* - .
Conservative *
In the July num-
LAUGHLIN ON THE . . 4. JT ,
ber ° f the Journttl
CUKKENOY
of Political Econ
omy Professor J. Laurence Laughlin , of
tlio chair of political economy of the
University of Chicago , contributes a
strong paper pointing out the danger to
our financial dystein of the election of a
free silver president , notwithstanding
the new currency law.
"As regards the establishment of the
gold standard , "pays Professor Laughlin ,
"not only has practically nothing been
introduced into the situation by this
bill , but wo have in general no new
means of maintaining the standard
which we did not have before the law
was passed. If there had been possible
danger from silver before March 14 ,
1900 , the same danger still exists. "
If the new law is to be effective in
establishing the gold standard it must
be administered by officials in sympathy
with it. About this , the Journal of
Commerce makes the following observa
tion : "We do not doubt the efficacy of
the law in the hands of its friends. If
Mr. Altgeld were secretary of the treas
ury and Mr. Champ Clark were attorney
general , who will undertake to say that
they would construe the law as Mr.
Gage does ? "
"It has been repeated by the public
press , " says Professor Langhliu , "and
assumed by the
Recent Monetary , , . *
country , chiefly on
the basis of reports
emanating from Washington , that the
act of March 14 , 1900 , whatever may
have been its shortcomings in other
directions , has at least firmly established
the gold standard in the United States.
The belief is generally prevalent that
the election of a president pledged to
the cause of free silver would no longer
be a source of danger to our monetary
system , because the gold standard has
been placed by the new legislation be
yond the reach of executive control ;
that the mere action of a future Secre
tary of the Treasury hostile to gold
could not cause public or private obliga
tions to be paid in silver ; and that no
thing could now be done for silver ex
cept by new and positive legislation , a
contingency which would be impossible
so long as the senate and the executive
favor gold. Hence we are assured that
we may rest free from all danger of the
"silver issue , " which we hear on all
sides is now "dead. " On the strength
of this belief , political lines are being
drawn , and a plan of campaign is being
formed. That there has been a subtle
game of politics played with our recent
monetary legislation through the in
fluence of the senate is unmistakably
clear and is nothing unusual or sur
prising. But it is not certain that the
general public is aware of the exact
effect of the provisions of the new law ,
or informed how little has been done.
Without any desire to be sensational or
to create alarm , it is my belief that it is
wise to face the facts of this new act as
they are. While I do not believe that
the gold standard is in any more danger
than it was in 1899,1 certainly do be
lieve that we are not in any better posi
tion in 1900 than we were before.
' 'In speaking of the gold standard as
firmly established , one means the obliga-
. , , 4.tiou to Pa7 g ° ld
Gold Standard Not . , , ,
Established. whenever the word
'dollars' is used.
As every one knows the word 'coin'
allowed an uncertainty as to whether a
contract generally payable in 'dollars , '
could be paid in silver dollars ( of 871 J
grains pure silver ) or in gold dollars ( of
28.22 grains pure gold ) . This uncertain
ty in regard to United States bonds
seriously affected their value , and was
one strong reason why new legislation
was thought to be necessary to remove
all doubt. It may , therefore , be a
shock to some trusting people to be told
that , in spite of the new law , a silver-
loving Secretary of the Treasury could
today pay off very large amounts of
government obligations with silver del
lars. If a free silver president were to
enter the White House in 1901 , there
would probably be a large amount of
obligations which could then be paid in
silver.
"The act of March 14 , 1900 , author
ized a partial refunding of the old debt iu-
, , , . to 2 per cent , bonds
.
Ilomls Payable in . .
Sliver , whose principal
and interest is
made specifically payable in 'gold coin
of the present standard value. ' It does
not allow the refunding into the new
twos of the extended twos of 1891 , nor
the of 1925 in all
four-per-cents a sum
of $187,079,900. Very recently ( May ,
1900) ) the extended twos have been called
in for redemption , so that the bonds of
1925 are the only ones in fact excluded.
But it remains clear that a secretary op
posed to the gold standard , might on
change of parties pay off at maturity
$162,815,400 of national debt in silver ,
at his discretion. Nor is that all of it.
Of the $889,146,840 of old debt refund-
ible into the new gold twos , at the time
of writing ( June 1 , 1900) ) , only about
280 million dollars have been offered for
exchange. How rapidly , or how
thoroughly , conversion will go on , no
one can now prophesy. However , there
are so far unconverted bonds to the
amount of 559 millions dollars which , if
not refunded , could be paid off at
maturity in silver. In other words , not
only the $162,815,400 of 4 per cent ,
bonds of 1925 , but any of the other
descriptions of bonds which may not be
refunded into new twos , would be pay
able in silver ( in all , taking the im
possible supposition that refunding
should cease entirely from now on , to
721 million dollars. ) To the extent that
conversion goes on , this gross sum will ,
of course , be reduced.
"With the above situation it must be
kept in mind that the act of March 14 ,
1900 , specifically enacts ( sec. 8) ) :
'That nothing contained in this act
shall be construed to affect the legal
tender quality , as now provided by law ,
of the silver dollar , or of any other
money coined or issued by the United
States. '
"That is , the act of February 28 , 1878 ,
which made the silver dollars "a legal
_ , , , . , , tender , at their
. m .
Silver .Legal Tender. . , ,
nominal value , for
all debtspublic andprhtate , except where
otherwise expressly stipulated in the
contract , " is still in operation. The
outcome is a visible attempt to sit on
two stools : in one word to declare that
the gold dollar shall be the standard
unit of value , and in another to declare
that the silver dollar shall remain an un
limited legal tender. The political leger
demain in this- depends upon the in
ability of the public to saparate the as
signment of legal tender quality to the
standard ( in which prices and contracts
are expressed ) from the assignment of
it to a token money ( which should be
redeemable in the standard money. ) Be
cause the standard money is made legal
tender , it does not follow that a medium
of exchange should have that quality
( such , for example , as checks and
drafts. )
"The dodging of the standard issue in
regard to government obligations cannot
be excused on the ground of inadver
tence. The House Bill ( sec. 2) ) reads :
"That all interest-bearing obligations
of the United States for the payment of
money , now existing or hereafter to be
entered into * * * shall be deemed
and held to be payable in the gold coin
of the United States as defined in sec
tion 1 of this act. "
"These words did not appear in the
senate bill , and were excluded from the
conference bill. In short , for political
reasons , the senate leaders advisedly
chose to change the currency measure
in such a way that it could still be said
that a large part of our national obliga
tions were payable in silver ; while
scheming for votes in the East on the
ground of having established the gold
standard , it would be possible to ask for
votes in the Rocky Mountain states on
the ground of having preserved the
right to pay a large part of the bonds iu
silver. It must be said , therefore , that
the new legislation establishes the pay
ment in gold of only a part of our gov
ernment obligations ( and also that this
amount depends upon how far they are
refunded into the new twos. )
"The consideration , however , of most
importance to the business public is the
, , . . . certainty of the
. . .
Private Contracts. , . , .
standard in ordin
ary private contracts drawn in 'dollars,1
without a specific agreement to pay
gold. Naturally , it may be said , that
the national bonds could not be paid in
silver any way until the time of matnr-
* v
" "
* & &
