The Monitor-register., 1896-07-03

hence the measure of value, but in gov.
ernmental supervision and regulation of
granting of credits.
True, so long as gold payments were
maintained by the banks after surrender
by the government to the banks of the
right to Issue paper money, issues of
money by the banks would be controlled
to some extent by the Gu antity of gold
in their vaults; but while necessity of
redeeming their paper in gold would
place a limit to expansion, there would
be no limit to contraction.
The first result of handing over to the
banks the power to issue paper money in
| place of h government would be to
cause a contraction of the volume of
paper money, or suspension of specie
payments. To sustain the present vol
ume of paper on the narrow gold basis
strains the of the government
for the banks to support the same vol
ume of money would be impossible
They would have to so contract the vol.
ume of money as to cause prices to fall
so low that foreigners would take com
modities in preference to gold in payment
for Indebtedness; or they would have to
supply the gold for export. as the gov
eminent has during the past few years,
which demand, if unchecked, would soon
force them to suspend gold payments.
And suspension of gold payments
would prove anything but Objectionable
to them, for with the power to issue
paper money in their own hands, and
gold payments suspended, there would
be no limit to arbitrary expansion and
contraction of their issues, as they saw
fit to raise or depress prices. The pro.
ducing classes would be absolute ely at
their mercy. and they would be in posi-
ton to reap the profits of industry.
We are asked to surrender the control
over the measure of value to the banks,
to place the producing classes at the
mercy of speculative bank managers.
and for what? Simply, if we can trust
the assertions of the gold monometallists,
of a class that urged silver monometall-
ism when they feared a depreciation of
gold as the result of the discovery of
| gold in California and Australia, and
now urge gold monometallism, whose
| first and foremost tenet is that the dear.
est money is the best money, and who
are eontractionists on general principles,
| because the treasury has no means of
| protecting its gold reserve.
They tell us the Bank of England can
control and check any export of gold, if
need be, and stop at any time a drain on
it specie reserve, simply by raising the
rate of discount. The United States
Treasury, on the other hand, they tell us,
has no real means of protecting its gold
reserve. 1t does not discount CONNER.
cial paper, therefore it cannot raise the
discount rate, and consequently is pow
erless to check the drain on the gold
reserve.
Gold is exported because our foreign
creditors demand gold in payment, and
for no other reason. We hear from time
to time that bad money drives out good
money, that it is our silver circulation
that causes the export of gold. The
nero existence of money of less commod-
ity value in our circulation, as silver is at
present compared with gold, would not
of itself drive out gold, the dearer metal.
We are constantly mourning debts
abroad on account of interest on our
foreign debt; on account of services rem
dered by foreign ship owners in carrying
our foreign trade; on account of the ex
penses of Americans abroad, and on
account OF our purchases of merchandise
made abroad, etc. And these debts must
be paid either by export Of merchandise,
or gold and silver, or they may be en-
porarily put off by our creditors accept
ing American government, railroad and
other securities ON which interest must
be paid.
In payment of our indebtedness we
have only to offer our commodities, the
produce of our soil and mines and fac.
tories, gold or our securities. Oar for.
eign creditors will take payment in that
which is most attractive. When gold
goes it simply means that our foreign
creditors prefer gold in payment to our
commodities at such prices as we see fiji
to sell them, or to our securities. They
prefer gold when, and only when, they
can buy with it more elsewhere than in
America.
The export of gold contracts our vol
ume of money and depresses prices, and
under the gold standard must continue
until prices have fallen until they are
lower here than in other quarters of the
globe, from which our European credi-
tors may draw their supplies. The only
way to check the export of gold and thus
protect the gold reserve, is to make it to
the advantage of our creditors to buy our
commodities, rather than take our gold.
And how are we to make our prices
attractive? Gold monometallists tell us
there is only q way-contraet our cur
rency and depress prices. Surrender to
the banks the sovereign power to issue
money, the exercise of which. on behalf
of the government, they style a banking
business for which the Treasury is un
suited; and then they tell us the banks
can protect their gold by raising the
rates Of discount. And raising the rates
of discount means what Pa contraction
of credits, of the money In circulation,
and a fall in prices.
By raising the rates of discount high
enough they could, without fail, SO con-
tract the currency and reduce prices as
to check imports, stimulate exports, in
duce the loaning of money by foreigners
uishino RI faEo advorc. A.. L:-l