Rensselaer Semi-Weekly Republican, Volume 19, Number 43, Rensselaer, Jasper County, 1 February 1898 — Page 6

•ad has paid them In that -way, and ■mat continue to do so if the gold Standard la to be maintained. Bat the country has no assurance that they will h* «> paid except the general declaration of policy contained in the law and tta confidence that the President and Secretary will maintain that policy, ftach a condition of law ought not to exist. It leaves the most vital question which affects business hanging in mid-air; the most momentous of all issues depending on the will of one man Scarcely less injurious to the general food Is the effect of this ambiguous situation of the law in its tendency to confuse the minds of the people and expose them to misleading influences. When a free silver orator talks to his audience about the injustice of paying Government bonds and notes in. gold, when the law says In terms that silver dollars are legal tender, his hearers may not see the fallacy of the argument. They may not see that as the Government made the silver dollars itself, and put them out at par with gold, and has promised to keep them as good aa gold, it can not in honor pay its own debt with them unless it is ready to take them back the next minute and five gold for them. Otherwise it would by its own act break Its promise to preserve the parity of the two 1 kinds of money.

If we could only remove these two ambiguities from the law and dispel all doubt In the minds of men as to the reality and perpetuity of the gold standard In the United States, our public eredit would rise at once to the highest place known among nations. Our bonds would find buyers at 2 % per cent. Interest, and we could refund our bonded debt, If we do not wish to pay it, at a saving of many millions per annum. This, however, would not be all, nor the greater part of the gain. As I have pointed out, our money, except the gold, all consists of or rests upon Government obligations. Everything hangs on the credit of the Government. Unless that be kept spotless, everything else will become tainted. As long, therefore, as the present ambiguous condition of the law continues, there will be a margin of doubt entering Into •very business transaction among men. livery debtor in the land is paying a penalty for that doubt to-day in high interest. The men who sold gold to the Government In 1895- were willing to abate one-fourth of the Interest on their bornjp to have that doubt removed In that particular transaction. If we could remove It altogether froui every transaction there would soon follow a like saving in interest f6r all of us. The amount of that saving on the aggregate of State, county, municipal, corporate and private Indebtedness in the United States would be a sum beyond my power to estimate.

DIVISION OF ISSUE AND REDEMPTION. The next important feature of the plan of the commission is in the provisions recommended with a view to greater security in the redemption of the demand notes—the greenbacks and Sherman notes. I have pointed out that, as the law now Is, there is no fund for the payment of these obligations except the general balance in the treasury applicable alike to the payment of all dues. Hence, whenever a deficit of revenue occurs or is threatened, there is instant apprehension that the Government may not be able to meet its demand obligations for want of funds. In order to remove this evil, It Is recommended that a separation be made between the ordinary fiscal operations of the Government, which consist In the

collection of public revenues and the payntfent of governmental expen St's, ar>d its operations In connection with the issue and nedmeptlon of Its notes which circulate as money. To this end it is proposed thtut a division shall be created In the Treasury Department to be known as the Division of Issue and Redemption; that the gold reserve and silver bullion and silver dollars shall be transferred to that division; and that the whole business of issuing and redeeming shall be carried on there. The gold reserve so transferred Is to be a sum equal to 25 per cent, of the greenbacks and'ljhennan notes, and 5 per cent, of the silver dollars, which would make about $135,000,000; and is to constitute a common fund for the redemption of the notes nnd exchange for silver dollars, and be used for no other purpose. This redemption fund is to be maintained from surplus

revenue to be transferred from tlie general treasury to the Division of Issue and Redemption when a surplus exists. But if the fund should become Impaired and no surplus be available In the general treasury to replenish it. the Secretary of the Treasury to have authority to sell bonds for that purpose. • In order that there may never be any occasion to take money out of the re* demptlon fund to pay current expenses, It la recommended that In case of a deficit of revenue the Secretary of the 'Treasury be authorized to Issue short time obligations to tide over the deficiency until Congress can provide funds to make It We are redeeming the Government notes in gold now; and when the revenue falls short we have to borrow. It will add nothing to our present burden In that respect to provide a separate di vision In the treasury'to have custody of the funds and do the business, n*. the contrary, It will diminish the burten by Increasing confidence in the cer-' talnty of redemption. THE SILVER CURRENCY. It was considered by the commission that provision he made bf law

for the exchange of gold for silver dollars on demand. Such an exchange, in strict sense of the word, is not a redemption. The silver dollars are not promises to pay, like the greenbacks. The Government has simply agreed to keep them good as gold. These are the Words of the law: '

