An Original Scheme

The Detroit Tribune prints the following communieation from L. Á. S herman, oL Port Huron, which is of considerable interest at the present time. It is another attempt to solve our financia! probleni : Port Hurón, Mich., April 6- Editor of the Tribune : The currency plank of the republican platform of 1892, adopted at Minneapolis on June 9 of that year, included the following declaration : The American people, from tradition and interest, favor bimetallism, and the republican party demands the use of both gold and silver as Standard inoney, with such restrictions and under such provisions, to be determined by legislation, as will secure the maintenance of the parity of values of the two metáis, so that the purchasing and debt-paying power of the dollar, whether silver, gold or paper, shall be at all times equal. The interests of the producers of the country, its farmers and workingmen, demand that every dollar, paper or coin, issued by the government shall be as good as any other. Most republican nevvspapers and statesmeii support the declarations contained in tliis plank at the present time, and assert that l.hey are in favor of bimetallism and the largest possible use of silver in onr currency consistent with the maintenance of parity of values between the two metala. All tliis is very well in theory ; but is it not a fact that if we should have free coinage of both gold and silver at auy ratio, our currency would always rest upon a single standard, that standard beiug the dollar of least market value for the time being? At the present time no one questions that oür currency rests upon an exclusive gold basis. We have plenty of silver in circulation, and hundreds of millions of dollars' worth stored in the treasury vaults, but our silver dollars have but half the value of the gold dollar in the markets of the world, and circuíate at par in our own country only by virtue of the fact that it is possible to secure their redemption in gold by the treasury of the United States. If the free coinage of silver would be retored at the ratio of sixteen to one, with that metal at its present commercial value, the intrinsic and market value oi the dollar would be reduced one-half. And supposing Congress should restore the freè coinage of silver, putting in the silver dollar sufficient metal to make its market value the same as the market value of the gold dollar, say on the first of January, 1896. Might it not be anticipated that within three months from that time there would be a sufficient variation in the proportionate market values of the two metáis to drive one or the other out of circulatiou and place our currency again upon a monometallic basis? NO ACTUAL piMETALLISM. It is, indeed, quite impossible to maintain the currency of this or any other country upon a bimetallic basis for 'any considerable length of time, with free coinage of the two metáis. All acknowledge this. And under these circumstances is it not strstnge that our statesmen have failed up to the present time to propose any practicable scheme for actual bimetallism as the. basis of our national currency? And why should there be "free coinage" of any metal ? Why should the producers of gold and silver be permitted to make money for the nation, any more than the producers of coin and wheat? What the country really needs and desires is a basis for its currency which will be stable. varying but little or not at all in market value as compared with the products of labor and industry and with every dollar in circulation as good as ever other dollar. Is it possible to provide such a basis fór our currency. and to give the country actual and permanent bimetallism? To me the problem seemsto be simple and easy of solution. Heretofore it has been the custom to make our paper money payable in gold or silver. To give us actual bimetallism it is only necessary to make it payable in gold and silver. The following proposition I have submitted to a number of men who make finalice a business or study, or both, and have yet to hear any one pronounce it impracticable, or to say that it will not accomplish the object aimed at: Make gold and silver equal partners in our currency, and a measure of all values. Let the national government issue coin certificates, payable at the treasury of the United States or any subtreasury, one half in gold at its present coinage weight and the other half in silver at the present coinage weight of the standard silver dollar. Make these certificates a legal tender for all debts public or private, except obligations heretofore entered into payable specifically in gold or silver. Let gold and silver be a legal tender for not more than $10 of silver and $20 of gold. Then, if any other currency is issued, either national or state, let it be redeemable in coin certificates. It is acknowledged, of course, that if this proposition should be adopted our curreucy would fall in intrinsic and market value from a gold basis to a jasisrepresented by a point equi-distant betvveen the market value of the old dollar and that of the silver dolar. Assuming that the present market value of the silver dollar is one-half that of the gold dollar, a dollar of the new currency would be worth onequarter less than a dollar of the present currency. WOULD THEIU2 BE INJÜSTICB? AVould there be iiijustice in such a readjustment? Those whoassume that ;here lias been no appreciation in the value of gold will assert that the creditor would be robbed of one-fourth of ihe money due hini ; and without doubt this would be true as regards obligations incurred since silver reached its present value. But going back to the year 1873, when silver was practically deraonetized, I believe it can be practically denionstrated that gold has advanced in market value since that time, as compared with the other products of labor, quite as much as silver has declined. And is there any good reason why those wlio hold credits should have their coniparative value increased by the appreciation of our currency standard, any more than holders of actual property should have its comparative inoney value increased by depreciation in the currency standard? By passing over all questions of justice to debtor and creditor and looking only to the future, I believe arguments may be presented in support of the plan presented above which are unanswerable, presuming that a stable currency basis of both gold and silver is desired. The proposed new currency wonld be put into circulation by substituting it for all classes of government money obligations now outsanding. New legal tenders would be issued at any time upon the deposit in the treasury of gold equivalent in weight to one-half their face value at its present coinage rate, and silver of like value at its present coinage rate. The present reserve of gold and silver in the treasury would unquestionably be sufflcient for all demands likely to be made. Indeed, it is probable that there