Hot Springs weekly star. (Hot Springs, S.D.) 1892-1917, 1896-09-18
A Plain. Simple Definition by Prof.
VIM. Morse Cole of Harvard.
THE JUDGMENT OF AN EXPERT.
What II Is-How II Came to Be-
What It Will Be if Free Coin.
age Prevails.

Cole. formerly Instructor in political
economy at Harvard College, has writ
ten pamphlet upon what would hap
pen II the mints vi the United States
were opened for the free coinage of sill
Yer ut the existing ratio. which presents
some little considered aspects OF the
subject In new light. and will repay
the attention OF thoughtful people. He
states the question before The country
as being whether the Government shall
coin Tree an unlimited number of silver
collars. and Still allow men to pay
Cheir debts in dollars containing % %
grains OF gold or i'll dollars containing
S7lA grains OF silver. as they may
choose.
Having thus defined the case. which
mas been submitted u TIN. Judgment of
tue American people, he proceeds to eN-
anime the effect of coinage laws upon
the price of bullion, and in beginning
this inquiry propounds the fundamen-
tai question, What is dollar? The
answer Is that dollar is nothing but
q verbal expression to which Congress
arbitrarily supplies the meaning. What
ever Congress calls dollar is dollar.
Its power Of definition in this respect is
absolute and illimitable If it decrced
that 300 grains Of pig iron should be Il
dollar that is what a dollar would be,
and the people who are advocating the
Tree coinage of silver as means of
cheating the fcredltors by authorizing
-Qayment of debts in coin less valuable
~ than that in which the debts were in
CURED must often be surprised at their
moderation.
But while Congress has unlimited
power to say what a dollar shall be, it
has no power whatever TO fix what a
dollar shall buy. 1t may decree that a
dollar shall consist of 100 grains of sill
Yer, but it would not follow as result
of such decree that 1OO-grain silver dol
lars would buy as much as the present
article. AS Il matter of fact. they
wouldn't buy more than about Il fourth
as much. The Congressional fat is
pcwerless TO create values, and fifty
three cents worth of silver bullion
would not. through the process of being
converted into a disc, and of having
the words one dollar" and I'm God we
trust" stamped upon it, gain an addi-
tional forty-seven cents in value. 1t
would be a dollar because Congress
said so. but as compared with the dollar
containing 1922 grains of gold it would
only be a fifty-three-cent dollar. 1t
would buy no more, as soon as people
''gOt on'To it. than to the amount of it's
commercial value. And it would. of
course. ekpel the 10O-cent gold dollar
I. FROM .:irkulation. under the operation
6rt the so-called Gresham law.
+ That law has no CONNECTION with the
late Secretary of State. IL was named
after Sir Thomas Gresham. an eminent
merchant in his day. who WAS Lord
Mayor of London three hundred years
ago, and who made and recorded the
observation that the worse currency ill.,
variably drives out the better. There
is no mystery about this. 1t is a law
whose operation is illustrated in the
everyday experience of us ALL If he is
an average human being, the man who
haS bright, clean note aud an old
dirty one, passes on the dirty one. If
he has two quarters one OF which is
very much Worn, he gets rid of that one.
ference is tritling and immatcrial. How
much the more, then, if lie has two
kinds of dollars. one of which is actual
ly worth nearly twice as much as the
other, does he Use the one of lesser
value and send the other one to some
= place where 1t is properly appreciated.
Thus, IN the event of the admission of
eilver to free coinage all our gold coin
would become commodity and most OF
1t would be exported.
This would produce a serious contrac-
tion of the currency, but such u con
traction would be far less Important
and disastrous than the attendant con
traction Of credit due to the uncertain
ties of the future. Upon this point Mr.
Cole is very luminous and emphatic.
He says:
"Hesitation over the acceptance of
credit payments invariably follows, in
tMe minds Of most men, from the ex-
pectation Of new and cheaper stand
ard Of money. The result of such a
Widespread check to activity can be
only distress and business panic, reach
ing all classes in the country. Many
Q man who has incurred financial re-
sponsibility in the past by contracting
4 to do work within specified time. or
TO pay for property or rights within Il
given time. will find that the banks or
individuals from whom he had CONT
5 IDENTIFY expected to borrow are not only
unwilling to lend, but eager to collect
4 outstanding debts. Such failure to re-
cetve expected support will lead to
countless bankruptcies. Each bank
.cnptcy. moreover, will reduce the re-
sources of many other individuals or
3 business firms. and will cause new
bankruptcies. These last, in turn, will
8 start a new circuit, until none escape
{ altogether untouched. The panic will
be general"
L Mr.. Cole anticipates that under the
\ influence Of a debased currency prices
4 would rise, but he argues that the rise
& would be irregular, and that farmers
n