People's Pilot, Volume 3, Number 43, Rensselaer, Jasper County, 13 April 1894 — ANOTHER EXPLANATION. [ARTICLE]

ANOTHER EXPLANATION.

More Light as to What the Seigniorage Keally Is—A Scrap of Coinage History. We have been asked to explain what “seigniorage” really is and what amount of silver bullion now in the vaults of the treasury the Bland bill proposes to coin. The discussion of the seigniorage bill which has been going on for months is well calculated to confuse and bewilder the public. Seigniorage is nothing more nor less than the charge made at the government mint for the work it perforins in transforming the bullion that is brought to it into coin of the legal weight and fineness. Originally seign-« iorage was charged only to the extent of the actual cost of the work of the mints. While that was the case, and it is the case with our gold coinage today, the value of the bullion in a particular coin always equalled the value of the coin itself minus only the cost of minting it. Where, however, the government has an exclusive monopoly of the coinage of the country it becomes able to charge more as seigniorage than the cost of transforming the bullion into coin and thus to deprive a profit from the operation of its mint. While it would be profitable, for example. for outsiders to coin silver dollars of the requisite weight and fineness, they are forbidden, under penalties of counterfeiting, from doing so. It is because the government assumes the monopoly of coinage and limits the output of its mints that it is able to secure large profits from the seigniorage and to maintain the coins issued at their face value. The Bland law of 1878 provided for the purchase and coinage bj’ the United States treasury of not less than $2,000,000 nor more than $4,000,000 in silver per month. Of this money a great deal was later stored in the treasury and put into circulation by means of the silver certificate, which is merely a certificate of the deposit of a certain number of silver dollars in the treasury, payable upon its presentation. For every silver certificate that is in circulation there are actually coined silver dollars in the treasury to redeem it. The Bland law was repealed and superseded by the Sherman law in 1890, which put an end to the coinage of silver dollars. Instead of purchasing and coining silver sufficient to make at least $2,000,000 monthly, the secretary of the treasury was now directed to purchase 4,500,009 ounces of silver monthly and to pay for it with new silver treasury notes at the current market prices. The new treasury notes do not represent any specific amount of coin or bullion in the treasury, but are payable at the option of the secretary of the treasury in either gold or silver coin of the United States, while the whole amount of bullion

bought is.held as security for the whole amount of treasury notes issued. But the same law of 1890 proclaims it to be the established policy of the government to maintain the parity of value of all the money issued by its authority, and, in order to carry out this policy, the secretary of the treasury has taken it to be his duty to redeem the treasury notes in gold if the holder so demands, since, otherwise, gold coin, being the more difficult to obtain, would immediately jump to a premium. Under the Bland law there were coined $846,000,000 and under the Sherman law, previous to its repeal,there were purchased 108,000,000 ounces in silver, in exchange for which treasury notes to the amount $156,000,000 were issued. If the bullion purchased under the Sherman law had been coined and put into circulation, either as coin or by means of silver certificates, instead of being held against treasury notes to the extent of the purchase price, the government would have issued some $55,000,000 more money than it has issued. This $55,000,000 would have represented the profit on buying bullion at the market price and paying it out after coinage at the legal ratio of 16 to 1 as compared with gold. The seigniorage to which the new Bland bill then refers is only an estimated seigniorage, or profit, upon work that has not yet been performed. Mr. Bland’s proposition was to coin this $55,000,000 representing the government’s profit, first, because the treasury is in need of money to tide over its deficit. This would leave in the treasury, bullion which, if coined into standard silver dollars, would equal in face value the treasury notes outstanding. If Mr. Bland had his way he would then coin the remainder of this bullion and call in the treasury notes, replacing them with the coined dollars either as coin or in the form of silver certificates. Were this process completed, we would in time have eliminated the treasury note from our supply of money. The result would be to have all the silver purchased under both the Bland law of 1878 and the Sherman law of 1890 represented in circulation by coin or its equivalent, the silver certificate. The country would then be in the same position as it would if the Sherman law had provided for the purchase and also the coinage of 4,500,000 ounces of silver monthly while it was in force. This is what Mr. Bland hopes to attain.— Omaha Bee.