The Sun.
London, England, 1870-02-17 00:00:00

SENATOR FENTON ON SHERMAN'S BILL.

Governor Fenton spoke in the Senate on the 25th
of January against Sherman's Finance Bill. He
dwelt on the evil influence of an irredeemable cur-
rency, showing that one of its worst effects was in
habituating the people to the state of things it pro-
duced, leading many eventually to regard it as
essential and desirable. Mr. Fenton believes that
the difficulties of resumption cannot be avoided by
postponements; on the contrary they will increase.
They are of two kinds :—“First, a heavy addition to
the burdens of the debtor class; and second, a gene-
ral decline of prices, accompanied by a prostration
or greater embarrassment of trade. An addition
of a fourth or a fifth to the private indebtedness of
the country, such as would ensue if debts contracted
in 'depreciated currency were required to be paid in
gold, is too grave a matter to be lightly considered.
This individual indebtedness cannot now be less than
$7,000,000,000 or $8,000,000,000, and an increase
of a fourth or a fifth would itself nearly equal the
whole amount of the national debt. To impose
this vast additional burden at once, or within a vorY
short period, upon the debtor class would produce
great hardship and distress. Yet delay only en-
hances the difficulty. Credits are constantly ex-
panding, and individual indebtedness is steadily in-
creasing. If it amounts to $8,000,000,000 thisyear
it will amount to more than $8,000,000,000 next.
Great as is the embarrassment now, it will only
become greater by the lapse of time. If the country
shrinks from the effort at present, it will recoil
with
still greater repugnance another year." Mr. Fen-
ton does not believe the decline in prices will be as
great as is generally supposed ; but it will entail
hardships, though there will be compensations, for
if prices decline, so does the cost of living ; if the
merchant loses in what he sells, he gains in what he
buys. Whatever the evils of a return, they are in-
significant compared with a continuation of the
present system. He advocates a gradual change,
and quoted England as an instance, where six years
were required after the Napoleonic wars to attain
to specie payment, though her currency then was
far less depreciated. In discussing the means, the
Senator dismissed the question of the amount of
currency required by the business of the country,
the real one being, the conditions upon which specie
payments can be restored and maintained. gc If
any one tells me," said he " we have none too much
currency for the requirements of business, I fully
concur that we have none too much at present
prices. if any one tells me we ought to have twice
as much currency, l fully concur that twice as much
would not be too large a sum for the conditions
which would then exist. If any one tells me we
ought to have • less currency, I fully concur
that less currency would suffice, with the fall
of prices which woul I accompany the reduc-
tion of volume." The value is regulated by
the volume, and, as prices adjust themselves to the
amount, the more issued the more is needed to
make exchanges. 'Will it be claimed that one-fifth
more currency is needed, or if it could be so far im-
proved in value, thus producing an equal decline in
pfces, the country would need the present volume.
The currencyis worth, say 83 cents on the dollar. If
$700,000,000, each worth 83 cents, is reqUired
would the country need $700,000,000, each worth
10;.) cents ? It is a fallacy to attribute the depre-
ciation solely to the currency being irredeemable,
for something is due to its excess. Again, an error
prevails that the rate of interest determines the
amount required, a high rate showing a necessity
for an increase in the currency. Strange as it may
seem, the reverse is the case, history showing that
interest is highest when currency is largest ; that is,,
money is oftener cheap and plentiful when it is
1 mited, and dear and scarce when it is excessive.
So it was before the great convulsion in 1836 ; so
also in 1857 ; while, on the other hand, interest
was lowest after the panics and the volume had
been curtailed. After illustrating this, the Senator
proe2eded to discuss how to make paper and gold
equivalent. Sherman's Bill, Mr. Fenton thought,
did not tend to advance that end, notwithstand-
ing the withdrawal of the Three per Cents., though
equivalent to so much currency, it would be seen
in practice:, that though intended as an excLange of
one form for another, the $45,000,000 in notes will
be more difficult to get rid of. Mr. Fenton pro-
ceeded to dunonstrate by the histoty of England
and of the Utii ed States the impossibility of retain-
ing gold upon a redundant paper currency, and as
a consequence of that currency, that gold and gold
bonds have been steadily flowing abroad, $37,000,000
of specie and bullion alone having gone during the
last year. The Secretary of the Treasury is right
m stating that American exports should equal the
imports,exclusive of public securities,!as one essential
for a return to specie pay meats. Is it not, asked
Mr. Fenton, the depreciation of the currency with
its consequent inflation of prices that makes the
Union a poor market to buy in, but a good market
to sell in ; and if true, must not the adjustment of
the currency precede the adjustment of trade? It
is a mistake to imagine that there are sections in-
terested in maintaining the present state of things.
