Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1896-04-24
DUMPING-GROUND FOR SILVER

The Fallacy of the Persistent Claim
of the GOidites That Our Country
Cnder silver Coinage Will He
Flooded With the White Metal.
A. J. Warner.
When other things fail, the advo-
Gates of the gold standard and dear
money ask: "Do you want to make
the United States the dumping ground
for all the silver OF the World?" Well,
we let them dump everything else
here, why not silver? Nobody is
afraid of their dumping too much
gold here, or too much sugar, tea,
coffee or anything else. Silver seems
to be the only thing we are afraid of t;
and, can any one tell why? We have
to pay for for what gold we get. We
get no more goods than we are willing
to pay for in other goods or in money.
Are We likely to get more silver
than we are willing to pay for2 Is
anybody really afraid other coun-
tries will give us silver-force it on us
for nothing? Who ever heard before
of country being hurt by an inflow
OF the precious metals2 Such talk is
foolish. The simple truth is we would
get, under free coinage, as much as we
are willing to exchange goods for and
no more. Nobody will be compelled
to exchange gold for silver. If silver
became abundant. more of it would
have to be given for goods; fewer
goods for the silver. Can't our people
be trusted any longer in such.a trade?
Let us inquire, however, where all
this silver is that is coming here. In
the first place, the coined silver of Eu-
rope, or of India, would not come
here because it is worth more in gold
at home than it would be under free
coinage here. The ratio of coined
silver to gold in Europe is Is! to l,
and in India Is to l; while our ratio
is l6 to l. Hence the loss, including
loss in weight of coins, and cost of
sending coins here, would be not less
than 4 per cent. on European coins
and 8 per cent. on Indian rupees. In.
stead, therefore, of merchants sending
foreign silver coins here, if we had
free coinage, any one having such
coins in this country would make a
saving by sending them home rather
than taking them to our mint to be
melted into bullion. Moreover, it
would be simply impossible to with
draw these coins from the circulation
of the countries where they are now in
use as the circulating medium. Their
withdrawal would so revolutionize
prices as to convulse all Europe.
We have only to consider, therefore,
silver in the form of bullion, and as
there is never any large amount OF
this metal carried in stock as bullion,
the question is practically limited to
the annual production. II we assume
that the annual production will rise
again to $l6O. .OOOO 900, from this must
first be deducted what is consumed in
the arts and for subsidiary coinage,
not less than $60OO0OOO for both.
Then there would be left 100000, 900
for money, for the United States and
the silver countries of the world with
a population of 100000, 900 of people,
and with the trade (and with it the
demand for silver) OF South America,
Africa and Asia constantly increasing.
Is this a threatening prospect?
The United States alone will soon
need an annual supply OF $l00,O0O,-
600 of money, and is therefore in no
danger of a flood from silver. and
without silver where is the money
supply to come fromf But if in any
event there were danger of an over
supply Of silver there is an easy way
to provide against it and at the same
time greatly improve our financial
system. Our money system is now
constituted, in round numbers, as fol-
lows:
silver, or silver certificates ....... 5Oo,OOOOOO
Paper ACKNOWLEDGEMENTS. 5O0,0O0,000
Total. Observation-Disclosures. .... 81 500, ,OOO, ,OOO
OF this $1,OOO,OOO,OOO are in the
hands of the people, doing the every
work of money; $5O0,OO0,OOO are held
as reserves in the banks. Out of this,
or on this $500. 100000 as a founda-
ton, the banks erect superstructure
of credit, known as bank credits, of
"a, 100000, 600. In other words, they
add to the $500, ,000, 600 of actual money
they hold, $4OOO,OOO,OOO of credit
money-money made with pen and
ink on books of depositors and called
deposits. Right here, in this mass OF
credit money, lies the storm center OF
every panic that has ever taken place.
When scare begins depositors of real
money begin to draw it out; then
comes collapse OF the credit bubble.
1t is perfectly plain that if any time
the entire $5OO,OOO,OOO of actual
money should be drawn out of the
banks the entire mass of $4,000O00,-
OOO of credit would, for the time being,
be absolutely extinguished. Suppose
now, instead of only FIVE hundred mill
lions in actual money in all the banks.
they were required to increase their
reserves to thousand million dollars;
in other words, reduce the credit part
OF our present financial system by five