PUBLIC STORE NOTES

The last report of the Director of the Mint (as quoted in Statistical Abstract of the United States, 1908, p. 714) gives the stock of gold in the United States as nearly $1,600,000,000 and amount of silver as almost $700,000,000—in all, $2,300,000,000. Of course, all this coin will never be at the disposal of the State; some of it will remain as now in private hands. But all the coin now held by the Government as reserves to secure greenbacks issued will be gradually released by the substitution of store notes for greenbacks. This substitution cannot be honestly effected except in proportion to the amount of produce which goes into the public stores. There are at the present moment a little over $1,000,000,000 of greenbacks issued by the United States Government redeemable in coin. If in any given year the produce acquired by the state amounts to—say, $100,000,000, the state can withdraw greenbacks to the amount of $100,000,000 and substitute therefor public store notes for $100,000,000, and so on, until there have been substituted public store notes for all the greenbacks in circulation.

As regards the remaining $1,300,000,000, some of this, of course, will remain in private hands; and if it were the policy of the government to increase its supply of gold for the purchase of foreign goods, it could levy taxes paid by those engaged in private industry in gold instead of in produce. If, on the other hand, the private banking system operated satisfactorily, the state could leave the whole of $1,300,000,000 in the hands of private bankers and through its ownership of mines, would still have the whole gold and silver production in the United States for the purchase of foreign goods.

As the amount of gold and silver produced in the United States amounted in 1907 to over $90,000,000 of gold and over $37,000,000 of silver, it will be seen that the state would have at its disposal some $127,000,000 in gold and silver which it could use in the purchase of foreign goods against which it could issue public store notes. In other words, gold and silver will be confined to the amount used in the competitive system and that required for the settlement of foreign exchanges.

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