“It Is hereby declared to be the policy of the United States to continue the use of both gold and Silver as standard money, and to coin both gold and silver into money of equal intrinsic and exchangeable value, such equality to be secured through International agreement, or by such safeguards of legislation as will insure the maintenance of the parity in value of the coins of the two metals, and the equal power of evjgry dollar at all times in the markets and In the payment of debts.” The Government cannot make a silver dollar equal In value to a gold dollar by merely saying that it shall be so. Its promise to preserve that equality means that it will do whatever may be necessary to that end. We have had such confidence 1n that promise that we have accepted the silver dollars as equal to gold In value upon the faith that the Government would do what-

ever might be necessary to keep them so. But the vote for Mr. Bryan was notice that nearly hall of the people were In favor of repudiating that promise, and letting the silver dollar take care of Itself. The seven million citizens who voted the other way ought not to be content with a mere count of the votes, nor with the Installation of a President who will keep the promise while he Is In office. That great veralct ought to be entered of record, and pass Into Judgment In tne form of law. And there Is no form of law which, will give positive and practical effect to that verdict except one which will give the holder of a silver dollar the right and opportunity to exchange It for a gold dollar If he desires to do so. The only objection which any one who believes in maintaining the value of the silver dollar at par with gold can make to this suggestion is that it might put on the Government an added burden—that the silver dollars might be used to raid the treasury In the endless chain fashion. The plan I am discussing contains a provision intended to guard ngainst'that danger. It Is to put our silver dollars into a form In which they will do the small, current business of the people, and so be kept in such constant and universal use that they will not come to the treasury for ex-

change. We have now in circulation greenbacks, Sherman notes, bank notes and silver certificates in denominations of $5 and under, amounting, in ~ round numbers, to $354,000,000; and about 60,000,000 silver dollars In circulation in specie; making the total amount of money in use, exclusive of gold, in denominations of one, two and five dollars, $414,000,000. We have, altogether, some 452,000,000 sliver dollars. Hence If we would withdraw all our paper money other than silver certificates, under $lO, and transform all the silver certificates over $lO in\o smaller ones of sl, $2 and $5, we would have use for nearly all our silver Cellars In the form of coins, and certificates of $5 and under. These would be scattered over the entire country In banks, cash drawers and pockets, doing the daily work of small exchanges and payment. It wouyi be Impossible to get that kind of money together In large amount for presentation to the treasury! No one would have any amount on hand at any one time; and the banks would not let it go in large quantities. It Is the business of a bank to meet the wants of its customers. It. is expected to have on hand supplies of money In the forms which they require

for paying workmen, buying products and transacting business of all kinds. A man could pick up a few thousand dollars In small bills easily enough, but he would have to scour a wide extent of country to get a million. It was considered by the commission to be entirely certain that under such conditions no great volume of sliver dollars will be presented for exchange; while at the same time the opportunity to make the exchange will sustain the value,however few may be presented. The chief weakness of our currency system Is the lurking fear that It may tumble to a silver basis. We have given a general pledge to the country that our silver money shall be kept as good ns gold, but we have provided no specific menns for keeping It so. Let us redeem the pledge by providing the means. So shall we establish nnd strengthen confidence. The stronger the confidence the less will be the burden of keeping our promise. We could go this far—enact as law the provisions I have discussed,- and no more, with Incalculable advantage. We would then have: (1.1 The express and formal pledge of the Government to maintain the gold standard In its own payment of Its own debts. It would be nothing but words, of course, but words of mighty meaning. The faith of a government Is the most sacred of earthly engagements. It binds all the people alike—as well those who dlsßent as those who concur. We have had the gold standard In this country for sixty years, as matter of fact, and by express law since 1873. A movement has been on foot for several years to Introduce the silver standard by free coinage of that metal. It has hneu voted dowu; but the question Id. , and will remain open until wo close It by a further declaration of law. Wi#U Is the use of an election If It settles nothing? The way to make It settle something Is to embody the result of It In law. (2). The separation of the business of • ' - v. ■ •d

