The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1896-05-03

SOUND MONEY AND PROTECTION.
In n assssas IN TIE April Forum ssaassp
John ahsnDaa setributes De dspisttsa -
ths GslA reserve 10 ths de1c1esey ef ~
ttoeal revenue. and not 10 the sxistsoco
Of the unrsdsemed legal tender notes. -
Cleveland doss. He asks the per1nsnt
lsassin whether the legal tenders AAvU
not bssn outstanding ever since the owl
was with . possibaisty Of demand bong
made for thsir redemption as any time
curing mat period - vel - during the
last three years II - clearly brought
out that the credit u the government -
based upon he same considerations - the
credit Of IN individua; o. . banking cor
poration. When every ons feels confidence
In the integrity Of the tssuer Of . note and
his ability b pay In ths legal standard
! Of value on demand. there IL no concern
felt about the note. and e Issued IN de-
nominations small enough 70 be used -
neney Il win pass from hand to hand
without question ~ sound value in pay
msnt for any service or commodity. The
main question with respect to . piece Of
paper 1asued by government. banks q In
dividuais y whether II II good" Once
this II ensured no impediment arisss II
the ordinary circulation Of II.
We say ordinary ~ distinguished from
certain extraordinary or unusual uses to
which money 10 put. such as payment foe
goods boush. In foreign countries. where.
In tbs nature a rnings. little n known
with reference to the security upon which
the notes Of another country In based.
discrediting the notes Of any country when
an attempt v made to give them circula-
ton abroad. A Bank Of England note 10
unQuestionably As good - gold. for thers
u . sound sterling Of gold lying In the
vaults Of that bank to redeem the note
when presented. 1t In not based. a. our
paper money IL. upon . reserve OF = to
% ger cent Of tho issue. but upon IN
actual gold reserve Of 100 per cent. Of
the issue. with the exception Of some
E1s.ooo.ooo for which tho government 10
directly responsible ard which could doubt
less Be- paid In gold by . sale Of me de-
bsnturss more rapidly than the notes could
be presented.
Yet. with backing % perfect - this.
there are Thousands Of people In the United
States who would refuse to take these
notes. not being familiar with them. and
not knowins whether the next man to
whom they ohered them would accept
For this reason the notes Of an Individual
win not usually BE- taken outside Of his
immediate neighborhood: even the notes
Of Canadian banks are discounted at
Seattle.
Now. when any doubt arisss ~ to the
ability OF an issuer to redeem his notes
on demand. confidence IL At once shaken.
and the nrst impulse Of holder IL to test
the matter and make himself safe by pre-
sending the note Cor payment: and the
ieas, intelligent Of mankind knows that II
he can once get the gold In his possession,
individuals. banks and governments may
smash right and left. but he has the value
In his Jeans. This is why. when confidence
10 disturbed. men Immediately revert 20
the only kind Of value That 10 known in
all places and by all men to be practically
inaestructbls and readily held In personal
possession They do not have to depend
upon the credit Of any body or any thing:
they have the value In their pockets and
they feel safa
Immense credits have often been noased
upon very narrow basis Of actual redemp-
ton money. but such credit always becomes
unstable IN Just the degree that 4, exceeds
the redemption fund. The general rule es-
tahlished by experience. both with respect
to government notes based on goid re-
serves. and ordinary bank balances to b
held as security for depcsitorx, - that the
reserve cannot with safety fall below one
third or one-fourth OF the total obligation
to be met Miscellaneous credits win gen.
orally be expanded to from ten to twenty
t'mes the amount Of the cash reserve IN q
country. but neither the banks nor the
government can. 90 far ~ reserves are con-
eerned. venture on anything Of this kind.
The sss.cco. 600 OF United States legal ten
der notes are supposed 70 Be on q par with
Soid. eniy because they are legally sx-
all times At the national treasury But .
reserve IN gold OF SOC 90 600. less ,haa one
third the amount Of the ncses. was kept
tor that purpose. When the reserves OF
the government. under the low ssrin pol
icy. began 70 fan below the expenditures.
this balance which should unser ell ctr
euns:anees have been heps intact. was.
not perhaps seoniousiy but certainly very
anwissly. drawn upon 10 make good the
deecit Doubtless this was cons IN ire
hope tina, the revenues would rscupera,e.
thus permitting the distracted fsns. 10 be
replaced bet tns revenues ga rot Co VIVA,