St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1894-02-26
THOUGHTS ON CURRENCY.
Written for the Globe.l
CHAPT Err TX.


States treasury for the purpose OF re-
deeming such greenbacks as may be
presented. Indeed, NJ my good people.
really believe that the entire super
structure OF business has no other fOun-
dation. and they fondly flatter them
selves that in some way, by increasing
the amount of silver in use. they can
broaden that basis.
shall try to point out at least three
grave fallacies in this course of reason
Ing.
First-All that vast volume of trade
that is conducted by means of book ac-
counts. checks. drafts, banks and clear
ing houses, is not based on money at
all. In these cases one debt is made to
offset another. Such transactions are
| really barter. as was shown by Con-
gresham Walker in his address BET ore
| the Chicago bankers SO me months ago.
| The work is done by other and better
| machinery than money-better, because
| cheaper, simpler and more efficient.
| The value of each obligation is eSti-
mated in terms of money, it is true; but
money is no more used than when two
| jockeys swap horses on the highway, or
when the country woman trades eggs
| for calico at tie village store.
A due appreciation Of these facts will
| greatly diminish the load that is sup
| posed to rest on that little pile of gold
In the treasury, and help dispel the
| nightmare that is disturbing So many
good people.
Second-The gold in the treasury, in
ordinary times, has nothing at all to do
with maintaining our greenbacks and
| other government issues. All such
| Issues greenbacks, silver dollars, frac-
tional currency, silver certificates, and
treasury notes-are nothing but govern
ment drafts drawn against the revenues.
They are redeemed by being received
| by the government for taxes, and hence
are seldom or never presented for gold
| redemption.
Such government issues are not prom
issory notes to be paid and destroyed;
| but simply very convenient machine
| for distributing the taxes among the
| peOple-a very efficient and economical
instrument for conducting public bust
ness. The farmer might Just as reason
| ably burn up his machi merry at the end
| of the season, The government can
use the old greenbacks, or other issues,
| Just as the farmer uses the old pillow and
harrow till they are worn out. Then it
| is time enough to make new ones.
Thus have we lifted another very
| great load from the little pile of gold in
| the treasury-a load equal to eight hun
| bred millions or SO. About that amount
| of government issues do now circulate
on the fact that they are received for
| taxes and dues to government and thus
| redeemed.
And further than this, instead of be-
| ing part of the mighty SuperStructure
| of our currency system, these green
| backs and other government issues are
really part of its foundation. They
are just as much basic money--just as
much money Of ultimate redemption
as are the gold coins that are kept
| in the treasury under the impression
| that they are needed to redeem with.
The only possible use for the gold in
| the treasury, so far as propping up the
| government issues is concerned, would
be in case like the following: Suppose
| at any time the volume of greenDackS
| and other government issues in circula-
! ton should be greater than the demand
for them to use as a circulating medium
and to pay taxes. Then q small amount
would be presented for gold. The gold
| so drawn out would be used. of course,
| not as money, but for some other pur-
pose. If the amount of government
issues were never allowed to become
excessive, none would be- presented for
gold.
There may be times when govern
ment, like all individual, will be obliged
10 borrow TO meet current expenses; but
l see 10 reason whatever to issue bonds
TO "strengthen the gold reserves" with
over sixty millions of gold in the treas
ury. There is really very little for the
gold reserve to hold up. Our govern
ment issues are amply supported in
ordinary times by being receivable for
taxes.
So much for the second fallacy that
gold reserve is needed to prop up the
greenbacks.
The third falIacy is that we can broad
en- the 'basis" of our currency by fore
ing silver into circulation.
We now have two kinds of basic money
In use: First. our gold coins. which owe
their value to the labor OF producing The
metal they contain; and second. what
ever volume of greenbacks and other
government issues will readily stay in
circulation by being receivable for
taxes.
LII 1878 the government began buying
silver, stamping it, and forcing it, or its
paper representatives Silver certif-
cates) into circulation. The silver coins
were heavy and clumsy, so the people
sent most of il right back 10 the treas
ury, and there it stayed. The silver
| certificates are better, and the people
keep them in circulation.
Finally more of this silver and paper
was forced into circulation than The
| business Of the country had any use
| for. The channel of circulation was
| filled more than full. Our greenbacks
and treasury notes could be used to
draw gold out of the treasury. The
silver and silver certificates could not.
The greenbacks and treasury notes,
therefore, came back to the treasury
not to pay taxes, but to get gold.
| Now, kind reader, stop here and
the country needs is more money"
From July IA, 1890, to July Is, 1893,
this insane scheme of buying silver
drew out OF the treasury no less than
$4,000, 600 in gold. This gold was not
taken out 10 use as money-the paper
notes were Just as good for that pur-
pose. Over SSS, 100000 were sent abroad
| and the rest boarded.
So far from strengthening the basis
| VI Jul cuileicy' tHiS silver buying mas
almost destroyed that part of the basis
composed of gold. and would have
driven the last gold dollar out of the
treasury If we mad not stopped buying
| silver bullion. We should soon have to
issue bonds to pay for the bullion we
| bought.
If you say, why not redeem the treas
ury notes in silver, reply that then the
market value of the metal would regu-
late the purchasing value of the silver
dollar. Then you would drive all the
gold out and bring our currency to sill
yer recommendation. The dishonesty of
such a course have shown in pre-
vious chapter, and il need not be re-
peated here. But what is the sense of
buying silver bullion and giving our