The Washington herald., 1908-02-15

money in circulatiOn-tO contract or eX-
pand-practically making these associa-
tions the masters of our finance.
Wants Books So Balance.
He condemned the policy Of the gov
ernment in collecting more revenue than
is needed to pay its expenses. and con-
tended that the monthly receipts ought to
balance, whereas now we have S2il,0Oo 900
of the peoples money deposited in ma
tional banks. not paying one cent Of in
terest.
This money" said Senator Clay. rs
worth at least 100000 per year interest.
We rob tho American people-the men
who cultivate the farms. who work in our
shops. who build our houses, who labor
for bread and for the support of their
families.
I'VE are here" he added. "to do justice
| to every class OF our people, and not 10
grant special privileges and favors 10
others at the expense Of the people.
Senator Clay denied the proposition that
the government must have gold dollar
as a reserve for every paper dollar Issued.
If such were the case, he said, we could
not transact the business Of this country.
currency and Reserve Now
He proclaimed that now we have in
circulation $500 100000 OF national bank
notes, and more; nearly 500, 100000 Of sill
yer certificates. and S950000,oo0 Of Treas
ury notes, making nearly N.5oo,@0G0
Of paper money. redeemable IN gold, and
there was only sl5O,o00ooo Of sold reserve.
Mr. Clay said:
IF your paper money is kept as good
as gold and silver, It is more valuable for
use. and the people have no desire 20 re-
deem il in gold; and it IS supreme folly 20
contend, in order 70 issue paper money,
that you must have in circulation gold
equivalent 10 the paper money to re-
deem" Regarding the gold certificate.
he said It was foolish policy 10 keep
on hand gold bullion enough TO redeem
them. when on this amount Of gold, twice
or three times that amount Of paper
money could be issued.
Lodge for Central Bank.
Senator Lodge spoke IN explanation Of
his attitude regarding reserves lie came
out strongly for a central bank Of issue
and the retirement Of all Treasury notes.
He indicated that he was opposed to the
Aldrich bill as a general proposition. but
said that Il was the best that could be
done short of reforming the entire cur
rency system.
1T is admittedly a sufficient reserve for
bank circulation 10 hold third tn gold, %
he said THAT is considered amply sufii-
cient by all the conservative banking
systems Of the world. We have S54s.oso000
Of greenbacks. upon which We hold $780,
000,0O0 gold reserve. which is ample re-
serve for the protection Of those green
backs. We have $S25. .000000 Of gold GER
tihcates, which are warehouse receipts
representing actual gold ia the Treasury.
We have SfS00o000 OF silver. certificates,
which are also warehouse receipts repre-
senting actual silver IN the Treasury,
THE total with the gTeenbacks Of the
government money is. In round numbers.
81. sol 0O0o00. Now all the money being at
parity. and all directly or indirectly re-
deemable, We have as a gold reserve
against that mass Of currency, the xs25 20
10000 OF gold represented by the gold
certificates And We have 100000 Of
gold reserve for the payment Of green
backs. making nearly I000000l0 Of gold
held by the government for redemption
purposes. against a total issue of govern
ment paper Of S1.650G180. In other
words, we are holding a reserve Of two
thirds against the government paper that
is out.
Bank Notes and Gold.
Now. take the bank notes. They were
$607 600. I think. in August. 1 think
they are about Ss9OoQ0,Oo0 now. They are
redeemable, not directly in gold, hut in
lawful money Of the United States: that
is they are redeemable by any form Of
the S165, 100000 Back of that Sl65. .000. 600
lies the $1,000 eO0.O00 of gold. The bank
currency. therefore, is not an additional
drain on that gold. The bank notes can
be taken up by any form of the govern
ment money now out, and must not be
added to- the government notes as an ad-
ditional claim on gold reserve"
Senator Lodge declared that since va
ri0us Senators put forward their financial
ideas, he. too, would ike 20 make his
confession Of faith"
Il should be very glad" said Mr.. Lodge
Ito see every dollar of government notes
withdrawn. I wish we did not have a
dollar Of government notes anoat I
should Ike 70 see the government con-
fined to coming gold and silver and only
issuing, If necessary, warehouse receipts
against them. l do not understand how
the government can get paper out after
il has printed it unless it either lends It
or spends it. The one method is pure IN
fiation; the other is entering upon the
business Of loans and discounts, which no
government should touch
should Control the Banks.
Il do not believe in the creation of
money in order to meet current expenses.
1 think that is the way toward imitation.
/ do not believe the government should
be in the mOney-lending business. That
is the business Of a bank. The govern
ment should control the banks. unques-
tiOnably, and all governments do. be-
cause every government must hold its
hand upon the money that is circulated
the creation of money being necessarily
the function of sovereign government.
But should like 10 see all the paper
money issued by banks issued against
gold reserve. which, I think, is the sound
business way. I have no faith in this
bond-secured circulation as a scientific
method of issuing currency. II has, no
doubt, at one time, served our purposes
admirably. We ought now to substitute
for II better system. Your bonds sell
at an extravagant price and are growing
more and more inadequate as basis of
circulation. The bonds OF the govern
ment, which ought TO be a means for
the investment of the savings of people
OF modest means, to-day are selling at
fancy prices, because the banks need
them in order TO furnish their circula-