davidaulloa/AmericanStories huggingface dataset:
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Good in Theory;
Bad in Practice

Now, not at all denying that the
requisite wisdom and steadfast
courage may some time be attained,
it is at present clear enough that
they are not yet available. Up to
the present time history records no
instance Of the successful applica-
ton of the paper money principle.
And especially unpromising is the
immediate outlook under popular
political institutions. IF money is
good, let's have more Of it'-and al
ways with the greater enthusiasm
as the cost is less. When money
can be printed-good money, too,
why should any Of us have to pay
taxes? The pressure for excessive
issues is always great. Recurring
fiscal deficits are a constant temp
tation to easy and short-sighted
fiscal devices. Victory at an cleo
ton is not an adequate certification
OF technical skill in finance, nor has
it any virtue to transform an ordi-
nary citizen into a financial sage.
The victor is metely left to plan as
to how best to get reelected.
But even if an age-long expe-
rience had not adequately estab-
lished the practical and always i'm
minent dangers through getting
away from cost-produced and cost
limited money standard, it would
suffice for proof to point to the ex-
perience,of these recent war years
a worldwide carnival of irrespon-
sibility and laundering. And yet it
is out Of the facts of these years Of
monetary initiation and of currency
depreciation that the opponents Of
metallic money are somehow able to
infer the wisdom Of an entire aban-
dcnment of the coinage standard
the substitution of money that has
no practical limits of issue in place
of a money basis that appeals for its
limits Of supply to the costs of pro-
duction of mining.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Strange Financial
Preparedness

BY the new facilities of the central
reserve system still further oppor-
tunities for credit expension were
opened - facilities promising, or
menacing-a possible price imitation
of something over 200 per cent.
ThereupOn we congratulated our
selves on our phenomenal "inan-
cial preparedness" - essentially a
preparedness for phenomenal in
fation. And now we are busy with
the attempt to prohibit the prices
which our financial policies have
made notwithstanding to make
way against the profits that rising
general prices always award, and
always award inequitably-contriv-
ing profits taxes to absorb some
small part of the gains that never
should have been made possible.
And out Of all this riot Of varied
folly, this creation Of circulating
media out of government promises
to pay, this scuttling Of the gold
standard, this disorganization and
Generalization Of all that is safe and
restraining in metallic money-there
is somehow deduced an argument for
the further trusting of the govern
ment to substitute a system of pure
paper money in place of such small
stability in metallic money as still
remains to US through the limitations
Of mining costs.
1t is no part Of my present inten-
ton to advocate taxation in place Of
borrowing as the correct method of
war finance, but solely to urge that
such borrowing as is undertaken be
worked out by methods that menace
no violence to the monetary system
and to the derivative situation Of
general prices. Whether the private
incomes available for the govern
ment be seized as taxes or attracted
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Flabby Blundering
Of Governments

This correspondent is therefore
fully justified in his attack upon the
gold standard. But it is still to be
emphasized that, in the main, the
evils of which he complains have not
been due to the haphazard forth
coming of gold under the cost of
production adjustment of its sup
ply, but rather to the improvident
folly and the flabby laundering of
the various governments. We are
suffering not from the absence of
greenbackism, but from its presence.
The need is not for more of it, but
for less Of it. 1t is unfortunately
true that our best wisdom lies in
trusting to chance for our safety
rather than to legal authority. The
gold standardized we adhered to it
consistently-would have been bad
enough at the best. But we are suf-
fering now not from the degree in
which we are retaining it, but from
the degree in which we are abandon
ing it. Instead Of trusting the mines,
we are trusting the ministries and
controllers and Reserve Boards, and
we are getting from them instability,
initiation and depreciation. The
issue is merely one of practical fact
not what could be, but what will
be. Even if ever paper money should
come to be wisely administered, that
time is not the present time or
rrobably-any war time.
The truth is that these last three
years have been prolific of dsap-
pointments and surprises to STU
dents Of monetary problems. De
Easements of coinage in the emer-
gcncies Of war finance we knew to
be things of the past. Paper money
mutations, also, we believed to have
been thoroughly discredited and to
have gone their way into the limbo
of other financial mediRvalisms.
Even if modern civilization could
still tolerate war, we believed it to
be sufficiently developed to avoid its
financial fallacies, excuses and pit
falls. There would be no hocus-
Focusing with the names Of things,
with standards of measurement,
with the terms of contractual I'M
dertakings and with the counters
and intermediates of business rela-
tions.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Where the Real
Trouble Lies

