The sun., 1903-01-05


the issuance Of new stocks representing a
par value OF billions Of dollars and the
general imitation Of prices that has taken
place has absorbed all the money available
for speculation and has even deprived
business OF its fair share OF funds.
Naturally, now that business is beginning
to resent the treatment. the cry arises that
II IL not over-speculation but defective
currency system that Ia at fault. and plans
for radical change in this system are
urged upon the national law-making body.
Those pressing these plans are very careful
not to openly declare that what they want
is more money Al ths' y ostensibly
asked for is relief from the present evils
OF our "inelastic" currency. The argu-
ment runs in this way: Our circulating
medium is now absolutely. sAfe; but a.
IL is based for the most pan on Gov
eminent bonds. its supply fluctuateS accord
ing to the prices Of these bonds rather than
according to the business needs OF the
country: and as the quantity OF Govern
ment bonds tends to decrease rather than
increase our currency suffers contraction
at a time when business interests require
II to expand. What we need is currency
that will expand and contract automati-
cally with business requirements. Here
the humor OF the situation becomes ap-
parent. With the single exception Of
he bill introduced by Senator Depew.
every one Of the currency reform projects
that has been proposed-at least every one
that has attracted attention-has not ad-
dressed itself to the supposed inelasti, ,ty
Of the currency system In the slightest,
but Ia an out -an6.out imitation measure.
All OF these schemes. save ns stated. simply
contemplate an addition On mdsse to the
circulating medium OF the land Of n amount
Of paper money varying all the way from
S?OO. 600 200 to $500 900 ,Ooo. based on gen.
eral banking credits. Senator Depew's
bill provides that banks may only issue
bills Of this kind by paying tar to the
Government so large that the banks will
not find profit In putting out the new bills
except when money rates in the open market
are very high: thus the banks will seek to
retire such bills whenever they are issued
as soon as interest rates In the market fall.
Such law would secure real elasticity in
the currency and be q valuable contribution
to our currency legslation. But the en-
actment of a measure like the others
&c bei would, In the p esent state OF
suspicion already existing abroad regard
ing our financial state. he the most deplor-
able event that could happen. 1t might
produce for a time higher prices and a
rabid speculation, but 1t would almost i'm
mediately expel gold from the country
There seems little reason to fear. how
ever, that bill Of this kind will become
a law. Popular hostility. especially in the
West. is aroused against It. An imposing
array Of statistics is mustered to show that
II bank asset currency had been in vogue
since the foundation Of the national bank
ing svstem in 1859. the losses by reason Of
IL would have been uncomfortable. But
the argument convinces nobody National
bark; az they have been conducted under
the present system and as they would be
conducted with several thousand officials
issuing asset currency are two different
propositions. Jeremy Benthams meta
physicll argument showing that ghosts do
not exist is said Lord Beacon sfield. "ab-
! solutely convincing-in the daytime. At
night il does not hold
The other great feature Of the business
| life Of the year has been the dimini led
p offs Of all business by reason Of increased
| expenses The tendency has been most
| plainly visible in the operation of railways.
| largely because o. the statements Of earn
ings published by most railroads at regular
| periods: but all industries have suffered
| from it, and inasmuch as the increased
| expenses are OF the so-called permanent
order being advances in wages and enlarge
! ment q OF her expenditures that once made
| can with difficulty be curtailed. .he chances
are that they will suffer from II more in TIE
L . l..
the enormous volume Of tonnage moved
and passengers carried, the net earnings Of
the railways Of the country were less la I
year than they were the year before: and
every railroad official in the country whose
opinion is worth anything admits that
| these earnings will be lees in the present year
than they were last year, unless the people
consent to pay increased rates for the
| transportation Of freight. Whether the
| people will consent to pay these rates, and
whether the railroads can maintain the rates
among themselves. is, obviously. very
| important question. There can be no herm
| in referring 20 the feet that railway officials
| privately express great scepticism a TO
| whether these higher rates can he main
| teined. If they can be successfully i'm
posed. the further question then arises as
| 70 how great an extent will the fact reduce
the profit Of shippers using the railroads,
and. So continuing, curtai general consump-
ton. The effect Of the reign Of high prices
| upon our once overfowing export trade
and upon the foreign markets for our secur-
ties is now apparent to every one. The
doctrine hns before been expounded in
| this column. but IL il worth while rce1-
pounding because daily events are now
| illustrating its correctness. that whenever
every producer ia continually asking and re-
| ceiving hi CHER and higher prices for whatever
he sells, every producer soon finds that he is
paving other producers as much as he him
self receives: his foreign markets disappear.
| there is limit 70 which higher prices an he
pushed in market strictly domestic: and
so prof a blc production ends.
All this certainly emphasizes the sweet
| reasonablcness Of rest and quiet in Wall
Street rather than attempt TO get up another
| boom right away. Our coming crops. too
must he thought of. All Trustworthy
testimony is that the people In tho " stern
| part Of our country. hsving hrst paid on
their debts. are conducting, and have
planned for the future business entcrpris IS
in great part Of speculative nature, re-
! o,,;ripo tho continuance Of local prosDerity Y