Middletown transcript., 1897-04-17
WHAT GAGE SAID.
PRoPHEsIEo IN 1891 THE PREDIcA-
MENT OF OUR TREASURY De-
PARTMENT IN 1898.


His Often Quoted Address OF 1804-Im.
portant as Outlining the Present Views
Of the Secretary of the Treasury-Im-
portance Of Credits Money Versus
Promises to oPay-Malzeslift LegisIation-
Summary Of Defects of Our Currency
System.
The new secretary of the treasury,
Lyman ]. Gage, is not a novice either
in the theory or practice of financial
affairs. Long before most bankers and
business men were greatly concerned
about our national finances he saw dam
ger ahead and prophesied what would
and what did-happen, unless certain
changes were made in our unscientiic
and unsound financial system.
On Feb. 10, 1891, Mr.. Gage read a
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 in consensus Of
action, and never by conventional agree
ments made in advance" he discussed
our own monetary conditions. He point
ed out how the United States, by ao-
cepting both metals and by allowing its
creditors to choose either, kept together
the two metals, whose values were di=
verging rapidly. To the question, Cam
not the government continue this policy
indefinitely and thus forever preserve a
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, T" he
said, will steadily increase until the
treasury department will be obliged to
either pay in silver or buy gold in ex-
change for it. With free coinage of sill
ver, - he added, "this result will be the
sooner reached" Nothing could be
clearer or sounder than this 1t is pre-
cisely what happened.
In the autumn of 1894 he took part in
an elaborate discussion of the money
question at the Commercial club of Chi
cago. His address at this meeting is
often referred to and is now of much in
terest, since it contains what he says
are still substantially his ideas in regard
to currency reform. We quote below the
greater part of this address:
In speaking upon the subject of our
money system one must be aware that in
whatever he may say he will excite the
hostile criticism and draw forth bitter
inyective from some one or more of the
various factions who are seeking to es-
tablish on new and experimental foun-
dations our much disturbed financial
structure.
Through our heterogeneous system:
the public mind has seemingly lost the
power to discriminate between real
things and the shadows or signs of
things. It is necessary that disguises be
pulled aside and that real facts appear.
"There is, in truth. only one real
money-viz, metallic coin. It 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 can 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 we are led astray.
Seeing that the greenback is uttered by
the government; that it has, by the legal
tender quality impaired to it, the power
to pay debts, and that it circulates with
all the power of money, discrimination
ceases-we call it money-and the idea
that government can create money by
its sanction or fiat becomes rooted in
the mind. The distinctions just pointed
out are, however, fundamental distino-
tons They should be taught in the
schools They are simple, easy to be un-
derstood even by child.
"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 q credit
balance in solvent bank. For, to secure
this better form of good. people volun-
tarily give to the banker these promises
to pay-yea, even gold itself-for a
credit to an 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 well 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 an 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 in bank-arB IN their nature and
essence one-yiz, they are forms Of
credit. Their value, each and all alike,
lies III the ability Of the owner to con-
vert them at last into the only real form
of money now existent-metallic coin
And to push the question little far
ther, the only value of the metallic coin
lies, not in the coin as coin, but in
the power of the metal tho coin contains
to exchange for other things.
at 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
in gold to pay customs dues. Having
an equal value in this direction, the
quantity being limited, it has equal
value in all directions but the difference
between the metallic value of the silver
dollar and this arbitrary value lies in
the realm of credit What l have so far
said lies at the foundation of the subject
and must be first understood.
"We have now current in the United
States available in the purchase and sale
of commodities and for the payment o.
labor services the following agencies:
First. gold coin. silver coin--real
money.
Next, greenbacks treasury notes,
national bank notes and bank checks. |
The last four to be classified together as |
forms of credit.
s'Their respective legal relationships |
TO real money, however. are not alike |