The representative. [volume] (St. Paul, Minn.) 1893-1901, 1893-08-16
CAUSE AND REMEDY.
PRESIDENT OF THE BIMETALLIC
LEAGUE ON THE SITUATION.

The Act Of 1890 Not the Cause Of the Pros
emit Money Stringency. but Tends to Re-
lieve It-There Is No Way Out but to
Make Silver Do Part of the Work.
They who ascribe 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 $45, 900, 900 annually. How does
or how can this increase in the money
volume cause money stringency? Such
a claim is preposterous, and such talk is
foolish. It would be as radical to say
that copious showers had produced ex-
treme drought
Did the Sherman act cause the failure
of all the banks in Australia? Did it
cause the trouble in Greece, in Turkey
and in Portugal? Has it produced the
money stringency in England and Ger
many?
But, 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 not-the silver is pro-
change 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
redemption of these notes by coming as
much of the silver purchased under the
act as may be necessary for the redemp-
ton of the notes, and if this were done
no gold would be passed in the transac-
ton at all, and the notes of 1890 would
no more operate to expel gold than ma
tional bank notes or greenbacks.
The truth is the present financial
trouble is due to the readjustment of
prices to an ever increasing gold stand
ard, and to nothing else. AS gold in
creases in value prices fall, and period
ical 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 have gone through
or are now going through, the United
States with the 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 defer
and relieve the strain Of readjustment to
an increasing gold standard
The readjustment of prices precipitated
by the Barring failure resulted in shrink
age In few weeks of $500, 1000, 900 in
stocks alone, and the present readjust-
ment will result in much greater
shrinkage in stocks and proportionately
in time of everything else.
But just now everybody is saying it is
want of confidence. Confidence in what!
Is there want of confidence in the
money itself? Have people lost conf
dence II silver dollars and silver certif-
Gates or in greenbacks? Is confidence
lost through fear that there will be too
much money? This is ridiculous. 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 that it
cannot be sold for money when the
money is wanted. The want of conf
dence is in prices, not in the character
of the money. But credit, they say, 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 founda-
ton money becomes reduced, the struc-
ture of credit erected upon it must be
proportionately reduced or confidence of
course will be shaken.
We cannot expect confidence to be
sustained when there is nothing to sus-
tain 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 800, OOO,-
600 in this basic money, then there must
be acontraction of $500, OO0, 900 to 81, OOO,-
0O0,0 900 in the volume of credit and a cor
responding fall of prices, and that is
just what is now taking place in all gold
standard countries, but most violently
in countries where the proportion of gold
to credit is lowest. Gold is constantly
being spread thinner over the world, and
the scramble for it is intensified by ex-
listing conditions.
BY refusing to coin and pay out silver
in redemption Of the notes issued under
the act Of 1890, as required by the plain
terms of the act, we unnecessarily throw
our gold into the hands of spectators.
The fault is not in the act, but in the ad-
ministration of the act.
There is no remedy for such financial
troubles as we are now experiencing
and no way to provide against the recur-
renee Of such troubles but to put under
our structure of credit broader founda-