But, after all, is not this exactly
what the correspondent was saying
the very sum of all his complaint,
| the basis of his argument, the an
ncuncement Of his conclusions? A
good bit short of it, in fact; for
while | differ with him not at all as
to the nature Of the disease, ! am
worlds away from his interpreta-
ton Of the causes Of it, and from
his prescription of the remedy for
it. 1t is the gold standard or me-
tallic money to which he attributes
those evils which we are agreed in
regretting. But ! insist that it was
tampering with the gold standard,
partial forsaking Of it and an es-
sential disloyalty to it, that is to be
held accountable for the major por-
ton of the present trouble. He would
seek the remedy-if / at all under
stand HMM some sort of paper
money system. ! hold, instead, that
it is precisely through paper money
that we have committed our incred-
ible fOolishness. He wants still
more of what l think we have al
ready had too much Of. do not go
along with his homeopathy of rem
edy-more Of the same thing-hair
of the dog that bit you.
But l hasten, nevertheless, to ad-
nit that | have no serious quarrel
with the general theory of green
backism, or any quarrel with the
particular variety of greenbackism
which | attribute to him. ! recog-
nize no necessity, but only practical
political and financial eXpediency, in
any metallic or other commodity
standard as money. | believe the
economists to have been in error in
denying-so far as actually they
have denied-the possibility Of max
ing paper money issues into ulti-
mate money-the last and the ulti-
mate money of redemption-legal
tender for all obligations. For fiat
money has no terrors for me as a
question of pure theory; at the bar
of this tribunal | take it to make an
entirely valid ase-defensible
against all attack. / see nothing in
it of the impossibility of miracle.
To condemn it as a vagary of max
ing something out Of nothing does
not impress me. | don't even be-
lieve that paper money, if it is to
circulate at all, need rely upon gov
eminent credit or, for that matter,
need have attached to it the pros
pect Of a sometime redemption in
gold or in anything else, in order
that it circulate as money and fulfil
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
By II. J. Davenport
Professor Of Economies in Cornell
University

NtNN'Ns V! NNN'hNf''N' Wv - ~ ''''N
University
A CORRESPONDENT of The
"A Tribune is convinced that
the monetary systems of the
Western world, with their basis in
gold, have broken down-or are fast
breaking down-and that the time
is approaching for searching out and
establishing another and a better
basis. If, indeed, there could ever
have been any doubt Of the Gun
wisdom of a money system the unit
OF which is a metal bearing an in
trinsic value" that doubt, he thinks.
must have been dispelled by the ex-
perience of these current years Of
war. Gold is zigzagging and crisis
crossing about the regular lines Of
trade and silver rising to record
heights. with bimetallism becoming a
probability-exchange values all dis
turbed.' The time has come, IL Is
urged, for "a new financial scheme
for money which shall be a measure
of value a voltage of pur-
chasing power, and nothing else
greenbacks or something Of the sort,
one infers.
Doubtless all the evils and per-
turbations of which this correspond
ent complains are actual-are, in
deed, serious beyond limit. His rem
edy, however, is quite another mat
ter. It really points, so far as | can
make it out, to a further extension
of the very thing from which we are
now suffering.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16

