The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-01-03
DEMAND oBLIGArIoNs.
The Commission Thinks They Should
BE Gradually Retired.

The Commission Thinks They Should
BE Gradually Retired.
1t is part of the plan submitted that the
demand obligations of the government shall
be put in course of retirement by a process
which shall be gradual in it's operation as re-
spects the current MONEY and business of the
country, but which will lead ultimately To
the substitution of other forms of money in
their place. The demand obligations. nron-
erly so called, consist of the United States
notes or "greenbacks," amounting to 1896.
6Sl'Ol6. and the treasury notes of 1890.
amounting to $1O9,31S,2S0. While the former
are not in terms payable in gold, and the
latter are by law payable in gold or silver.
al the discretion of the secretary of the
treasury, it is obviously necessary in order
to keep good the pledge of the government.
10 maintain the parity of the two metals
as coined to pay all its notes in gold when
eoio Is demanded by the holder So that.
IN practical sense, the note obligations of
the government payable in gold on demand
must De reckoned at the sum of the green
Iachs ana the coin notes-that is, 1855 994 296
these obligations may be briefly sumnarized
as follows Su1iiAii - i1eu
/ The separation of the note issuing and
Ieueemlng operations of the treasury from
It's Ordinary fiscal operations bv the creafion
OF DIVISION of issue and redemption. and
and
other resources held against obligations The
government notes to be paid in gold coin ON
demand through that division
& The reserve to be maintained from row.
enue When adequate, and by sale of bonds
Whsh necessary, the proceeds of such sales
other FPS' S'iiu ~
B Notes paid to be Cancelled as paid up to
me amount of $50,000,000. the cancellation
thereafter Tor i've years not to exceed the
increase of bank notes. After five wears the
noteS PAID to be retired at a rate not exceed
zig ~ per cent. per annum OF the amount
tnen outstanding, at the end of ten wears
Ine Iegai-tender quality of the notes then
outstanding to cease.
4. No note once paid to be reissued other
wise IMAM In exchange for gold except that
IN case or an excessive accumulation of re-
deemed and uncanceled notes in the division
OF issue and redemption, the secretary of the
treasury may use them in the purchase of
United States bonds for the benefit of the
division of issue and redemption. such bonds
10 De neId IN that division and sold for the
Dy the secretary of the treasury.
A HAZARDOUS SITUATION.
AT the present time the government has
no fund for the payment of its demand
obligations except the general balance in the
treasury applicable alike to the payment of
all dues. Our revenues are more or less un-
certain in amount; our expenditures are
large and growing, and liable to vary with
changes in the spirit of the times and the
disposition of Congress and the people It
Is, therefore, uncertain whether we shall
nave at any particular time an adequate
fund for the redemption of the demand
obligations without recourse to borrowing
borrowing is an eneffectual resource be-
cause, under the law as it stands the notes
winch nave been paid must be returned to
circulation, and, so, may be used over and
over to draw out the borrowed gold The
uncertainty of this situation is increased by
tne TACT that the issue OF bonds rests with
the executive department. and whether it
WI VII be resorted to or not will depend upon
ofhcials at the head of that department
More serious still is the fact that it is in
me power OF the executive department, as
Lne law now stands, to decide absolutely
whether the government notes shall be paid
IN gold or in silver. An end ought to be.put
10 this anomalous and hazardous situation
by making specific and adequate provision
Tor the payment of the demand Obligations
and directing in the law that such payment
shall be in gold at the demand of the holder
II Is regarded as certain that if this were
done there would be comparatively little
presentation of notes at the treasury for re-
demption, in the absence of serious public
alarm, and that the best possible security
against the recurrence of such alarm would
be attained. The provision authorizing the
purchase of bonds during the period men
toned is recommended with the belief that
1t would enable the secretary of the treasury
to prevent any injurious contraction. The
bonds purchased with the notes returned to
circulation would furnish the means with
which to redeem them when presented
again
proposal to retire the government notes
may be received at first with disfavor by
some persons, but it must be supposed that
upon due reflection, preferences which are
to large extent merely sentimental will
yield TO arguments resting on solid grounds
Of safety and advantage to the government
and the people. All good citizens must de-
sire that the credit of the government shall
rest on basis so secure that wind that
can blow will ever shake it; that the stand
ard by which all obligations and values are
measured shall be the most perfect express
sion of truth and honesty and unchange-
ableness which is possible of attainment;
and that all the money IL circulation shall
be up to that standard III it's value, and
shall, IN respect to its form and quantity
and distribution. serve every requisite of
commercial and personal use as equally and
completely as is in the nature of things pos
sible. If it is necessary in order to accom-
phSh these results to relieve the govern
ment from the function of supplying money
IN the form of its own notes. it is only
necessary to make that fact clear to the
people to secure their approval of the meas
ure. Not to believe this would be to de-
spair of the capacity of the people for wise
and successful government
BREEDS FALSE NOTIONS.
A government paper currency educates
the people who use it in false notions con-
corning money. Such a currency, circulate
ing year after year without redemption. APP
pears to those who dc not look at it crit
ically to derive its value from the govern
ment stamp" It ceases to be regarded as
promise-to-pay money and is thought to
possess the virtue of money in and of itself.
1t is so easy to create ii that in an emer-
gency the call for more is perfectly natural.
There can be no doubt that the alteration
of judgment the money question by so
many of our people in recent years has
been largely due to the miseducating in
fluences of the greenback currency. The
young and middle-aged men of to-day have
grown up in a vitiated financial atmos-
phere.
Such currency also lacks the important
quality of automatic adaptability to the
varying demands of business. A paper dol
lar is a useful form of currency so long as
is no legitimate use for it it becomes
superfuous and injurious thing-a tempta-
ton to speculation. extravaganza and un-
wise business ventures. A paper currency
created by legislation is fixed in volume by
the law of its creation, and can neither
contract nor expand to those varying con-
ditions which bound to occur in the af-
fairs of men.
More important than this is the fact that
such a currency puts upon the government
the burden of maintaining the credit OF all
the financial institutions of the country.
The government notes are as good gold