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The Nebraska Adycrtiser
V. IT. SJJVMMM0 PmbU$hr.
FRIDAY, MAY 14, 1897.
fiflSi
FAILURE OF BIMETALLISM.
Japan's Experience with the Free
Coinage of Silver.
Tho nittcmpt of Japan to maintain a
mint ratio that was different from th
market ratio was a failure and resulted
in denuding' the circulation of gold. Bi
metallism -had failed in Japan as else
where. Tho decline in ttie value of money had
in Japan the effect it always has had of
robbing the laborer and enriching tiie
capitalist. The miserable pittance paid
to the wretched operatives must at no
distant period lead to a social revolution
unless the rale of wages bo consider
ably improved.
In 1872 a family consisting1 of five
members of the lower middle class could
eubsist on 70 yen a year. In 1803 the cost
of living had risen to 180 yen a year.
During a period of 22 years the silver
yen declined very nearly one-half in its
gold value, about two-fifths in its power
to buy merchandise and about one
fourth In its power to buy labor.
Tho gold value of tho exports from
the United States and England to Japan
was6ver $18,000,000in 1802 and nearly
$31,000,000 in 1800, while the imports
of the two from Japan, were over $29,
000,000 in the first year and less than
$31,000,000 in tho Inst year. Fred Per
ry Powers, in Sound Currency for
March 1.
MONEY IN TEXAS.
Why intercut ! Hlsh and Loanable
Faada Contracted.
Tho Galveston Daily News reminds
Its Texas readers of the difference in in
terest rates in the northeastern states
and in some of the western and south
ern states and gives them a few elemen
tary lessons on the reasons for this dif
ference. "Interest is never so low," it
eays, "in communities given over to
suspicious Aires, questionable assign
ments, fraudulent failures or to legisla
tion with a decided turn against the
creditor and in favor of the debtor."
Much of the market rate of interest is
insurance against risk, and of course
diminishes as the risk decreases.
"Where men are required by law to pay
their debts and are not sheltered and
encouraged in tricky courses by unrea
sonable exemption laws and by a pub
lic prejudice against creditors as a class
the risk is naturally less serious."
Making its application to Texas; the
Kews says: "We have a right to leave a
fraudulent debtor a resident worth $50,
000, all the bank stock or bonds he can
carry and an extraordinary collection
of the tools of his trade or profession
and to defy his creditors to crook a
finger at him. We can do this if we
prefer, but it is going to cost us some
thing." It asks why the "goodly ma
jority of the people of Texas," who "are
not disposed t live high to-day and
hide behind the exemption law, the as
signment law or some other law to-morrow,"
should be forced by the discredit
of bad laws and a few dishonest men
"to pay two prices for every dollar they
borrow." It believes the rate of interest
would come down one-half and the
loanable funds would double i-f the hon
est men of the state would demand the
enactment of laws under which?a cred
itor could collect what is due him.
Tne Hobic Ballded en the Sands.
Ilennbllean BaggeiUont,
.The retirement from circulation of
United States notes is a step to be taken
In our progress toward a safe and stable
currency which should be accepted as
tho policy and duty of the government
and the interest and security of the peo
ple, President It. B. Hayes, in His An
nual Message to Congress December 6,
1860.
The several forms of out paper
money offer, in my judgment, a conr
stant embarrassment to the govern
ment and to a safe balance in the treas
ury. Therefore I believe it necessary
to devise a system which will
present a remedy for those arrangc
ments.which, temporary to their nature,
mightwell in theyearsof our prosperity
have been displaced by wiser provisions.
President William MoKinley, in His
Inaugural Address March 4, 1897.
jC
j SCrdWl.nW?nWKdnHnB.SiMW.
OUERENCY ELASTICITY.
Our Bystom Inferior to Thoao
Sootland and Canada.
of
Need for More Money to Move Crop
Is at Oaee Supplied In Other
Countries, llwt Not
In Thin.
Secretary of the Treasury Windom
said in his treasury report for 1800:
"In my judgment the gravest defect
In our present financial system Is its
lack of elasticity. The demand
for money, in thiscountry, is so Irregular
that an amount of circulation which
will be ample during ten months of the
year will frequently prove so deficient
during the other two months as to cause
stringency and commercial disaster.