serves calling for reinforcement
little loss of gold for one or gain TO
another. They are in regime not
Of government paper currency, but
Of bank credit currency-"voltage OF
purchasing power" But as much OF
their gold as they have thought wise
to release they have sent to America.
And in America this artificial
plethora of gold, while it has left
the gold standard intact as ques-
ton of grains and pennyweights,
has emptied it Of all meaning for
the purpose essential to Instability
in purchasing power.
The freshet Of gold pouring into
American banking reserves 49, to-
gether also with the more liberal re-
serve requirements of the new bank
ing law-have opened the way for
our American credit institutions to
follow after Europe in the policy
of credit imitation. The enormous
outpouring Of European war bonds
and the enormous marketing here
of foreign-held securities have
furnished the Indictment to new
demands from borrowers equipped
with new collateral with which
to secure the new loans. In the abb
sence of new restrictions and reg
ulations adapted to the new emer-
gency the temptation before the
banks was irresistible. No isolated
bank, indeed, had any choice but to
do promptly what its competitors re-
manned free to do and were certain
to do. The business Of government is
not merely to fix the plan of compe'
tition. When the fire breaks out in
the theatre, it is bad for you to make
part Of an impossible jam at the
exit, but perhaps still worse to stay
with the flames.
No one here moved-as Scandi-
navia moved-to prevent the gold
from entering. No attempt was
made to sequester it away from use
as a reserve basis for loan expan-
sions. No new and larger reserve
requirements were imposed upon the
banks to forestall their competitive
efforts to employ their reserves. In
stead of any of this, the Reserve
Board invited the deposit of the gold
of the banks with it, credited it to
the depositing banks as reserves, and
then. on the basis of its own enor-
nous gold holdings, promised itself
as a harbOr of refuge for any banks
that could not initiate enough without
its help, or that should turn out to
have ventured too far or too fast.
Using its reserves as basis it stood
ready to create volumes of credit
currency serviceable in turn to the
banks as their reserves, on which as
basis still further volumes of credit
currency could be put into circula-
ton. And, in the event that there
should be any menace of limited col
lateral for all these purposes, our
government has set out on a long
policy of bond issues.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
The Great
Bank Initiation

Ddlih
II must, however, be admitted that
the warning nations have not gone
far in the brute and crude creation
Of new currency through the direct
emission Of government promises to
pay or Of governmental issues of
nat. But if the processes have been
indirect-and in this sense more re-
fined or subtle-they have amounted
to the same thing. By the express
authority of the governments, or
through the absence or suspension of
restraining regulations, it has been
left or delegated to the banks to do
the initiating. 1t is bank imitation,
in the guise either of banknotes or
of deposit credit, to which the gov
ernments have had recourse for the
extension of their powers of pur-
chase.
But bank borrowing does not take
place as a process of the mere trans
fer of existing units Of the circulat-
ing medium. When | buy goods
from you and pay you money for
them there is no modification in the
supply of media. AS much as | have
less, you have more. 1t is only a
transfer, an assignment, of ire
distribution or relocation. So, like
wise, if ! give my check in payment,
the amount of deposit credit is not
changed; you become the holder in
my stead. So, again, my note to you
for the purchase price has no bear
ing on the volume of currency, pro-
vided always that you hold it till it
natures, or, if you sell it, sell it to
some neighbor. | merely pay you, or
your vendee, later instead of now.
So long, indeed, as the note is not
discounted at a bank or offered as
collateral against which bank loan
is granted no change in the volume
eli currency takes place.
But banks lend not money but
credit. They do not assign deposit
credit; they create it. They lend or
pay by issuing their demand prom
ises to pay; and these promises to
pay, whether in the form Of deposit
credit or of banknotes, circulate as
additions to the volume of currency.
When they discount for the govern
ment, or buy from the government
is securities through the grant of
deposit credit, or lend to Individual
borrowers on the faith Of the gov
crnment securities as collateral, the
process Of imitation by governmental
procurement begins. These bank
promises to pay, representing the
cash proceeds of the governments
promises to pay, circulate as media
Of exchange and are the equivalent.
for all present purposes, Of the di-
rect circulation of the government
promise.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Drifting Back
to Greenbackism

