The daily morning journal and courier., 1899-05-23
SOUND SYSTEM OF CURRENCY.
Where and How the Plan of the Presi-
 dent Fails to be Effective.

Where and How the Plan of the Presi-
 dent Fails to be Effective.
 Reports from Washington represent
 the president as being resolved to urge
 upon congress the following articles of
 currency reform:
 First, the separation of redemption of | United States notes and treasury notes
 from the other transactions of the treas
 ury, and placing the gold reserve beyond
 reach of congressional appropriations. | Second, provision that such notes once
 redeemed shall not be re-issued. except
 in exchange for gold.
 And third, authorization of the treas
 ury to borrow at it's discretion to re- | plenish the gold reserve.
 It is gratifying to find the president
 thus prepared to commit his party to these initial steps in monetary reform. | Those enactments would more fully con- solidate the gold basis, and, at the same time would provide the means for for | tifying that basis; all of which implies | that the president is well on the way to- wards getting rid of his whilom silver | proclivties It would be great mis- l fortune, however. should the sound non ey element in congress be found willing | to stop at this limit which MT. McNin- ley prescribes. There is no small danger | that, if reform be restricted within these | lines, the incompeteness of the change | may provoke indiscriminating discon-
 tents which defeat supplementary at | tempts to make currency reform com- plete and effective.
 The presidents programme is designed
 to gradually withdraw from active cir culation a considerable portion, If not
 ultimately the whole, of the government
 notes in active notes in active circula- tion and its value must be judged by
 the reality of it's adaptation to that end
 It is pertinent to note that the change of relations between the New York sub treasury and the Associated banks, ini-
 tiated under Secretary Fosters adnlinis- tration has had the effect of compell- ing the banks of this city to get the gold required for export through the ex- change of legal tenders for gold coin, in- stead of taking it from their own vaults as formerly For the recent period of large excess of merchandise exports our exports of gold have been nominal and the banks have therefore had no occa- sion for drawing gold from the treasury for foreign shipment. But for the four preceding years, the banks turned into the sub-treasury a yearly average of r;c al, laIIo tnr ders to procure gold for shipment to Flu rope and for the five next preceding years QS8S to 1892 inclusive) the exports of the yellow metal averaged close upon fifty million dollars per annum, Taking these latter figures as representing our probable future average annual with drawal of the metal from the treas ury for export, it would follow that the treasury will have to take in fifty mill lion dollars yearly of it's notes in such redemptions. According to the presi- dents proposals these notes would be non-relssuable except in exchange for gold. At first sight, this may seem to promise very important contraction of the greenback circulation. Surface req soners argue that in some eight years the government would thus get its whole note circulation into it's hands, and that all that would remain for it's final ex- tinction would be law ordering the cancellation of the notes.
 This assumption however, overlooks the contingency that the large classes of unwilling holders of gold may avail themselves of the right offered by the president to exchange their gold for the redeemed notes held in the proposed de- partment of issue and redemption. In view of the fact that paper money has already become very scarce, that it is universally preferred to gold in the ordi- nary circulation, and that it can be more conveniently and cheaply trans mitted than coin as between the domes- tic financial centers,-there is the strongest reason to conclude that the exchanges of notes for export gold would be about evenly offset by the ex changes of gold for notes for the con- venience of the internal circulation. And, this being the outcome, what would the elaborate mechanism of exchanges proposed by MT. Mckinley amount to? It would be mere empty feint at doing | a thing impossible under the conditions | prescribed and which, therefore, would | undone. The contractions of the | greenback circulation would be only | spasmodic and transient, and nothing l whatever would be accomplished to- l wards eliminating the greenbacks from | our monetary system,-professedly the l chief object contemplated. Taking the | presidents suggestions as they stand, l they could only result in deception |