issuing and redeeming notes from that of collecting revenue, and paying expenses, with provision for the maintenance of each branch of the business independently of the other. This would demonstrate by acts the sincerity of the words. It would “mean business.” It would inspire confidence. We would not be so easily alarmed as we are now. A deficit In the revenue would involve no danger 6t panic. J (3). The Government would keep Its promise In regard to the silver dollars In a way that we would all understand. There was a great deal of confusion on this subject at the opening of the campaign of 1896. Comparatively few persons understood the situation. The silver dollar seemed to pass current on He merits as a coin. To one who looked at It In that way 4 was not easy to see what harm would come from more of them. Half the work of the campaign was In explaining why the silver dollar was current at par with a real value of only 50 cents. And then the explanation was only half satisfactory, because we had nothing to show but a general promise of the Government without means provided by which it could be performed. It will clear ujs the subject and help the people to a better understanding of the whole situation to supplement that vague sort of guaranty with some gold in the cash drawer ready for exchange for silver dollars. A boy can understand that. These provisions, with nothing more, would make no change in the quantity or kind of our money. Wfe would continue to have Just what we have now, and with no Increased cost to the Government. But its quality would be enormously improved. RETIREMENT OF GOVERNMENT NOTES. • *

The members of the Monetary Commission were called upon by the terms of thedr appointment to formulate the best monetary scheme they could think of—one applicable, of course, to the conditions of life and business In the United States, and to be capable of adoption by a gradual process which would produce no Inconvenience in the operation; but, to these limitations, to be as perfect as It was within their power to bring forth. The discharge of that duty necessarily brought up the question whether orn6 a paper currency issue by the Government, like our greenbacks and Sherman notes, is the best form of paper money. It was* the judgment of the commission that it is not; and the plan recommended by It provides for the retirement of these notes by a gradual process extending over a period of ten years or more. Is that a wise recommendation? The Republican party has been the friend *of the greenback* At first we had to defend it against the attacks of those who opposed its issue, and denounced it when issued* as worthless rags. Then its adversaries shifted their ground and proposed to make flat money of it by Issuing it in unlimited quantities with no provision for its redemption. We stood by it as an honest note, honestly Issued and to be honestly paid. We won that fight When John Sherman opened the treasury doors on Jan. 1, 1879, and said: “I am ready; here is gold for your greenbacks.” Later it was proposed to dishonor the old note by paying It off in 60-cent silver dollars, and again we came to Its rescue and saved Its good name. It is not strange that Republicans should be attached to the greenback. But the question is not one of sentiment. It Is cold business. Are government notes the best form of paper currency—best for us, best for the government, and for all Interests concerned? If the greenback has spent Its day of usefulness we shall honor it and ourselves most by paying It off In good gold and retiring 4 from service. In that spirit let us take up this subject. WHAT IS GOOD MONEY? There Is a disagreeable flavor of pedantry In the discussion of abstract and theoretical questions in an address like this. But I am here to discuss the money question; and all that I shall say will be as tinkling brass unless I make clear to your minds my conception of the nature and functions of money. For our present purpose I know of no better description of money than that It is a labor-saving tool. Human Industry consists chiefly in the production and interchange of iymmodules. Among civilized men the business of interchange is scarcely less important than the business of production. Money is the tool by which interchange is effected. Men could get along without mimey in the same lame and Ineffectual way In which they could get along without harvesting machinery. wagons, locomotives, or other tools of industry. A farmer could pull his wheat wMth his hands, thresh it with a pole, carry it to town on a horse and parcel It out among those with whom he deal* —a bagful to the doctor, another to the blacksmith, and so on. But by selling It for money and using the fjoney to pay his debts and make his he saves much time and labor. To be a good tool of business money must b j capable of two uses. It must be a tr’ic-measure of value; and it must be a convenient medium of exchange. It W impossible to exchange things or deal/in them without some way of immuring them. A idle of wheat is an unfljown quantity until w» measure It In Vushels or pounds. That tells us bow