It certainly would have been far
better to have borrowed by methods
which should lodge the securities in
investors portfolios rather than to
have set the national promises-or
their discounted proceeds-into cir
culation as currency to disturb
prices. Only that we could not
unless at the same time we applied
ourselves seriously and ineXorably to
the problem Of conforming the
policies and activities of the banks
tc the requirements Of this new and
extraordinary situation. The Euro
pcans were allowing themselves to
drift from their gold mornings, were
falling into essential greenbackism
and infation-that sort of green
hackism that, in default of the req
uisite wisdom and restraint, runs
into all excuses and dangers-dan-
gers and excuses from which con-
sistent adherence to the principles
of metallic money would have fur
nished a passably adequate protec-
ton. But in modern times banking
has become an integral part of and
even a predominant factor in those
monetary systems that rest finally
on a metallic coinage. The stability
o. the gold unit requires that bank
ing be so conducted as not of itself
to supply the causes Of instability
We forget this at the beginning Of
tie war, as, indeed, we had, in the
main, been accustomed to overlook it
in the years before the war. And
with the beginning of the war, we
watched the Europeans initiating
their own gold out of their own pcs
session-which we could not help
and into our oSSesSion-which we
could have helped. Then, once the
gold was in the country, we allowed
the banks to take it. Instead of
sequestering it away from them, we
allowed them to add it to their
already redundant reserves. Instead
Of raising their reserve require
ments, we applied to them the lowest
requirements in the history of the
national banking system.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16

adequately and admirably the money
function. Theoretically, indeed, |
get along quite comfortably with the
paper money, or even the fiat money
programme. / go, for that matter,
a step further: | believe that fiat
money, if wisely provided, wisely
limited and wisely administered, is
preferable to metallic money, and
preferable also to paper money with
reserves of gold behind it for its i'm
mediate redemption.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Stability the
Primary Essential


l readily agree that there is no
fundamental need for either an ex-
change unit or a money standard
based on any metal. 1t is, indeed,
historically the fact that other COM
modities than metals have served in
the money function-tobacco, for ex-
ample, and cattle and cowry shells.
The best that can be said for gold
or silver is that either is particu-
larly we'll suited to the monetary
use-easily divided or aggregated,
uniform in quality, chemically inert
and therefore practically immune
from rust or decay or other deterio-
ration, easy of recognition and diff
cult to counterfeit, of high eX-
change power relative to weight and
bulk, and fairly constant in supply;
this last by virtue Of the fact that
most of all the production of the
past is here in present supply, so
that the annual product is always
an inconsiderable fraction of the
total available volume.
1t should be clear that these favor
able characteristics are in the main
significant only through their con-
current bearing to protect the pur-
chasing power Of the money unit
from indefiniteness or from serious
huctuation Stability is the primary
\ essential Of any medium Of exchange.
y A trader who receives the interme-
diate. the medium of trade, takes
il in order i'm turn to buy with it,
and must be able to rely on it for
this purpose. Especially is stability
important in contracts for deferred
payment. else the trade is subject
TO incalculable notifications in its
terms by the sheer fact that a
period Of time has interviewed be-
tween the performance of the two
parts of it-this mere fact of de-
layed fulflment on one side rem
dering the quid pro quo to be re-
ceived uncertain and speculative.
Whether, therefore, a money is
performing It's functions well is to
he tested by the degree of its APP
Proclamation to stability. But sta
bility tried by what test? The an
swer is clear from the very nature
Of money-a medium, an intermedi-
ate, in the exchange Of goods. It's
function is to divide the process Of
exchanging goods into two steps as
against barter where there is only
one. Instead of Swapping say,
hats for shoes, one sells his hats for
money and buys with the money the
shoes. Money is therefore the gen
eralized form of purchasing power.
The advantage of it lies partly in
the permission that it carries with
it to delay deciding into precisely
what goods it shall finally be con-
Vcrted-partly in the assurance it
offers that whoever has anything for
sale will accept this money in ex-
change for it, and this for the same
reasons that appealed to his prede-
cossor in its receipt.
Money Has Been
Working Badly
Thus money is a generalized com
mand over goods in general. The
test, then, of its stability--of
whether it is doing what it prom
ised TO the holder of it and TO the
parties TO contracts expressed in it
is whether the wide range Of things
that are priced in it retain an un-
changing price relation to it. Not
that particular prices need or can
remain unchanged, but that viewed
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Anything Will
Serve if

