Aberdeen herald. [volume] (Aberdeen, Chehalis County, W.T.) 1886-1917, 1903-05-04

ply means that the business world is fast
coming TO realize that our supply Of
money is so inadequate that even the
loaning OF bank reserves over and over
again will not suffice TO furnish the money
required to meet the needs Of the coun
try. The bank reserves ought not to be
loaned at all. The law requiring banks
to keep a reserve against their deposits
ought to be so amended as to require the
reserve to be kept in the bank vaults. To
allow this reserve to be loaned when all
is sunshine only 20 be suddenly con.
actel at the approach OF storm is
utterly without defense. 1t means that
when money Is easy it is too easy, and
that it cannot get little tight without
necessarily becoming very tight.
The scarcity Of money can be under
stood when one inquiries what the result
would be if the government required
banking to be done on safe basis and
the reserve to De kept in the vaults.
Such result would produce stiingerfry
that might bring on panic, and yet H.
stead of providing more money with
which to do business, the financiers insist
upon the gold standard with all the
danger that it involves.
The asset currency isS urged for foIr
reasons: First, because the banks fear
that in the course of time the national
Il VI l,a off nd l. hot
with the payment Of the bonos the pres
basis of bank note circulation will disap
! pear Second, the banks also know that
as the national debt is reduced the strug-
| gle to get bonds will raise the premium
and lessen the profits of national bank
ing. Third, the bankers know that there
is more profit in an issue OF bank notes
on their assets than in TIL issue Of notes
on government bonds, both because it i
necessary to invest money in the bonds
and also because the money invested in
the premium cannot be offset by bank
notes. The fourth reason why the bank
eis favor the asset currency is that it en-
ables them to issue a larger amount OF
money and they everywhere feel the
need of more money.
Why not satisfy this need by the coin
age of silver rather than by the issue OF
paper promises to pay, resting upon the
shifting banking assets of banking in
stitution? Every wel.informed student
OF finance knows that the coinage OF silver
under the Bland Allison act and under
the Sherman law conferred great bene
fit upon the world by increasing the
amount of real money. The government
will socn finish the work Of coming the
silver in the treasury, and there is then
no law for the futther coinage Of silver.
| Not satisfied with this, the financiers are
attempting to make the silver dollar re-
deemable in gold, thus lessening the
volume OF real money and increasing the
volume OF credit money. While it is
possible to issue certain amount OF
credit money upon given amount Of
real money, it has never been possible to
establish with mathematical certainty
just what that safe relation is, and it
varies With financial conditions. When
everything is running along smoothly
given amount of real money will carry
larger amount of credit money than it
will in time OF panic or industrial depres-
sion. Then, too, the government can
carry a larger amount Of credit money on
d given amount of real money than an
individual or private corporation can, be-
cause the government, with its taxing
power, stands back of its paper. This
is assuming that the government paper,
like the banking paper, is redeemable in
standard money!
1t is merely statement Of self-evi.
dent truth to say that financial system
becomes weaker and less secure in pro-
portion as the ratio OF credit money to
standard money is increased. 1t is easy
to understand why the great fnanciers
insist upon gold standard, bank paper
and an asset currency. But why should
anybody else advocate these things? The
farmer, the laborer, the business man
(the business man who thinks for himself
and is not under the thumb of some
; financial magnate) are all interested in
having volume Of money that is not