The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-11-02
SUGGESTIONS ON CURRENCY REFORM

SUGGESTIONS ON CURRENCY REFORM
Hambleton & Co., prominent bankers of
Baltimore have issued a circular in which
they embody their answers to some Of the
questions sent out by the monetary commits
sion at Washington. They deal with the
subject like men who know what they are
talking about In common with all sound
financiers, they regard the outstanding
United States notes, commonly called green
backs, as a menace to the credit of the gov
eminent and a constant source of annoy
ance and distrust from financial point of
view. To the question ION what grounds,
if any, would you favor the gradual but en-
tire withdrawal of the treasury notes OF 1890
and the United States notes?" they reply:
We favor their withdrawal upon the
grounds that it is not the province of gov
ernmentS to issue money and furnish the
circulation of the people; that our govern
ment, although having outstanding an
immense amount of demand notes:
payable in gold. has no means %. of
providing gold except through the
sale Of bonds; that our currency system is
unscientifc and in defiance of the laws of
finance and economy, and that the cost or
maintaining our government notes at par
with gold is ruinous.
There are a great many persons who will
take issue with these gentlemen on the
statement that cit is not the province of
governments to issue money and furnish the
circulation of the people," meaning paper
money One of Bryan's catch phrases in
the last campaign, referring to the claim
that the government should go out Of the
banking business, was that 1.-THE banks
should go out Of the government business"
There are great many people as ignorant
as Bryan of sound governmental and finan-
ciaI principles who are satisfied with that
kind of an answer. But the fact remains
that the issuing of paper money is not
normal function of government, and should
only be exercised as war measure or in
some great emergency. The coming of
money is a proper function OF government,
and the Constitution expressly confers that
power, but the issuing of paper money is
very different thing. Every dollar of paper
money that the government has issued is
an avenue through which its credit may be
assailed, and experience has shown that the
cost of defending these avenues and pro-
tecting the government credit has been
enormous The cost of the panic of 1898,
which was precipitated by the destruction of
confidence caused by the alarming shrink
age of the gold reserve held to protect the
greenbacks-the cost of that panic alone far
outweighed any imaginary advantage the
people derived from their circulation since
the war. The financial affairs of the gov
eminent should be divorced as far as pos
sible from the business of the people. The
government should have no such connection
with the banking business that the shrink
age of gold reserve which it is obliged to
maintain may precipitate a panic. 1t should
get out of the banking business entirely,
Mr.. Bryan and fiat moneyists of high and
low degree to the contrary Notwithstanding.
Returning to the circular of Hambleton
& Co.. we quote answers to two other ques-
tions of the monetary commission:
If it shall be decided to retire the United
States notes, how can it be done without
adding to our bonded debt? Answer: When
the government has a surplus revenue the
legal tender notes can be accumulated in
the treasury, and in this way a portion of
them can be retired. provided system of
bank note issue shall have been previously
provided for. Then portion of the gold
reserve might be utilized, as the reserve
fund would increase very rapidly as soon as
when once in the treasury, would stay there
every one would want to get rid of gold
and hoard legal-tender notes. And in adj
dition the $780, 000, 900 worth of silver bullion
held security for the treasury notes of
1890 might be utilized.
How, in that case, can provision be made
for maintaining an adequate amount of cur
rency available for purposes or business?
Answer: Remove the restrictions on the
issue of the bank note currency which make
it Improbable for national banks to take
out circulation. Banks, like individuals, are
in business to make money, and being free
agents, cannot by any process or law be
made to issue currency unless there is a
profit in it. Therefore, as a beginning, per-
NIT the issue of circulation up to the par
on circulation. Then permit the issue of an
emergency circulation, based upon first lien
upon assets of bank and liability of stock
holders under certain restrictions.
This is very brief treatment of a large
subject The answers are not intended to
be exhaustive, but they present the outline
of a harmonious plan. Any plan of cur
rency reform must proceed substantially on
these lines, including the gradual retirement
Of the greenbacks by a process that will not
cause any appreciate contraction of the
currency, the simultaneous increase of
bank circulation and the issuance of a gold
bond at a very low rate of interest for re-
funding and banking purposes. The Journal
predicts that the secretary of the treasury
in his forthcoming annual report will rec
ommend plan embodying these main fea-
lures.