Iowa state bystander. [volume] (Des Moines, Iowa) 1894-1916, 1897-12-10


year, have demonstrated that 1t Is not
only an expensive charge upon the gov
eminent, but a dangerous menace to the
national credit. It is manifest that We
must devise some plan to protect the gov
eminent against bond issues for repeated
redemptions. We must either curtail the
opportunity for speculation, made easy
by the multiplied redemptions OF our de-
mand obligations, or increase the gold re-
serve for their redemption. We have
$500, 900, 900 OF currency which the govern
ment by solemn enactment has under
taken to keep at par with gold. Nobody
Is obliged to redeem in gold but the gov
eminent. The banks are not required to
redeem in gold. The government is obliged
to keep equal with gold all Its outstand-
Ing currency and coin obligations, while
its receipts are not required to
be paid In gold. They are paid
in every kind of money but
gold. and the only means by which the
government can with certainty get gold is
by borrowing. 1t can get 1t In no other
way when it most needs 1t. The govern
ment without any fixed gold revenue is
pledged to maintain gold redemption.
which it has steadily and faithfully done.
and which under the authority now given
It will continue to do.
Gold Must Be Replenished.
The law which requires the government
after having redeemed its United States
notes to pay them out again as current
funds demands a constant rcplenishment
OF the gold reserve. This is especially
SO In times of business panic and when
the revenues are insufficient to meet the
expenses Of the government. At such
times the government has no other way
to supply its deficit and maintain redemp-
ton but through the Increase Of its bond
ed debt. as during the administration Of
my predecessor, when $262, 315. 400 Of four
and half per cent bonds were issued
and sold and the proceeds used to pay the
expenses Of the government in excess Of
the revenues and sustain the gold reserve.
While 1t Is true that the greater part Of
the proceeds Of these bonds were used to
supply deficient revenue, a considerable
portion was required to maintain the gold
reserve. With our revenues equal to our
expenses there would be no deficit re-
quiring the Issuance OF bonds. But If the
gold reserve falls below $10O, 10000. how
will 1t be replenIshed except by selling
more bonds? Is there any other way
practicable under existing law? The seri-
GUS question then is, shall we continue
the policy that has been pursued in the
past-that u.s. when the gold reserve reach
es the point Of danger issue more bonds
and supply the needed gold, or shall we
provide other means to prevent these re-
curing drains upon the gold reserve? II
no further legislation is had and the pol
icy OF selling bonds is to be continued,
then congress should give the secretary
OF the treasury authority to sell bonds at
long or short periods, bearing q less rate
Of interest than Is now authorized by law.
5@ earnestly recommend, as soon as the
receipts of the government are quite suffi-
Gent to pay all the expenses Of the gov
eminent that. when any Of the United
States notes are presented for redemption
in gold and are redeemed in gold such
notes shall be kept and set apart, and
only paid out in exchange for gold. This
is an obvious duty.
To Maintain the Reserve.
II the holder Of the United States note
& prefers the gold and gets 1t from the gov
eminent he should not receive back from
out paying gold in exchange for it. The
reason for this is made all the more APP
parent when the government issues an
Understanding debt to provide gold for
the redemption Of United States notes
MISUNDERSTANDING debt Surely it
should not pay them out again except on
2 demand and for gold. II they are put out
In any other way they may return again
to be followed by another bond issue to
redeem ttem-another interest-bearing
debt to redeem o misunderstanding
debt. In my view 1t is of the utmost i'm
portance that the government should be
relieved from the burden of providing all
the gold required for exchanges and ex-
port. This responsibility II alone borne by
the government without eny OF the usual
and necessary banking powers to help
itsslG The banks do not feel the strain
Of gold redemption. The whole strain