would be practically no demand whatever for the redemption of notes, as any one desiring a quantity of either gold or silver would not be williug to take an equal amount of the other metal. Gold and silver would thereafter become articles of merchandise, as they should be, and those having occasion to use thein for foreign exchanges, or for any other purpose, would make their purchases in open market, and not seek to obtain the metal desired by demands upon the treasury of the United States. EQUILIBRIO! OF VALUE. The financial history of the world shows that, almost without exception, gold bas risen in market value when silyer has fallen, and vice versa. The equilibrium of value has always been a point between the two metáis, and a given number of dollars in gold at its present coiuage weight,' and a like nuinber of dollars of silver at its present coinage weight, taken together, have at nearly all times had a stable value. An illustration of the proposed partnership of the two metáis is seen in the pefadulums of regulator clocks formerly made, having altérnate rods ofbrass and steel. The theory is that when the steel expands the brass contracts, and vice versa, so that the pendulum as a w'hole does not vary in length. In like manner it may be assumed, and denionstrated as a fact, that when gold increases in market value silver decreases, and vice versa, so that a currency payable in the two metáis must always have a stable value. Xext to a necessity of a stable basis for our currency is the necessity for the adoption of a plan by which it can be increased or decreased in amount as the demands and emergencies of commerce and business may require. While it is to be anticipated that our national debt will decrease under the policy likely to be adopted by the republican admiuistration which will succeed the present executive, it is certain that there never will be a time when there will not be hundreds of millions of dollars of first class municipal and state securities outstanding. It is perfectly practicable to make use of such bonds as security for loans of coin certificates (legal tenders) when there is an extra commercial demand for currency, and the following plan is proposed : Pass a law providing for the issue of coin certificates to individuáis, corporation or banks by the government, upon deposit of uational, state or municipal bonds as security, such issue of certificates not to exceed in any case over 90 per cent of the par value of the bonds deposited ; interest on the principal of the bonds deposited, to an amount equal to the coin certificates issued, to go to the government until the bonds are taken up. NO HOAKDINQ POSSIBL.E. If it should be assumed that the government would run the risk of loss upon bonds so deposited, the interest received upon them while they were on deposit might be made a fund to cover such possible loss. It may be also considered certain that the banks or individuals depositing the bonds would redeem them as soon as the extraordinary denjand for currency which led to their deposit might be oyer. Hundreds of inillions of dollars of bonds are lield b}' banks tliroughout the country, and always will be. If a law like that proposed above had been in force when the financial panic of 1893 carne on, is it not evident that every solvent bank would have been able to procure all the curreucy necessary to meet the demands of its depositors without delay? Indeed, knowing that so easy and simple a means of obtaining currency was available, depositors never would make demands for currency to be hoarded, and the means being always available, tliere never could be a scarcity of currency. The adoption of the plans suggested for a stable and elastic currency would not interfere with the present Tiational banking laws, or anyother law Congress may see fit to pass authorizing the issue of notes by banks. The coin certiflcates, payable in gold and ilvcr, would be the legal tender currency of flie country, and would form the basis of ■ all other currency. The United States is large enough, and has sufflciently diversified natural resources, productions and established industries, to have a currency of its own, independent of any and all other nations. What is needed is a stable basis forour currency, giving it a valué that will not fluctuate, and some provisión for elasticity, based upon established commercial and industrial conditions. My claim is that the plan proposed herewith will accomplish all this. If not, let those who oppose the sclieme explan why not. It is simple, and as the public is not in the habit of dealing with complex systems, it is not unlikely that some will oppose the scheme because it is not elabórate and difficult to understaud. Nor should the bugbear of "foreign exchange," and the assumptions of some financiers who have inherited their ideas f rom past generations be allowed to stand in the way of the adoption of an independent American currency. All balances with foreign countries are now settled in coin or bullion, and it always will be so settled ; and if any foreign country with which we trade requires that purchases and sales shall be made upon the basis of either gold or silver bullion, it will be a simple arithnietical problem to figure the value of the composite dollar in either metal. As well might it be claimed that our currency must be expressed in pounds sterling, to enable us to trade with England, as that it must be based upon gold alone, to prevent the United States from being placed at a disadvantage in foreign trade. We had jio trouble in making exchanges witli foreign nations during the sixteen or seventeen years that our currency was not redeemable in any metal, and we shall fiud it quite as easy to calcúlate our exchanges and settle our balances when it is payable in gold and silver at a fixed ratio. It is quite time that our alleged statesmen should stop talking,"binietallism,'; unless they are prepared to offer some practicable scheme for maintaining actual bimetallism or to accept such a scheme when proposed by some one not claiming the distinction of either statesman or financier. It is also quite time that the republican party should propose something inore than general? ities when dealing with the currency question. The advocates of "free silver" are making headway among the people, who fee! the weight of a currency standard which issteadily appreciating in the market value, as compared with all other commodities; and unless the advocates of the single gold standard present a practicable scheme for the use of both metáis 3s a standard, tliey certainly will be overwhelmed, :ind we shall find ouvselves in the whirlpool of speculation which a fall to an exclusive silver standard cannot fail to bring, followed by thn bankruptcy and ruin which succeeds financial debauch. There should be compromise, and tho only safe ground for compromise is the half way point between the two metáis herein suggested.