Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1898-11-03
IT WILL NOT WORK.
The Bank Currency scheme and the
Gold Standard VIII Not Kit
Together.

Either the scheme to allow banks to
issue currency at discretion. or the gold
standard, one or the other, must be
given up. They are antagonistic and
cannot be made to work together. The
doctrine that, having adopted gold as
our standard, we can then have as much
currency as we please. will prove de-
fusion if ever tried. That is equivalent
to saying that we can have the gold
standard and at the same time have any
range of prices We please. To have the
gold standard prices must be kept at
the gold level. and any devices that
carry prices above that level viii carry
them away from the standard. In
other words, the standard will break
down. This is too plain to need argu-
ment to prove. The gold standard and
high prices do not go together and can
not be made to stand together. The
gold standard can be maintained by
maintaining gold standard prices, and
in no other way. To maintain gold
standard prices the currency, of what
ever it consists, must be made to vary
substantially as purely gold currency
would vary. so that prices will go down
when gold goes out, permitting obliga-
tons abroad to be paid with commodi-
ties instead of with gold, and rise when
gold comes in until an equilibrium is
restored. Banks never adjust currency
to these conditions; they cannot. Give
to them the privilege of increasing the
currency by issuing three or four dol
lars of paper for one of gold held in re-
4 - L
credits five or six times again, and how
long will prices conform to the gold
standard? But the worst effect will be
when they find it necessary, as gofd is
wanted for export, in order to keep up
the original proportion between gold
and credit, to suddenly contract this
structure of credit from six to ten
times as much as a gold currency would
contract. No business can stand such
shocks. Such currency system would
be little else than panic breeding. Its
expansion would go on till the elastic
limit was reached and then the explo-
sion would come. Such currency sys-
tenn would be fittingly described as
dynamite currency.
Rotschild and Giffen in this are right;
there cannot be q. gold standard with
out, in part, at least, a gold currency.
There must be gold enough in the coun-
try to allow such outflow of gold as
trade balances require, and that means
such limitations on other forms of cur
rency as will always leave room for,
nay, will always require, some gold to
make up our full distributive share of
the worlds money.
And it cannot be too often repeated
gold standard in debtor country like
ours, the level of prices will always be
lower than in creditor countries rated
by the same standard; and that as
prices go lower. more and more of
commodities will be required to pay
debts abroad. And, furthermore. that
as the gold standard is extended over
the world, gold must continue to ap-
preciate under the increased demand
for it for world money, and prices cor
respondingly to fall.
OF course the outflow of gold can be
temporarily stayed by selling bonds. as
was done by Mr.. Cleveland. But that
is but postponing the day of settlement,
anu the
when it is made. The basic truth will
still remain, whatever the expdients to
tide over crises, that to maintain the
gold standard prices must be kept at
the gold level. and that if by currency
expansion or other devices prices are
carried above this level, gold will leave
us and the gold standard will fail. The
other fact will also stand as unalterable
as the first: that to make prices con-
form to the gold standard, the currency
must be made to vary substantially as
gold currency would automatically
vary.
I WARNER