People's party paper. [volume] (Atlanta, Ga.) 1891-1898, 1893-03-17
One Kind Of Expansion.

| St. Louis Republic.
1t is claimed by some that there is
half a billion dnllars $500, ,O00)
in gold in the country. This is prob
ably an overtimate, but conceding
that there is fully this much, it is in
adequate to do the business of half a
dozen States, much less of the entire
country. Compared with the amount
of tokens of value demanded to do
the business of labor and commodity
exchange, the gold supply is a mere
nothing.
Last year the banks in the clear
ing-house cities of the United States
handled sixty one billion dollars OF
private paper (private money or to-
kens of value issued by private par
ties) and less than five billions of
cash (gold, silver and government
papea1. With every fv6 doklars III
government tokens of value they
declared" over sixty-one dollars of
private paper.
Here the private currency of credit
is twelve dollars for every dollar of
cash handled in ''clearing it. But if
we make all of this credit paper call
for gold the banks in the clearing
house cities alone would handle over
1920 of private paper for every dol
lar in gold in the country available
to redeem it.
This shows how little gold has to
do in reality with business, and it
also shows the folly of attempting to
restrict business to the gold supply.
If that could be done, the business
of the country would be best repre-
sented by vast inverted pyramid,
resting on its apex.
Students of the phenomena of
panics are familiar with the results
of contracting the cash currency
greatly below the demands of ex-
change. It is undoubtedly so con-
tracted in the United States at pres
ent. There is not cash enough to
do in ten per cent of the business,
but business men exc it out by money
of private issue which circulates for
short time only and is then re-
deemed or I" cleased."
This currency of credit is ordina-
rily capable of expansion without
much regard to the very limited
amount of cash on which it is sup
posed to be based. Business men do
not, therefore, feel the need of a
cash currency, increasing with the
increase Of population and the extern
sion of business, as they would with
out this system that so greatly re-
lieves the demand for cash to be act
ually handled in each transportation.
Undoubtedly this system of private
paper, which is in reality money of
limited existence, is one Of the great
est inventions of modern times, but
it depends great deal more On faith
than 1t does on an actual "cash
basis"
1t may be well enough for one dol
lar in gold to stand for and redeem
twenty dollars in paper as long as
there is no impotence among the
holders of the paper. When those
who have to wait the longest to have
the cash come their way will wait,
there is no trouble, but when they
will not, there is immediate dan
ger of a collapse Of the whole
vast system. At such times gold is
worse needed than at any other, but
it is apt to disappear at once, and for
the time being it becomes impossible
to carry on the business of commod-
ity exchange, because the credit cur
renoy has mostly disappeared and
because the cash, always inadequate,
has been locked up.
It thus appears that an undue con-
traction of the supply of cash is GER
tain to result first in an undue ex-
pansion of the currency of private
paper, in which most of the business
| of civilized countries is done, and