The Providence news. (Providence [R.I.]) 1891-1906, 1896-07-01

"
Mount Vernon, N. Y, May 60
This is a good example OF an American
citizen who does not stop to think. Un-
less all American citizens stop to think
there is going to be great deal OF trou-
BILE In this country.
II this citizen had stopped to think he
would have recognized-for he is plainly
an intelligent, although q needless citi-
zen-that the government OF the, United
States has a function which the cities
and the States that get along without
gold reserves do not possess. That is,
to provide safe and sufficient currency
as a medium OF exchange for the citizens
of the country. What is called the ba-
sis of that currency--that is to say, a
certain amount Of standard money, good
the. world over with the same face and
intrinsic value-must be constantly main
tanned. The government must, in short,
Re able 10 redeem at a moments notice
every one of the promissory notes which
ii has put afioat for it's citizens to do
business with. For this purpose, and
not to pay its expenses to supply 1t with
pocket money, 1t is obliged to keep its
gold reserve.
Now, under normal Conditions there Is
no.difficulty in keeping that reserve. For
IL years, from 1879 till 1892, the average
American citizen outside of banks and
brokers' offices aid not know that the
government had O gold reserve any more
than a man with a sound digestion knows
that he has q stomach. This was be-
cause the reserve was maintained out OF
tho governments ample revenue. 1t was
maintained the more easily because prior
to 1890 the promissory notes of the gov
ernment, payable Il, gold-the greenbacks
were fixed and limited In amount SO
that no one could doubt the governments
ability to meet its obligations. When in
that year the Sherman act was passed,
adding "a. .0O0,0 900 a month to the govern.
ment's gold liabilities while adding moth
ing to Its gold stock, doubts began to be
felt of the continuance of the govern
ment,s ability to redeem its promises. So
gold ceased TO come to the treasury. But
this would have made little difference had
the notes paid into the treasury even in
exchange for gold been allowed to remain
there. As long as a note was In the
treasury 1t was as good as gold, for ii was
a gold obligation extinguished. When
the superhuous currency of the country
was thus locked I'D and deprived OF its
depicting power no harm could come to
the reserve, simply because there would
be no further means of lowering it. 1t
was hoped and expected, OF course, that
the increasing business OF the country,
with its natural growth. would absorb
the extra n, 600, 600 month provided by
the Sherman act.
Under these circumstances came the
election OF 1892. Imports fell off, as i'm
porters- believed that lower rates Of duty
would be enacted by the successful party,
according to it's promise. Revenue fell off
in consequence, and long before the
promised act was passed the deficit began
eating into the gold reserve. Between
the decrease OF imports, due to the expec-
teton OF the act-the present tariff-and
the decrease in duties fixed by the sche-
dulles of the act, the encroachments up to
last December of that deficit on the gold
stock amounted to Sl35, 600, 600.
But this Is by no means all the harm
that came to the gold reserve by reason
of the election OF 1892. Business, in the
first place, stopped in panic-stricken
realization of the fact that system which
endured during the active manhood of
all men living was about to be violently
overthrown. Consequently the absorp-
tion of the Sherman notes ceased.
There was only one use for them. That
was to facilitate the shipment OF gold to
Europe. A tremendous business of this
sort sprsng up. 1t amounted in Febru-
srv, 1895, to 10, 00O, 000 in one day. The
New York agents OF foreign houses made
thousands in commissions by gathering
up this idle currency In the stagnant
market and presenting ii for redemption
at the United States Treasury. Nor was
this all. Under the new tariff tremen-
dous iuportations of some lines of
goods, woolens in particular, set in.
With light duties they yielded not enough
OF revenue to the government TO make
up the deficit. But payment for them
added to the drain of gold from the coun.
try. They had TO be settled for in gold
or its equivalent. foreign exchange,
drafts on London. When foreign ex-
change was "high," as II was continu-
ously last summer-when, In other
words, 1t cost penny more in the
pound TO buy a draft--they were settled
for in gold. This, to large extent,
came out OF the gold reserve also. Against
all these calls the government could do
naught but constantly replete its stock
| oy loans. III II had not done so IL would
have had to defraud its creditors by
paying them in silver dollars worth fifty
| two Cents each for notes for which they
hal given 100 cents worth of goods or
| labor. That its embarrassments were due
| TO it's own ill-judgment, principally in
! tho passage OF the present tariff law,
| absolved II in no degree from the duty
of maintaining the pubic credit and the
| bases OF trivaie values.
One csure for this depletion has been
removed in the repeal OF tho sherman
| purchase act. The other, and immessnr.
ably the chief cause, remains in the
| Wilson -Gorman tariff act. The repeal OF
that law, which we hope 10 SEQ acoom-