The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-12-12
HOW GEN. WARNER SEES 1T.

HOW GEN. WARNER SEES 1T.
The Gold Standard as Effected by the
| Issue of Bonds.
| IN. Y. SUM
To the Editor of The Sun-Sir: Inc issue
of another installment of fifty millions OF
bonds is avowedly to keep up the gold re-
| serve. and thus maintain the gold standard
# ought. however, to be manifest to any
one that the gold standard cannot be main
| tanned in that way.W are debtor nation;
! as a people we must pay to other countries
| annually, as interest on loans and other
| dues, not less than s25o,Oo0, 0oo That IFS, at
| ter balancing imports with exports, we
must still pay this sum besides. This must
| he paid in gold or in commodities We
could not nav this interest for single
year in gold without the gold standard
| breaking down. 1t can be paid in COM
modites only on condition that we will
| sell them as low as any other country. In
| fact, we must offer our products enough
] lower than other countries to induce our
| creditors to take our products rather than
| demand gold. 1t is evident from the con-
tlnu6u SnlpHoIlS VI 'SOiu oui LIS io'' 'HtNe
we have not been paying the interest we
! owe abroad with products. We can per-
manenty stop the outflow of gold, as long
| as gold alone continues to be standard
money, in way but by putting down
prices low enough to induce other countries
| to send gold to us for products, or at any
rate to take goods instead of gold for what
we owe them.
| This being the case any attempt to raise
| the price level of things here above the
| international gold level, either by protec
| tive tariffs or by currency expansion, as is
| now proposed, must necessarily result in a
more rapid expulsion of gold land a con-
| sequent ultimate further fall of prices. In
| deed, nothing is better settled in national
| economics than that no debtor nation,
| however desira BILE such a policy might be
can make tariff measures effective to raise
| prices Undoubtedly the importation of
goods into this country may be checked
| somewhat by high tariffs, but this is all
| that can be done; and it is simply stupid
| to attempt, under conditions now existing
| in this country. to raise prices and make
! good times by Mckinley tariffs. 1t is
| dertaking what is impossible to carry out,
| and for this there will not very
| soon be another political battle fought over
| the tariff
| 1t is admitted that this condition may be
| temporarily modified by the issue of bonds,
| Dul Only temporarily. t rum the TeSuIup-
| ton of specie payments in 1879 to 1892. we
| increased our Indebtedness abroad, on the
| average, by not less than 5000, 900 year.
| That is, instead of paying interest on what
we then owed abroad, and for the carrying
| trade, either in money or with products,
we paid with securities of various kinds;
| in other words, gave new notes We have
/ been doing what farmer does when hav-
| ing mortgag ed his farm, instead of paying
| the interest on his mortgage from the
produce of his farm, he gives each year
| new note for it, and has a good time
| Thus, by paying what we owed annually
| with additional securities, and probably,
also borrowing something more besides. we
were able, by protective tariffs and an in
| creaslng currency, to maintain level of
| prices somewhat above the Internal ional
| gold level At any rate prices in this
| country during this period did not go down
| quite SO fast, nor quite SO low, under the
| influence of the appreciation of gold as..in
| other countries. But when our creditors
| stopped taking the kind of securities they
had been taking and demanded gold then
| gold began to go and the sudden drop of
| 1893 came
! Now, again, as we see by the continued
| outflow of gold, point is reached where
bonds are called for to pay interest with
| and stop the outflow of gold. Our creditors
1 don't want any more railroad or 'indus-
| trial. stocks; they want governments and
| no doubt the outflow of gold can be temper
arly checked and prices kept up by issuing
| bonds enough to pay foreign interest but
| in no other way. The secretary may de-
| mand payment for the bonds in gold, but
| that will do little good; the gold will not
| stay here. 1t will flow away as fast as
| liberate Conditions that make it necas-
| sary for a country to borrow gold to keen
| up prices or to maintain the gold standard
will take the gold out of the country as
| fast as it comes in. We might as we'll
| propose to pump water from the Niagara
| river into Lake Erie, expecting it to STAY
] there to expect gold borrowed to pay
| debts with and save prices from falling to
| stay here. OF course, the end of such a
policy is national bankruptcy.
| Gold can be kept here and the single gold
standard be maintained in this country
while we remain debtor nation, in one
! way only In nut shell it is, contract the
currency restrict bank credits bring prices
| down to or enough below the international
| gold level of prices to induce creditor
| countries to take products for all we owe
them rather than gold. There is no other
| way. A debtor nation, for manifest rea-
| sons, can never maintain as high level of
| prices a creditor nation can. Mill long
ago demonstrated this Let prices drop till
| gold comes to our market for commodities
| and the issue of the bonds will not be
necessary, but put prices up by tariffs or
| by currency expansion and there will be
no let up to the demand for them. The
prospect of lower prices may not be
| hopeful one to the business interests Of the
| country, but 1t is the necessary concomitant
| Of the gold standard, and the people might
| as well accept the inevitable first as last.
/ They must learn some time that 1t is inn
possible to have gold prices and high prices
/ at the same time.
| To say nothing, then, of the lawfulness
| Of the proposed bond issue, as an economic
/ proposition, it Is unsound through and
i through, and ought to blast and will blast
/ forever the administration that adopts it.