The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1897-10-30
The aaeha pay Eaere Saturday 7orning etob 80, 1897

idle reserve or foundation for another
form OF circulation. seems justifiable on
IL on the score Of the greater convent
ence of it's paper representative; but 1t
does not increase our circulation.
eve are accustomed 10 think OF our
national bank circulation as being pro-
tected by a deposit OF bonds in the ratio
OF 100 to so, while the government de-
mand note seemed to require less than
80 per cent Of idle gold reserve. The
| national bank note went through the
panic without the shadow OF suspicion.
because 1t had the interest bearing
promise 10 pay Of the government be-
| hind it, dollar for dollar The govern.
ment note with its partial gold reserve
nearly ruined US, and caused us a di-
rect and indirect loss far greater than
| ly safe currency in place Of the danger
GUS credit currency.
1.-THE treasury differs from the banker
or merchant who attempts 20 carry de-
| mand loans ON 80 per cent gold reserve
in that the latter must have other as
sets in addition to his reserve to justify
| his being in existence at all, while the
treasury has no other property and is
compelled TO create an interest bearing
promise to pay under unfavorable con-
ditions when unusual redemption OF its
notes is demanded.
Real money (the two metals which
have value in themselves and are COM
monty and exclusively recognized as
| money! does not exist in sufficient vol
ume and is not sufficiently convenient
to transact our business and make our
exchanges OF property, and the use Of
various forms Of credit money, aside
from paper currency, has become so gen.
eral that it is variously estimated to
effect 80 to 90 per cent Of our daily bu-
siness.
at has a very considerable element Of
| danger and is necessarily subject to con-
slant individual option, and prompt re-
demption and clearance is essential.
| Whether, II We had never used govern
ment demand notes 80 per cent money
| and 20 per cent faith) and national bank
notes "a mobilization OF fixed wealth.
We could have made checks, drafts. notes
and other forms Of credit money answer
all trade requirements not filled by coin
or its paper representatives, is not now
within proof. Having been accustomed
to certain large amounts of safe paper
money in fixed currency denominations
it is very doubtful if We could safely
dispense with either the government
notes or the national bank notes with
out replacing them with an equally safe
and convenient circulation. It would
not be to our credit as nation to offer
to our people for general use a currency
| Lass 90 ~,.l- 49,
| blesome conditions.
Bear in mind, please, that one form
OF our currency circulation has been the
| promise to pay Of several thousand
bankers, but that such promise was new
er OF any value, and redemption was
never sought, even during the worst Of
our panics. because full value in bonds
was behind the notes for their ultimate
redemption; and in the meenwhile the
| people OF this broad land nHeded, at all
times, reliable currency with which
to make their daily exchanges, even
more In times Of panic than when con-
f1dence made all the numerous forms
/ Of credit circulation or instrumental
ties available.
The other form OF circulation was
|
iself, and for fourteen years after re-
sumption Of specie payment, it was ap-
psrently safe and convenient instru-
ment. Even through an annual aver.
age OF twenty-seven millions OF gold ex-
| ported. only four millions annual aver
age of these dangerous notes were pre-
scented for redemption, but during the
next four years with an average annual
| gold export OF ninety-one millions, near
| ly one hundred and sixteen millions of
notes each year demanded fulfillment of
the promise to pay
| Instead of safe and convenient
form Of currency, 1t was we'll nigh the
means of our undoing.
/ do We need stronger proof that for
our daily domestic uses, and to keep
our entire people in a state Of serene
confidence, we do not want a currency
subject to demand redemption in gold
al times, when, from natural or artifi-
cial causes the gold reserve, whether
held by the government or by banks OF
issue, becomes quite inadequate.
1--WE want absolute safety and certain
ty of value for this small portion OF
our daily financial instrumentalities. Il
is not essential that it would be elastic.
providing the volume is ample and pro-
viding the existence of temporary sur
plus does not entail an expense.
with a stock Of gold such as has ex-
listed IN this country for nineteen years
at least, even though az times II went
| into hiding: with a perfectly possible
| financial confidence which would keep
the entire gold stock available for daily
uses. and with a experimenting circu-
lation not subject to the danger OF our
| present demand notes-a circulation
which shall be an element OF strength
rather than OF weakness, we can depend
upon a large volume OF credit currency
| in the form of checks. drafts. notes, etc,
. 10 provide the elasticity which the per-
iodics, movement OF crops, etc, seems 10
call for.
Credit currency. as its name implies,
! rests upon an insecure founda ton; il
has behind il part money and more
largely faith-faith that the party issu-
ing II has assets or resources which may
be converted into available redemption
! funds. II needed. II is based upon the
doctrine OF chances-tie law Of aver
1 ages: but this law Is the result of ex-
tremes as well as OF means. Il will do
/ for faith weather, or for a long series
OF years; but an extreme financial panic.
/ Ike our recent experience, may make 1t
quite impossible for particular banks 10
( continue their existence long enogh 10
2 establish an average. The one extreme
| settles their business forever, while its
| effect upon the establishment OF an ay-
! e-age for an entire large group IS not