The herald., 1897-11-15
HORACE WHITE MAKES REPLY
TO QUESTIONS OF MONETARY
COMMISSION
Greenback Retirement Not Enough
The Silver Coin Also Must Be
Redeemed in Gold
Associated Press Special Wire.

WASHINGTON, Nov. 14.-Mr. Horace
White, whose book on money and bank
ing has attracted so much attention,
to the interrogatories of the monetary
commission regarding improvements in
the currency system Of the United
States. Mr.. White is an outspoken a6vo-
cate of the retirement of the greenbacks
and the adoption Of an elastic banking
currency based upon business assets.
He declares that the silver dollars should
be redeemed in gold and that in q finan-
cial sense there is no difference between
the several forms of fiduciary circula-
| tion. of which silver dollars are part.
The latter. he declares, are metallic
greenbacks.
He does not believe that the amount of
circulation presented for redemption
would be any greater than at present
if silver We're redeemable in gold. In
answer to the questions regarding the
maintenance Of the gold standard, Mr..
| White says:
Il would recommend the redemption,
tender notes as first step. Probably
the silver certificates and silver dollars
| would thereafter remain at par with
gold, like the outstanding thalers of Ger
many, and would not be presented for
redemption in any considerable amount,
being needed, like the smaller silver
coins, for circulation in retail trade.
After the retirement of the legal tender
| .I, 10 III
what to do next.
| Question-For the purpose of facili-
tating the use of existing silver currency
what do you recommend as the smallest
denomination of United States notes anG
bank notes which should be put into cir
culation? 4.l
Answcr-The ten dollars at first, bu
this should be made matter of expert
ment, the object being to determine the
dimensions of circulation which will alb
sorb the currency, leaving the rest tc
| bank notes.
In regard to the legal tender notes
| Mr.. Whites views are as follows:
Question-On what grounds, if any
would you favor the gradual but entire
| withdrawal of the treasury notes of 1890
and of the United States notes?
Answer-On the ground that there is
| no certainty and can be no certainty that
the government will always redeem
them in gold Redemption or non-re-
demption is political issue to be fought
over in elections and must remain so az
long as this kind of paper is outstand-
ing. Mere uncertainty is always a
| drawback to business prosperity Fail
| ure of redemption would be bankruptcy
| public and private.
| Question-If it shall be decided to re-
tire the United States notes, how can II
be done without adding to our bonded
| debt?
Answer-Dy cancelling all that are re-
ceived at the treasury for taxes or pre-
sented for redemption, or received over
and above the governments necessary
disbursements.
Question-How, in that case, can pro-
vision be made for maintaining an ade-
quate amount of currency for purposes
of business?
Answer-Provision will be made auto
matically in various ways, viz: /. By
retaining the gold produced by our own
mines. q By importing gold from
abroad. g. BY the issue Of national
bank notes. Prior to the civil war the
government gave itself no concern about
providing currency for purposes of busi-
ness. yet the supply was never deficient.
Question--If it be thought inexpedient
to fund the United States notes, how can
they be redeemed with an assurance that
bank currency will take their place?
Answer--The assurance is found in the
fact that in every case where currency
vacuum has existed 1t has been filled b,
bank notes. This was the case in the
panic of 1895. The process Of taking out
notes might be more expeditions. This
is matter of machinery and of legal
regulation. 1t is perfectly certain tha,
If there Is profit in issuing bank circu.
lation it will be issued If there is nc
profit in it we must conclude either that
the law needs amendment or that tho
demand for currency is slight.
Mr. White believes that in process OF
time 1t VIII not be possible to rely upon
national bonds as security for bank
note issues because Of the extinction OF
the public debt. In reply to the questions
whether any safe and practicable plar
can be devised for using other securi-
ties, he says that he thinks not.
Il should not like to be charged with
tHc responsibility OI selecting the SeCur-
tiles or choosing between the different
kinds offered"
He believes that 80 per cent Of the
paid up and unimpaired capital of the
bank should be the limit of note issues
and that cash reserve should be held
for the redemption of others, the same
as now provided by law for deposits,
viz, rs per cent in reserve cities and Ii
per cent elsewhere, with the right tu
keep three-fifths of the said Is per cent
in the reserve cities. There is no differ
ence between deposit liabilities and note
liabilities SO far as the bank itself IL
concerned, and no reason why the re-
serve should be greater or less for the
one than for the other. The reserve
should consist Of gold and should be in
the vaults of the bank or In q clearinp
house depository. Other questions re.
garding the best plan for establishine
and regulating banking currency are
| answered by Mr.. White as followss
lows: x
I'm general / approvs of the plar
1dQp<o0 " tho kyn0T1oon 86nEoros a,