Evening star. [volume] (Washington, D.C.) 1854-1972, 1897-11-29
THE MONEY
Bank Paper Based on Asse Is Claimed to Be
Fest.
Why the Government and NatiounI
Jacob L. Greene's Argument.

Jacob L. Greene. president of the Con-
recticut Mutual Life Insurance Company
Of Hartford. Conn.,. has submitted to the
Tcnetary commission an argument In favor
Of the retirement of government paper
money and the substitution of bank paper
based on assets. He objects to the present
national bank notes and the greenbacks as
not being the outgrowth of trade and cor
responding to none of its needs. He de-
clares at the outset that the primary char
acteristic and only source of value Of
paper currency is the property which it
represents.
Paper Currency.
The three points upon which the exist
ence and management of a paper currency
must depend are, he says. the questions,
who should issue such currency, what is
the property upon which it is based, and
how is that property pledged to the holder
of the promise to pay; in other Words to
the holder of the currency itself.
1t follows, he contends, that the govern
ment can in no wise be intrusted with the
issuance CT currency or money. Inasmuch
as its functions are political, inasmuch as
it is the owner of no property. and mas
much as it can obtain property only by
taking j; from citizens 1t cannot be suf-
fered to carry on trade operations. for 1t
can be neither buyer nor seller or have any
relation to the property upon which credit
rests, and the mechanism by which it must
be regulated. 1t Is a common error to sup
pose that government issues money 1t can
do no such thing. 1t certtfies the quantity
Of metal in a coin by its stamp. 1t throws
safeguards around the issuance and use of
money, and it can borrow the capital of
citizens for definite uses, but, under pres
ent conditions. not as a basis of business
operations. These must be conducted solely
hyy in tow F t,Dx>
which business depends. They can be
trusted, and they are the only individuals
who can be trusted, to issue credit cur
rency. just as they provide the mechanism
carried on, for they alone can accurately
judge of the character and amount of such
credit currency which is needed. They
alone can furnish the wealth which is nee
essary to redeem the promise made by the
issuance of credit currency, for they alone
are the owners of this wealth.
Referring TO the American currency sys-
tenn. lie says: THE present scheme is I'M
natural, in that it is not a true banking
credit currency. 1t is not based upon COM
vestment in government debt. 1t is not
reGeemaDle i'll actual dollars. but in the
promise to pay dollars, and this latter fact
in itself has been ere Of the most vicious
influences Of the greenback-the fact that
it is a legal lender TIC say that a man
who has promised a dollar can rio himself
of that promise by rendering, not the dol
lar. but another's promise of 1t. imports a
standing falsehood into private contracts
and destroys their sanctity. and this crit
icism applies also indirectly to the national
banking currency"
The Remedy.
AS to the remedy he says: ITO make the
promise to pay a dollar really worth a
dollar it is only necessary to place sufti-
Gent readily convertible property behind
the promise. Because our largest expert
ence of a bank currency of uniform value
was had with one based on government
debt, and because the variable values of
bank issues in the international bank
days were due to uncertainty concerning
the amount of property behind the notes,
people have supposed that bond deposit
is necessarily incident to stability of the
value of currency. In reality, however, a
properly secured instantly redeemable
elastic and adequate bank currency can
be obtained by forcing all banks of issue
to take national charters and prohibiting
nCte issues in excess of a certain percent
age of capital, with an absolute first lien
upon all the property of the bank, making
ote holders preferred creditors and secur-
ing current redemption on demand by the
banks Themselves, with government guar
anty Of the notes Of failed banks
These conditions are exemplfied in the
successful working of the Canadian bank
ing system, which is completely automatic
trade and furnishes currency the instant
that commerce demands it, redeeming it as
fast as no longer needed.
Retiring the Paper.
According to the latest returns. TIA per
cent of our gold stock is in circulation,
only 90 per cent is represented by GER
tificates. OF our silver dollars only 1874
per cent are in actual use, while s5.2 are
represented by certificates. If the green.
backs be retired the gold held for their
redemption will be paid out. At the same
time gol1 certificates should be called in,
the gold held therefor paid out and, mas
much as it is no part of the function of
government to store and care for money,
it should redeem it's silver certificates pay
out as much silver coin as can be absorbed
ty commerce and sell the rest, should
there finally prove to be an unusable resi-
due. thus permitting it to become available
to commerce through the coin itself and
through It's use as a part of the assets of
the banks. Only by these means can COM
mercial and monetary questions be remov-
ed from political influence and the govern
ment be freed from danger arising from