St. Paul daily globe., 1895-04-17
ny THE LIGHT OF THE PAST.

IN THE LiGhI OF 1hC
Let us assume that this monetary
craze runs on to its intended end ana
congress enlacts a law permitting any
owner of silver bullion to take it to
any mint and have it coined free of
charge into standard dollars contain
ing 371A grains of fine silver, ana
that it makes these dollars a legal
tender for all debts public and
private In the light of all the ex-
perience of similar attempts what
is certain to result?
Gold would inevitably at once
cease to circulate in the currency
for the very simple reason that no
man having gold, solvent every
where, would pay it out when he
could get another dollar worth less
because solvent only locally. He
would be only obeying that very hu-
man instinct to keep the best and
get rid of the poorest which, in
finance, is formulated in Gresham
law, that the cheap or debased
money always drives out of circula-
tion the best or solvent money.
Then the legal tender side OF the
law would come into play. NO
man would pay his debts in gold,
but in the cheaper silver and paper
money, acting both under the I'M
mise that finds expression in Gresh-
em's law and on the less honest i'm
pulse to scale down his debt.
But the legal tender law only ap-
niles to debts contracted. 1t does
not and cannot oblige owners 10
part with their property Tor the
money having only the support OF
the arbitrary law. Immediately
then there would result a parting
of price scales, the seller asking
one price if paid in solvent money
and a larger one in the money sup
ported only by governmental oe-
cree. Forthwith there would arise d
clamor against these money
SHARKS" Congress would be Appeared
10 to pass a yet more drastic law
obIiging sellers to take the legallzed
money at par. If yielded to the
courts would probably hold 1t uncon-
their property without due course
of law. If they held it valid men
would refuse to sell, trade Wouio
ston and the crash would come
Meanwhile, with every effort to
force the cheaper money into cir
culation. the lower it's purchasing
capacity would fall, the cheaper 1t
would become.
Legal tender acts are of no value
whatever. When people have con-
fidence in all the forms of currency,
that token money will be held good
and that paper money will be re-
deemed in money, these various SUBJ
stitutes for money float with the
money universally solvent. Men
take paper in payment of wares or
debts Unfortunately. But when
confidence becomes shaken by
doubts of the continued solVency OF
any one or more of the substitutes
then the legal tender quality be-
comes apparent in accentuating the
difference in the forms Of money
when used to buy or to pay debts
with. 1t becomes the ready imple-
ment of dishonesty only, and it is
never anything else. Gold needs no
such support. Silver did not until
after 1873. Its backing of the green
backs was ineffective to maintain
them at a parity That was only
restored when they were redeemed
in money.
This forecast of the outcome of the
present monetary delusion is not
mere Surmise. 1t is based on the
repeated experience Of other coun-
tries as we'll as that of our own. an
experience especially rich in this
country in the period between the
close of the revolution and the
adoption of the constitution. No one
can read the financial history of
those days without being struck by
the similarity of argument then and
during the greenback craze and in
the present silver craze. The indie
pendent states then, excepting Con-
necticut and Delaware, made the
same experiment now urged, except
that they printed their notes on pa
per instead Of, as now eNtravagant-
ly proposed, on silver. And the de-
preciating effect of legal tender acts
was completely demonstrated.
A sketch of it's operations may not
be waste of time now. Georgia
prohibited any planter or merchant
from exporting any produce until he
made affidavit that he had never
refused the states scrip in payment
Of it, and the scrip fell faster than
ever. Rhode Island loaned state
notes to farmers on mortgages at
half the farm value. The notes fell
i'm value at once; that is, prices of
commodities rose, when goods were
to be paid in them. The farmers
controlling the legislature promptly
enacted law fining a man $500 and
depriving him of his suffrage if he
refused to take the paper as the
equivalent Of gold. A butcher re-
fusing, he was arrested and the su-
preme court, elected by the legisla-
ture, held the force act void. A
special session Of the legislature was
convened and removed the judges.
In addition a more stringent force
act was proposed disfranchising and
making Ineligible to office every man
who would not make oath of his
willingness to take the money at
par. The notes had fallen to sixteen
cents on the dollar. At this ex-
treme Of tyranny. the whole fabric
fell. Legal tender was carried to it's
farthest limit, and broke down of
its own weight. Human nature, it's
instinct of self-preservation impel-
ling 1T to refuse to exchange the pro-
ducts of its labor for less than what
1T considered it's value, triumphed,
and law IN its last logical ex-
preston became impotent.
THE SUMS PRECEDENT,