Year: 1874

OUR MONETARY SYSTEM, PAST AND PRESENT


CONTINUED.


THE SYSTEM OF CURRENCY IsTER-oONyERrI
BILE WITH GOVERNMENT BONDS.
| In dealing with this subject we musi


bear in mind that under our system ol
government, all power is vested in and
emanates from the people, and that ths
power to make money and regulate iti
value is an essential attribute Of sover.
eighty.


The monetary system adapted to the
aristocrstic principle of government must
be such as will tend to the Capitalization OF
the wealth in the possession of the few
MOBILES, or governing class. On the other
hand the system adapted to the democratic
principles Of government must be such as
will tend to the equitable distribution Of
the wealth among the people. If then
we would maintain and perpetuate our
liberal institutions we must institute mon
ey 80 that it shall be under the direct con-
troll Of the sovereign people who produce
the values it is designed to represent,
measure, and exchange. This is the OBJ
lect the advocates of this system have in
view and which they believe would accom-
plish this desirable end, 80 far as it can be
affected by Legislation.


1t would restore the circulating medium
to the nation, to whom it belongs, and
provide the people with . currency Just in
its bearings on all classes and interests,
and in which each citizen would be inter-
ested to the extent Of his wealth or the
amount of property and products he might
have to exchange, and have q correspond
ing influence in its regulation and manage
ment. 1t would possess the elasticity
necessary to adapt it to the ebb and flow
of trade and be elf-adjusting for should
the amount in circulation at any time be
insufficient TO meet the demand, and the
rate Of interest advance materially above
the rate paid on the government securities,
the bonds wonld be converted into money.
Tn the other hand if at any time the
volume in circulation should be in excess
of the demand, and the rate of interest IN
legitimate business fall to or below the rate
paid on the government bonds the currency
would be exchanged for bonds, to the ex-
tent necessary to restore the proper equi-
librium. This would prevent the violent
expansions and contractions Of the cur
rency, and the extortionate and huctuating
rates of interest which have ir the past
proved and are now proving 50 detrimental
to productive industry and legitimate COM
merce.


With the rate of interest on the govern
ment bonds sufficiently below the rate of
increase in the national wealth as to make
a fair division Of the joint productions of
capital and labor between money or nom
producing capital and productive industry,
the producers and distributors of the
wealth would receive fair compensation
for their services, and capital would like
wise receive Just reward for its use. 1t
would thus establish an equitable standard
of distribution to capital and labor, which
is the most important function of money
If not Of government.


Resting as it would on public faith,
which is the foundation upon which our
system Of government 10 based, and being
endowed with all the legal attributes Of
money, it would have uniform credit and
permanent value, and be fitted for the
performance of all the functions Of med
ium of exchange equally as well as coin
better, because more convenient and eco
nomical


THE RATE OF INTEREST THE KEY TO THE


SYSTEM.


As the rate of interest on the govern
ment securities would under this system
govern the rate in all business transactions,
and as the bonds would be the most desir-
able and convenient form of investment,
khaxy xvn,,lJ ~. v.rofarra1 &<, o&hor
even at a somewhat lower rate of interest
1t follows that the rate on them should be
below rather than above the average rate
of increase in the national wealth by pro-
ductive industry. If greater, the effect
would be to absorb too large portion of
the loanable capital and to advance the
rate of interest beyond the point where
capital could be safely and proftably en-
plOyed in legitimate business. This would
defeat the end sought to be obtained by
the advocates of the system, which is to
establish fair and uniform rate Of inter
est and an equitable standard of distribu-
tion to capital and labor.


As the subject Of the accumulative pow
er of interest, and its depressing effect on
the industrial and commercial interests of
the nation, seems not to DO generally un-
derstood, and has not received at the
hands Of our Lawmakers that consider
alton its Importance demands, | will, for
the purpose of bringing the subject before
the minds of your readers, show the value
of one dollar (omitting fractions Of cents)
at the several rates following for twenty
seven years, or at the end Of the present
century. This is period in which all who
are now entering upon the duties and
responsibilities Of life are directly inter-
ested, and the subject is therefore worthy
Of their careful attention: