T3be Conservative *
prices follow silver. In short , it 1ms be
come evident thnt the world prices of
today nro not quoted in silver , nor nro
they dependent upon the value of silver ;
a situation has been brought about
slowly but steadily in the last 20 years.
The Supply of Gold.
Calm reflection upon facts constantly
overlooked may lead us to believe that
the consensus of opinion among the
large commercial states of Europe in
favor of a stable gold standard is not
based on flimsy grounds , and that wo
ourselves are in no danger of metallic
constriction. From 1498-1850 , the
world's production of silver was $7,858-
450,000 , of gold § 8,814,558,000 or more
than twice as much silver as gold. From
1851-1891 the world's production of
silver was § 2,967,444,000 , of gold
$5,072,410,000 or nearly twice as much
gold as silver. In the United States
alone the gold production has been
about twice as large as silver : 1792-1891
of silver , $1,078,172,000 ; and of gold ,
§ 1,904,881,769. The § 5,072,410,000 of
gold product in the 40 years since 1850
has filled the channels of circulation in
Europe and America , and permitted the
disuse of silver. The resumption of
gold payments by the United States in
1879 , the adoption of the gold standard
by Germany , Denmark , Scaudanavia ,
Italy , and Austria-Hungary has not re
quired at the outside more than § 1,000-
000,000 or § 1,500,000,000 ; leaving more
than § 3,000,000,000 for general uses ,
exclusive of the stock existing in
1850 which is about as much more.
Never before have the paper currencies
of the world been bettor secured by
gold reserves. There is in sight
today more than § 5,000,000,000 in
gold in the reserves of the banks of
Europe alone. In view of these facts
it does not seem wise to feel any doubt
of the ability of the United States , with
its untold resources and exportable pro
ducts , to keep intact its small reserve of
§ 100,000,000 , or double that sum ,
which it should be.
Nor , in view of these facts , should
too much weight be assigned to the
argument that general prices have fallen
because of the demonetization of silver
in 1878. The less so , when it is to be
remembered that Germany took to her
self only about § 400,000,000 of gold , and
discarded about the same amount of
silver. In short , apart from the action
of Germany , silver is as much used now ,
in all the other states of Europe as in
1878. If the giving up of silver by Ger
many lowered the level of prices for the
world , then the action of this country in
buying as much silver as Germany dis
carded ought to have restored the former
level. That it did not , shows how un
tenable is the position that prices have
fallen because silver was demonetized ,
or that prices can be regulated by legis
lative action by increasing or diminish
ing either gold or silver. In short ,
prices can never bo fixed by the more
quantity of metallic money in the
country. They depend much more on
conditions of credit and banking. If
this is properly understood , it will be
possible to see how debts can be paid
without the infusion of more silver into
our currency as easily as ever before.
The only means of paying debts , in fact ,
are saleable goods ; for they can always
be changed into a means of payment.
Our Bunking System.
It is a truism to state that the amount
of actual money , metallic or paper , is
very small , at all times , compared with
the country's commodities which are
being exchanged. If all goods were to
bo at the same moment offered for
money , the money would not be enough
to go around ; any more than a million
men could all cross a bridge at the same
moment , although they could all cross
in a very short time a few at
once. In a sale of goods a comput
ation in terms of money may be
made and a check or draft drawn
for that amount ; through the agency
of banks these drafts are exchanged
against each other , rendering the
actual transfer of money unneces
sary , and enabling goods to be moved
rapidly and economically. The grain ,
the provisions , the manufactured goods
of the country are thus dependent on
the banking system for their exchange.
These transactions , by which the banks
assist the community in transferring
goods by checks and clearing-houses
amount to as large a sum as § 60,000,000-
000 per annum. This service , by which
the banks furnish a means of exchange ,
is of really greater importance to trade
than the mere quantity of metallic money.
These services , moreover , are so constant
ly and easily done day by day that the pub
lic are often unaware how intimately the
banking system is interwoven with the
interests of trade and commerce. Only
in such a time as the present , when the
paralysis of credit prevents the banks
from serving the public as usual , is our
dependence upon a good banking sys
tem clearly perceived. The most impor
tant constituent in our system , of ex
changes is , therefore , the $2,500,000,000
of credit-deposits in our banks which
arise from the check and deposit func
tion. This is what enables the § 60,000-
000,000 of goods to bo exchanged , and it
'
shows clearly that v > re are not depeu-
dent for a medium of exchange merely
on the quantity of gold and silver in
hand. It also shows , as clearly , the im
portance to the community , of a well-
regulated bank system , and the neces
sity of great care in directing it. It calls
for careful , intelligent legislation , because -
cause it affects every business interest
in the country.
National Dunk Circulation.
In the consideration of our currency
questions an undue share of attention
has been given to the silver money , and
little or none to the issues of the na
tional banks , which although not a
legal-tender , have served the purposes
of money with the greatest perfection.
Through the speculation and panic of s
1878 , and the two decades since , no one ! ' * .
has ever lost a cent by holding a note
issued by a national bank in any state
in the Union. This circulation is
equally good in all parts of the countiy ,
its security perfect , its daily and ulti
mate redemption assured. If it is
deemed wise to increase the quantity of
money in the United States , it would be
more consistent with sound principles to
legislate for the increase of this Icind of
money , rather than that based on a de
preciating metal like silver. We are
met by the fact that our present hetero
geneous currency , composed of gold and
silver coins , gold certificates , silver cer
tificates , treasury notes of 1890 , United
States notes and national bank notes
have been created by various exigencies
and without combined or unified action.
The national banking laws need revis
ion ; but this revision should be under
taken as part of a general and consis
tent revision of our whole currency sys
tem. As concerns the general banking
functions , legislation is needed to in
sure greater care of the interests of inno
cent shareholders and depositors by di
rectors of banks , perhaps by increasing
the liability on their own shares ; per
mission to issue circulating notes to the
amount of 100 per cent , instead of 90
per cent , of United States bonds depos
ited ; the consideration of a suitable se
curity for future circulation ; or , if the
note-issues are abandoned , the adapta
tion of legislation to the present system
so that the banks may go on exercising
only the functions of deposit and dis
count ( it being well known that the
largest city banlcs do not use their pres
ent right to issue notes ) . Prof. J. Laur
ence Laughlin.
Currency Commission.
Believing that a revision of the bank
ing system is imperatively needed , and
yet seeing that it would be unstatesman-
like to try to treat such intricate ques
tions hastily , or disjointedly ; and recog
nizing the still greater need of a com
prehensive treatment of our different
kinds of currency , THE CONSERVATIVE
urges strongly upon public attention
the wisdom of providing for a nonpartisan
tisan and expert commission to report
upon a plan of revision for our currency
and banking system , with a view to es
tablishing a permanent and stable basis
for our growing domestic and interna
tional trade. Such a commission might
accomplish a great and lasting service
to the country.
Gallant. "A man is as old as he
feels , " said the gentleman of the old
school , "and a woman as old as she
says she is. " Indianapolis Journal.
