Year: 1874

suuF-ITs ABILITY TO DO 50 WiiiioCi "'4>'>"


INTO pEBT-IHE GOOD POLICY of hSiADi' -


A FINED STANDARD OF VhUE-DlSuhAO1 H>D


n.n,,r,,,xrss OF THE PRESENT SYSTEM OF


FINANCE.


~ On. pd,ior Of The Tribune.


S,n. The term "specie payments IS generally un-
ao,s,ood 70 signify the payment by the Government
ti,s paper money in specie, coin. Wherever pay
,,ont is involved there is debtor and creditor
I'm this case the Government is the debtor ana the
holder of its paper money the creditor "heh tne
ouestion of payment is discussed there are generally
,nlv two considerations that suggest themselves to
the minds of lust men, namely, the justice of the
,reditor's claim and the ability of the debtor TO
meet it. In this case, however, the question OF
"pocy" has been introduced with such apparent
xood sense and plausible argument as to render it
necessary to number il the leading consider
ations in the discussion of the subject. 1t is my
purpose. therefore, in this letter. to discuss the
moral obligation, the policy, and the ability of the
Government to return TO specie payments.


The moral obi CATION of the Government to
return to specie payments hinges on the meaning OF
the word dollar" as the promise to pay Is PLAINLY
inscribed on every division and subdivision OF the
entire circulation. IL there IS any doubt as 10
whether the words American dollar mean gold
dollar il wOuld be well to find out when the mean
ing of the word was changed; as we all agree that
the word meant definite quantity of gold before the
war. The policy of returning ftO specie pay
mentsh as few disputants among thinking men, Inc
most cursory view of the situation reveals the abso-
lute necessity of fixed standard of value as the
basis of medium of exchange. The experience OF
all epochs establishes the fact that when the value
standard of the monetary system has been yacll-
laung, speculation has been encouraged TO dlsas-
trous extent and productive labor has always SUI
fered in the end. The great disadvantage under
which many merchants and manufacturers lapor
in paying for their foreign material in gold ana
eventually selling il for currency the single item Oh
brokerage and commission paid yearly in this coun-
try for the purchase of gold for the payment
of duties; the discouragement of the investment
of foreign capital in worthy and legitimate enter
prise. and the general want of confidence incident
to incompetent financial management. all pow
erfu arguments against continuance of the present
system. The money in circulation is not only
medium of exchange, but the basis of measurement
of all values: and there would be just as much logic
in advocating the use of a system OF measurement
that is subject continual variation as to advocate
the use of money that is constantly changing IN
value.


The ability of the Government to resume is by
far the most important consideration, the lack Of
ability would render the discussion of the foregoing
questions premature. When man wishes to gauge
his ability to pay, the first thing to do is to ascertain
the amount of his debts. In this case the Govern
ment owes about S4OO,OO0OOO. hear some one say,
"Stop, il is twice that amounts you forget the Ma
tional bank circulation" | claim, however, that
its debt does not amount to more than $i00OOO0OO,
which represents the Treasury notes payable on de-
mand and the fractional currency, inasmuch as the
National bank circulation is not debt of the Gov
emment but of the banks TINT have issued it. The
Government is merely the custodian Of bonds placed
fhp nj inn TO rode
of the notes of hand made by the banks and issued
TO their holders as money. The National bank note
derives ITS value from the lega-tender Treasury
note, and it will always follow it.


When Treasury notes are worth their face in gold
which will never be until the Government offers
to pay gold for them-the National bank note will
follow, on the same principle that they huctuate
with the Treasury note or grcenback from day to
day. Now since the Government owes about
S4OO,OOOOOO of Treasury notes, payable on demand,
the question of the ability of the Government TO
return to specie payments resolves itself to the
ability of the Government to borrow S4JJOO00O0 on
interest-bearing bonds, which Is simply
question of the amount of interest that 1t
would be necessary to offer for the money.
Granting that the money could be raised at per
cent-which is outside figuTe-the exact cost of
return to specie payments would be $24 100000 per
annum, an amount which represents the profit de-





S4OO,OOOOOO. This circulation Is form of debt
which bears interest. Funding this debt with
coin borrowed on interest-bearing bonds would not
place the Government one farthng more i'll debt
than it is at present, but would simply cost the in
tercst, now saved.


II after the paper money redeemed Congress
saw fit to issue National paper circulation on a
gold basis, similar TO that Of the Bank Of England,
or any properly managed banking institution, the
profits derived from such circulation would more
than cOunterbalance the entire cost of return to
specie payments; Or in other words the interest
the Notwithstanding debt of the Government.
II is an open question. however, whether the Gov
ernment should iSsde a circulation other than coin.
ii involves the Gift of large discretionary powers to
its officers, aud holds out great tcnptatiOns and
therefore argue that l. would be far better for the
Government TO pay the interest on its entire debt,
and leave the Iisks and profits of banking business
to the people, under restrictions that will insure
good monetary sy stem. A great deal has been SAID
RboUt the danger Of immediate resumption, in
shriukGCe Of values and injury 20 the debtor class.
The argument of shTlDkage of values has no fOunda
ton; for all merchandise and property has its gold
value to-day, and will always have it, for il is not
gold that changes in value. but paper money that
would be brOugh: mp to the gold standard by the
action Of resumption. 1t is true that many who owe
money and do not possess as much as their debts
amount to Will lose certain percentage when the
Government resumes. and IT is perfectly equitable
that they should. They lose Oh the same principle
the man that parts with rising stock before he
realizes the advance. If gold was to 90 up, or
more properly speaking, if paper money was
to depreciate, the creditor class would have
no right TO complain although in that
they would lose. On the other hand,
it gold 80 down to five per cent by the action