Iron County register., 1899-03-30
EVOLUTION IN cuRREycY.
fhe Power to Issue and Regulate 1t
should Not Be Controlled by
Private Interests

Surely no one will claim and certain
ly no economist will agree. that a cnr-
rency is or can be improved by takiney
from 1t Its chief money function-that
of legal tender. Evolution in currency
for hundred years has been toward en-
dowlng whatever is allowed to circulate
as money with this highest money
function. Hence, nearly all the paner
currency of Europe to-day is full LEGAL
tender. Moreover, in all commercial
countries the relation between the riobt
to issue paper currency and the pover
over coinage Is recognized as such that
they cannot safely be separated. And
in the currency laws of all advanced
nations the relations of the currency
volume to the business interest of the
whole people are recognized as so close
and sensitive that the regulation has
come to be considered as a function he
longing exclusively to governments.
No question has ever been more thor
cughly discussed than that relating to
the regulation of currency, from the
first bullion report in 1910 down to and
including the great parliamentary re-
port of 1875. And it is believed that
no statesman of eminence since that
period would favor the surrender of
so great power as that of issuing and
regulating the currency of 75.GOO.OOO of
people to private interest. And 1 con-
tidently assert that no economist of
distinction can be named who ever has
given or would give his sanction to such
Il proposition as is now contemplated
in this country. And, believe | NAV
go further and assert that there is no
other enlightened nation that would
debate for an hour a proposition look
ing to handing over TO thousands of
banks the right TO issue and control
the currency of the people. For, by
what principle will they regulate its
supply? This is the all-controlling
question. Every phase of this ques-
ton was discussed to final conclusion
in England during the period | have
referred TO. from 1910 TO 1857. This
discussion was also participated in by
a few leading writer's and thinkers on
this question in this country such
writers as Albert Gallatin. Condy
Racquet. and. TO some extent by Web
ster and others. Every principle of
regulation was enumerated and con-
discussion now. The main question.
then, is. by what principle will banks
be governed in the regulation of the
volume of currency if the sole right 70
issue and control the volume is turned
over to them? Will it be as the public
interest requires. or rs their own in
terests dictate? If in the public in
terest, who will decid.e-one or all, of
thousands of bank presidents or bank
cashiers? Or will it be left to the mere
discretion of those issuing the curren
cy? Other countries have attempted
to regulate the volume of currency by
the state of the foreign exchanges. The
British act of 1914 adopted what is
known as the currency principle" by
which the volume was to be made to
vary as purely gold currency would
vary, by the outflow and inflow of gold. !
In other countries the mote security"
plan has been often tried and has as
often failed \ brief review of these |
several principles of regulation may not |
be altogether Improbable. First. take |
the note security principle. for this |
is foreshadowed in certain of the ques- |
tions of the commission as one of the |
principles 10 De Telleta upon buJ one |
of the first conclusions reached in the |
long and able discussions to which ref
erence has been made. WAS that ''se-
curity of final payment of notes cid |
not secure such regulation of amount |
as would insure stability of value" One |
of our earlier secretaries has been cred |
tied with first announcing this law.
That an oyer-issue of currency the ul- /
innate redemption of which may be
amply secured. may take place. cannot
be questioned. Such Over-issues have
been made time and again in different
Our rational banks in that
way inflated the currency of this coun-
try near the end and after the close of
the war. simply because by the high in
terest and low-price bonds it was made
profitable for them to DO so. The first ef-
feet of such a currency as pointed out
by Lord Overstone and others, as to
the lower value of all currency. includ-
ing coin. as compared with the curren-
cies of ot her countries. resulting always
in the expectation of part or all of the
coin. with consequences which always
attend the contraction that necessarily
J. Warner