financial settlements, seriously
depressed the prices of stocks Loans
were called in on Friday to an extent
which temporarily put the rate OF interest
I'D to 25 per cent per annum and caused
decline of from l to points in the whole
stock list
WHY the loss of a few millions of gold
most of which came out of the United
States Treasury-from a total currency
amounting to. over 81, ,000, 900, 600 should
create so marked scarcity of money is ex-
plainable only upon the theory that tear is
more potent than actual fact. To be sure,
is is small comfort to q man who is carrying
stock on borrowed money and has his loan
called without being able to place it again
except at % per cent per annum, or possl-
bly, is compelled to slaughter his security
on the Stock Exchange at panic price, to
be told that he is the victim OF a groundless
deusion, but that is one of the risks he took
when he bought what he had not the cash
to pay for.
A Chance TO Recoup Losses.
delusion equally unreasonably may
come ere long, to put prices up as much as
thev are put down, and then, if he has been
able to hold on or to buy in again, he will
recoup his loss
An instructive incident in Fridays furry
is the effect which the rise in the rates of
interest had in checking tine very shipment
of gold which led to it. 1t was q beautiful
illustration of the automatic regulation of
the flow of currency by supply and de-
mand and it ought to do great deal to-
ward dissipating the false idea which many
people entertain that gold is exported and
imported not as matter of business, but for
some mysterious and recondite purpose
which has no connection with pecuniary
gain.
No one supposed that wheat or cotton or
pork or tobacco is sent out of the country
for any other reason than because it will
bring better price abroad than it does at
home, and an increase in the export of these
articles excites neither surprise nor alarm.
Yet when gold is exported the transaction
is treated as one of exceptional significance,
aud all sorts of explanations are invented
for it in disregard of the true one, which is
that the owners think they can use the gold
more to their advantage abroad than they
can here.
Foundation for Credit Fabric.
In one respect, it is true, gold differs from
other commodities, and it is this difference
which accounts for much of the current
superstition in regard to it. 1t serves as q
foundation upon which civilized commercial
communities have reared an immense fabric
of credit, so that for every unit OF gold in
use there are many credit units of the same
value Thus we have in this country 1885,
OOO 600 of greenbacks and $120, 600, QUO of
coin notes. which are of equal trade value
with gold although the Government keeps
in the Treasury only S123. 100000 of gold
with which to redeem them on presenta-
tion. Evidently, if the holders of all these
notes were simultaneously to demand gold
for them, onlv S123, 600, 900 of them could be
redeemed and the rest would become mere
evidence of an uncollectable debt, or what
used to be called "failed paper.
In the same way the Bank of England
has out $50, ,000 900 of notes against which it
holds no gold whatever, and the Bank of
France $780, 900, 600 of notes against only
1885, 900, 600 of gold. A simultaneous de-
mand for the payment in gold of all this
paper money would inevitably result in
some of it not being paid and when to it we
add the obligations to their depositors of in
stitutions emitting it, the diSproportion of
real gold to credit gold becomes greater.
Never Enough Gold on Hand.
The banks of this city, as a further
illustration. owe their depositors $3.50, 000,-
600 and their note holders S., SOC, 900 more,
but have in gold only ST., ,0OO, 900 or there
abouts with which to pay their obligations
on demand. Thus any given increase or de-
crease in the quantity of gold held by
governments or by banks is magnifed sew
eral fold, as the rise or fall of the mercury
in baro is mapnifed hv he
hand on its dial
The proportion of real gold to credit gold
upon which it is supposed to be prudent to
do business varies in different count ries
The United States resumed gold payments
in 1879 with less than 500, 900, 600 gold,
against S346, ,000, 900 of legal tenders, and
since then, although we have immensely in
creased the amount of paper lmpliedly, if not
legally. redeemable only in gold, 500, 00O, 900
OF the metal has been treated as a safe mini
mum. though at this moment the Treasury
has sl23. 1000. In England the entire bank
deposits OF London rest upon gold in the
Bank OF England to the amount of only
about one-eighth OF their total. The Bank
of $3.50 OOO. 600. deposits to the amount of $780,
600 Co., making its total liabilities $500 COO O00
to nay which it holds but 1886, 600. 600, or 42
per cent OF the amount in gold.
Why the State of Affairs Is Thus,
This great difference in the proportion Of
ROlQ IoSGIN0 III Glo menGlO0eQ
may be explained partly by the habits Of
their people-Frenchmen, for example,
being accustomed to do business more for
cash and less upon credit than the English
but also by the different degrees of their
enterprise and skill However this may be
in detail, the broad fact is everywhere the
came in commercial countries, that moro
or less magnified + superstruc:ure of
credit is reared and maintained
conservntivalv aunau au,ornt
If solid money, the mutual confidence
pf men in each other supplying the defici-
ency 1t is plain, therefore, that anv alarm
following a diminution OF n country's stock
of gold is not the result OF an Impairment of
the ability of its governments, its institu-
tions OF its private debtors to pay their obli-
cations in that medium, because they never
haye that ability in full, but only partially.
whether our Government, for example,
BOO or $500. 10000 in gold, it could
not redeem with it the $346 600
of original greenbacks, much less
fhe additional legal tenders under the act OF
JuIv 1890 and the millions OF silver dollars
and silver certificates which it is bound in
honor TO make as good as gold. So, neither,
couId DUR banks nor the banks of Europe,
than a part of their outstanding obligations.
For the liCuidation OF the -est they would
have to call upon their debtors, and thus
bring all business to a stand.
Emptiness of a Bi-Meta1list Plea.
These facts demonstrate also the empti-
ness Of the assertion so often made by BIZ
rnetalIfsts and free-silver-coinage men, that
there is not gold enough IN the world to do