St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1894-01-30
THOUGHTS ON CURRENCY.
Written for the Globe.l
CHAPTER V.
Can government issue be made elastic2
-CnnornSsman IOhnSnn'S Plan

-ConSreSsnan Johnson Plan.
In considering the questions that arise
from the use of greenbacks, certain
fundamental principles must never be
lost sight of. Those principles are so
important, and their relation to the sub
Ject of this chapter so vital that | re-
state them here in order that their cou-
nection with what follows may the more
readily be understood.
l. The greenback is simply govern
ment draft, just like a town order.
2. 1t is issued, not to furnish the peo-
pie with money, but as convenient in
strument for conducting public bust
ness.
8. 1t is paid out to meet current pub
lie expenses.
4. 1t is redeemed by being received
for taxes and dues to government.
5. The people use the greenback for
money because it furnishes simple and
convenient medium of exchange. Vi
6. Its volume depends upon the
amount Of revenue collected by governs
ment.
Bearing these facts in mind, it will at
once be seen that the greenback lacks
one OF the most important qualities of a
good and safe currency. 1t is not elias
tic. When the business of the country
requires an enormous and sudden in
crease III the volume of available cur
rency. as when the fall crops have to
be moved, there is no way that the
greenDack can be multiplied to meet
that demand. When the demand ceases
and considerable contraction is neces-
fai
ever proper it may be to use greenbacks
as a part of the currency-however
large part they may be, it is plain that
the part OF our currency that Increases
and dlnlnlSheS with the demands of
trade can never be greenbacks, but
must be sought outside of government
issues. Neither can silver help at all,
for all our silver currency now in use is
only silver reenbacks-governmen
Issues printed on silver instead of OH
paper.
1t is not my purpose in this place to
show how the elastic part of onr curren-
cy can be supplied, except to say that
thlnk 1t must be done outside of all gov
eminent issues, by the voluntary Co
operation of individual citi Zens. But l
90 wish here to point out possibility
of our government issues that seems to
nave been overlooked by most students
OF currency.
We have large bonded national debt
drawing low rate of interest.
That debt must some day be paid by
taxing the public. LIE that debt were all
to be paid next year. the taxes for next
year would have to be increased just
that much.th government Issues would
beeincreased to the same amount, and
the volume redeemed would be just that
hn Ia,
words, there would be great increase
in the volume of greenbackS; then that
increase would be redeemed.
Now, as long as the debt exists, and
the bonds are out, what is to prevent
using them to impart elasticity to our
issues? Suppose a period of great cur
rency Stringency such as we had last
July. Many holders of bonds would
gladly have exchanged them for green
backs for temporary use.
What possible harm could come from
permitting any holders of United States
bonds to deposit them in the United
States treasury and take away their face
value in greenbackS?
The advantages of such a policy
would be:
First-Citizens would get currency
for immediate use-a matter of vital
Importance at the time OF money
panic.
Second-The currency stringency
would thus be relieved, to some extent,
at least.
Thlrd-The government would save
the interest on the bonds while the
greenbacks were out. 3
When the panic is Over-when the
sudden demand for currency has sub
sided-the owners of the bonds would
bring the greenbacks to the treasury.
take their bonds away, and begin to
draw interest OH them again. If the
demand for currency were TO remain
permanent, so that the greenbacks were
never returned to get the bonds again,
why, then. the bonds would be paid, and
that would be the end of it. AS long as
the owner Of the bonds could make
more than their interest by keeping the
greeubacks to use as currency, he would
leave the bonds in the treasury and the
interest would be saved. When he
couldn't make so much, he would come
to the treasury with his greenbacks and
take his bonds and get the interest.
New bonds should not be issued for
debt lasts, it can be used in this way to
tide over panics and impart certain
degree of elasticity to our government
issues.
Congressman Tom L. Johnson, of
OHIO, has introduced bill covering all
these points, which ought to pass imme-
diately. 1t would have been far more
useful last summer than now, but it is a
good law to have handy to use if we
should need it again.
Of course it will be seen that Mr.
JohnSon's plan propose to extend to all
holders Of United States bonds the same
rights that arenow enjoyed by national
banks. He accomplishes all the good
results that can possibly come from the
national banking system, while avoid
ing all Its Objectionable features.
Mr.. johnson does not set the govern
ment up as bank, but simply proposes
to make our very burdensome and OBJ
jectionable national debt do US little
good. G. j. BUELL..