The Providence news. (Providence [R.I.]) 1891-1906, 1897-11-16
Questions of Monetary
Commission Answered
BY BANKERS MAGAZINE.
AS to Metallic Currency and Bank
ing Methods.
SOME CONSERVATIVE VIEWS.

The Monetary Commission appointed
by the Executive Committee If the In.
dinnapolis Monetary Convention, held in
January last. has sent out "a number Of
inquiries relating to the cur
rency and banking system of
tho country. These interroRatories,
together with the replies of the Editor of
the Bankers Magazine, are printed be-
low. The publication of the questions
and answers is made with the consent Of
the Commission.
METALLIC CURRENCY.
1. Should or should not the silver dol
lars and silver certificates be redeemed ON
demand in gold? IL redeemed what
reserves should be provided and howY
Answer.-As a general proposition sill
YER certificates and silver dollars should
be redeemnble on demand in gold. But
the gold standard can be maintained by
their indirect convertibility into COLA.
when gold is required, without direct
redemption. BY indirect convertiblity
~ meant the reception OF silver dollars
and certificates by institutions OF exchange
from customers and the giving a credit
which may be checked against tor such
amounts of gold as the customers may re-
quire.
III there Is direct redemption IL would
be necessary for the government TO hold
gold reserve OF at least 10 per cent of the
outstanding silver dollars and certificates
This reserve would necessarily be- ac-
quircd either from revenues or the sale OF
bonds, or perhaps by the sale of some of
the silver bullion now on hapd,or bullion
obtained by melting some of the dol
lars now held in the treasury. For in
stance. II the government could grad
ually sell dollars and bullion tsiiver) now
l..lI t.. g lnn an
cents on the dollar for gold, IL could
gradually accumulate gold reserve in
the neighborhood OF 500, OO0, OO0
The remaining silver dollars would
amount TO S3O7. l72, 3i2. The account
would would ,cS nov show SS74. 69o. s9e
t577, ft5; ~ st+eer dollars outstanding; IN
all Si3l, 766, 069 protected hy S307 l72, 3i2
silver dollars and 800. 600, 600 in gold. The
treasury notes of 1890 are not includet at
IL Is assumed that they are protected bv
the present gold reserve The process of
melting down silver dollars ana selling
the bullion for gold could be repeated as
silver certificates and silver dollars were
redeemed in gold. Tho s.ocess might from
the beginning be gradual one. continued
as the market was found To bear the sill
YER offered. In this way the silver cert$H.
Gates and silver dollars would by degrees
furnish their own gold reserve.
2. What in your Judgment would be
the probable amount OF silver dollars and
silver certificates presented, II direct re-
demptiou were enacted!
Answer. Ill he amount of silver dollars
and certificates presented If direct re-
demptinn in old were enacted would de-
pend upon the business conditions prs
vailing throughout the country at any
given time.-A very large proportion Of
daily payments is made today in silver
dollars ana silver certificates and this use
OF this form of money in preference 20 the
use of National bank votes, legal-teu-
uer notes ana treasury notes is strictly
in accordance with the Gresham law.
This active circulation of silver certih-
Gates and dollars for ordinary trnnsac.
ton prevents unuer present conditions
any great amount being available for
presentation for redemption. lhey an
swer the purpose of those who receive
money TO pay IL out again. People prefer TO
holu their surpluses in money more ga silly
conScrtible into gold, and thorefrrH all
reserves public and private are usually
held in legal tendsr notes, Treasury notes
and National bank notes.
The direct redemption OF silver certih
Gates and dollars in gold would change
this condition somewhat, but the banit
OF making these silver notes ana dollars
do the CummOner work Of exchange would
when business condit tious wero good pre-.
vent any very large proportion beng i'm
is now redeemable in gold, and YET tie
recurring demand for il prevents any
great presentation for redemption. Ii
would oe the same in @ degree with silver
collars ahd eertili A sudden enact
mcnt might cause the presentation of
perhaps fifty millions. But If the change
were introduced by degiees in the way
suggested in the answer to question ],
there would be very few presented, The
silver dollars ana certificates Ore prac-
tically superior variety OF subsidiary
coin.
IL would be wise to require the certiti-
catas and dollars to be presented in sums
of not less than slO00. Iha denominations
Of silver certificates issued Cor dollars
should bo confined To tive collars and ltss.
Large silver certificates, ten dollars and
upwards, should only be exchanged for
smBll ones The demands OF business
would keep most Of the smali certificates
and dollars constantly t1get' er.
3. To insure the permanent inviolabil-
itv Of the gold standard, what measures
would you recommends
Answer-1his would appear in one
sense an impcssibillty, iuasmuoh as lt
is always In the power Of one LOf gross -
amend previous legislation. Apnroxl.
lnately tnis invioabiiity may bo secured
by enacting:
lst--That the cold dollar Ct specific
weight and fineness shall b. the scl9
standard OF value
2d-Ihat all paper money shall be re-
deemablc, whan Presented i'm gold dollars
under such special regulations rs appear
10 be most suitable for such class of
N Oncy.
3d. That silver dollars shall also be re-
dcemable i'm gold.
ith. That tha word coin in all bonds
aud OBLIGATIONS shall be construed to
mean gold coin, unless silver coin is dis.
tiuttly stated.
i.-for the purpose Of facilitating tho
use of existing silver currency, what do
you recommend as the smallest denOmin-
alton Of United states notes ana hank
notes which should pe put into circUla-
tion?
Answer. United States no:es twenty
dollars; hank notes, ten dollars.
DEMAND OBLIGATIONS