Birmingham state herald., 1895-11-01
EXPANSION AND CONTRACTION.

EXPANslOH AND CONThACI1OH. F.
 It is easy to understand what the gold standard advocates mean when they say that the government must go out of the banking business. and must therefore fund into bonds all the national treasury notes, greenbacks and what not in order to get them out of the way and prevent drain upon the gold reserve. But it is not so easy to understand what they mean when they propose national bank note currency which they expand or con- tract according to the necessities of trade They offer something as a substi- ute for the grenbacks which appear to us to possess all the vicieusness of the greenback and none of it's stability, and which is much less valuable as g. cur rency. In what respect should bank note circulation contract or expand? If it could be contracted such contraction would be the acts of the banks, and to give the banks power to contract the currency of the people at will would be clothing them with authority to depress and inhate prices whenever it might suit their interest or caprice In this connec- tion we refer again to the address of Governor Merriam before the bank con- vention at Atlanta. Governor Merriam is a Republican, eminent as New Eng land statesman and more eminent as banker. The Governor proposes that the greenbacks shall be superseded by bank currency "of an elastic kind" based upon money and not upon government bonds. What kind of money he does not say. He is opposed to the present bank system as being based upon a fallacy. In this view that very able paper, The Nation, agrees with him. It says: We have learned, or ought to have learned by this time, that currency to be really serviceable must expand and contract simultaneously with the expansion and contraction of business, and that neither the greenbacks nor the national bank notes do this or ever did" Again 1t says: "As Governor Merriam showed in his speech, this is not an elastic currency. We may have a secure currency under the present system, but we cannot have one which responds to the public de- mand."
 If then the issue of treasury notes by the government as currency does not meet the public demand and if the pres ent national bank notes based upon gov ernment bonds as the very best security does not meet the public demand, we would like to know what kind of cur rency is to meet that demand. Here we are all at sea. MT. Carlisle presents one scheme, the Baltimore bankers present another, the Bank of England is pointed to by some as an exampler worthy of imitation and still others point to the Bank of France. Then we are advised to adopt the Scotch plan or the Canadian plan. Everybody appears to have plan of his own and nobody seems to offer a matured plan. The cry of sound money" is lost in the new cry for paper curren- cy possessed of the magic power of con- traction and expansion at times and places and by men or things unspecified and unknown. The people can under- stand why a currency should expand with the expansion of the country in wealth and population, that new and more banks should be esta blished and the volume of money should keep pace with the need for it's use, but nobody can un- derStand why a bank or an individual like the late Jay Gould should have the power to corner the gold or money market and in twelve hours, by contracting the currency, bring ruin upon myriads of honest, hard-working people. An india rubber currency subject to the will or caprice of banks or even of congress Is not what the people want. They want free banks, with the power to issue notes redeema ble in gold and silver and they want these banks based upon securities which are strong enough to be quoted on the New York exchange lists. In the meantime they see no necessity for the retirement of the greenbacks. That cur rency is sound enough for the people, and in their opinion is just as good as a bank note based upon the honor of the govern ment. If the banks, under a free bank ing system, stand ready to redeem their notes in gold and silver and if our rev. enues were equal to our expenses, we would find no run upon the gold reserve of the treasury. Indeed, we would find no need of keeping that reserve locked up and idle. We are paying interest on that idle money at the rate of about $4,- 000000 a year-enough to build us four first-class warships each year, with which we might meet the aggressions of Great Britain after a time.
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