The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1896-09-26
A REPLY TO A BANKER

business man of Los Angeles in reply to
certain objections to the free coinage of
silver raised by prominent banker Of
this city. and is such a valuable contri-
button to the question that The Herald
gives it prominent publicity:
1 received your letter on the 23d in
slant. enclosing memorandum Of five
points, regarding the silver question,
and asking answers thereto.
Your first point reads, "There Is not a
free coinage country that is not on a sill
yer basis" This is true and the free
coinage of silver. in the United States,
would for time, put US upon a silver
basis, though, in my opinion, the value
in gold. Of silver bullion, would be very
much higher from the start, than the
present market price, and would rapid
ly rise owing to the enormous quantity
of silver which would be absorbed into
the trade of this great nation. That
other f1rst-class nations would join us
after time, appears to me inevitable.
Your second point-"there is not gold
standard country that does not use sill
yer as money along with gold" Yes, but
only as token money, and for small
change.
Third. "There is not silver standard
country that uses any gold along with
silver" No nation with as vast foreign
and domestic commerce as this country
is on a silver basis. The quantity of sill
yer which Mexico, for instance, can take
into her trade, is insignificant in COM
parison with that which we would need,
with our minis open. The small demand
for silver created by the very few minis
now open to it, is, of course, insufficient
to raise the value of silver to anything
like that of gold and under present con-
ditions it would be absurd to expect sill
yer and gold to circulate in company,
except where a limited quantity is kept
at par by being practically exchangeable
for gold.
Your fourth and fifth propositions are
answered by the fact that no great COM
mercial nations are now using the silver
standard, but while the per capita
money circulation of this country is
greater than that of free silver coun-
tries, our trade is proportionately very
much greater and more active but the
amount of money in circulation here is
yet altogether too small for the needs of
the industries, which are crippled for
wand Of ready money, though they have
abundant valuable assets.
You are an experienced banker, and
know that under our much eulogized
gold standard, the amount of money in
circulation Is so small compared with
the needs of business, that an unsafe
percentage of trade is done upon credit.
You know there are plenty of your GUS
toners who are abundantly solvent, but
whom you cannot supply with the
money they need, to conduct their BUSH
ness in sufficient volume, to give them
fair return after paying the fixed
operating expenses, which must be met
as long as their dtlrs are open, whether
business is good or not. Modern inven-
lions and other causes have so vastly
increased the commerce Of the world
that an enormous proportion of trade is
necessarily conducted upon credit. That
credit is based upon too small aquan-
tity Of actual money, and when a breath
of fear blows away the confidence which
buoys up credit, money lenders all call
for their gold at once, and down goes
credit, and millions are thrown out of
employment. You had an instance of
this not long ago, when, during sense
less panic, a widespread suspicion
against your own substantial and con-
servatively managed bank caused your
frightened depositors to withdraw an
enormous amount of money in one day
and made you reluctantly close your
doors.
7 nnf oI1inn a : yx-1o
fess to believe that silver would go tc
par with gold, III thirty seconds after the
passage of free coinage measure, and
do not think free coinage could be re-
sumed without violent unsettling of
financial conditions, which would at
first be disastrous in it's effects in many
quarters, but I think it better to meet
that condition courageously, and have
it over, for the ultimate lasting good of
the United States and the commercial
world. The longer we wait for interna-
tional agreement, the lower silver will
go, as measured with gold, until inter-
national agreement will become impos-
sible. Unless some great nation like this
boldly makes the plunge and leads the
way, the restoration of silver to its legi-
eiiAdeS PidSC w Ia iicN CT OG dCCOIIlpllSIiGQ.
Without unlimited coinage of gold.
where would be the demand which keeps
gold where it is today, and who ever
heard of the possibility of an over-pro-
duction of gold, as long asst is the stand
ard of value, unless mountain chain of
solid gold should be discovered, in
which event another standard would
have to take it's place. Demand as we'll
as supply sets value, and with the
minis Of the civilized world open to both
metals, at an agreed ratio, the unlimited
demand for their use as money would
keep them at par with each other at that
ratio.
Another point which presents itself
to my mind, is the inability of this gov
eminent, under present conditions, to
keep the large. amount of silver now in
circulation, and in the treasury, at par
with gold, except by the very expensive
artificial process of frequent issues of
IYgnds for replenishing the gold stock of
the treasury, SO often raided by the re-
spsetable financial pirates, who claim
the Possession of so much wisdom, and
WHO gravely call themselves patriots,
while denouncing the supporters of Mr..
Bryape as anarchists and lunatics.
N.Y. 6sas may - yet be . little crude.