The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-02-08
MONETARY ELASTICITY.

Cottocthoer VI tuo proposition tnRt kn6
money OF a country should be sound in
quality and sufficient in quantity to
supply business vants. Its soundness
does not depend upon what is
called intrinsic value of the material
employed, but upon the law which ere.
ates and is behind the money. Gold il
not nor can it be money till law steps
in and says it shall be. Thsre is no
difficulty then in having q sound cirs
culating medium.
sufficiency OF volume ia not so specific
ally matter of legislative control.
What is wanted can only be fairly de-
termined upon the basis OF the volume
OF trade. Ii transactions are too much
upon credit, call for liquida ton OF in
debtednsss will drive large percentage
OF debtors into bankruptcy, and this
will be an inevitable result even whom
times are ordinarily easy. Wisdom sug-
gests that the volume of money shall be
large enough to avoid such disastrous
results. What should be the proportion
of money to the volume of trade? On
this point it may be expected there will
be differences OF opinion. Fifteen per
cent certainly cannot be too much; not
15 per cent as the volume Of money ap-
pears of record, which includes all that
is held as reserves in the banks and In
the public treasury, but Is per cent OF
the volume of trade, which shall be
money actually in the banda OF the
people or available for use.
The same volume is not absolutely
reached at all times. Hence it is neces-
sary that there should be some degree
OF elasticity, some means at least by
which the volume can be enlarged to
meet the demands OF an increase of
business. There is a dread among the
people of money stringency, and on the
part OF capitalists q dread of redund-
annoy. stringency hurts every body but
the money-holding classes. and redund-
ancy only hurts them because it reduces
the earning power of their money. So
far as the masses are concerned there
cannot be redundancy of good money.
Gold is good money because the law
says it is. and it would be the same with
silver under the same legal treatment.
Paper would be sound money under
legal sanction and especially IL made
Reasonable in metal money. as that
seems to be the idea prevailing gener-
ally thronghout the world.
Free and unlimited coinage of silver
will produco avpuuainu hauoo1 oroc
ton. Men possessing uncoined silver
will take il to the mints and gst it
coined az long as they cannot otherwise
make more profitable use of the COM
modify. When they can get more out
of it for other uses they will cease taking
1t to the minis, which is security against
sny real or imaginary injury that can
result from redundancy. ii 1t is possible
that there can be such thing as a res
dundancv of good money.
Whether free and unlimited coinage
of silver will sufficiently enlarge the
money volume may be problem asical. |
rhatit will increase it is beyond quss-
ton. As the country is used |
10 paper money and favors il on
account of convenience, the sufficiency
Of the volume can be attained by
issue of treasury notes aud, on the basia
of go much per capita, or a percentage
OF the volume OF domestic trade. For
sign trade need hardly enter into con-
sidsration, for it is trivial as compared
with internal trade. and the balance
one way or the other is never large.
Where money is most needed is in
domestic commerce, and whatever the
law makes money is good enough for
that purpose. The citizen who must
take it can make others do likewise.
Ii the government controls the volume
then there will be safety against ruin.
Gus contraction, for the people can die
tate what its action shall be.
To delegate to banks the authority TO
regulate the volume OF money, is TO
place the public interests in the hands
OF interested parties. Expansion and
contraction will be manipulated
in their interests. Such has
been the universal experience, and 1t is
AZ "'SoiuanCo WlbA tue belu6Qn6HH oil
human nature. 1t is probable that IN.
der such control elasticity will not re-
gard the wants OF trade. Bank paper
certainly will not be Hounder than that
Issued by the government. The guar
anty OF the government is that which
has made national bank notes safe to
the holders.
1t is folly to think that a sufficient
volume OF money can be issued if it |
had to be limited to gold redemption
basis. There is not enough gold in the
country for that purpose, nor can suf.
fcisnt quantity be produced. Some
other material must be used as q basis.
and the only one available ia silver. A
sufficient volume OF paper can be main
tanned II redeemable in coin, gold or
silver, at the option of the government,
snd without embarrassment to the
treasury. What the people want is a
money that will pay debt. and enough
of it to prevent thoHe advantages which
are possessed by capitalists when money
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