The midland journal. (Rising Sun, Md.) 1885-1947, 1893-07-07
QUESTIONS OF THE DAY.
The Act of 1890 Not the Cause of
the Present Stringency, But
Tends to Relieve 1t.

They who ascrlbe the present money
stringency to the SO called "Sherman
act" of 1890 either do SO ignorantly or
purposely to confound and prejudice
the public mind against silver. This
act provides an increase of the currency,
at the present price of silver bullion, of
about S45,O00,0OO annually. How
does or how can this increase in the
money volume cause money stringency?
Such claim is preposterous and such
talk is foolish. 1t would be as rational
to say that copious showers had prod
duced extreme drouth.
Did the Sherman act cause the fail
ure of all the banks in Australia? Did
it cause the trouble in Greece, IN
Turkey and in Portugal? Has it pro-
duced the money stringency in England
and Germany?
Bnt, we are told, this act is driving
out gold. How does the act of itself
drive out gold !? Even if silver were
bought with gold-as it is no!-the
silver is produced at home, and how
could the exchange of gold for silver.
at home, drive out gold? Gold flows
from country to country in settlement
of trade balances, and in no other way
unless bought on speculation, with
bonds, as most of that which has gone
abroad lately was bought.
The silver purchased under the act
of 1890 must, according to the terms of
the act, be paid for with notes which
are made legal tender.
The act also requires that the Secre-
tary of the Treasury shall provide for
the red mption of these notes by coin
ing as much of the silver purchased
under che act as may be necessary for
the redemption of the notes and if this
were done, no gold would be passed in
the Transaction at all, and the notes of
1880 would no more operate to expel
gold than national bank notes or green
backs.
The truth is the present financial
trouble is due to the readjustment of
prices to an ever increasing gold stan
dard, and to nothing else. AS gold
increases in value prices fall, and a
periodical readjustment must take
place, and that change is always and
necessarily attended with failures,
bankruptcies and money stringency.
That is what all gold standard countries
are now going through, the United
States with others. We hear of no
trouble in India or anywhere except in
gold standard countries. So far as the
act of 1890 has had any effect at all it
has been to sustain prices and to deter
and relieve the strain of readjustment
to an increasing gold standard.
The readjustment of prices precip.
itated by the Barring failure resulted
in shrinkage IN few weeks of $780,
100000 in stocks alone, and the pres
ent readjustment will result in much
greater shrinkage in stocks and pro-
portionately, in time, of everything
else.
But, just now, everybody is saying
it is want of confidence. Confidence in
what? Is there want of confidence
an the money itself? Have people lost
confidence in silver dollars and silver
certificates or in greenbacks Is con .
fidence lost through fear that there will
be too much money? This is ridicu-
lous, there is no fear as to the money
itself, the fear is that property will not
be worth enough to pay what is owed
or thot it cannot be sold for money,
when the money is wanted. The want
of confidence is in prices not in the
character of the money. But credit is
shaken. Well, credit is not money
nor legal tender and what else could
be expected in such times?
There must be some relation between
the volume of money Of ultimate pay
ment and credit devices. If the foun-
dation money become reduced the
structure of credit erected upon it must
be proportionately reduced or conf
dence, of course will be shaken.
We cannot expect confidence to be
sustained when there is nothing to
sustain it.
If the proportion of primary money,
on which all else is founded, to the
volume of credit based upon it is as
five to one, or as sometimes eight or
ten to one, and there is shrinkage of
$l00,000.0O0 in this basic money,
then there must be a contraction of
100000 900 to 81, 900, 100000 in the