The herald., 1896-10-30
REEDS FOOLISH FALLACIES

which is true, but not exactly according
to Mr.. Reeds understanding of the way
it is done. Honesty of purpose to pay
is the basis of commercial credit, pro-
vided there is confidence in the ability
to pay. The word of one man may be as
good as the bond of another, but the
only difference between them in the eyes
of commerce is that the ability of the
first to pay is not questioned, and that
his word is a guarantee that he will
pay, while with the second neither his
ability nor his inclination to pay is con-
sidered in the transaction, for hope of
payment is centered in the bond. Com
merce wants it's bills paid at maturity,
and it bases its expectation upon the
security it has, whether the security be
business integrity and ability to pay,
or bond. But business integrity, or en-
tire Willingness to pay will not buy
goods on credit unless there is ability to
pay for them when the bills mature,
hence, while it is true, as Mr.. Reed
says, that the business Of the country
is done on the confidence of the peo-
pie, confidence in ability to pay is the
real basis of credit. Commercial integ-
pay in the event of ability to pay.
This country has been visited with
several very severe financial and COM
mercial storms since gold became the
money of final redemption Of business
obligations, and during such times cred
it's were refused, not because of weak
ened faith in the integrity of buyers,
but because their ability to pay had
been impaired and made doubtful
When such conditions prevail, business
integrity counts for little. 1t stands
on a parity with the man from whom
bond is required at all times. In times
of war or during widespread pesti-
lence or famine natural trade laws are
abrogated and credits are not expected,
for there is nothing to give confidence in
ability to pay. The periods of business
depression in the last twenty or more
years in the United States are traceable
for the most part to shrinkage in the
value of all lines Of goods and wares,
caused by an insufficient supply of
money, which obliged producers to ac-
cept such prices as holders Of money
felt inclined to offer. That Is to say, the
insufficiency of money caused such COM
petition between merchantable COM
modities for money that prices were cut
to the point where profits were destroy
ed. Had there been volume of money
fully equal to the demand Of trade and
traffic, there would have been competi-
ton between money itself for the most
favorable opportunities for employment,
and their business integrity would have
been a sufficient basis for credit, be-
cause of the ability of the buyer to Sc
cure money when wanted.
Now, what advocates of the remone-
tization of silver claim is that money
should be in sufficient quantity to oblige
money lenders to seek under sharp COM
petition, the one with the other, for
openings to employ their holdings. 1t
being admitted by even those advo-
eating the gold standard that such
volume of money could not be secured
in any way other than by coming the
worlds product of silver into dollars of
ultimate redemption it follows that
to give commerce the assur-
ance that it's natural movement
would not be retarded by an in
sufficiency of the one common article of
exchange, the mints will have to be
opened to the coinage of silver without
limit. Mr.. Reeds idea is that the diff
ference between the requirements of
business for money and the volume of
money should be made good by individ-
ual notes and other forms of indebted
ness, but the experience Of business
men in the last quarter of century is
that such methods only give those who
control the volume of actual money
firmer hold upon the agencies of pro-
duction and distribution. Not that the
use of notes and checks should be dis
|scontinued, but that there shall be more
actual money in circulation SO as to
make their payment at maturity possi-
BILE without having to be run through
the squeezing machines of money syn
dicates.
Had Mr.. Reed qualified his assertion
that times are good when people bor-
row money he would have the indorse-
ment of the experience OF business men
generally. Times are not good when
men borrow money to tide over" Pc
riod that Is full of anxiety and uncer-
tainty, and that is the condition under
which money has been borrowed ever
since silver. was deprived of the func-
tion Of redemption money. Times are
good when people borrow money to