The Washington times., 1935-02-02

. K
100000, ,OCO. Of E
this amount, Ss
$3.50 90 10000 ssSSS*:S'A
was "in circUla- Lewis Haney
ton" ("In circulation" means all
money outside the United States
Treasury, except a billion or so
held by Reserve banks and
Thus $e,ooo,ooo,ooo is in the
Treasury. The bulk of this is
$4,000, 100000 in gold metal. The
next biggest Treasury item is
$4,000, 900 in silver dollars and
bullion.
But far the largest part of the
money "in circulation" consists of
$500, 100000 Federal Reserve
notes (Which are chiefly secured
by the credit of the Government).
The second largest amount "in
circulation" is National Bank
notes ($819, ,00O,O0O. And third
comes silver certificates in the
amount of $591, 100000. (Siver
certificates have been increasing.)
Silver coins, and United States
notes (the remains of the old
"'greenbacks'O, make up most of
the balance in circulation.
It is obvious that we have far
more money than we are using.
Probably not more than a third
of the net total supply of metal
and credit money in the cOun-
try is actually being used by the
people. "a good deal of the
amount reported Gin circula-
tiOn" is not actually circuIat-
ing in buSiness.)
But more than that, there are
bank deposits to consider. These
total about $45 billion dollars, as
nearly as can estimate.
A large part of this vast sum
of bank credit-say about half
us subject to check. Checks
constitute a part of what we
call "currency"-they do some
what the same work as money"
does in making individual trans
actions, but we term money"
only that part of the currency
which circulates freely from
hand to hand without regard
to the credit standing of the
issuer. (Thus a dollar bill and
my check for ST, are both cur
rency, but only the dollar bill
is money!
# We eliminate about 10 billion
dollars in mutual savings banks,
and another 10 or II billion dol
lars in "time deposits" in com.
mercial banks, there remain,
roughly speaking, something like
"a billion dollars actually sub
ject to check, and therefore
available for use as currency"
OF course, part of the deposits
are made in cash money, and do
not represent an addition to the
total currency. Probably some
what over one-half of my rough
estimate of the "a billion deposits
which are subject to check, how
ever. are book credits extended
by the banks and may be consid-
cred as a net addition to our cur.
Tency-Say 13 billion dollars.
So, you see, we have available
now for circulation at least IL
billion in money, and Is billion
In deposit credit currency.
(These bank figures are very
rough, but a few billions either
way make no difference in my
point.)
No. we are not on the gold
standard now. The huge gold
hoard held by the Treasury is
not used as standard for our
money. In fact, a paper Re
serve note today buys more goods
in this country than gold dol
lar is supposed to buy, judged
by the price the Treasury pays
for gold. But the Government
will not trade us gold dollars
for paper dollars, so we really
don't know.
Furthermore, the Government
is experimenting with silver buy.
ing in way that suggests some
kind of bimetalliSm.
Yes, England was forced to
leave the gold standard, while
we abandoned it deliberately as
an experiment in price rails.
ing. Other differences are
that England has balanced her
governments budget, so people
there have a real basis for
cOnfid dence in government
bonds and paper notes. Also.
people in England can hold
gold, and buy it or sell it as
they please!