The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1895-03-20
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Much is being said and written just
now about the "gold basis" "gold re-
serve" and "honest money!" but perhaps
few people understand clearly what
these expressions really mean. The mon
etary affairs of the United States have
been placed on gold basis, not by any
act of congress-, but by the action Of the
present secretary of the treasury.
The Sherman silver purchase law of
1890 declared that it shall be the policy
of the government to maintain the parity
between gold and silver.
On the strength of this clause Mr.. Car
Isle has assumed that the holder of gov
eminent notes, who presents them for
redemption. has the right to choose what
kind of coin he will receive. provided he
chooses gold, but if he should prefer sill
yer then the secretary claims the right to
pay in gold, regardless of the wishes OF
the holder of the notes
Anomalous as this position may appear
it is strictly true. In proof of this it
will be remembered by those who have
closely followed the events of the past
i've years, tAdt III 1000 bAOdSuAJ AOtOo "a
1890, which were payable in coin,
were presented for redemption and
silver was demanded for them. The
secretary of the treasury, how
ever. absolutely refused to
honor the request. and the
holders of the notes were compelled to
exchange them for silver certificates
.-h;.h +bo soo-o+orv oo,1Id not nonsia.
tently refuse. though even then he an
nounced publicly that he would have
preferred to redeem them in gold.
Thus the government announced to the
world that it would redeem all outstand-
ing obligations in gold. Thus the gold
basis was established, and gold became
the sole money of final redemption.
The base, upon which the financial
structure of the United States rests is best
illustrated by an inverted pyramid, the
apex of which represents the gold in the
treasury, upon which all the rest of the
circulating medium of the country rests.
The amount of money in circulation
June 1, 1898, was. exclusive of gold coin,
81 ,09e, 205, 1857. The amount in circula-
ton at present would perhaps not vary
greatly from this figure. When it is re-
membered that to make this enormous
sum "good money" "honest money"
there is a gold reserve in the treasury of
about $9O,OO0,0OO, and that it has been
lower than that, the righteousness of the
governments position must be apparent.
It is assuming to maintain a gold basis
almost without any gold Could any
thing be more absurd?
The New York banks could exhaust
every dollar of gold from the treasury
any day they saw ut and they would
doubtless do it if it " ere not for the fear
that such a proceeding would force the
country to the use of silver to prevent
bankruptcy, thus doubling the amount
of the money of final redemption and
thereby reducing the purchasing power
of their gold one-half. Realizing that
they would be the losers by such a
transaction they only withdraw a
sufficient amount of gold to force an is
sue of interest bearing bonds to borrow
it back and then repeat the process.
AS there are about $12 outstanding for
every dollar in gold in the treasury it
will be seen that the dollars in circula-
ton, except gold, are worth about 815
cents and these are the "honest dollars
that are talked about. and this is what it
means to be on gold basis.