The crops of the country have reached
proportions so Immense that their move
ment to market, in Augustand Septem-'l
ber, annually causes a dangeroiiB ab
sorption of money. The lack of a suffi
cient supply to meet the increased de
mands during those months may entail
heavy losses upon the agricultural as
well as upon other business interest.."
How hard and inelastic b our present
unscientific currency system, or lack of
system, is apparent when a comparison
is made with the currency systems of
other countries. In a pamphlet recently
issued by the sound currency commit
tee of the Keform club Mr. L. Carroll
Hoot illustrates the relative elasticity
of 20 different bauking systems in 10
different countries. lie says:
"The data secured include weekly or
monthly statemcnts.of the outstanding
circulation of the leading bank cur
rency systems of the world. The period
covered in each caBC is the two years
1894 and 1805. The method of prepara
tion of diagrams has been to take the
minimum circulation of the period as n
base line and to reduce the amounts on
other dates to percentages of this. In
this way a common measure has been
secured, " and comparison of one dia
gram with another is facilitated."
We rcproduco below three of Mr.
Koot's diagrams which show in a strik
ing way the great difference in elastici
ty of currencies in Scotland, Canada and
the United States.
BANKS OF SCOTLAND TEN BANKS.
TSTf
Circulation.
Circulation
1894
January 27. 6.220,623
1895.
January 26. 6 347,434
Feb. 23 6,276,997
March 23.... 6.322.469
April 20 6,606,203
Feb. 24
March 24....
April 21
May 19
Juno 16
July 14
August 11...
Sept. 2
October 6....
November 3.
December 1
December 28
6.101.264
6,089,075
6,289,309
6,809,22G
7.093,971
6,587,932
6,434,985
6.125,971
6,423,398
6,599,299
7,289.749
6.W6.079
ay 18..'.".'." T.1S5.K3
ine 16.'..'..'. t!44003O
Ms
June
July W.
7.095.838
August 10...
Sept.l
October 6....
November!
November!!)
December 28
6,907.t96
7.041,(01
7.C54.197
7,191,632
7,764,661
7,326,083
CANADIAN BANKS-THIRTY-EIQHT
BANKS,
Circulation.
Circulation.
1895.
1894
January 31 $30,571,375
February 28 .. 30, 603, 267
March 31 30,702.607
April 30 29.996,472
May 31 . 28,467,718
June 30. i..... 30,254,159
July 31 29,801,772
August 31 30,270,366
September SO 33,355,156
Octobor 81 34,516,661
November 30 83,076,861
December 31 32,375,620
124917,276
28,815,434
29,414,796
29,162,152
28.429.134
30,106,578
29,738,115
30,737,622
32,771,412
34,671,028
34,312.746
32,666,179
UNITED STATES NATIONAL BANKS
ISStS
EXCLUSIVE OP BANK'S OWN NOTES
ON HAND.
Circulation. Per cent.
December, 1893 $204,581,130
February. 1894 201,882,823
102.8 I
101.5 I
100.7
100,0 I
100.6
May, 1S94 200,514,419
July, 1894 19S.S84.634
Octobor, 1894 2L'0,370,704
December.1894 200,391,327
March. 1895 199,430,622
May, 1895 204.028.806
July, 1895 205.480,399
September, 1895 208.066.M3
December, 1895 209,766,713
Fobruury, 1896 211,889,760
100.7
100.2
102,5
103.2
104.5
105.4
106.4
These diagrams show that in Scot-
land there is about 20 per cent, more of
currency in circulation in November
than in February. In Canada there is
22 per cent, more currency in circula
tion in October than In May. In the
United States there was only six per
cent, change in circulation during the
two years 1804 and 1805, and the most of
this change is accounted for not by the
changing needs for currency at differ
ent periods of the year, but by the sulen
of United States bonds, which made It
convenient for banks to increuse their
circulation. Mr. Root thus explains
the changes in Canada and Scotland:
For instance, on comparing the cir-
l dilation of Canada nnd Scotland, tho
1 first thing noticed i that in Scotland
f 1 1664 I lip 6.
III
n J6d4 I 4fro I
ryagRCTR&wP'irEul'. Mug Mjv tun sag
J IV 1 1 r TV 1
.1664 I 8S8. I
tTBari48uawaaiwl trwiiiMciMMBUigw
there are two upward movements, one
culminating In May and the other in
November, while in Canada the former
movement is entirely absent nnd tho
other occurs one month earlier than in
Scotland. The explanation will without
doubt bo found in tho Scotch practice
of making payments on mortgages, in
tcrst, annuities, etc., nt those dates a
practice not followed so extensively in
Canada.
