New-York tribune., 1918-03-03
he Money Deluge

'at EdlLor OF The Irl bune
9if: have read with great interest
ehe communication of Congressman
Mctadden relative to the pronosed
hai1-oiIllon- dollar corporation having
authority to issue notes that shall cir
cuiate as money to the enormous
amount OF $4,000 900. 900. This would
almost double the money in circula-
ton in the United States. and there is
grave danger, as Mr.. McFadden pre-
olcts' that the parity with gold of so
great volume of paper money could
not be maintained. If this effect or re-
suit should be realized, then the whole
country will experience further in
nation of the already high war prices
and the United States will he com
pelied to buy war supplies at the in
Hated prices. Thus it will lose at the
ouAghole what it has saved in intere st
at the spigot.
ne cheapeninc of money throucb
excessive issues Of paper currency that
i&ll to maintain a parity with gold is
well understood, but there is a more
subtle cheapening, not so apparent.
Whenever the money in circulation ;s
unnecessarily increased There nav re-
suit cheapening of money even
though 1t all remains at a parity with
gold.
10 illustrate what I mean, let US
suppose that the world hitherto had
depended for money on gold coin alone.
IAN 1t be doubted that money would
have greater purchasing power than at
present, when Treasury notes, bank
notes. Federal Reserve Bank notes. sill
yer certificates and silver coins re-
deemable in gold are all helping to fill
out the measure of the nations none
tary needs? In other words. these
forms OF credit money, all maintaining
their parity with gold, are relieving
gold OF part of it's burden, and
thereby lessening the demand for the
, actual gold coin itself.
If this be true, then credit money.
whether issued by banks or the gov
ernment, keeps down to a certain ex
tent the value of gold, even though it's
parity with gold be maintained. In
other words, its effect is to cheaper
soid through diminishing the demand
Tor 1t. And if gold is cheapened in
this manner. then its purchasing power
is lesseDed.
The writer has lived for many years
IN one of the great mining centres of
the West, and for that reason has
taken a more than ordinary interest in
the matter of gold production. DuriNp
the present century the worlds average
annual production of gold has ox
ceeded the production of gold and sill
Ner IN 1895 estimating the latter at a
coinage ratio of sixteen to one If the
proposed coinage of both during that
year was national menace. WHY has
not the coinage of gold during this
century been one? There has been as
mucn new gold produced in the world
during the seventeen years of the TWEEN
tietn century as there was produced
during the entire last half of the nine
teenth. And the last half of the nine
teenth century, beginning with the
goid discoveries in California and Aus
t1alia, produced more new gold than
the preceding five centuries.
Ihis deluge Of new gold has worked
some astonishing results. Throughout
the civilized world it has intoxicated
men with new visions Of wealth. II has
produced or world divide scale all the
goid-lust and turned loose all the cle-
mental passions Of new gold mining
camp. It is hardly conceivable that the
present deluge of war could have oc-
Cured if this deiuge of gold had not
preceded it, filling the war chests of
the nations and hanging out fabulous
commercial prizes to tempt their
cupidity.
More could be said of the evil ef
fects of too much gold The world
wide rise of prices has not been due to
multitude of causes, but to lust one
don't forget too much gold. There
is such thing as too much money in
CIRCULATION, and no one suffers more
from ci1eapcning money than the wage
or salary Garner.
Much could also be said of the bene-
acial effects of this new money, such
as the relief to the debtor and produc-
ing classes and the stimulus to invest
ment that accompany rising markets.
Al this time, however 7 want to in
sist on the one thought that our money
mas cheapened enough. Congress
should try to arrest its further de-
cline. Its effort should be to make the
dollar stable It's stability cannot be
determ ned by Weighing or analyzing
the coin itself, but by determining its
purchasing power, as shown by the cur
rent scale of prices
The proposed issue of four billions
more Of paper money will quite Ger
talnly aggravate all the Ills of high and
rising prices. which have already been
greatly aggravated by the war.
A few years ago | saw n very beau
tiful piece of machinery ry-a governor
in n water power plant that was sup
plying electricity to a great city nearly
one hundred miles away. AS the load
Of the city's many industries on the
Transmission line varied from moment
10 moment it's fluctuations were in
Stantly registered by the governor
which trembled back and forth and au-
tomatically choked off or released, az
needed, the flow Of water to the pen
stocks Of the turbines.
believe that the time will come
when our rulers will give constant heed
10 thc index Of commodity prices as
showing whether money is rising or
falling in purchasing power. and by
CHOKING off or releasing supplies Of
credit money viii give the dollar r.
stability Of value TINT is impossible Of
attainment under the present crude
systems Of finance.
EDWARD B. HOWELL.