The Farmington times. (Farmington, St. Francois County, Mo.) 1905-1926, 1922-03-17


Reserve notes--which are partly gold
value and partly promise to pay
one might justifiably doubt the eff
cacy of the gold fraction. A Federal
promise to pay would be just as good.
Money metal has been in use for
centuries. That does not mean, how
ever, that it is infallible. In fact,
there is every evidence that negotiable
paper on the one hand, and govern
ment evidences of Indebtedness, have
displaced almost all metal. Said one
of these authorities: "Out in the open
country, far from the centers of
banking, most of the millions of
Americans live; and these millions do,
in fact, control the government and
the nation. Most of these millions
know nothing Of the Federal Reserve
System beyond seeing this new and
relatively powerless paper money"
Then follows the suggestion that gold
be replaced upon the counters of all
banks to "be taken at sight by bona
fide depositors, as of old"
But the banks themselves do not
want to be bothered with gold, apart
from the cost of carrying large stocks
of it and its occasional falling under
the limits of tolerance. No sane
American or foreigner looks to the
banks for gold. He likes to get it if
he wants it, but in the aggregate it is
an infinitesimal amount that turns ov-
err more likely than not, since it re-
turns to the Treasury sooner or lat
er. A jewelry store would be the log
ical place to buy coins that are Fed
eral medals.
The modern school of thought has
practically eliminated the gold stand
ard from practice. This same school
would substitute the government as
the source of money, to be issued as
needed, within reasonable ratio,
based upon national wealth and an
nual turnover. The suggestion is log
ical. AS long as money is medium
of exchange it need not be one thing
in preference to another. Practice
has popularized paper, so paper may
well continue its present function.
1t would be at once objected that
paper without gold Tor silver at least)
would not be money. But the peo-
pie do not want money, whether it
is metal or something else. They
want something that is current and
which they can exchange for what
ever commodities they happen to
need. Today gold is the shadow be-
hind all these exchanges-but it is
shadow that can be eliminated with
out disturbing the equation.
Naturally, it will not be possible to
rearrange finance OH this basis as
long as the present superstition holds
it's place. Back of it are all the stock
holders of the banks. Back of these
are the hosts of petty spectators.
The only real profit the average bank
er makes today is through the gold
fiction. The speculative element
would vanish with the elimination of
the metal standard Moreover, if the
government issued money on it's own
account, under a well-thought-out,
practical, automatic law, the govern
ment would not have to borrow money,
or sell certificates of Indebtedness Ito
buy them back at a premium, for that
is what interest amounts toy or go to
great expense to accommodate its
finances through the agency of the
very banks it has licensed to operate.
Fiat Money! All Money Is That.
Fiat money-that is the damning
term with which bankers dispose of
it. But what are their own bank
notes? Fiat money, they say, would
be mere promise to pay, with moth
ing behind it to guarantee payment.
But is gold or silver a guarantee?
Are either Of any use to a community
that practically boycotted both years
ago? Money issued by the govern
ment under its constitutional sover-
eign right would be, in fine, evidence
of Indebtedness; promissory note of
the government payable to bearer.
Enough of such certificates could be
issued, to put it mildly, as would in
turn be repayable to the government
as taxes and miscellaneous revenues.
How long since the government ac-
cepted its own paper for the purpose?
Only at the time of writing the Sec
rotary of the Treasury announced
that income tax could be paid with
Victory notes. If money were ten
dered would it not oblige the govern
ment to do that much more book
keeping?
There is another example, not uni
versal, riot representative enough.
The owner of any government bond,
regardless of it's issue or rate, can
tender it as payment for any pur-
chase made in the larger cities, and
probably in the country, too 1t is
not money, no, but it is a medium of
exchange. The only objection to it
as things stand now is that it must be
taken to the bank and sold and the
banker must get his profit out of it,
but as far as market value goes it is
a good medium. Either the man who
can keep it as an investment, or the
man who must deposit it subject to
market deductions" has faith in the
words, Omitted States of America"
If bonds with variable value prior
to maturity are medium of ex-
change, it is obvious that definite
evidence OF United States indebted
ness, like the greenbacks, would not
be subject OF the vicissitudes of col
lection charges and operations so dear
to the managers Of our present COM
plicated financial system.
The only possible objection to the
value of such money is that involving
the stability of government. 1t is a
valid objection, theoretically. But