"In general n slnglo annual move
ment may bo said to characterize agri
cultural communities. This occurs In
the fall, and Is due to what wo ham
omp to call movlntr the crops.' Its
explanation may be found in the fact
that farmers as a class are not accus
tomed to make use of bank deposits,
nnd consequently when payment are
made to them for their crops (largely
at a bIqIc season of the year) the sur
plus .over immediate paymcuta is re
quired by them in the form of notes It
being unquestionably true that In any
of our agricultural communities in this
country the average farmer has in his
possession during the six weeks follow
ing the sale of his crop a much larger
amount of currency than during the
j rest of the year. The result in the ag
gregate is an extraordinary ueraana,
suoh ns that which leads in Canada to
uu annual expansion of 20 per cent, in
tho bank circulation."
Undoubtedly the needs for currency
In the United States change ubouC us
much n in Canada, but the cost of buy
ing bonds at a high premium on which
notes can be Issued only to 00 per cent,
of their par value, tho red tope ncccn
sary to obtain these notes from the gov
ernment and the tax on circulation
make a delay and cost in increasing the
circulation which practically prohibit
an increase until the need for such in
crease is past. Therefor interest rates
in this country run up rapidly in Au
gust and September without appreci
ably affecting the supply of currency.
In Scotland and Canada the machin
ery necessary to increase the supply of
currency is simple and is entirely in the
hands of the banks; hence the cost and
delay necessary are much less than with
us. Thus in Canada a fow big banks
with numerous "branch banks" supply
all parts of the country with currency.
When more money is needed In any
province ns In Manitoba when the
wheat crop is being harvested rates of
Interest begin to rise. The profits of sup
plying currency in this province are in
creased, and immediately additional
supplies of currency are sent from tho
big banks in Montreal, Quebec or To
ronto to their branoh banks in Mani
toba. Thus the cost of moving the crops
is much lower in Canada than In the
Unlfll States, where rates of interest
go up and down without materially
changing the supply of currency. Of
course the farmers, through increased
competition of bidders, who obtain
plenty of money at low rates of Interest
and can afford to pay high prices, reap
most of the benefit.
There are other advantages con-
jnected with "branch banks" which it Is
I unnecessary to explain here. It is Buffl-
oient to say that in Canada there is no
Bllver question to disturb business and
occupy the time of politicians and leg
islators. It Is net like!;' that we wHl
have financial pcaco until we greatly
Improve our banking and currency sys
tems. Cheap Confederate Money.
A southern firm ndverttes 15 varie
ties of confederate bills for 25 cents,
also a "rare collection of 50 different
bills and shlxplasters for only $2." Ap
parently the firm has milllonsof dollars'
worth of this money for sale cheap.
What a pity that our old fogy consti
tution is In the way! But for it the
cheap money advocates in any state
where they have a mojority could buy
i up this whole confederate outfit and
start in business at once. The amount
of prosperity and happiness that could
be extracted from this old paper mine
would depend upon the size (popula
tion) of the state fortunate enough to
secure the monetary outfit.
For instance, it would probably give
Nevada more than $1,000 per capita and
would at once transform her from one
of the poorest to one of the wealthiest
of states. Instead of sagebrush and
prizefights she would teem with gran
aries and warehouses. Down with a
constitution which prevents state home
rule in monetary affairs and the mani
fold blessings of cheap money!
Retire Lesal Tender Notes.
The fear of contraction has a good
deal to do with the very common oppo
sition to the policy of retiring the legal
tender notes, but there is no sufficient
ground for it. No one has suggested
any process of retirement that would
not be gradual, and the process would
necessarily be spread over several
years, though the bencilclal results of
the policy would begin to be felt at
once. An act of congress providing for
the retirement of the notes would es
tablish confidence at home and abroad
in the determination and the ability of
our government to prevent a repetition
of the panic of 1803 and its ensuing ills
that would be of marked benefit to the
country, and all the advantages of a
sound currency system would be ex
perienced long before the last of tho
legal tender notes had disappeared.
Our large volume of paper currency
! has tended to keep gold out of tliecoun-
'try, and with the diminution of notes
the ordinary forces of trade would send
gjj this way. Iron Age.
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