The times. [volume] (Richmond, Va.) 1890-1903, 1895-06-02

! We are perfectly well aware that we
are running directly counter to the popu-
lar idea OF to-day on this subject, in lay
ing down these propositions. The popu-
lar idea that has grown up amongst the
| people since the war committed our Gov
eminent TO those vicious ideas that IL was
| established to forever Danish, Is that a
paper currency ought TO circulate all over
| the country. and that a note issued In
Maine should be Just as current In Texas
as II Is in Maine. This sacrifices the
| substance for the shadow. All the people
of Maine want. at all times. an abundant
volume of paper currency to operate their
domestic transactions amongst them
selves. An occasional citizen OF Maine
| has need for a Maine bank-note in Texas.
| Ninety-nine per cent. Of the transactions
between Maine and Texas are settled by
| drafts and bills OF exchange: an insig-
nihcant percentage or them employ Maine
! bank-notes.
We say. then, with the utmost conf
dence, that IT is all the better II Maine
I
perform its functions properly. it must be
always eager 10 get back TO its issuer
to demand coin for it's redemption. This
keeps him always alert and on his guard
and keeps the money Of the country,
coin, which is the only money that is
possible.
Money-that is. coin, which IS the only
money-is for circulation amorgst all
the people as the standard Of their
values. Paper currency IS rot and cannot
be money. 1t consists of promises to pay
money on demand. II II is a currency
that circulates from end t. end Of the
country financial panics are inevitable
But II It is local in its nature It per-
forms every act which a paper curren-
cy can properly perform and when a
panic sets in i'm regard to It, that panic
!. confined 10 the region Of territory
where that currency circulates. Under a
system Of currency issued by State banks
there might be a panic in Virginia. and
yet it might not except in the slightest
Just across the Potomac river
The whole business Of paper currency
is in its infancy yet and IL has never
yet been scientifically treated. except in a
spasmodic way. in this country, and as
soon as the country got so situated as
that it might have a fair opportunity TO
demonstrate what could be accomplished
with a paper currency, based upon the
philosophical and business ideas OF the
trainers Of our Constitution the war came
on; all correct ideas OF constitutional re-
publican government were set aside and
we drif;ed into the worst forms Of finance
that the country ever saw. The only
country except our own which has fur
nished any lessons upon the subject of
paper currency that are worth attention
is England. and the lessons that she
furnishes are all against a national cur
rency. and in favor OF local one.
We pass by the history of England's
currency until the passage Of Sir Robert
Peols act. in 1874 That act nationalized
her currency thoroughly, with one ex-
ceptlon that will be noted further on. so
that a note OF the Bank of England is
looked on all over Great Britain as a
government note (though the Bank OF
England is entirely private concern),
and. though issued by a private corpora
ton. In which the government really has
no interest whatever. yet, as there is a
tacit understanding that the government
backs it, its notes circulate as money
everywhere I'm the Empire. What has
beer the result? There have been three
financial panics in England since 1874;
one in 1871. one in 1857. and one in 1866
land would have been broken and ruin
spread all over the face Of the country
II the government had not come to its as
sistance And how did it come to its as
slstance? Sir Robert Peers act divides
the bank into two departments-the issue
department and The banking depart
mcnt-which are as separate according
TO the law. as two separate corporations
can DC. ne pdIhIlS department. ItNtlNCS |
deposits and lends money. and the issue
department issues the banks notes. The
act allows 1t to issue fl5.Ooo,Ooo of notes, |
based upon 100000 OF government |
bonds. but for every other note it issues
IL is required 10 have gold 10 the amount |
OF the face OF the note. Neither depart |
ment has any right. under the law, to |
touch the funds Of the other yet in each |
Of the crises referred 10 the executive |
government Of the Kingdom has author
lied the banking department to invade the |
issue department. and take it's funds to |
upon H from depositors. leaving the note /
circulation without the backing Of gold |
that the law requires IL TO have. ard pos
sibly without any backing whatever. The
government did this in each one Of the
crises mentioned. and. in 1851. the bank
ing department actually awaited itself of
the authority given. and took money
from the issue department In other
words. the bank had failed. and 1t was
only saved from public exposure by an
act OF spolation.
Englands experience with a thoroughly
rational currency shows US. then. that 1t
5 liable to periodical panics. when It
would smash up everything. right and
eft II the government did NOT CANA |