The Providence news. (Providence [R.I.]) 1891-1906, 1893-01-19

The statement made by Mr.. John w.
Vernon before the Board of Trade yes
terday, that if it is necessary, In order
to secure the repeal of the Sherman
silver act to repeal the tax on state
bank issues he would approve of repeal
ing that tax, must have been received
with some degree of surprise by those
4 present.
IL is due to Mr.. Vernon, with whom
we venture TO disagree on this point. to
state that his view is theoretically rea-
sonable. II is not supposible that with
national bank issues secured by gold
bonds and state-bank issues circulating
side by side there could be any doubt of
which money the people would prefer.
Undoubtedly, in New England, in the
Middle states and in the Ohio Valley
western states, the choice would be in
every instance in favor of the national
bank issue. But in the silver states of
the West and in the South the
national banks are few in number,
and are as Mr.. Vernon states, objects of
distrust and dislike. The very fact that
the masses in those sections want more
money In circulation and are in favor of
the repeal of the state-bank tax shows
conclusively that they want the state
banks to issue the money. Under such
conditions, Is Mr.. Vernon certain that
tha nircnlatinn ~ h. o1 L.. L..
would be preferred? Is it not rather
more reasonable to suppose that the
local pride which is so strong in the
south and west would operate to favor
state-bank issues?
IL is doubtful if many of the eastern
state banks would avail themselves of
the privilege of issuing circulation, but
1t is certain that elsewhere in the coun-
try state banks would flood the states
with their issues. What the result of
such initiation would be is known to all.
Mr.. Vernon, to some extent, ac-
knowledges the weakness of his posi-
tion on this point when he says that if
the two classes Of circulation are per-
mitted by law he bases his confidence in
the national bank issue on the theory of
the survival of the fittest" and the
fact that people who will not listen to
the logic of argument will listen to
the logic of experience"
What is this "logic of experience
that is proven by the " survival of the
fittest, if it is not that we learn through
financial losses to discard state-bank
issues and accept only national bank |
issues as stable currency?
If the two currencies can be main
tanned at par, and all this talk about |
" wildcat" and "red-dog money" is |
thunder, as Mr.. Vernon sug-
gests, there will be no "logic of expert
ence," for there will be no survival of
the fittest." Both currencies will be
equally good and will circulate at par
side by side.
Now If we are to learn by the "logic
Of experience" is there any reason to
suppose that the lesson will be any
better than it was thirty-fv years ago?
With the discovery of gold the era of
speculation began, which ended i'm the
panic of 1857. In 1859 there were 1,57O
state banks. During that year s32 of
hem failed, and their circulation was a
otal loss to its holders. Rhode Island
iad ninety banks, the currency of which
vas at an average discount of 25 per
,ent; one with discount of 30 per cent,
md two whose notes were unstable.
In Massachusetts there were 1S1
,anks, and not one had notes at par. In
there were 7S banks: the
Iotes of three were unsaleable, and those
f the rest were at a discount of from
% per cent to 25 per cent.
The fever of speculation is not less
ctive to day than then. 1t is especially
ctive in the West and South-sections
where the greatest initiation and counter
citing is likely to take place when state
anks begin their issues. These people
re inflationists by nature. They believe
hat their only means of escape from
ebt lies in more money. What les
on will tneir "logic of experience"
each them while they are learning
bout the survival of the fittestw
low great will be the suffering when
he crash comes!