The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-01-03
STANDARD OF MONEY.
Gold Alone FuIfiIIs the Conditions Re-
nuired hY All Nations.

quired by All Nations.
The most serious evil affecting our pres
ent monetary system is the threatened
degradation of it's standard. The story is
familiar, but it will be useful to recall it
briefly in this connection. The close of the
civil war found the people of the United
States in the possession of a deprecated
legal-tender paper currency, with its in
evitable accompaniment of inflated prices.
To return from such a condition to one of
sound money and nominal prices is always
a painful process, and when the govern
ment began that process, under Secretary
McCuloch, in 1866, there was an outcry
against it, and it suspended. From
remonstrance against the payment of the
demand obligations of the treasury at that
time the movement grew to an opposition
to the payment of them at any time, and
| finally to demand for the issue of more of
them, and that not in the form of promises
to pay, but of fiat paper dollars. The num-
ber of persons who were carried away by
these delusions was very great. The politi-
cal struggle which ensued was prolonged
and intense, and the victory which the de-
tenders OF sound money achieved in the
passage of the resumption law of 1876 was
close one
That victory ought to have settled all dis
LuFDlnB questions IN relation TO the mon
etary policy Of the United States, and would
nave done so, sc far as can now be seen, If
1t had not been for the fall in the value of
silver, which began while the contest was
going on. From 1892 to 1873 the legal stand
ard of value in the United States was the
double one of gold and silver at prescribed
ratios. BY the coinage act of 1873 the silver
dollar, which was then worth more than the
gold dollar. and which no one could foresee
f TOulu ~ evei ne tless' WoItn less' anu oI Wnlch very
lew were IN existence, Was dropped from
the coinage, leaving gold as the only full
legal-tender coined money.
Soon after the passage of this law the
value of silver began to decline. The friends
of cheap money saw their opportunity and
lost no time in improving it, The clamor
for the restoration of the sixteen-to-one sill
yer dollar to free coinage began. This was
q far more plausible, and, therefore, more
dangerous movement, than the fiat paper
money scheme. Silver had a real value.
At the beginning of the agitation that value
was not greatly less than sixteen of silver
to one of gold in weight. 1t was claimed
that its admission to free coinage would in
crease its value to the full measure of that
ratio Patriotic sentiment was invoked in
its favor. 1t was said to be the money of
the fathers and the Constitution. To this
was added the appeal to class prejudice.
Gold was said to be the money
Gold was said to be increasing in value,
and so depressing all prices, and increasing
the burden OF all debts to the unjust adj
vantage of all creditors. The advocates of
free silver professed to be the champions
of the farmer, the mechanic and the laborer
against the aggressions of the capitalist,
the banker and the corporation. Such ap-
peals came to men in debt, out of employ
ment and downcast in spirits with great Sc
ductive force. Evidence enough of that
fact is on record in the elections returns of
1896.
STANDARD SHOULD BE FIXED.
The pertinence of this retrospect is the
proof which it affords Of the fact that SO
large a portion of the people of the United
States have no conception of the nature
or Importance of a money standard. In
such a country as ours the legal monetary
standard is whatever a majority, or a plu-
rality, it may be, of the voters say it shall
be. 1t is therefore of the utmost Importance
that the standard shall not only be dis
tinctly declared in the law, but clearly fixed
in the minds of the people as the first and
indispensable element of sound monetary
system. All history is evidence that the
people who suffer most from d degradation
of the standard are not the rich and pow
erful but the poor and helpless. Com
pared with this danger all existing evils of
mere kind or quantity of our present money
are relatively only inconvenience. The first
need OF the situation is to fortify the
standard.
There are some considerations as to the
standard which ought to commend them
selves to the judgment of the country There
must be some standard of value. The
standard must have a market value as a
commodity independently of any govern
mental fiat and of all legal-tender laws; it
must be durable; it must be homogeneous;
1t must have a maximum of value proper
toned to its bulk; 1T must have as d COM
modify, as stable a market value as pos
Sible, and in order to secure the stability of
that market value the relation between it's
supply and demand must be as constant as
possible Gold alone fultills these condi-
tions. The civilized world has therefore
determined that the standard shall be gold
No government however powerful, can in
fact reverse that determination or, without
injury to the interests of all its people, at
tempt to establish any other standard of
value.
There is clear distinction between the
functions of money as a standard of value
and as a medium of exchange. While that
money which is the standard of value Will
always serve also as a medium of exchange
yet other forms of currency of inferior mar
ket value can in no sense be a satisfactory
standard, and can be a suitable medium of
exchange only when their convertibility at
par into the standard money is assured
Any possible currency is, therefore of one
Of two kinds. The first kind is that which
has been adopted as the standard of value
The second kind is that which is without
reference to its market value as a COM
modify, receivable at par. because con-
vertible at par into the standard money
first kind United States notes. national
bank notes, silver dollars. subsidiary silver
and minor coins, are currency of the second
kind. The face value of the silver dollars
the subsidiary silver and the minor coins
more or less largely exceeds their bullion
value, and they differ from the note issues
they are made has some market value as
bullion.
Under modern conditions of business pur-
chases, sales, loans, the discharge of debts
and even payments of wages are effe cted
in great part by drafts, checks or transfers
of credits. While the work which the
money, which is the standard actually per-
forms in the exchanges of the country is
relatively small. yet every one of those ex-
changes is based on that standard If all
the money of the country is convertible at
par into gold there may then be whatever
and as much Of the representative forms of
currency as the convenience of the people
may require. On the other hand. If the
standard Of value be lower, there neces-
sarily follows a loss of public confidence
lessened use of credit and of credit forms
of currency and consequent diminution of
the effectiveness of the currency. The gold
standard, therefore, does not mean gold
monometalisnl. and it necessarily results,
not in contraction, but in the greatest pos
sible expansion of the currency within the
bounds of safety.
TO PREVENT TAMPERING.
AS gold derives no value from any legal
tender law. nor any value from coinage at