The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1896-01-25
MAsIrunAr1oN OF THE oURRrNor


their financial schemes the granting
of increased powers to banks to en-
large their circulation of bank notes.
In other words, single gold standard
advoea ties would turn over to the banks
the whole work of issuing currency.
President Cleveland in his annual mes
sage 10 congress advocated the retire
ment Of the greenback currency and
the treasury notes, by selling bonds for
gold to redeem them; and then to pre-
vent the contraction of the currency
which would otherwise follow. he fav-
ored allowing the banks to issue hank
currency to the full par value of United
States bonds deposited by them with
the treasury. He also urged the re-
duction of the tax on bank circulation
to one-fourth of one per cent. instead
of one per cent. as now provided by
law.
This plan was also urged upon con-
gress by Secretary Carlisle in his an
nuaI report, on this head he but echoed
that which President Cleveland had
recommended. Articles in the maga-
zines written in support of the single
gold standard also include such recon-
mendations in their arguments. In
deed, Mr.. Paul Leroy-Beaulieu, in an
article in the December Forum which
attracted very general attention, held
that the only salvation for America
financially, the only way in which gold
exports could be controlled, was by
turning over the issue of currency to
the banks. He held as necessary to a
healthy financial condition of a coun-
try the fexibility of its currency
power to contract or expand to meet
ever varying conditions, and then
added:
This capacity to contract or expand
can hardly exist in a system of fdu-
ciary currency distributed by the state.
1t is only professional bankers, con-
stantly mingling in the daily current
of the country's business, who can,
with competence and tact acquit them
selves of the task of furnishing this
substitute for money in the proper pro-
portions. varying as these do from day
to day"
Following Mr.. Leroy-Beaulieu's arti-
Gle in the December number of the Fo-
rum is one in the January number
of the same magazine, much in the
same line, by Adolf Ludenburg. but
recommending a sort of federation of
banks with national clearing house
bank at its head with power to furnish
bark balance money and currency to
the people.
Now all this looks very much like
a concerted effort to favor the banks,
to secure to them still greater 1rivi-
leges than they now possess by turn
ing over to them functions that prop
erly belong only to government. But
few perhaps realize how great the
power is that goes with the authority
to issue currency, or know how COM
handing the force it confers on those
endowed with it. AS a means of
bringing home to the mind the great
ness Of this power. and therefore the
danger Of granting it to any class Of
citizens in the commonwealth. we
quote part Of a speech delivered by
John G. Calhoun in the United States
senate March y, 1884:
''All feel that the currency is a deli
cate subject, requiring TO be touched
with The utmost caution; but in order
that it may be seen as well as felt why
II IS so delicate, why slight touches
either in depressing or elevating it agi-
tate and convulse the whole commu-
nifty, will pause to explain the cause
II we take the aggregate property of
GF17Yy - ~
currency constitutes in value a very
small proportion Of the whole. What
this proportion is in our country and
other commercial and trading commu-
mites is somewhat uncertain. l speak
con1ecturally in fixing it as one to
twenty-five or thirty, though 1 presume
that is not far from the truth; and
yet this proportion in our country and
other commercial and trading commu-
mites regulates the value of all the rest,
and forms the medium Of circulation
by which all its exchanges are effected;
bearing in this respect a striking sim
ilarity, considering the diversity OF the
subjects, to the blood in the human or
animal system.
IF we turn our attention to the laws
which govern the circulation, we shall
find one Of the most important to be
that, as the circulation is increased or
decreased, the rest OF the property
will, all other circumstances remain
ing the same, be decreased or increased
in value exactly in the same proper
ton. To illustrate: If a community
should have an aggregate amount of
property of $31,000,000, of which 81. 000,-
600 constitutes its currency; if that
81, 000, 900 be reduced one-tenth part,
that is to say, 100000, the value of the
rest will be reduced in like manner,
one-tenth part, that is, $4,000 900. And
here a very important fact discloSeS
itself which explains why the currency
should be touched with such delicacy
and why stability and uniformity are
such essential qualities; 1 mean that
small absolute reduction of the cur
rency makes a great absolute reduc-
ton Of the value Of the entire prop
erty of the community, as we see in
the case supposed, where q reduction
of 500, 900 in the currency reduces the
aggregate value of property 100000,
a sum thirty times greater than the
reduction Of the currency.
From this results an important con-
sideration. If we suppose the entire
currency to be in the hands of one por-
tion of the community and the prop
erty in the hands of another portion,
the former, by having the currency in
their possession, might control the
value of all the property in the com
munity and possess themselves of it
at their pleasure. Take the case al
ready selected and suppose that those
who hold the currency diminish it one
half by abstracting it from circula-
ton, the effect of which would
be to reduce the circulation
to 100000; the value of property
would also be reduced one-half-that
is, $4,000, 600 Let the process be re
versed and the money distracted be
gradually restored to circulation. and
the value of propertY would again be