The malign influence of politics is thus shown; first by a lessened volume of clearings, which means fewer business transactions; and secondly, by an increased interest rate, which means greater expense in the conduct of business. It reduces the opportunities of business and increases the cost.

Business settlements are effected by the use of money and credit, and as it is well known, the great majority of transactions are settled by the use of credit instruments and not money. A slight contraction of the money currency may have no appreciable effect upon trade, while unwise political action often destroys the effectual use of thousands of millions of credit instruments, and entails widespread loss upon all business interests.

New Haven, Conn.

CHARLES E. CURTIS.

TWO PLANS FOR CURRENCY REFORM.

F the progress of currency reform seems slow and laborious, the forward movement halting and the goal remote, we may do well to pause a little for breath, to take a calm survey of the distance already accomplished and the height gained, as an aid and stimulus to further endeavor and ultimate success. And the two plans for currency reform, embodied the one in the bill of the Secretary of the Treasury presented in the House of Representatives, December 16th, 1897, the other in the report of the Monetary Commission bearing date December 17th, 1897, furnish a convenient ground for such a halt. Both of these proposed measures come with an authority and embody a maturity of knowledge and reasoning which no plans previously advanced could claim. The bill prepared by Mr. Carlisle, when Secretary of the Treasury, and discussed in the House Committee on Banking and Currency in 1894-5, was the work of one untrained in banking and finance, however great his judicial and economic wisdom and learning; it represented the opinion of but one section-and that the smaller one of a divided party; its only mission was to awaken interest and furnish a concrete object for discussion, largely antagonistic. The bill of the present Secretary of the Treasury is, on the contrary, the work of an experienced banker and financier, holding high office in an administration brought into power solely on the currency issue; the dominant party shows, as it always has shown, far greater coherence and subordination, and its chief, the President, commands the loyal respect and confidence of all its members.

In like manner we may compare with the report of the Monetary Commission the so-called "Baltimore plan" for currency reform, put out in the fall of the year 1894. This latter was essentially a bankers' plan, elaborated by men who had felt the full pressure of the calamitous months in 1893, and were resolved to do their utmost to remove what they judged to be some obvious causes of financial disturbance. But the

knowledge of these causes among the public was not widespread, and the right of the authors to speak with authority was not widely granted; they too had to content themselves with doing pioneer work, opening up a path to be enlarged and laid on solid foundations by others after them. The Monetary Commission's report, on the other hand, is the work of a vastly more representative body, armed with authority far more deeply rooted and wide-reaching; it appeals to a broader constituency and commands from the outset a larger measure of approval.

But the progress in the three years from 1894 to 1897 is not to be measured solely by the change in political conditions which has given us a united executive and party in place of a President and House at sword's points, nor by the development of a class measure into a national one. The postulates of the two latest plans, the axioms on which both Secretary Gage and the Monetary Commission have based their proposed remedial legislation, are highly significant as marking great and necessary advance along the line of sound financial understanding. Secretary Gage, in explaining his bill to the Committee on Banking and Currency, begins thus: "The objects I have in mind in the series of provisions offered by me are: first, to commit the country more thoroughly to the gold standard, remove so far as possible doubts and fears on that point and thus strengthen the credit of the United States both at home and abroad." Compare with this the statement of the Monetary Commission, as follows: "We submit

a

plan for currency reform, in the hope that it will, if enacted into law, accomplish, so far as possible, these results; first, to remove, at once and forever, all doubt as to what the standard of value in the United States is, and is to be; second, to establish the credit of the United States at the highest point among the nations of the world." That the standard meant is the gold standard is set forth later clearly and in terms.

No one can read these opening sentences without perceiving the advance which has been made. The word "gold" has been robbed of many of its terrors since the St. Louis platform and the campaign which followed it; just as it was one thing to

be an Abolitionist in 1835, quite another to be one in 1860. The believers in the gold standard no longer have to limit their confessions of faith to the closet and family hearth, or at best the ear of a friend at the club; an encouraging evidence of growth in common-sense and righteousness. For a long

time we hardly dared look the facts in the face, much less breathe them aloud; a "dollar as good as any other dollar" was, financially, our summum bonum. Now, the Secretary of the Treasury on the one hand, and on the other a committee of men of weight and distinction, representing every section of the country, join in declaring that we have and must maintain the gold standard, and thereby establish and strengthen the national credit at home and abroad.

Any analysis of a scheme for reform, involving many and serious changes, may well start with the endeavor to determine from what side the author approached his plan, to learn if he holds a brief for any opinion or system which may throw light on his whole course of reasoning or procedure. Without making distinct avowal thereof, Secretary Gage leaves no room for doubt as to the shape in which the problem presented itself to his mind. To "strengthen the credit of the United States both at home and abroad," and to "strengthen the Treasury in relation to its demand liabilities;" these are confessedly his aims in proposing the changes embodied in his bill. That the nation's credit and its public purse should be the chief objects of the solicitude of our public officers, is what we may expect and demand; but the fact has in this case had too scant recognition.

The Monetary Commission, on the other hand, hold, and profess to hold, a definite brief from the Indianapolis Monetary Convention, which is clearly stated at the opening of their report. They there set forth certain principles which they have accepted, both as embodying the instructions under which they were appointed and because approved by their own judgment, which may be thus summarized; the maintenance of the gold standard, the gradual retirement of all United States notes and the establishment of a banking system which shall furnish a safe, elastic and adequate circulation. As compared with the

avowed aims of Secretary Gage, their scheme is obviously much the wider one.

One point, however, may be fairly considered in explanation of the differences just noted. The Secretary of the Treasury, surrounded as he is by the members of both Houses of Congress and in close touch with their leaders, has kept more constantly before him the desirability of producing a measure which might hope for speedy passage. All plans for currency reform have perforce their political side; requiring legislative enactment to become effective, they must be constructed with some regard to the possibility of such enactment. And to this side of the question the Secretary has evidently given more attention than the Monetary Commission. It may be that he is mistaken and that the one bill could be passed as easily as the other; but the fact is easily established, apart from all a priori inferences, by the Secretary's unwillingness to propose cancellation of any of the United States notes, and by the provisions in the Monetary Commission's bill calling for the payment by the Treasury of gold coin for silver dollars and giving the Secretary of the Treasury authority to sell silver bullion for gold. Each one of these questions must, sooner or later, come up for answer; but Secretary Gage evidently believes either that the answer may be deferred or that under the new conditions established by his bill the answer will find itself.

Let us look now at the plans themselves in detail, to determine what they aim to accomplish and how far these results, if accomplished, may be expected to prove beneficial.

Both plans propose the immediate establishment of a separate division in the Treasury department, to be known as the division of issue and redemption (Gage bill, Sec. 1; Monetary Commission's report, Secs. 7, 8, 9); and for the transfer to such division of certain moneys, coin and bullion now held in the general funds of the Treasury department. But the make-up of these two funds, and the purposes for which they are to be used, are not identical. Under the Gage bill there are to be transferred to this new division "one hundred and twentyfive millions of dollars in U. S. gold coin and bullion, and such