Shenandoah herald. [volume] (Woodstock, Va.) 1865-1974, 1896-01-31

great countries nave issued or caused 10
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 a
great and vital error which we did not
repair entirely when we resumed specie
payments in 1879. "a government, >"
he says, "is i'll fitted and i'll equipped
to maintain paper money in circulation,
even if the paper is redeemable in spe-
Gle Tho redemption done is in itself a
great trouble and a continual embarrass-
ment." He thinks that the function
aries Of q government "who must act by
fixed and always identical rules, can
not make a flexible and safe currency
out Of government paper. The greatest
inconvenience and danger from it is in
regard to tho 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 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 NJ. Leroy
Beauheu says:
In most countries the
banks, either public or private, main
tain the specie reserve. Obliged to pay
their notes in specie on demand, it IS
their permanent interest that the specie
reserve shall not be exhausted. More
over, they have very eifectual means for
protecting it. Gold must always be fur
nished for export, otherwise business
with other countries will bo restricted
and at times rendered impossible, and
the credit Of the country will be i'm
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 CIVILIAN advance in tho rate Of dis
count. $50
"An advance in the money rate in
order to arrest the outgo Of specie, par
ticularly 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 i'm
ports Of merchandise, and, on the other
hand, stimulates experts. 1t draws cap
itai from abroad TO seek the better re-
turns which are the cOnse ,cHsn2o Of this
advance. 1t induces certain nunNs2r
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 tiduciary cur
rency, as in the United States, ii has no
real means of protecting the metallic re-
serve. It 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 Oh the gen.
eral current Of business, their proceeds
are soon exhausted and they must be re-
newed. This incapacity to protect its re-
serve Is the chief reason why state Is
not fitted TO issue flduoiary money. "
The second part Of NJ. Leroy Beau
lieu's article is headed "Bimetallism.
He discusses our silver question in a
mastery way. Because Of general
movement toward gold and away from
silver and the great decline in the price |
Of silver, he concludes that "the diff
culties in the way Of the restoration CT |
silver are infinitely greater than they |
were 90 years, or ten years, or five |
years since" He believes that bimetal-
ism is practically thing Of the past,
and that all governments Of Europe are
satisfied with the "pro-eminence Of gold
and the secondary and circumscribed
function Of silver" He attributes the
occasional bimetallic utterances Of gov
eminent officials in Europe to their
habit Of avoiding offending CT definite
ly estranging any group Of voters, even
one Of slight importance. "
In conclusion he says:
"As soon as the capitalists, small and
great, Of Europe shall know that the
United States have definitely adopted
the gold standard and relegated silver
to subordinate monetary role the saw
ings of western Europe will flow toward
that country Freed form the fear that
he may some day be repaid in depreciat-
ed money, every person with savings in
all Europe will be happy to find a re-
turn of 81 to per cent in good Amer
lean securities, and Of to 81 per cent
in the shares of we'll established Ameri-
can enterprises. Then the immense ter
ritory Of the United States will find its
vast resources rapidly and completely
put in the way Of exploitation. The
of notes or paper money
issued by the state. the definite adop
ton Of gold as the sole standard-these
arc the two necessary conditions OH
which the United States can secure a
financial position as important as that
they now hold in agriculture and in in
iustry. Or these two conditions they
,an some day approach and equal Great
Britain as financial power. If, on the
contrary, they persist in their system Of
government paper money and in the
rehabilitation Of silver, their indus
rial and commercial development alike
will be trammeled, and they will I'M
lergo marked and permanent experiences
il financial weakness.