The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-01-30
CURRENCY ELASTICITY.

among the Q6GIctlOnS our cOnten-
porary, the Minneapolis Times, draws
from it's proposition that "the issuing
Of money is an attribute of sovereign
ty'' which prerogative it "abandons
when it delegates that right to private
individuals or corporations, is the per-
fectly logical one that 1.-The right to
issue money necessarily involves the
right and duty to regulate it's volume
and circulation" Just what is meant
by regulating it's circulation is not
clear, but the other right is, granting
the premise. 1t is interesting, and per-
tinent at this time and in this connec-
ton, TO compare the movements Of
credit money, it's adaptation to the
varying needs of trade in those coun-
tries where, as in the United States
and England, the ''prerogative" Of the
government to regulate the volume"
is claimed and exercised, and the SIM
iliar movements in other countries
where the sovereignty leaves the vol
ume more subject to the demands and
laws of trade
The credit money of this country con-
sists Of the greenbacks, arbitrarily linn
tied by the act of 1873 to $346, 900 900,
and the national bank notes, practical
ly limited by the amount and value of
the bonds securing them. Under the
operation of the increasing value of
the bonds we have seen note issuing by
the national banks becoming unprofit-
able and their volume shrinking from
1854, 100000 in 1875 to 1852 O0O, 900 in 1891,
and responding to the intense demand
for currency caused by the panic ex-
pand only to $207, 900, 900 in 1895. For
any additional supply of money COM
merce had to rely upon private enter
prise to produce and mint gold. Eng
land also assumes the regulation Of the
volume Of currency issued by banks,
but, in common with most other ma
tions that have learned wisdom by ex-
perience, declines to exercise it's "pre-
rogative' Of issuing credit money on it's
own account. Beyond the credit money
the Bank Of England can issue on the
basis Of government securities, now
some Els, 600, 900, every note issued must
have it's amount in gold behind it in
the bank vaults. Private banks and
joint stock banks, operating under
older and more liberal charters, are not
so severely restricted, the provisions
relating to them having more in view
the absolute solvency of their notes.
In the trade Of every country there is
a certain distinct, rhythmical move
ment of currency responsive to that Of
the chief products. In this country that
movement is known as moving the
crops During such movements, I'M
der whatever name known and respon-
sive to whatever commercial needs, the
volume of currency expands to meet
and float the products of industry and
when this is accomplished, shrinks to
the volume demanded in the transac
ton Of ordinary business. In those
countries where an unenlightened pa
ternalism does not assume the "pre-
rogative of sovereignty" the fright to
regulate the volume" Of the currency.
except to assure it's solvency, this ebb
and flow Of money is perceptible in the
reports of the banks showing the
amount OF their currency in circulation.
There one can easily trace the rhythm
and find it's cause in the principal in
dustries Of the country. But where SOW
ereignty exercises it's prerogative, as
with us, these reports give no indica-
ton Of the industrial forces that create
the tidal movements Of currency But
the laws of trade are more imperious
than those of governments and find
ways to operate in spite of the efforts Of
the latter to curb them.
The author Of the article on Bank
ing" in the CycIopedia Britannica,
while defending the Peel act organizing
the Bank of England, is obliged to adj
nit that the effect OF the hard-and- fast
provisions of the act has been to null
tipIgothea issue Of checks, drafts and
bills of exchange "out of all proportion
to the stock of ready money on which
.ss12 asag