CHAPTER XXIII.

BY WM. P. ST. JOHN, PRESIDENT OF THE MERCANTILE NATIONAL BANK OF NEW YORK.

UNDER official dictation, tutored by the one most aggressive of all our handful of "goldites" in the United States, congress fiddles with bank notes while the burning issue is our primary money.

Identically tutored, our Chief Executive has required his Secretary to abandon the option conferred by law upon the United States and grant to holders of the United States notes the right to exact gold always, silver never, as their redeeming coin. Had the option to redeem in silver dollars been exercised boldly at the time when only 3,000,000 silver dollars were owned by the United States, with an ownership of $116,000,000 gold, any possible alarm could have been laughed to scorn. To attempt to seize upon and exercise the option now, or under immediately prospective conditions of our treasury, would be to court all the perils of disaster.

Identically tutored, the demand appears, "one step at a time," to substitute bank promises of money for $907,000,000 of the primary and secondary money which they promise. Were the scheme adopted and successful, the result achieved would be $907,000,000 of new bank promises, $207,000,000 of existing bank promises, and $1,700,000,000 of promises called deposits, an aggregate of $2,854,000,000 of national-bank

liabilities payable on demand, resting or wrangling on our available supplies of gold. The pretense of the tuition is that this is "sound finance."

Redundant bank notes have invariably banished gold and silver. They never were suspected of enticing either into money. And national banks cannot hope for popular consent to their redeeming their circulating notes in officially discarded paper dollars.

Money is the creature of law. Money is all domestic. Our $10 gold piece is accounted 258 grains of ninetenths fine gold when beyond the jurisdiction of the United States.

Money and the yardstick have nothing in common. The yardstick is an exact, unvarying measure of length. Money is an uncertain, variable measure of varying values. The yardstick is not bartered for commodities. Money is the means of acquisition and momentarily the measure of value of the thing acquired. The yardstick is a unit of length. The dollar as a "unit of value" is preposterous. Our Hamilton-Jefferson statute, founding the mint, provided a dollar as our "unit of account." That dollar of 1792 and the dollar of 1894 contain identically 371.25 grains of silver.

The aggregate of all money afloat and in bank in the United States is our true measure of normal value of commodities here. The aggregate of money of all nations trading internationally is the measure of normal value of all commodities consumed by all. Therefore,

to enlarge the aggregate of money in the trading world is to raise normal prices of commodities everywhere. To enlarge the aggregate of money in the United States is to raise normal prices for home and internationally consumed commodities here. Per contra, to diminish

the aggregate of money in the United States is to lower all normal prices here; and to diminish the world's ag gregate of money is to lower all normal prices of internationally moving commodities in all the trading world.

Omniscience and infinite integrity in law-making, but nothing short of these, would yield perfection in money. Perfection in money, thus provided, would involve the use of neither gold nor silver, nor any other commodity.

Now, if my caution against it will be quoted along with my description of it, I will describe perfect money, to wit:

Any convenient substance of about the "intrinsic " properties of silk-ribbed paper prepared to defy the counterfeiter, issued by authority of the law of the United States, and promising no redemption whatever, except acceptance for all dues to the United States, and also made receivable and payable for all dues and debts, public and private, within the jurisdiction of the United States. But my caution against any attempt at such perfection in money of the United States is that imperfect humanity has not been more safe to handle. any near approach to it, nor with any other than commodity money, than children are to toy with keen-edged tools.

If United States notes of 1862 and treasury notes of 1890, together $497,000,000 were retired, they might all be replaced with logically perfect money as described, provided silver dollars and certificates and bank notes were also all retired. The success of the issue would insure overissue, and then collapse.

Bank notes differ only in degree from treasury notes, for this same peril is lurking in them. The wary can es

cape a degree of peril in the bank note, refusing it as not a legal tender. But the peril is in the bank note, nevertheless, as Jefferson and Andrew Jackson knew. Nature's restrictions upon the world's supplies of gold and silver, and the burden of the art and industrial uses for these commodities, make these safer than irredeemable paper as our tool of trade.

Gold bullion and United States gold coin enter Europe with one and the same right conferred by law, the right of transition into English money at the price of £3 17s. 101d. per Troy ounce, eleven-twelfths and 1 penny-weight fine. By law, France, Germany, and the other important continental states similarly endow gold. And, by virtue of our law, gold carries the right of transition into the money of the United States at the fixed price of 23.22 grains pure, or 25.8 grains ninetenths fine, for a dollar.

Thus, by law, the market price and mint price of gold are one and the same, so long as there is gold produced each year more than the arts and industries and India absorb. For so long, gold in the lump, its weight and fineness being known, is the equivalent of coin in Europe and the United States, for the reason that the possessors of gold will accept no lower price while the mint price is offered in lawful money at the mint; and artisans will not pay more for gold because it is obtainable at the mint price by melting the coin.

Imagine all these mints of Europe and the United States to deprive gold of all further right of transition into money. Imagine the law of each of all these nations to grant to silver exclusively the right of transition into the money of each, at one price, equivalent to 871.25 grains pure (412.5 grains nine-tenths fine) for a

dollar. Thenceforth the "price of silver" in Europe and the United States would be this one mint price. Silver in the lump then, as gold now, its weight and fineness being known, would be the equivalent of coin. Possessors of silver then would not accept less than this one mint price for it, for the reason that lawful money could be had for it, at this price, at the mint; and the artisan would pay no more for silver because he could obtain it at this mint price by melting silver

coin.

But, with the support of mints withdrawn from gold and provided there is, as some economists aver, a yearly production of gold, neighboring $25,000,000 more than the arts, industries, and India absorb, the market price of gold would fall rapidly until the price attained would permit the lower arts, in utensils and the like, to absorb the surplus gold. Exactly this result is evident in the world's withdrawal of mint support from silver, but much less rapidly attained.

Next, imagine all these mints of Europe and the United States to grant alike to gold and silver the right of transition into their money at the will of the possessor, at one price for gold, equivalent to 23.22 grains for a dollar; and at one price for silver, equivalent to 371.25 grains for a dollar, all the coins resulting to be unlimited legal tender within the territory of the nation coining them. If gold is produced each year more than the arts, industries, and India absorb, the one only use for the surplus is employment as money. If there were silver produced each year other than is likewise absorbed, and no one doubts it, the only use for such surplus silver would be employment as money. Hence, for so long as there continued to be any surplus of gold