The Birmingham age-herald., 1913-08-17
GOVERNMENT IS NOT
GAMER WHEN PAPER
MONEYISDESTROYED
Always Necessary to Keep
Gold and Silver in Re-
serve to Redeem
Certificates

serve to Redeem
Certificates
While party of men were gathered at
dinner table one of them observed that
another of the group had a punctured
silver dollar dangling at the end of his
watch chain, says the New York sun.
DO you realize" he asked. that you
are guilty of violating the federal law
against the mutilation of coins in wear
ing that coin as a watch charm?"
GUILTY. replied the man with the
coin. why, the government should be
grateful to me for helping it to get rich
How do you make that out?''
Every time I mutilate silver dollar
and take 1t out of circulation the gov
ernrnent makes clean profit-of 12 cents.
You see, the actual value of a silver dol
lar is only SO cents, according to the pres
ent price of silver. 1t sells this coin to
the public at ST. In this transaction it
makes no profit because the purchaser
can always demand 100 cents for his coin
However, if this coin is destroyed or
lost, SO that it is taken out of circula-
ton, that claim is no longer binding and
the government can count u cents to It's
credit. Therefore it should thank me
rather than punish me-"
The contention Of the coins owner was
disputed by several of the men. warm
discussion arose a result. but at the
end it still remained moot question
whether the government profited by the
withdrawal of the silver dollar from cir
culation. The question was referred to
an authority on such matters.
ITO begin WITH said the authority
'let us investigate a more simple aspect
of this problem Here is a United States
gold certificate for $t0 Suppose | were
standing at the end of pier and tossing
1t up in the air. A gust of wind carries
it out of my reach and it drops into the
water to be washed out to sea and lost
forever.
Government Gains Nothing
Now, paper money is purely repre-
sentative and has no intrinsic value Be
hind this $40 bill, however, the govern
ment has deposited in the treasury that
dlilOuiil III BOlu TO De pd1u TO the bearer
of the certificate on demand. This GER
tihcate, we are assuming, has been lost
forever and the government will never be
called upon to pay up.
The question that now confronts us is :
Does your loss mean a gain of $40 on the
part of the government? Theoretically
the answer would appear to be in the
affirmative, but practically it is a fact
that the government Is not the gamer
For how is it to know how many bills
are being lost or destroyed and how can
1t keep track of these losses?
Il nthe absence of any method of re-
cording the withdrawal of paper money
from circulation the government must
continue to consider the certificates as
part of its liabilities and must always be
ready to pay all claims whenever pre-
sented. The unclaimed money may lie
in the treasury for eternity without the
governments being able to lay hands on
it, unless legal provision is made for its
appropriation.
There is only one instance on rec
ord where the government actually
profited by the destruction of paper
money. During the civil war con.
siderable quantity of fractional cur
rency' was issued. In 1876 it was de-
cided to withdraw this currency and
substitute silver After three years
somewhat more than $15,0o0,0Oo still
remained Unclaimed.
Made a Profit Once
1T appeared evident that a part of
this amount was being withheld by
collectors and that the rest was prob
ably lost or destroyed In order to de-
termine how much of the fractional
currency had suffered the latter. fate
a commission was appointed to investi-
gate. This commission, working on a
hypothesis that could be nothing more
fl.r. rTrI, i A.tx1
of the $4,000. 900 that remained un-
claimed $S,375,934 was either lost or
destroyed By the act of June 81, 1879,
the government dropped this amount
from It's liabilities. In other words, the
government had made a profit of more
than $S,000,000.
This, however is a unique case. In
all other instances the government does
not gain anything by the destruction of
either silver or paper money.
I'm the case of the man who pune
lures a silver dollar and wears it as
watch charm, withdrawing it perma-
nently from circulation it is wrong to
assume that because the value of the
bullion in the coin is only SO cents the
government makes profit of 12 cents.
What is true of paper money is true
of silver coins. Every silver dollar has
behind it 100 cents. This is part of the
liability the government assumes in
issuing these coins. No matter how
long it remains unclaimed. the govern
ment can't appropriate it for its own
use, and therefore it is not the gamer
unless the procedure of 1879 be re-
peated.
Not only is the government not
gamer. but the circulation of silver
coins involves a 'loss which is very
often overlooked For example, a sill
Yer dollar is redeemable for it's full
value. 100 cents, no matter how much
it may be abraded by wear. This wear
is often considerable and depreciates
the bullion value of the coin.
Coins Wear Off
"fhe present value of coin of this
denomination is SS cents when it is
issued from the mint, but if it remains
in constant circulation for long Pc
riod it gets worn off and becomes light
er in weight 1t is then worth natur-
ally less than 1t WAS originally. yet
when presented at the sub treasury on
Wall street is will be exchanged for a
new coin.
This loss in silver, amounting often
to several cents in single coin, must
be stood by the government. No mat
ter to what extent silver coin is
abraded. so long as it has not been