much there is of it. Bat In order to bay or sell H we mast apply another measure to It; we must have a measure of Its value. ?: As a measure of length must have length and a measure of weight must have weight, soa measure of value must have value. Value is a very different thing from length, or weight, which are purely physical qualities. We could agree on any length we pleased and call It a foot, and measure all lengths by that standard. But Value depends on need, desire, supply, demand, and a multitude of complex circumstances. There Is a world of learning on this subject which need not enter. It Is enough to say that the value of a thing rests on the extent and intensity of human desire to possess it, and the difficulty of obtaining It. That which all men want very much and Is very hard to get is very valuable. That which men generally care little about and Is easy to get has little^value It Is possible to use any form of property as a measure of value, and many such have been used. Grain, tobacco, living animals, the skins of deed ones, and - many other commodities have

served as money at one time and place apd another In the world’s history. A great step was taken when gold and silver became the standard money of the world. It took men centuries to reach that point. Centuries later the next great step was taken in the introduction of money, which in*modern days has been multiplied in its forms and uses until only a small fraction of the business of mankind is done by means of coin. And so, not as a thing made to order, or devised for the occasion, but as a part of the evolution ■of the race, that vast department of its life constituting its mechanism of exchange has come into existence. We have come by our money as we have come by our clothes—by selection, invention, trial, experience. I have spoken of money as the tool of business. The comparison is a helpful one to me, and I would like to make it so to yon. Money is a value-measuring and property-exchanging tool. I can Illustrate my meaning in these expressions best by turning for a moment to measuring tools of other sorts. The simplest unit of measurement is that of length. It requires g standard to begin with, which may be an actual length arbitrarily chosen, and fixed or defined in some way that will taake It certain. We may call that a yard, and suppose that such unit is defined by law and exemplified in standard yard measures deposited in public offices where they are accessible to all the people for the purpose of comparis&n. From this standard the people develop as many different kinds and forms of length-measuring tools as they need to use. The carpenter wants a steel square at his l>ench and a folding rule to carry in his pocket. The merchant wants a yard stick. The surveyor wants a long chain. The draughtsman wants a delicate rule graduated to six-ty-fourths of an inch; while the manufacturer of watches and optical Instruments wants tools that will measure to a thousandth of an Inch. All these tools rest for their authority and value upon one standard. If they depart from that they have no value at all. As long as they adhere to that they dan be multiplied In form to any extent wtych the convenience of men may require. And in this multiplication the invention of man comes Into play, the object being to produce tools which will do all kinds of human work with the utmost excellence and the least labor. When we come to value-measuring tools we have very much the same conditions. We must first have a standard, and just as the standard of all lengthmeasuring tools must have- lengtn so the standard of all value-measuring tools must have value. But value Is a much more indefinite thing than length. It Is not a mere physical property of matter. It rests In the estimation of mankind. The standard of value must therefore be some form of property which is highly estimated by men, and which they will always be ready to accept In exchange for any property which they have to dispose of. Many centuries ago mankind settled down by a general concurrence of choice upon gold and silver as forms of property suitable to express their conception of value. As between these two the world was comparatively indifferent until within fifty years past. But within those fifty years the worl& has made more progress in /ill things that relate to manufacture, trade and commerce, than during centuries preceding. These changes have created a necessity for a more exact, unchangeable and widely accepted standard 6f value than can be furnished by two things Interchangeably used. Let me Illustrate this by reference to the greatest of these modern developments. Every railroad man understands the use of the standard clock in the superintendent's office. As a time-keeper it may not be perfect. It may gain or lose a second or two in a month. But If It be a good clock, and the employes all set their watches by it daily it will serve the functions of a standard. But suppose the company should set up two clockß actuated independently of each other and each subject to some irregularities of its own, and make each ciock a standard for all employes equally with the other. It would be impracticable to operate a railroad in that way. If the trainmen treated them alike nnd one engineer set his watch by one of them, and another by another, the running of trains would lie hazardous and uncertain. If the company had no more sense tlmn*to set up a double Standard of time of that sort the trainmen would be compelled to remedy the blunder of the company as well as they could by agreeing amour themselves that they would always set their watches by one of the cloeks In disregard of the other, or else' set them by the one which was faster or the one

