The Portland daily press., 1895-06-22

that are ordinarily likely to be demanded
with a supply in hand, or that can be OBJ
tanned, to meet any extraordinary de.
mand.
The aggregate Of the cash basis of the
whole worlds business and credit has
been estimated by competent experts al
seven or eight billion dollars, of which
about nall IS gold and half silver The
estimate is probably too large, as it prob
ably includes the boards Of silver in
private hands, principally among the
peoples OF Asia, and the great deposits
in the United States treasury and in
banks Of coined silver, which, being treat
ed simply as merchandise, and not used
as RESERVE for the payment Of even
those securities which were payable in
silver coin, have been of no service what.
ever in sustaining the fabric of credit.
Only the COINS used in providing for &C
tual payments, and the reserves, really
treated as such that is, appropriated to
the actual payment of notes, bills &c.
coming due and presented for payment,
are to be considered as the cash basis OF
the business and credit of the commercial
world. The boards, whether in India OF
in the United States, and the non-used
reserves are as effectually out of the COM
mereial structure, as if they had been
conjured back into the veins under
ground, whence they have been labori-
OuSly extracted.
To see how high and wide an edifice of
productive credit may be maintained on
so slight foundation, we have only to
study the monetary system of such a
highly developed people as the British
nation. The note circulation of the Bank
of England rests for fixed amount upon
the credit of the government, it is an old
debt of the government to the bank re-
newed from year to year, and the balance
of gold in reserve either coined or in bars.
The other banks, city and country, keep
accounts with the Bank of England and
a reserve of coin to meet their drafts and
checks But the Bank Of England's gold
reserve is the visible basis of the whole
peoples capital, any considerable dimin-
ut1on OF Which causes serious commercial
disturbance.
The merchants use the bills of the ma
tional, the country and the private banks
in making their exchanges and a larger
volume OF checks and drafts in the same
institutions for the same purpose. and
when the enormous trade of England in
products Of industry, in the purchase of
lands. of government and corporate Sc
curities, for Investment in commercial
and industrial enterprises is considered
1t is seen how small specie foundation
so ponderOuS a structure.
The coin reserve of the United States is
the fund from which the whole national
debt, interest bearing and due on de-
mand, must be paid, an enormously dis
aggregate The reserves in
the banks are never so large as the liza
bllity of the government on its bonds for
the ultimate redemption of the banks
own Indebtedness to it's depositors and
bill holders, and these reserves are liable
to be drawn out any day by change in
the rates of foreign exchange. The
banks have kept their reserves by divert
ing to the United States tr easury an alb
normal and unhealthy demand for it's
reserves of gold.
When the available cash is looked for
we see that it is much less adequate in
our system than in that of England
Now the principal reason, if not the
sole reason OF the panic of 1898 continued
through 1894, if not up to date, with it's
tragic record of failures, depreciation in
real and personal property, railway
wreckage, arrested enterprise and growth,
was the weakening of the reserve. upon
which business credit was founded The
President and his Secretary of the Treas
ury, who had in hand more than
$500, 600, 900 of silver dollars and bullion
that could be coined into silver dollars
and so made legal coin money, under the
laws OF Congress- an effectual instrument
OF purchase and payment, refused to use
1T as a part of the treasury reserve in paw
ment OF such presented notes as were due
IN coin, or even in payment OF those Sc
curlties which were due in silver coin,
and so discredited all the silver currency
Of the country not in actual circulation
by making it in the banks and among
bankers as well as in the treasury COM
pletely unavailable as a reserve, a mere
hoard of unstable merchandise. The
great and important function of all
coined money is, as have shown, it's
function as reserve, its other services
being easily dispensed with When it was
refused service in that capacity by both
the government and the banks, the loss,
panic and disaster might have been fore
seen.
The panic was more acute, and the dis
aster more destructive, because we had
not in our monetary system the conser-
vative resources, which the Bank of Eng
land has found effectual in all but three
great crises to check the outflow of its
gold, viz, a prompt raising of the rates
of discount The expedients, which
when their houses are on fire, are proven
bal, but would it be believed that our
statesmen and flnanciers &C.
5ually proposed in the emergency their
own improvidence had brought on, to
pay off and retire the greenbacks-of
course with SO much more gold? If it
took the sale of $165, 600, 600 of bonds to
furnish the treasury with the pittance
that has been added to the gold reserve.
hoM many would require to be sold to get
$500, 900, 600 to pay off the old greenbacks
alone? A generous bag full Of standard
sileyr dollars, with the loan of a wheel
barrow to take it away would have con
mitigated the impetuosity of
United States security holders to tres
pass upon the healthy integrity of the
treasury reserve
Mr.. Carlisle is reported to have excused
himself to his fellow citizens by saving
le had no silver of his own to pay with.
It was all held as special deposit to re-
ieen outstanding silver certifcates-a
most sugg estive confession that his silver
was in active circulation at par
n the most safe and normal way posi-
lie. But if 500, 10000 gold was safe
eserye for 1920, 900, 600 of treasury notes
me dollar of coin for more than three
lollars of paper-and so Congress had
instructed him why was dollar fer dollar
needed as a reserve for the silver certifi-
,ates, and if his silver was pledged to
hem, why did he not use it in redeem
ng the pledge?
G. T. TALBOT.