The true interests of all are involved, but most so
those of the agricultural population, who enjoy
less of the benefits and experience more of the in-
jury than any other class. In the fluctuations caused
by the currency, wheat and cotton exhibit the
smallest ratio of increase, which means that the
producers paid proportionally more for what they
bought, receiving less for what they sold, because
these being the great articles of export were regu-
lated by the world's standard of value, and not by
the currency fluctuations. Gold itself is really
cheaper than other commodities, and therefore
wheat is cheaper, which most closely follows it. It
has been suggested that the currency difficulties
will disappear as the country grows up, even to the
plethora of the present supply, a plausible idea
with something of fact, though based on a miscon-
ception of the character and purposes of money. The
circulating medium bears no such proportion to a D a-
tion's wealth and business that it needs to expand
in the same proportion, Money is not needed nor
wanted for its own sake, its purpose being to serve
as a medium of exchange, as the instrument of
transfers and payments, apart from its being a
standard of value. Deposits, cheques, drafts, sup-
plement and enable a smaller amount of circulation
to effect a far larger amount of transactions. The
principle of the second part of the bill providing for
new banks with specie notes and redemption, is
sound iu principle ; but, if worth much for imme-
diate application, should embrace the whole system,
which is manifestly impracticable. These notes,
convertible on demand into gold, could only be kept
in circulation on the Pacific side, for as gold, still
at a premium as compared with tbe general cur-
rency of the country, would remain a subject of
si eculation, such notes would be used to draw out
the gold gathered in these banks. The attempt
might as well be made to drive into general circula-
tion the gold now occasionally sold from the Trea-
sury. Notes worth 80 cents cannot be maintained
side by side with notes worth 100 cents, both of
equal denomination. Since the time of the clipped
coins of Amsterdam the circulation of lesser value
has invariably driven out of the field that of higher
value. That unequal currencies cannot be kept in
the same business intercourse is supported by the
experience of mankind and the plainest principles
of, political economy. Mr. Fenton, however, did
not see any grave objection to this feature of the
bill becoming a law, for, if correct in his views,
it could not be brought into effect by any law... He
sees no possibility of establishing a currency eqniva-
lent to gold, except by lifting the present cur-
rency to par with gold. The West and South
ask for a larger proportion of currency, to
which the Senator did not object, if unaccompanied
by expansion. How much they would absorb is a
matter of uncertainty, but the currency of a coun-
try tends to distribute itself, guided by the laws
regulating its trade and demand. He appreciates,
however, tbe necessity for supplying the sparsely-
pe9pled districts, as they have less of the substi-
tutts which come with advanced society. He would
not, however, increase the present volume, but cur-
tail instead, with a view to early resumpti in. "If
a system of banking based upon the proposed new
securities or Consols, entirely free, with only such
restrictions as are essential to absolute security, and
to make every note redeemable in gold, is adopted,
then every section, as we reach the specie basis, can
have the amount of currency it needs and can pro-
vide for. In the mean time, it is my desire that we
should hold as nearly as possible to chose just and
s dutary maxims, the observant 3 of which is more
than ever iwpoi taut in a period of derangement
like the present." Mr. Fenton sees little in the
bill to aggravate the evils of the hour, and it may be
the best which can be got. He comes forward with
no pet scheme of his own, and his objections are
not eo much upon specific measures as upon the ,
general principles involved, wherein the interests
of all classes and sections are practically identical.
-!—Anglo-.Americcin Times.