which was slower. By thus either disregarding or.e of the standards entirely, or acting upon a common principle of choice between them, they could keep their watches pretty nearly together, and run their traliis with comparative safety. It is exactly so in money affairs. If two clocks could be made that would run together exactly they would be in effect one dock. And while they would furnish what you might call a double, time standard, it would be in reality a single time standard. If gold and silver would run together in a constant relation of value we could have what we call a double standard. But it would be, in effect, a single standard! And as they will not run together, the effect of setting them up as equal standards of value is to compel mankind to do exactly what the engineers would do if they were compelled to take their time from two clocks which would not run together. The world must either accept one standard in the transaction of its business and reject the other, or it must, upon some common principle of action, take that which is lower or higher for the time being. It does in fact do both. In its large, international transactions it uses gold as the measure of value, no matter what may be the law or the custom of one nation or the other in its domestic affairs. In dealings between individual citizens of., a country having a double standard the actual standard is the metal which is the cheaper for the time being. This is in accordance with Gresham’s law (which was mentioned occasionally in 1896) that the poorer money drives out the better. It is easy to see why the world has chosen gold as its universal measure of value. The first forms of money—tows, skins, shells, etc., were inconvenient. It was a great step in advance to substitute metals, including, as was done at first, iron, copper, brass, and bronze. It was another step forward to, narrow the list to silver and gokft and it was but another step of the same kind to come at last to gold.

In all this the world has been simply hunting the best value-measuring fool. I am not intending this as an argument for the gold standard. I assume that we that an<j are intending to keep it, in law as well ds practice. The point I make now is, that the first requisite of a good money system is a settled and determinate standard. Our present standard is gold, and its unit is a lump “of pure gold weighing 23.22 grains troy, or 25.8 grains 900 parts fine. The law calls that a dollar. Gold could be used as money and was so used for ages without coining, being estimated by weight. The object of coining it is simply to certify by authority of the government the weight and fineness of each piece, and so make It a better labor-saving tool. When we see a ten-dollar gold coin we know at once that it contains 258 grains of standard gold, and we are saved all the labor of weighing it or testing its purity.

Just as men have found it necessary to their highest convenience to multiply their length-measuring tools in a great variety of forms they have found it necessary to multiply their exchangemaking tools. We have silver coins, nickel coins, copper coins, bank bills, bank checks, certificates of deposit, bills of exchange, drafts, letters of credit, postofflce orders, express company ordert, telegraphic orders and promissory notes. Each of these, like each tool in a carpenter’s chest, has some particular use to which it Is better adapted than any other form of money. A cent for a paper, a nickel for a car fare, a dime for ft shave, bills for your pocket, checks for general business transactions, drafts for remittances, letters of credit for travelers and promissory notes for time payments or exchanges. Of such is the tool chest of trade. We do not in ordinary speech call all these tools money. But they are all Instruments of exchange, and they all serve the uses of money. It is one of the incidents of advancing civilization to use these quasi forms of money more and more, because they save labor. observations made through the®tnks have shown that In the United Hates more than 95 per cent, of the business done at bonk counters is done by means of checks draft*, and other credit instruments, leaving less than 5 per cent done in coin and bills put together. As all length-measuring tools must be true to some fixed standard of leqgth, so all tools of trade must be true to their standard. That is, if gold be the standard, they must each be worth the sum expressed on Its face in gold money. Here, again, is to be noted a difference between length and value. You can test your steel square by direct comparison with the standard; but you can not tell whether /or no a $5 bill is worth as much as a $5 gold coin by laying them on the table and looking at them. The only test of value Is voluntary exchange/ If your neighbor will freely give you his coin for yous bill, that is evidence, so far as It goes, that they are equal In value. If every man can make that exchange readily., universally find without limit that is complete evidence of the equality of value. So far as value Is concerned, all such money Is good money. But no money that will not bear that test Is good. This test of good money makes It necessary that there shall be a considerable quantity of gold coin In the country. We have one standard yard measure in every county in Indiana, provided by the State. And that suffices every necessity of comparison in order to test-the thousand and one lengthmeasuring tools which are in use. But we could not get albng with any such number of gold coin*. There must be enough of them to make it possible to apply the tfSt of exchange ns frequently as may be necessary 4o demonstrate the value of all other fonps of money.

No more than this ifc necessary- GbW money is convenient and good as U| every-day tool for use in amounts not too large. But its great and necessary function is as the standard of vaKwj and quality. In a system securely boi-j tomed on that foundation, other formal of money can be multiplied to whafc-j .ever extent the convenience of society! may require. The one supreme and Indispensable condition is, that thootj .other forms shall be convertible inti the standard by exchange on demand.': This requisite is like sweetness in) sugar, virtue in woman, or honor ikj man. Without it, all is bad; with it, all else can be added.

