Year: 1876

Ex-senator CoWan's Vsheme Tor He-
sumption.


Mr. Edgar Cowan, former Senator Of the


United States from Pennsylvania, gentle


man of intelligence and ability, has recently


addressed letter to Mr.. Cox, chairman of


the Committee on Banking and Currency, In


which he presents a novel plan for reaching
specie payments, which he thinks would Sc
cure the object in the course of a few months
without shock or convulsion, without any dis
turbance of business and without injustice
or even Inconvenience to either debtors or
creditors 1t must not be inferred from
these sanguine expectations that Mr. Cowan
is one of the numerous tribe of dreamers and
crotchet-mongers who are every day
blowing some fantastic bubble which
they mistake for great discovery. Without
at all indorsing his plan we think Il plausi-
BILE enough to be worth stating, as it ap-
proaches the subject on new side and may
perhaps suggest hints out of which some
thing can be made.


Mr.. Cowan's fundamental postulate is the
undeniable truth that the worst of all evils
IN circulating medium is the fuctuating
unsteadiness of value. A creditor who lends
money for seven per cent would receive
nothing at all for its use if the currency
should depreciate seven per cent between
the date of the note and its maturity. On
the other hand the debtor who agreed to
pay seven per cent would really have to pay
fourteen per cent if the value of the cur
rency should go up seven per cent. An
unstable currency damps enterprise and dis
courages business by making it unsafe for
men to enter into contracts to be fulfilled
at future time. 1t is not because the cur
rency is deprecated, but because its degree
of depreciation perpetually fuctuates, max
ing all calculations uncertain, that business
and enterprise are so ruinously crippled.
Supposing greenback dollar to be worth
eighty-fve cents, and could be steadily
maintained at that value without risk of fuc-
tuation, business would proceed with just
the same certainty and regularity as if the
currency were maintained steadily at par.
Thus far there can be no doubt that Mr..
Cowan stands on tenable ground.


The next question is whether it be posi-
BILE to fix the value of the greenback at say
eighty-fve cents and keep it there without
variation. Mr.. Cowan thinks it possible,
and points out method The plan is sim
pie enough, for it consists merely in recog-
nizing by law what exists as fact He
would have the government redeem the
greenbacks in gold at their actual value
This would, to be sure, require o stock of
gold, but not a large stock; for if they
were redeemable only at their real value they
would not be presented in great quantities,
paper money being SO much more conve-
nient than metallic. If at the time the law
was made the greenbacks were worth eighty
five cents they could not afterward fall
more than fraction of q cent below that
value because, as soon as they did, enough
would be at once offered for redemption to
restore them to that figure. Nor could they
rise more than fraction of q cent above
that value because as soon as they
did, the banks would issue more notes and
expand the currency up to that level. 1t
would be just as easy to maintain them at
eighty-fve cents as at dollar, but the ad-
vantage of redeeming them at their actual
value would be that it might be done without
disturbing business or affecting the relations
of debtor and creditor. Mr.. Cowan would
also have date fixed beyond which future
contracts should be discharged only in gold
dollars, unless the contract specified that
they were to be paid in currency, the green
backs still remaining legal tender at their
real value of eighty-fve cents.


The objection to this scheme-otherwise
so simple, practicable and benefcial-is that
it would be reputation by the government
to the extent of fifteen cents on a dollar. We
will not argue that point but only advert to
some facts. 1t is o fact that no present
holder of greenbacks ever received them as
the equivalent of gold dollars They have
cost their holders only their actual market
value, and they have.no equitable claim to
be paid more at tire expense either of the
debtors or the country. This view overlooks
the question Of public faith, which we will
not discuss at present But it is fact that
the government does actually redeem green
backs at their various fuctuating market
values every month in the year-that is to
say, as often as it makes sales of gold. If it
may do it in this form why not in more
open, direct and undisguised form? If it
may pay out gold for greenbacks at a fuctu-
ating market value why not at q steady
market value, especially if the latter method
would bring the great advantage of q stable
circulating medium