New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1900-01-12
ELASTIC CURRENCY.
A CORRESPONDENTS CALL FOR BETTER
DEFINITION-THE LIMIT OF ELASTICITY
AND THE ACTIVITY OF CIRCULATION

NC'NANi~S>t
DEFINI1ToN-THE LIMIT OF ELASTICITY
AND THE ACTIVITY OF CIRCULATION.
To the Editor of The Tribune.
Sir: Your discussion of elastic currency a
few days ago deserves the thanks of thinking
people Elastic currency has always seemed to
me a definition that needs to be defined. Elias
ticity is the quality capacity of being expanded
Gn1ated) condensed (contracted) But nothing
r this universe expands or condenses of itself. 1t
does only under the influence of either internal
external force of that little known power
called heat. Currency can expand or contract only
under somebody's will power
The most elaborate definition I have seen Of an
elastic currency 1894 by writer &C repute
and authority a leading gold standard advocate
who referring to the crisis of 1898, said: 1T would
have responded to the sudden demand for an en-
larged medium of exchange currency
which is elastic. which will increase with an in
creased demand and decrease with decreased de-
mand elastic. automatic power of in
creasing or decreasing with increasing decreas-
ing business demand a quick, responsive
expansion or contraction"
Nothing could be frank 1t is just what the
term elastic currency imports. If the definition
be not full of danger 1 have studied the subject
fruitlessly Any currency must be material sub
stance. Its elasticity is ideal. metaphorical. 1t
does not have, and cannot have, that automatic
power" which is made a term of the definition.
That power" must be vested somewhere else and
can be vested only in human beings Those human
beings must be either bankers or some department
of the Government.
The matter must be considered in connection with
the gold standard. gold the money of redemp-
ton. Divorced from that elastic currency
would soon rival John Laws monumental disaster,
or the Mississippi scheme" Therefore, when
speak of an elastic currency mean paper
money-more especially bank notes redeemable in
gold. The supply of gold has been settled by nat
ure, and cannot be contracted" or expanded" by
man.. Its very non-elasticity is its chief value as
a standard
HOW OBTAIN ELASTICITY?
Having once settled down gold as the stand
ard of value and the money of redemption, how
shall we get elastic currency'-one which can
be contracted" or expanded at pleasure? It is
not needed. and would produce the ending
cycle of crises" ''panics" and "depressions."
Taking our stand upon the gold basis and requr-
Ing all paper money to be redeemed in gold de-
mand what does elasticity of currency mean?
Does it mean that as much currency may be issued
is thought to be necessary transact the bust
ness of the country in active seasons, may be
thought on some great emergency necessary to
give relief against great money stringency
brought on by overspeculation not to call it gam
bling? If So who is to do the thinking? When the
relief has been offered accepted, the public
sun remaining doubtful and made more doubtful
would be made for the gold, the banks would "sus-
pend gold payments and at one bound we should
20 oack 10 1e0I 10 say nothing of the wildcat yell
low dog, crossroads banks of issue" of 1897.
-APIS dOlIleI test Oh the operation OF elasticity,
Given the following facts: Banks under Govern
ment supervision and control, bills redeemable in
gold and legal limit to the amount they issue
Whether that limit be paid up capital or capital
and surplus, or the amount of Government bonds
deposited as security, or however else regulated
the result is that total volume which the banks
have all gone into operation, and have issued only
sZ5OO00OOO of paper currency. An emergency sup
P0sea need Of more mS G o arises and the banks is
reached That would be an expansion of the actual
amount Of currency in circulation but not an eX-
proved to be elastic on one occasion. The emer-
gency passes off. things quiet down, the demand for
possession Of 5000 of their own bills lying idle
in their vaults, put there by depostors, which the
Thus far we had one expansion and one contrac-
in legal limits But 1t was an elasticity caused by
business demand and necessities, the law of supply
and demand In the next year another emergency
arises put me banks cannot then issue an addi-
can only use the whole OF the $780, 1900 provided
for all OF which was not before in that year need
edmtha It. is, not kept IN circulation by being Dor
If advocates of elasticity say I have described
never so stated their theory; They have simply
e co.. for eiasieity and have placed no lin
above described has nothing In it. Elasticity
body's Judgment the Volume Of paner monay in
istence may be increased.
RAPIDITY OF CIRCULATION
1t is elementary that rapidity of circulation, ac-
tvity in the use Of money. is a far greater factor
III NlSpdlCullB business IMAM the quantity
ume of money IN existence. If a elastic currency
means one that may be expanded or contracted at
pleasure, why all this denunciation for a quarter
The advocates of the gold standard concede away
more than half their ground when they seek to
couple II with an elastic paper currency. They
concede that there is not enough gold in the world
to do the worlds busness-just the contention OF
the silverites and the advocates of irredeemable
The country does use more money at some sea-
of the year than at others 1t is not to be OBJ
tanned Of good quality by printing at each season
or activity a rev cords OF paper bank I'm
simply by more active and handling of that
How is that to be accomplished? BY no safe means
known to man except by the only automatic"
mand for or the fact Of more active exchanges at
OF money. II TINS results in higher interest
season and lower interest at another. the average
is in the very fact that human agency no law
no emergency provision, no interested or corrupt
sfonHlenders affording safe bnsineSs rnen 1 PAN pan
drawing credits And there is but safe con-
traction-lenders discovering that credit and loans
frequently speculation have gone far as is
safe and limiting loans accordingly. Thus both
expansion and contraction are applied to credit
and not to currency. An elastic currency with its
possibly Interested people would offer temptations
10 abuse which human nature has never been
Having got the gold basis, are we to stop and
finger and count the gold coins at every transac-
even with a gold basis, people. as a mere CON
represent and pPome gold amy LET the the
gold be ready and available on demand, when the
certainty of his getting II the more Certainly he
will not want it. The time has passed for prom
iars' or 'co!h or lawful money or legal ten
der current funds" silver" 1t must be
gold.
WHO CAUSED THE TROUBLE.
Shall the community have no relief in times of
stringency. like the furry of the present month?
Who caused the trouble? Mere schemers, gambler
in hugely inflated enterprises and watered seouri-