Right here, I may note in passing, i» one of the mischievous errors of oor free silver friends. They argue that; there is not enough gold in the world) to do its business with, and hence Woj must add sliver as a co-standard with) gold. They say that there must bo enough standard money in the worm to buy all Its property, or at least to] buy all that is for sale from time t* time, else the scarcity of standard moan ey will.produce a fall in prices; whlctt is a great mistake. In its ordinary ana current use money Is an exchange-maW ing tool, not a value-measuring tooLi When an Indianapolis merchant ask»| me $2 for a hat he means $2 in gold, o*j its equivalent. When I pay him for one by a $2 bill all he cares to know fgj that the bill is as good as gold. It ma*i ters not to him how much or how littloj gold there is in the country, so there 111 enough to make sure of the redemp-j tion of that bill. If the paper money of the country b* issued and secured in such a way thal its redemption in gold is so certain thalj no doubt of it lies in any one’s mindvj the business of the country goes on jus4j as though all the money in the coimtryj were gold. That is the fundamental test of good paper money—that every one shall accept it as the equivalent of) gold—not blindly and merely becaua* other peojfle take it, but upon an intern Hgent understanding of the manner of! its issue and the nature of its security.; Suppose some one should bring into th* United States $100,000,000 in gold and! scatter it throughout the country in ex J change for paper money, and then lock! up or burn up the paper. What differ-! ence would it make in our business of prices? Not a bit. We.would have tboi same quantity of money as before. Woj would simply use gold money next,' month in place of the paper money wo used last month, to the extent of the, change. Or suppose $100,000,000 of gold were taken out of the country and’ paper money equally good put in it* place. It would make no difference in our prices, trade or business. There are abundant proofs of the, truth of these views in the practice of| nations. We have in this country,, speaking in round numbers, $9 per cap-i ita of gold, $9 ,of silver and $6 of pa-, per. In Great Britain the proportions! are sls of gold, $3 of silver and $3 of, paper. English people carry gold in their pockets and transact their dally business witfc. it. We do not, to anyi large extent. But thai mere difference in the proportion of gold used makes no difference in any condition of business or prices. The money of both, countries rests alike on the gold stand-; ard. If you have to pay a debt in gold; in London you can buy a draft at an, Indianapolis bank to do it with—a draft that will be paid in gold in London;' and the Indianapolis banker will not) care whether you pay for your draft ini gold or in paper. Our paper is just as good as English *gold as long as w»i keep it at par with gold here. In, France the amouiit of gold per capita is S2O, silver sl2 and paper $3. Thai situation of that country as re-; speets its standard Is very much the' same as that of our own. They have a large stock of legal tender silver, but its coinage has been suspended, and that which they have on hand is heldi at par with gold by the credit of the, government and the maintenance ofj free exchange between two metals.. You can buy a draft payable in gold, in Paris with American paper as well) as with gold. These differences in thei relative proportions of gold, silver and; paper used in these three countries make no difference whatever among them in respect to business and prices. There are differences in prices, but noi greater than are distinctly traceable to other causes.

This subject opens up an interesting bit of history which It Is well to remember. Our old friends, the fiat greenbackers, denied the necessity ofj any metallic standard. Their standard was a word; not a thing—Just the word: “dollar.” That word printed on a piece of paper under the “government stamp," was to be the measure of value. The “middle-of-the-road” Populists adhere to that view now. The leading plank in their last party manifesto is a demand for the issue by the government of SSO per capita of “absolute money;” that is, paper money, based, as it is stated, on “all the wealth and resources of the nation,” but without any provision for applying any of those resources to the payment of it. What these gentlemen think they are thinking about in the use of such language is more than I can fathom. But the paper money which they proiH>se is to be absolute, not representative, money, and be legal t#nder fflr all debts, public and private. The free sllverlsta go to the other extreme. The clilef dogma of their creed is, that in order to maintain prices there must be an immense supply of “redemption money*’—that is, metallic money, as distinguished from paper money, in circulation —enough to buy out everything at once, if required. And as the Almighty has missed It in His calculations so far as to create more people than gold, the only way ont Is to add the sliver to the gold as redemption money. It was a curious thing to. sec these extremes, having nothing In common except that they are both