The times. [volume] (Richmond, Va.) 1890-1903, 1895-02-03
though amounts may differ. the govern

though amounts may differ. the govern
ing principle is the same as IT was men,
Now this disproportion between cash
and Immediate Iiabilities-immense. when
I, is considered that the Liabilities repre-
sent the demands OF nation ana much
OF the outside world-has three tunes
brought the Bank OF England TO great
straits. In ls47 In 1851 and in 1866 the
Government has been forced TO suspend
the operation or the act of 1874 and 10
authorize the banking department or the
bank TO dip its hand into the issue Depart
ment and take It's money TO lend out, or
10 pay out on its Liabilities. These have
not been occasions. as is generally and
enormously supposed, in which the Gov
eminent has authorized the bank 10 sus-
pend specie payments. 1t has never au-
tnorized these since the act Of 1874 was
passed. But they are cases in which
the operation OF that act was suspended,
and the whole theory upon which British
finance is said TO rest was suspended or
overthrown.
In the fifty years that this act has OPP
Grated, II has given the English people
entire satisfaction. But that satisfaction
has grown out OF the fact that In perlious
times the Government has been forced 10
nullify the law. The balance wneei III
the English financial system CONSISTS
then. in an accepted principle hat there
IS an authority in the State which Is
above the law and is capable OF arrest
ing the operation OF the law at It's pleas
IRE. The system would have broken
down three times In those fifty years
without that principle.
Attractive, then, as the English system
Is. that fact makes it impossible that we
can ever adopt 1t. In a republic, or
which the essential idea. OF course, is
that all men must obey the law, the
proposition cannot for a moment be en-
tertained that any person or body of per-
sons IS to be clothed with authority TO
disobey the law.
The experience of Great Britain then
IN the three crises OF 1877, 1857 and 1866
teaches us that Il national currency That
spreads all over a nation and IS the same
at all points, is inevitably liable to pc
RODS Of panic, which must play havoc
with everything, unless there is some gov
ernmental power to interpose and arrest
its course. Our own panic OF 1913 teach
IS US that our own national currency is
liable 10 exactly the same misfortune, ana
the destructive panic of 1898 is equally an
illustration of the same idea, for though
that was not panic that arose from dis
trust OF a national paper currency 1t
was the same thing in substance, since
it expressed distrust OF the national sill
yer coinage, which was, so far as this
matter is concerned. the same thing as
national paper currency, as the Govern
ment was compelled TO keep it up to a
parity with the gold coinage, and the
panic was an expression of the worlds
dlstrust of its ability to do this.
The reason for This is perfectly plain.
In the case Of d national currency, what
ever Will excite the alarm OF man In
Maine will at the same moment excite
the alarm of a man in Texas and of one
in California. Whenever an alarming
thing happens. then. we find the entire
body Of the American people taking fright
all at the same moment. and this is what
we call a national panic. BY having the
English system of a national currency
therefore. we subject ourselves TO all It's
perils. but we are utterly unable 70 pro-
Il
uses.
This ought to open the way very clear
" 10 the necessity for our returning to
the plan Of our Constitution, under which
we lived 50 prosperously prior to the war
If the Constitution were only allowed to
operate we should have no paper cur
rency as good in one State as 1t is in
another" and subject, therefore, TO dis
astrous national panics, but we should
have State-bank currency that stayed in
the state of its issue, to serve the uses Of
the people OF that state. When a period
of panic occurred, 1t would be confined
to the state where it originated. If peo-
pie began to distrust the banks OF Nr-
ginia and made a run on them, 1t would
not in the least disturb the condition. of
affairs in Maryland. Under such sys-
TEN anything like panic that operated all
over the United States would be impossi-
BILE. 10 have a perfect money system,
then, that will give all men all the imam
cial facilities that their means entite them
to all that we need is to have gold coin
alone as the money OF the country ana
then 70 allow all the States To charter
banks upon such terms as suits them.
These will by degrees furnish all the peo-
pie OF all the States all the currency that
they need, and no more, and when panics
come they Will be confined to one state
at a time. But whilst our paper curren-
cy is Government currency, whether OF
national banks or of the Government, We
must always be liable to disastrous pan
les, without the English or any other
method for arresung them IN their de-
structive course.
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SHOULD WAGES BIZ FIXED BY TIE
LEGI>IAI IiiB?