The Anaconda standard. [volume] (Anaconda, Mont.) 1889-1970, 1899-12-27

Ing failure, when the bank OF France
loaned to the old lady Of Threadneedle
street fifteen million dollars in gold,
and a similar accommoda ton had been
extended at least once before.
In view of the stereotyped pleas with
which we are all so familiar that there
can be no financial stability or secu-
rity except under the gold standard,
and that England's wealth and COM
mercial prominence are the result of
her early adoption of that standard,
one would naturally expect to find the
bank of England the very Gibraltar
of finance. And yet the truth is al
most universally recognized that the
bank of France, with a reserve about
two-fifths of which is in silver, Is the
strongest banking concern in the world.
why Is this?
There are two general reasons for 1t.
The first is the very fact that the re-
serve consists OF two metals instead
of one. The bank of France never hest
tates to pay out gold upon demand
unless large sums are asked for, mani
testify to be exported. Then instead of
rushing up the discount, 1t tenders sill
yer instead, still holding itself ready
to furnish the gold upon the payment
of an agio or premium. This ability
to swing from one metal to the other
in order to save the one which is
threatened, is the buffer by which the
the bank of England cannot do it, be-
cause although that bank has a right
to hold one-fifth Of its reserve in silver,
| 1t does not exercise the right and has
| nothing with which to respond but
! gold. In truth the law allowing TWEEN
| ty per cent of the reserve to be in silver
| is virtually dead letter, because the
silver not being legal tender for more
! than forty shillings, no one is required
| to take it. Under no circumstances
would it be taken at more than its
bullion value, and person wanting
money" would not take 1t at all. This
simple statement shows the difference
between silver which is full lega'
tender and that which is not.
The second reason for the steadlness
of the bank of France Is found in the
fact that far less credit is employed II
that country than In England, or Ger
many or the United States. The sub
stantial business of the country is con
Quoted much more largely upon casl
basis, and hence there is less DANCE
of a crash, which always comes from
an over-extension of credit.
The entire gold standard theory l
that we must use gold alone as prinaar!
money. experimenting it with banl
notes and other forms of credit. Here
in lies its great danger The notes
and credits generally, are only goo,
so long as there is a sufficient gol
reserve to meet them as they are pre-
scented. The moment they get shak,
they are unavailable for the transac
ton Of business. Credit fails, confidenc
vanishes and then comes panic.
1t has been stated upon an authorit
no less distinguished than Williar
Fowler, an eminent English gold stand
ard fnancier, that commercial panic
are unknown in France, while q short
age of ten million pounds sterling 1
, the gold reserve of England would ere
ate a commercial panic there ainOs
| any time.
; These are the two circumstance
, which give the bank of France it's W
Tivaled strength and enable the bus
ness Of the country to sail SMOOTH
before the wind while panics like c,
clones are spreading wreck and rui
broadcast over other lands.