Nor is the argument for the prac-
tcability of irredeemable paper
money either difficult of understand
ing or of dubious cogency. The
necessity of medium Of exchange
is imperative, the demand persls-
tent and approximately inflexiblc.
This demand once taken for granted,
anything that supplies it will take
or value, if only the supply Of it be
limited. There is obviously no in
exorable necessity that either the
current media of exchange or the
money of ultimate redemption be
6igged from the earth, or otherwise
labor provided, under penalty of the
high human costs attendant upon
the process Of its production. viii
not men accept the paper money as
the intermediate Of exchanges?
Surely, if it will command for them
release from their obligations. Some
intermediate there must clearly be;
and for no matter what other inter
mediate, the paper issues are a legal
equivalent in the discharge Of obliga-
tiCns. This legal tender power
amounts, indeed, for all the purposes
of any individual to the promptest
sort of redemption; and in especial
degree is the taX-paying power of
this quality and potency. 1t is to be
recalled that the annual tax burden
in America is greater in volume than
the entire supply Of money-gold
and silver, national notes and bank
notes - an annual redemption
through acceptability for taxes.
Possibly enough international ex-
changes might impose the need for
some small supply Of the interna-
tional medium. But even this in
ternational medium might be paper.
And gold moves between countries
as other commodities move-as bull
lion rather than as distinctively
money.
But-once again-does not this
argument carry one directly and in
evitably into the camp of the enemy
"a thorough-going admission of all
that the opponents of metallic
money, the advocates of paper and
fiat. have ever claimed?
Note, however, the saving clauses.
Paper or paper fiat must fail Of the
primary requisite Of money unless
the supply Of it is so vigorously
limited and regulated as not by it
self to afford the causes of changing
general prices. And inevitably,
whether directly or indirectly, these
functions Of issue and Of regulation
must rest with governmental au-
thority, subject to the existing con
ditions of its financial wisdom and
political courage.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16
Paper Issues
Forced Loans

For it is clear that government
issues Of paper money are forced
loans. To obtain for the state half
Of the contributors supply of cur
rent purchasing power by doubling
the number IF units of it is in no
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16

Since the beginning OF the war Tow =,
prices in Denmark have increased y
per cent, fuel has increased In ca
100 per cent. clothing and footgssi Il
per cent, and house rents are 10
per cent higher.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16

political courage.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-16

shadow.
Evening star. [volume] (Washington, D.C.) 1854-1972, 1917-04-29
INVESTMENT PROPERTIES.

FOR sALE-s-RooM BRICK HOUSE: NORTH
west section; hot-water heat: cellar: bath
rented s23 monthly; price. s., 500. Address Boz
a5-R Star office.
Evening star. [volume] (Washington, D.C.) 1854-1972, 1917-04-29
Bungalow Headquarters

Bungalow Headquarters
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HAVE THE BEST SUBURBAN HOMES.
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New si1-room and bath bungalow
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On lot 50110O and has h.w.h.. elec.
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SHANNON LucHs.
Main 2345. lib 18th IT.
Takoma Park, Md.
14th st. car service-direct to door.
Lot 451140. Tiled bath. Electric lights.
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plenty of yard. Lot. 110x15O feet. Built
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SHANNON 4 LUCHs.
Main 2845. 71S 18th Ut.
Rosemont, Va.
2 beautiful bungalows. on ine auto
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Price, $5,75o.-Terms.
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SUBURBAN HOME AND BUNGALOW
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