The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-01-06
THE oUxRxNOY ISSUE.
A Correspondent Ansiysos Various Pisus
Of National FinancIaring.


/ THE HERALD of the Sd instant contained an
editorial upon Rational Financiering." 1t
was a good editorial upon timely and i'm
| portant subject but some portions OF it seem
| to the writer to be open to criticism.
That the act of issuing money is one that
should be performed only by the supreme
sovereignty is a proposition from which there
will be no dissent, except on the part OF those
| who profit by the delegation OF the privilege to
themselves. That the security OF the wealth
OF the nation is the best security, and that 1t
can as well be pledged by the direct issuance
OF the notes as indirectly by the intervention
| OF Understanding bonds are propositions that
should require no proof to give them accept
ance But the proposition that the way to
stop "the run on the United States treasury
for gold" is to stop it, and that the way TO get
and keep gold reserve is to buy it with gov
eminent notes and then lock it up in the treas
ury and throw the key away, is one that is not
| to be accepted without question.
The exact language used is:
''When the government has prepared its is
| sue of currency let it buy with the currency
from the output of mines, or Otherwise, say
5000, 0OU,000 of gold bullion. Place this bull
ion in the United States treasury ana turn the
key on it, then throw the key away. Let the
world understand that said golad Is net nt as
the currency when this nation decides to go
out OF business"
The particular run on the treasury for gold"
that is under discussion is that which results
from the gold redemption of outstanding de-
mand notes. The only use the treasury has
for gold reserve is in the redemption or pay
ment of greenbacks and treasury notes. These
last are the notes issued in payment for silver
bullion under the law of 1890, and which by
that law are expressly made payable in silver
If the government so elects. II there were no
gold redemption, there would BIS no need OF
gold reserve. The proposition to lock up
$500, 900, coo of gold and keep it as reserve
until the government retires from business is,
therefore, equivalent to abandoning gold re-
demption. because nobody expects the gov
eminent to retire from business. If gold re-
demption is abandoned the worst use the
5000, 600, 900 OF gold could be put to. would be
to lock it up.
There are at least two other ways of obviat'
ing run upon the gold reserve. One of these
is redemption in silver, which would require
silver reserve. The other is that kind OF re-
demptioE which takes place when the notes
are received for debts due the issuing agent.
This method requires no reserve OF any kind.
No one now questions that the greenback
would never have been at anything else than
par if it had been made receivable for all pub
lie debts as well as a legal tender for all private
debts. No one questions that volume OF
in payment of customs duties and internal
revenue taxes can be maintained at par with
out any other redemption than is implied in
its receipt by the government for such pur-
poses If gold is wanted at all as reserve for
the redemption of notes, it must be because
such redemption is sometimes necessary, and
If it is necessary it would not suffice to lock
the gold up and throw the key in the we'll.
1t is not the outside world that is interested
A..
but the people of the United States who hold
the notes. All the interest the outside world
has in United States gold is in the country hav-
ing enough of it to pay the principal and inter
est of debts owed to foreigners Indeed. so far
as quantity or amount is concerned the inter
est of the outside world does not even extend
so far as that, for everybody knows that only
small part of foreign debts are paid in gold,
much the larger part being paid in other mer-
chandise, and as to this part the foreigner is
only interested in being paid in merchandise
at gold values, and for this reason desires the
United States to maintain the gold standard.
The run on the treasury for gold that causes
pain and anxiety is the withdrawal of gold for
export. This kind OF a run hurts because it
diminshes the power of the government to re-
deem, and because it causes a contraction of
the currency, increases the value of money
and decreases the value OF property and pro-
ducts But the demand for gold for export is
a demand that has to be met. This demand is
not subject to government control. This de-
mand is one that would not be met by having
a stock of gold locked up and the key thrown
away. But would it not help matters very
much if in this country the entire work of
ultimate redemption was not put upon gold,
but upon "coin," which would include silver
also; or better still, ii the volume of paper
currency was kept at that amount that would
remain at par without any other kind of re-
demption than being received for public dues,
and no coin redemption was attempted except
of coin certificates that were issued for con-
venience in place of the coin itself?
Or, why not try the plan that works so sue
cessfully in the Netherlands, where silver and
paper money are the currency OF domestic use
and the stock of gold is left absolutely un-
guarded and unrestricted for international
use. In a speech at the Brussels conference of
1892, Mr.. Van den Berg, delegate and presi.
dent of TIE Bank of Netherlands, speaking of
means which the nations might employ for
protecting themselves against the struggle
for gold" said:
. . . . In my opinion great step in
advance would have been already taken If all
the great central banks which are subject to
the system of the 1imping standard Obi
metallic) were to be guided by the example of
| Inc BANK OF the NetnerlanQS IN tne pOllcy
which they pursue with reference to the
stocks of gold which they hold
1.-The Bank OF the Netherlands, gentlemen, is
very misery with its gold when it is demanded
| for home circulation. . . . Holland,
| which has not exactly the reputation of being
a poor country, accommodates herself well
enough to the lack of gold coins in her circu-
| lation.
"What is the object with which the bank,
over which have the honor to preside, follows
this policy? The sole object is that it may be
] able to release the gold demanded 70. export,
| when the necessity for such export is felt. The
| object which for many years we have had be-
| fore us, which dominates our whole policy and
| which has hitherto been attended with com
| plete success, is to prevent entirely any pre-
| MUM or agio upon gold. For SO soon as gold,
| which is the sole basis of our currency reaches
q premium. however insignificant that pre-
MUM may be. it means the depreciation. to g
certain extent, of our means OF exchange, g
depreciation against which we desire to pro
tect ourselves by every possible means.
"Well, gentlemen, if the Bank of France the
| National Bank OF Belgium and the other bank
would follow our example, they would SCI
their stock of gold grow much larger than it il
at present, and they would be able, with no in
convenience, to liberate as much as at an!
given moment would be asked of them for ex
port, with the certainty of seeing it return
again shortly, as we have so often observed il
Holland. If no impediments were put in thu
way OF the free circulation of gold. if it wer
| oil to Nd tha inu " p,