Worcester morning daily spy. (Worcester, Mass.) 1888-1898, 1898-01-03


Is maintainable only as a whole. The
paper Of the United States could not be
dishonored and Its silver upheld 1t is
necessary, therefore, that the govern
ment should keep large reserve fund
in gold. Such a fund in the hands Of
the government is defenseless against
attack In countries where the govern
ment has no demand debt outstanding
and the gold reserve is held by banks
the nations stock of gold is capable Of
some degree Of protection through the
rate of interest charged for loans. But
| our government has no such resource.
Its great gold reserve is an open mime
free to all who bring its notes. And as
the entire monetary system of the coun-
try hangs upon that one reserve, the sit
uation is one of uncertainty and hazard
against which no insurance is possible.
AS against these serious disadvantages
there is no advantage which can be pos
sibly claimed for paper money in the
form of government notes over any 9TH
er form of paper money equally good
except the saving of interest on so much
of the public debt as is represented 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
|
+! During 1886 1852, 3l5, 400 more were sold
to protect the same reserve. The stu
alton was then complicated by deficit
in the revenue, and it may be said that
I the necessity for the later sales arose
partly from that cause. Not to enter up
on that question closely, it is clear
/ that with interest to pay on $30T, 100000
/ of indebtedness incurred chiefly, If not
wholly, in consequence of the existence
| of the government notes and 500, 000,O 900
! of reserve lying idle in the treasury,
the saving in interest by the United
! States notes is small gain compared
| with the unending burden of providing
for their redemption. We have N1~eady
redeemed them in gold nearly twice over
-$54S, 6S1, O16-since 1879, 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 a 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 it's effect nevertheless,
and when it reaches an acute manifes
| tation, such as we have experienced
within the last five years, the loss occa-
stoned is beyond computation.
THE SILVER CURRENCY.
We have 1854 OBJ of notes of IS and
under and s6O196 1888 of silver dollars
in actual circulation, making total of
SAIL, 551, S19 of current money in use, ex-
elusive of gold, in denominations of 81,
\ 80 and S.. Our total stock of silver dol
lars is 1852, 713, 1872. This is an excess
sive quantity to have at the existing
discrepancy between their legal and
actual values. But with further coinage
of them discontinued and their parity
assured by the exchange of gold for
them on demand, it is better to retain
them as they are than to attempt a
final solution at this time of the problem
which they present. By Withdrawing
all silver certificates over S. and all
other notes under $40, a place will be
made for nearly all the silver dollars in
a way which will give the country the
full benefit of them for current use
without imposing upon the treasury
any serious burden in their mainte-
nance.
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 uhere shall be a de-
post of bonds with the government as
i a condition for the issuance thereof.
AS now the notes are to be a first lien
upon all the resources of the banks, in
Guiding 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 it 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 con-
ditions if no law prevented. Such a
other give the country circulating
medium 1t would readily and quickly
adjust itself from season to season to
meet the wants of the business of the
country requiring bank notes for its
convenient transaction.
Under the present system the problem
presented to bank when its customers
call for currency is not the amount OF
its own assets, but its ability and desire
TO make an investment IN something
quite apart from its usual business as a
bank, in order that 1t may be in posi-
ton to provide man who wishes to
move property or employ labor with the
: tools most convenient at the time for
his purpose Notes secured as herein
provided cannot fail to be safe because,
) being based upon all the resources of all
the banks issuing them, they are based
upon the whole business of the country,
and that business is the thing which
, gives life and value to all securities,
government, municipal, railway and in
dividual obligations. Should all the re-
sources of the banks ever so shrink in
, value as not to be ample security for
the amount Of notes that could be issued
, under this plan, then all other secur1-
, ties even government bonds, would be-
come valueless. The banks are bound
together for the security of these notes
to accomplish the same purpose that the
deposit Of bonds is intended to accom-
plish--namely, to guard against loss
through the misfortune or bad manage
: ment of single banks-and thus save
the holder of a bank note the need of aus
, pertaining the standing of any bank
The objection that is sometimes made
, that the larger banks in the great cities
) would not issue notes because of an APP
! pretended Inability for other banks is
shown by statistics to be groundless
The year of largest bank failures was
1898, but had all the banks of the coun-
, try then issued notes up to so per cent
z of their capital the amount of their as
: sessment to make good the ascertained
: deficiencies of that year up to the time
. of the comptroller's report of 1896
would have been only small fraction
of / per cent. Had so per cent of the
capital of all national banks been issued
/. in notes upon the proposed plan since
: the beginning of the national banking
system in 1865 the assessment upon the
banks annually would have been an
! amount so insignificant that it need
not be taken into account. Taking the
country banks as a whole, it is found
that on Oct. last, they had $401 ZOO, 0OC
! of the $63l 900 900 of national bank cap
ital Should they issue notes up to so per
, cent of that capital they would have
!, 1921, 100000 of notes, and there would
:. be 81, 956, 100000 of resources against
these notes NOT counting oclholders'