The record-union., 1898-01-03

given to this consideration by the fact
| that it would be scarcely possible for
| this ration to engage in war in its
present situation counting as a part
| of the situation the imperfect develop
ment of clear conceptions on the sub
| ject of money in the minds of the peo-
ple-Without a suspension of specie
payments and a resort to further issues
of Government notes. There is no
doubt that if our Government were re-
lieved of it's existing demand obliga-
| tions, and our currency system put in
working order upon gold basis it
would be entirely possible for us to go
| through war without suspension of
specie payment, or any arrangement of
our monetary system. If war should
come, the value to the country of the
ability to thus avoid the indirect losses
following from deprecated currency,
inflated prices and financial demoraliza-
ton would be so great that the burden
of paying off our demand obligations
would be as nothing in comparison.
We have a total volume OF paper and
silver in circulation amounting to
| S90S. 12S 0S7, all resting for its value
on the credit of the Government, less
credit is maintainable only as a whole.
The paper of the United States could
not he dishonored and it's silver up
held. 1t is necessary, therefore, that
the Government should keep a large
reserve fund in gold. Such a fund in
the hands of the Government is de-
fenSelhss against attack. In countries
whare the Government has no demand
debt outstanding, and the gold reserve
is held by banks, the nations stock of
gold is capable of some degree of pro-
lection through the rate of interest
| charged for loans. But our Govern
ment has no such resource It's great
gold reserve is an open mine free to all
who bring its notes. And as the entire
monetary system of the country hangs
upon that one reserve, the situation is
one Of uncertainty and hazard against
which no insurance is possible.
AS against these serious disadvan-
tages there is no advantage which can
possibly be claimed for paper money
in the form of Government notes over
any other form of paper money equally
good, except the saving of interest on
so much of the public debt as is repre-
sented by the notes. But this supposed
economy is more apparent than real.
Indeed, when we consider all the facts.
such notes are an extremely costly form
of money.
In order to create the gold reserve re-
quired for resumption in 1879, bonds
were sold to the amount of 800, 900, ,00O
During 1S94-95-96, $262, ,315 400 more
were sold to protect the same reserve
The situation was then complicated by
deficit in the revenue, and it may be
said that the necessity for the later
sales arose partly from that cause.
Not to enter upon that question closely,
it is clear that with interest to pay on
$357 100000 Of Indebtedness incurred
chiefly, if not wholly, in consequence
of the existence of the Government
notes, and S100, 100000 of reserve lying
idle in the Treasury, the saving in in
terest by the United States notes is
small gain compared with the unend-
ing burden of providing for their re-
demption. We have already redeemed
them in gold nearly twice over-$54S,- :
6S1, ,O16 since 1S79--and they are all
outstanding yet.
Worse than this, however, is the IN
jury which results from the element Of
uncertainty which is inseparable from
such d currency. Such injury is none
the less real because it may be upper
ceived. 1t may go long unnoticed, like
friction in machinery or malaria IN the
air, but it has its effect nevertheless;
and when it reaches an acute manifes-
tation, such as we have experienced
within the last five years, the loss oc-
casioned is beyond computation.
THE SILVER CURRENCY.
We have $354 ,355, ,031 of notes of s.
and under, and $50, 1916, 7SS of silver
dollars in actual circulate ton, making a
total of S414, sol ,S19 Of current money
in use, exclusive of gold, in denomina-
tions Of 81, 81 and So. Our total stock
of silver dollars is 1882, 713, 1872. This
is an excessive quantity to have at the
existing discrepancy between their legal
and actual value. But with further
coinage of them discontinued, and their
parity assured by the exchange of gold
for them on demand, it is better to re-
tain them as they are than to attempt
a final solution at this time of the prob
lem which they present. By with
drawing all silver certificates over So,
and all other notes under S1O a place
wifi be made for nearly all the silver
dollars in way which will give the
country the full benefit of them for
current use without imposing upon the
Treasury any serious burden in their
maintenance.
BANKING SYSTEM
The chief difference of the proposed
from the existing system of bank notes
is that it gradually does away with the
requirement that there shall be a de-
post of bonds with the Government as
a condition for the issuance thereof.
AS now, the notes are to be first hen
upon all the resourc ces of the banks, in
cluding the stockholders Liabilities. This
change is necessary because of the
scarcity of United States bonds, and
the attempt to substitute other bonds
would lead to many evils. The change
is wise because 1t permits the issuance
of notes in the way and at the time
when, and for the purpose for which,
they would be issued under natural
conditions, if no law prevented. Such
a system would more perfectly than
any other give the country a circulat-
ing medium: it would readily and
quickly adjust Itself from season to sea-
son to meet the wants of the business
OF the country ItquiNlIlS DdIlK notes
for its convenient transaction Under
the present system. the problem pre-
sented to a bank, when it's customers
call for currency, is not the amount
of it's own assets, but it's ability and
desire to make an investment in some
thing quite apart from its usual busi-
ness as a bank, in order that it may be
in position to provide man who
Dor with the tools most convenient at
-. hi