Evening star. [volume] (Washington, D.C.) 1854-1972, 1897-12-07


winch If consistently pursued, will ulti-
mateiy lead to conditions theoretically de-
sfrable rather than as being in themselves
final measures to that end. The condition
of the treasury in its relation to demand
obligations requires that one of two steps
be taken. The one may be a large REIN
forcement of the permanent gold reserve;
the other may be by an important reduc-
ton in the Objectionable form of liabilities
The latter is, in my opinion, the more de-
sirable.
RecOmmc ndn tiOns.
First. l recommend that proper legisla-
ton be enacted which will establish, sep
arate and apart from the ordinary opera
tons of the treasury as they relate to
revenue and expenditures, a department to
be designated and known as the issue and
redemption division. To this division the
sum OF sl25,000.O0O in gold should be set
over from the general fund in the treasury,
to be used only for redemption purposes
and all the silver dollars row held for re-
6emptlon of silver certificates, and all the
silver bullion and dollars coined therefrom
bought under The act of 1890. should be
passed to the same account. Further, that
the sum OF s2U0UUU.GH in the legal tender
notes of the United States known as green
backs he collected as hereinafter described,
and deposited in the said issue and redemp-
ton division, to be disbursed therefrom
only upon the receipt in exchange therefor
gold. when SO secured, to be held in said
division as part of the general redemption
fund.
Second. l recommend that provision be
made for the issue of refunding loan bonds
payable after ten years at the pleasure of
the government, such bonds 20 bear inter
est a. the rate of 2la per cent per annum,
payable, principal and interest, in gold
coin: and that the Secretary of the Treas
ury be authorized to issue such bonds and
receive in payment therefor, with an equit
able allowance for the difference in inter-
est, any part or all of the outstanding loans
of the United States which mature by their
terms of payment in the years 1914, 1897
and 1925.
Removing an Ambiguity.
The advantage involved in the proposed
action lies in this: 1t removes an ambgu-
ity from our contract obligations-an am
biguity which affects unfavorably the gov
eminent credit. The word COIN now used
to express the obligation In the public debt,
is an ambiguous word. 1t is no doubt I'M
derstood by the more discriminating public
creditor to mean gold coin, and the solemn
act of Congress pledging the maintenance
of silver coin upon a parity with gold coin
makes ii impossible to construe the word
COIN, therein used, to mean anything
other than gold or its full equivalent. Yet
as this is a conclusion of logic rather than
a clear statement of fact, the simpler and
more humble investors or would-be invest
ors in the public debt are confused and
doubtful, and the pubic creult Is the weaker
therefor.
Nor Is the course thus recommended
without wise precedent. The earlier issues
OF our government bonds were payable IN
dollars With greenbacks legal tender,
with gold and silver on substantial COM
nercial parity, but both at large prem
Jun over paper money, a similar question
arose What did dollars mean? And in
fIn h
ject,' an act was passed solemnly pledging
the faith of the United States to the pay
ment in coin or its equivalent or all its
Understanding obligations, except when
otherwise expressly provided in the law.
The commercial disparity between our
legal tender dollars and coin dollars was
not then essentially greater than the pres
ent commercial disparity between silver
and gold. This act of 1869 was judicious.
To refund our outstanding bonds now pay
able in coin into bonds payable In gold
would strengthen and confirm the public
credit and put in position to command
the markets of the world for our securities
on the most advantageous terms.
1T may be objected that the adoption
of a specific form of payment for the pub
lie debt would be inimcal to the spirit of a
qualifying clause in the repeating act of
1S.H which reads: And ii is hereby de-
clared to be the policy of the United
States to continue the use Of both gold
and silver as standard money, and to coin
both gold and silver into money of equal
intrinsic and exchangeable value If this
objection be raised, it loses all force when
we consider the only two methods by
which the gold and silver coins now IN
concurrent use with us can be so continued
as to maintain the parity in value of the
coins of the two metals and the equal
power of every dollar at all times in the
market and in the payment of debts
One of these methods is familiar to US,
since 1t has been in daily use In our flnan-
cial system since 1879. The other method
would consist in so advancing the coinage
value of silver by international agreement
or otherwise as to lend a natural parity
between the two. so that the present arti-
fetal method could be safely abandoned.
There is nothing in the proposition now
under consideration to interfere with the
purpose to secure an Inauguration of the
latter method. 1t must, however, be ad-
mitted to be a method which. II adopted
will operate to throw upon the governing
body whatever measure of risk may be
involved in the experiment, and 1t is mani
testify just that there the risk should lie,
rather than upon the helpless and posi-
BILE non-assenting creditor.
ITO accomplish the objects herein sue-
gested without contracting the circulation
some other form of paper money must be
allowed to fill the vacuum which would
otherwise be occasioned. The national
bank note now familiar to our people IL
the readiest and most practical agent to
accomplish that object, and under reason
able conditions it will be found responsive
Enlarged Issue of Bank Notes.
IAN enlarged issue of bank notes thus
contemplated would require a number of
amendments to the present national bank
act. These amendments should be made
only upon such conservative lines as
would, while granting the necessary aid
to the business world in facilitating ex-
changes, in nowise weaken the system
or lessen the stability of the notes to be
issued. The complaint uttered against the
national bank act as 1t now stands Ia
not directed toward the method of bank
organization or the absolute safety guar
anteed to the noteholder. 1t Is directed
toward those restrictions 1t embodes
which result in its failure to accomplish
the full benefit it ought to carry The
requirement Of the law now makes II i'm
possible to organize a bank with q capital
OF less than $4,000, no matter how small
the place in which 1t Is to be located
or how restricted the volume of business
there to be transacted. Because of that,
with the added expense OF taxation, both
national and local, many communities are
deprived of the aid of banks 81 .ae and
burdened with onerous rates .hanee
and interest charges.
In order to obvfate to great an extent
as possible those objections and make the
act more harmonious with proper business