Hot Springs weekly star. (Hot Springs, S.D.) 1892-1917, 1897-04-09
WHAT GAGE SAID.
PRoPHEsIEo IN 1891 THE PReplcA.
MENT OF OUR TREASURY DE-
PARTMENT IN 1893.

pOrtance Oh Credits-Kcal Money Versus
Promises to Pay-Makeshift Legislation
Summary of Defects of Our Currency
System.
The new secretary of the treasury.
Lyman j. Gage, is not IL novice either
in the theory Or practice of financial
affairs. Long before most bankers and
business men We're greatly concerned
about our national finances he saw dan
ger ahead and prophcsicd what would
and what did-happen, unless certain
changes were made in our u%nscientifis
and unsound financial system.
On Feb. 10, 1891, Mr.. Gage read Il
paper before the Sunset club in Chicago.
After explaining how silver and gold
money had been evolved "by the free play
of human choice, ending i'll consensus of
action, and never by conventional agree
mcnts made i'll advance" he discussed
our w monetary conditions. He point
ed out how the United States, ly ac-
cepting both metals and by allowing its
creditors to choose either, kept together
the two metals, whose values were di-
vcraing rapidly. To the question, Can
not the government continue this policy
indefinitely and thus'forever preserve IL
higher value to the silver coin than its
equivalent in silver bullion?'' he replied
that it could not. 1.-The proportion of
silver payments to the government" he
said, will steadily increase until the
treasury department will be obliged to
either pay in silver or buy gold i'll cx-
change for it. With free coinage of sill
YER, he added, this result will be the
sooner reached" Nothing could be
clearer or sounder than this. 1t is pre-
ciscly what happened.
In the autumn of 1894 he took part i'll
an elaborate discussion of the money
question ut the Commercial club of Chi
cago. His address at this meeting is
often referred to and is now of much in
tcrcst. since it contains what he says
arc still substantially his ideas i'll regard
to currency reform. We quote below the
greater part of this address:
"ln speaking upon the subject of our
money system one must be aware that i'll
whatever he may say he will excite the
hostile criticism and draw forth bitter
invcctivc from some II or more of tho
various factions who are seeking to es-
tablish on now and experimental foun-
dations our much disturbed financial
structure.
Through our heterogeneous system
the public mind has seemingly lost the
things and the shadows or signs Of
things. 1t is necessary that disguiscs be
pulled aside and that real facts appear.
"There is, i'll truth, only one real
money-viz, metallic coin. 1t may be
composed of gold or silver. 1t might be
OF something else, but it is not. Green
backs, treasury notes and national bank
notes are but promises to pay. In the
nature of things they al be nothing
more. They pass as money, perform the
functions OF money, often more conven-
iently than money itself. Because of this
confusion comes, and VIC are led astr;iy.
Seeing that the grcenback is uttered by
the governments; that it has, by the legal
tender quality impaired to it, the power
to pay debts, and that it c%irculates with
all the power of money, discrimination
ccases-we call it money-and the idea
that government can create money by
its sanction or fiat becomes rooted i'll
the mind. The distinctions just pointed
put are, however, fundamental distiIc-
lions. They should be taught in the
schools. They are simple, easy to he un-
dcrstood even by Il child.
1--WE admit that on many occasions
paper money, whether greenbacks, treas
ury notes or national bank notes, is
more to be desired than gold. Yet more
to be desired than either, as proved by
the daily conduct Of men, is IL credit
balance in u solvent bank. For, to secure
this better form of good, people volun-
tarily give to the banker these promises
to pay-yea, ever gold itself-for u
credit to All equal sum upon his books.
With an entry upon their passbook as
evidence of the transaction they claim
to have 'money in the bank" In popu-
lar language, the claim is we'll enough,
but, correctly speaking, it is positively
untrue. They have parted with their
money, if money they had. It belongs
to the banker; it is no longer theirs.
1.-The consideration they have received
is M agreement from the banker to
meet their acquisitions upon him from
time to time. If the banker is faithful
to his obligations they have made no
bad bargain, for all these things-green-
backs, treasury notes, national bank
notes and, to use the popular language,
money i'll bank-are i'll their nature and
essence one-viz, they are ferns of
credit. Their value, each and all alike,
lies i'll the ability OF the owner to coll
vert them ut last into the only real form
of money now existent-metallic coin.
And to push the question a little far
tl,er. the only value of the metallic coin
lies. not ill the coin as Il coin, but III
the power of the metal the coin contains
to exchange for other things.
, sit should here be noted that while
our silver dollar is real money its power
to exchange for other things is more
than doubled by another and artificial
value impaired to it through the law,
which gives it power equal to the dollar