Page:The Economic Journal Volume 1.djvu/818

 796 THE ECONOMIC JOURNAL before all things to retain a sufficient gold reserve in the Treasury, an therefore refuses to cash the new silver notes on presentation in gold, those notes will at once fall to a discount. At the banquet of the New York Chamber of Commerce last November, the Secretary of the Treasury argued that that could not happen, for the Resumption Act gives the holder of his office authority to borrow as much as may be required to keep an adequate gold reserve. But does Mr. Foster seriously believe that the American people will pile debt upon debt by lorrowing gold that constantly flows away from them for the sake of continuing the purchases of silver ? And if they will not, the Secretary must stop cashing the new notes in gold. These then will be redeem- able only in silver; and as nobody will want silver and every one will want gold, the notes will certainly fall to a discount. When that hap- pens, or, what is saying the same thing, when gold rises to a premium, gold will begin to be hoarded, and very quickly will disappear from circulation. The notes, being legal tender, will be used to discharge all debts at home; but they will not be available to make payments abroad, therefore gold'will be. sent abroad partly in payment of debt and partly for safe keeping, and silver and silver notes alone will circulate. But as the American people are intent upon keeping gold as well as silver in circulation, the rising of gold to a premium and its rapid withdrawal from the circulation will inevitably create a panic. The time when the circulation of the United States will be filled quite full is nearer at hand than it otherwise would be, because the banks refuse to hold silver in their reserves. From an analysis of the returns made to the Comptroller of the Currency some months ago by all the National Banks, which appeared in the Statist of October 17, we find that while the National Banks throughout the United States on July 9 last had reserves amounting, in round figures, to nearly 58 millions sterling, they held in those reserves less than 3 millions sterling in silver and silver certificates. Only about one-twelfth, that is to say, of their reserves, consisted of silver and paper. payable in silver, while eleven- twelfths consisted of gold and paper payable in gold. Practically, that is to say, the whole of the silver bought by the United States Treasury from 1878 until August, 1890, amounting to nearly 70 millions sterling, is in the hands of the general public to a small extent, in the form of coin, but chiefly in that of silver certificates. It is not accepted by the banks for reserve purposes, and therefore almost its only function is to serve for small change for the payment of wages and for retail purchases. T. THE REPORT OF THE HOUSE COMMITTEE ON THE SENATE BILL PROVIDING FOR THE FREE COINA(r, OF SILVER. Tam report supplies material for estimating the true character of the movement, and the results likely to follow its success. Not that the reports presented by the committee are in any way conducive t