The sun., 1916-08-27

deadly attack ever made upon the gold
standard. 60 unchallenged until 1t cul-
inmates In u utter undoing, complete
credit destruction. overwhelming COM
mercial disaster. or shall the Republic
can party here and now renew Its fight
for sound money, for the preservation
Of the gold standard?
II all the commercial nations Of the
world should enter into a conspiracy
for the express purpose Of devising
some scheme by which they intended
to take away our gold they could not
possibly ~conjure up anything that
would no successfully accomplish their
purpose as the Federal reserve act will
For 1t will literally dynamite the gold
out Of the country.
He who cannot see Overwhelming
disaster in the continuation Of present
conditions must be utterly blind to all
the lessons Of history.
The issue of sound money, the issue
Of the gold standard. was never more
clearly drawn than now-than 1t is In
,, this Presidential campaign in 1916.
Next after American nationality, the
creation Of a truly American soul and
ssN VI NilV VII
both land and sea. the most vital issue
In this campaign Is whether the Fed
eral reserve bank act shall be torn
from the statute books. whether the
gold standard shall be preserved.
1t Is the old fight OF 1868 and 1896
over again, and the Republican party
should stand now where 1t stood then.
against reputation and imitation and
In favor Of sound and honest money.
The Federal Reserve Bank issues are
the most expensive and the most dam
gerOus currency in the world. This
currency costs six times as much as
the right kind OF banking currency
would. and 1t is undermining the foun-
dations Of u commercial credits be-
cause It is being used as bank reserves.
thereby driving gold out OF the banks
and setting in operation Grcsham's
law. with the certainty that gold will
be expelled from the country whenever
trade conditions turn sharply against
us. as they are certain to do after the
war closes.
Debts Not a Proper Bank Reserve.
, A forty cent silver dollar. a United
States note or greenback with 43.35
per cent. Of gold behind Il, and a
United States Federal Reserve Bank
note with 40 per cent. Of gold behind
It, are economically identlcally the
same thing. and no man a point out
the slightest difference between them
economically. An Increase in any one
Of them will have identicaily the
same effect economically In the end as
n corresponding increase Of either of
the other two. and from this deadly
peril there can he no possible escape
except by di~scontinuance. as We have
already learned both in the case o.
silver.
Instead OF taking steps which must
inevitably lead to an unlimited issue
Of United States notes in the form of
United States Federal Reserve Bank
notes which are TO become a part Of
the bank reserves Of the country as
fast as issued. We should have forever
fixed by statute n limitation OF bank
reserve TO gold and gold alone.
The Bank Of England act Of 1874
contained a provision that the bank
could silver as a part ~ Its re-
serve up to % per cent. but the bank
has never recognized ANYTHING but
gold as ft for reserve. and the result
has been that the Bank Of England.
following this essential principle. has
demonstrated to the world that II any
country hopes to become the financial
centre OF the world gold must always
he had for the current price Of its use,
expressed In the rate Of interest. with
out the interference Of forces set In
motion by n violation Of this all i'm
portant law Of banking economies.
The Federal reserve bank act is
the same old attempt 10 deceive and
fool the people into the belief that the
Government a make money out o!
Its debts. the embodiment Of the same
old false pretence OF the Democratic
party that the Government can make
something out Of nothing by its mere
fiat. the same idea which has cursed
! the commercial world for centuries
that a debt which must be redeemed
in reserve money to prove its good
ness is itself good enough to be used
as that self-same reserve Certainly
II one debt Is good enough to be used
for bank reserves then all good debts
are good enough to he used for bank
reserves. This Is the end. this Is eco
nomic chaos.
The trainers OF the act pretended 10
seek to give the country a currency
that would automatically adjus, itself
t. the ever varying demands Of trade,
rising and falling with the tides OF
commerce as the seasons came and
went. But from the day that the act
became operative TO this hour there
has been one constant steady stream
Of circulation poured into the channels
Of trade. in season and out Of eason
until we now have $40 per capita Of
circulation as against only s3+.35 jan
uary l. 1914. when the act actually be-
! came operative. The United States
Federal Reserve Bank notes outstand-
ing aggregate $50. O0O. 900.
II We had had such a bank currency
as they have In Canada the variation
from maximum to minimum would
range from three hundred to four hun
dred millions during the summer and
fall as compared with the winter
months. Under the Federal reserve
bank act there has been no contrac-
ton Of our circulation whatever. but
expansion. expansion. expansion.
The Federal Reserve Rank Is grad
ually adding to the quantity OF our
circulation and correspondingly infat-
ing our credit, a fact that conclusively
demonstrates that the Federal reserve
49,. A.