Martinsburg herald. [volume] (Martinsburg, W. Va.) 1881-1920, 1896-01-18
NEEDED CHANGES.
TO GIVE AMERICA COMMERCIAL AND
FINANCIAL SUPREMACY.

~ Retire Our Greenbacks and Stop Gov
eminent Banking; {2) Put Quietus ON
the Silver Craze-M. Leroy Beaulieu's
Powerful Argument on These Two Cues
tions.
Paul Leroy -Beaulieu has an article in
the December Forum entitled sCondi-
tons For American Commercial and FL
nancial Supremacy. This great writer
and authority on economic subjects says
that but two things are necessary to in
sure American commercial and financial
supremacy-(1) the withdrawal of the
government from the banking business
and ca firm declaration In favor of a
gold standard and against bimetallism-
that is, against further special fayors to
silver. His discussion ON both of these
points is clear and convincing. Taking
up point one, he finds that while other
great countries have issued or caused to
be issued considerable amounts of paper
money during critical periods ours is
the first to refuse to take up and cancel
its notes as soon as possible This was
great and vital error which we did not
repair entirely when we resumed specie
payments in 1879. "A government, !"
he says, lis i'll fitted and i'll equipped
to maintain paper money in circulation,
even if the paper is redeemable in spe-
Gle. The redemption done is in itself
great trouble and continual embarrass-
ment. " He thinks that the function
aries of government 'twho must act by
fixed and always identical rules" can
not make flexible and safe currency
out Of government paper. The greatest
inconvenience and danger from it is in
regard to the specie reserve which every
government must keep on hand either
in public or private banks.
If the government were out Of the
banking business and private banks
were left to deal with the expectation
Of gold problem they would, when
harmful expectation begins, raise the
rate of discount until such expectation is
checked. This is what European banks
do in similar emergencies. When the
gold movement is controlled in this
way, it produces "only a light and
momentary embarrassment, not to be
compared with the shock and the dis
credit resulting from an outgo of gold
the end of which cannot be calculated "
Continuing ON this point M. Leroy
Beaulieu says:
'In most countries the
banks, either public or private, main
tain the specie reserve. Obliged to pay
their notes in specie oil demand, it is
their permanent interest that the specie
reserve shall not be exhausted. More
over, they have very effectual means for
protecting it. Gold must always be fur
nished for export, otherwise business
with other countries will be restricted
and at times rendered impossible, and
the credit of the country will be inn
paired. But when gold exports become
too extensive, and particularly when
they seem caused by speculative move
ment, and threaten the metallic reserve
of the country, the banks have an excel
lent means of obviating and removing
the eyil--an advance in the rate of dis
count
"An advance in the money rate in
order to arrest the outgo of specie, par
tieularly gold, is sure to succeed if the
| government does not disturb the natural
course of operations by artificial meas
ures. Such an advance checks the inn
ports Of merchandise, and, on the other
hand, stimulates exports. 1t draws cap
ital from abroad to seek the better re-
turns which are the consequence of this
advance. 1t induces certain number
of the holders of public and other Sc
curities to part with them and influences
foreign capitalists to purchase them.
''Thus whenever the banks, public or
private, are charged with the protection
of the metallic reserve of the country,
they accomplish it with certainty by
this sovereign method of raising the
money rate. = On the contrary,
when the state issues the fiduciary cur
rency, as in the United States, it has no
real means Of protecting the metallic re-
serve. 1t cannot raise the discount rate,
for it does not discount commercial pa
| per. 1t is under obligation to pay gold
/ to all who demand it, without any pow
er to regulate or reduce the demand. 1t
is absolutely disarmed. Its sole resource
is to secure specie by loans abroad But
as these loans have no effect ON the gen.
eral current of business, their proceeds