The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-02-06
AN ANALYSIS ANALYZED.

To THE EDITOR OF THE HERALD:-Judge r.
| N. Widney's defense of the proposition to buy
and lock up $500, 0oO, 900 of gold to be used In
| redeeming United States notes when the ma
| ton is ready to retire from business. has just
been called to my attention. He proposes to
| lock the gold up in the treasury and throw the
| key away, '1eaving the gold there as a basis Of
| confidence until such time as the interests OF
the people require its redemption" and de-
cIares this proposition to be both sound and
sensible" He then says: There are two
kinds of redemption. current or on demand
and final redemption"
Redemption on demand is Characterised as a
Financial lie and absurdity,' the meaning of
which he illustrates by the case of borrower
on demand, who. he very properly says would
be swindled if the lender should Immediately
demand the payment of the sum borrowed.
He then further says:
NOW II tho United States issued notes that
supply circulating medium, it must be that
such medium is needed for public business.
If the next day after 1t is issued it is called In
or redeemed, then the circulating medium Is
destroyed or contracted. 8. Either
we do not need the issue at all or VIC should
keep it out until the use or demand for it
ceases. But it is issued to meet the business
wants of the people, and the use for it will not
cease until the people retire from business.
This will be when the nation breaks up"
Judge Widney's analysis of redemption as
applied to currency is faulty. The redemption
of the government note means the fulillment
OF the promise to pay which the note hears
upon its face. When a note is once paid that
is its final REDEEM ption, whether the payment
takes place one day after its issue or hun
dred years after. The payment Of the note by
the maker Of it is the final redemption of It,
The note may be re-issued, but it is then new
mt To oil int fa Nd Eino1
demption is payment by the issuing agent.
There is another kinn of redemption. but
Judge Widney has not pointed 1t out. When
the holder of a greenback exchanges 1t for
groceries, that is the redemption of that note
as far as he is concerned The payment of the
same note by the grocer to his clerk for wages
is its redemption far as he is concerned.
And so the same note may pass from hand to
hand for years without once being presented
to the government for final redemption, which
would be either the payment Of it in coin or
the receipt of it by the government for debts
due to itself. This might be called current re-
demption, this course OF The greenback in Or
binary exchange and before 1t reaches the is
suing agent for final redemption. And a large
volume OF money can be kept at par with coin
with no other redemption than this that is i'm
piled in its passage from hand to hand and its
receipt by the government due for debts to it
self.
The kind of redemption which Judge Wild
ney calls final redemption is in fact no redemp-
ton at ALL He proposes to lock up 5000, O00,-
600 Of gold as "a basis of confidence" to be
used for redemption purposes ''when the peo-
pie retire from business, which, he says will
be when the nation breaks up"
But in the history Of mankind nations do
not "retire from business or "break up" after
the style of merchant or bank corporation.
When nation retires from business 1t does SO
in the throes OF revolution. 1t holds no clear
ance or auction sale of stock, nor does it call
in loans or liquidate liabilities Nations do
not retire from business until they have to,
and when they have to the redemption of cur
rency is not considered. At such times accu-
mutations of gold go to those who can capture
them aud carry them away. What sort of a
basis OF confidence would it be that could ouly
be realized upon under the conditions of a rev.
olution? Judge Widuey's $200,000.OOO Of
gold might just we'll be sunk in midocean
at once as to be locked up to await the catas-
trophe of national dissolution. Better far
better let Europe take that gold and use it to
buy our surplus products, or, as banker St
John says, make it the vehicle OF carrying
prosperity to us. -s,a
Judge Widney speaks Of this locked-up gold
as "basis of confidence" What is confidence
as applied to currency but the belief of the
no der of the mole that 1t will be redeemed or
paid? Will it inspire this belief to place the
means OF payment where it will never be
available?
Instead of redemption on demand being a lie
or an absurdity, it is the only kind of re-
demption there can be for currency. If this
redemption is to be in gold, then gold enough
to effect snch redemption must be kept and
used for that purpose. But redemption in coin
will be much easier, because that kind of re-
demption adds the stock OF silver to the money
OF ultimate redemption. LIS.
Los Angeles, February 9Th.