New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1897-02-08
New-York, Feb. 6, 1897.
CONVERSION OF IDLE MONEY.
THE UNCERTAINTY AS TO THE PRICES OF BONDS
DERIVES THE OPERATION OF
IT'S ADVANTAGE

A
DERIVES THE OPERATION OF
ITS ADVANTAGE.
To the Editor of The Tribune.
Sir: / have read with interest your article on
elastic currency in which you show the probable
ill-efects OF Government notes. fundable into Gov
eminent bonds But is it not fact that Idle
money at all times is convertible into Government
bonds and other securities, and that IL is so con-
verted whenever other investments are considered
undesirable And is not the advantage claimed for
this plan. that money can be had for these bonds,
on demand, when money Is scarce-not Clearing
House certificates, but Government legal-tender
notes? Your argument that to give idle capital in
terest by allowing its investment in Government
bonds is granting special privileges seems sound
one, but il seems that capital will not allow the
issue Of sufficient money, unless we provide for its
idle money, in periods of stagnation. And. fur
Their is not this idle capital the accumulation Of
the bank reserves required by law? With a,SocOO,-
900 deposits. the reserve mus: at least be Is per
cent Of that. 500 100000; and since the law AL
lows the banks TO draw interest on 1t while de-
posted in NewYork banks. 1t is very probable that
is used argument against any enlargement
of the circulation. The question arises If we have
is there this discussion to the best plan to in
1t, and what does this cry OF reform OF the
currency mean? An increase or decrease, or
better quality? Or is this. like international BIZ
metalsm, an excuse for hard times? 1t seems that
ting us know how much OF the so-caled circula-
ton OF 81 O0000 900 Of money is actually In circula-
ton after deducting the legal reserves daily bal
ances and other money tied up. destroyed and In
transit. in the National and other banks of the
country Should II result in finding that. instead Of
sae per capita had only 81 or 50 In actual circula
ton. we might decide to reform 70, the currency in
earnest. % 1-L ~ hhhNo
ut is a fact that idle money now be con-
yerted into bonds by purchasing them, but at
VARYING prices and can be reconverted by sale
OF the bonds, also at varying prices. The un-
certainty at what price bonds can be had for
CURRENCY or currency for bonds, when either
transfer may be wanted, deprives the operation
OF that convertibility which it is proposed to
cure The advantage claimed is that money can
be had where and when 1t Is scarce. Undoubted-
ly: and currency can. by holders Of bonds be OBJ
tanned at any time now The difficulty is that
the holders Of bonds do not happen TO be where
the money is wanted, and there is no evidence
that they would be If convertible currency
were substituted.
The idea that capitalists will not allow the
issue of sufficient money" is an absurd mistake.
Capital in no way prevents mportations Of gold
or the creation of National banks. II is the fact
that the capital engaged in such banks is all the
time anxious TO put out more bank notes. thus
creating more paper currency. when there is fair
opportunity for the profitable use Of such cur
rency IT is also the fact that there is always In
circulation more currency than can be used In
some sections. but less than might be desirable
In others.-Ed)