The Sun.
London, England, 1867-03-30 00:00:00

The New inflation.

That the majority of the House of Representa-
tives, who voted to issue a hundred millions of
greenbacks in place of compound interest notes,
knew that they were voting to inflate the currency,
cannot be doubted by any one who will examine
the yeas and nays. The West is nearly unanimous
for an unchecked reign of irredeemable paper cur-
rency, and it is to the West that this last victory
over common sense is due. Few people, however,
understand precisely how this inflation is to be pro-
duced. A few words, therefore, of explanation.
Since the accumulated interest on them has exceeded
three per cent. the compound notes have been
wholly withdrawn from circulation, and are no
longer money, but a national security. Such being
the fact, it would seem unjustifiable to redeem them
by a fresh issue of legal tenders, to pay off the
7-30's, or any other part of the debt in that way.
The excuse for it, however, lies in the fact that being
a legal tender at their face, the compounds are largely
held by the banks, as a part of their « lawful
money" reserve ; and it is claimed that the new
issue must take the place of them, and be held,
in like manner, as a reserve in the bank vaults,
and consequently that it will not increase the
circulation actually in use. There is just enough
of truth in this argument to impose on those who
wish to bo imposed upon, and no more. To the
extent to which the new greenbacks will be
absolutely locked up as a bank reserve they will
not affect the currency one way or the other, but
not more than fifty of the hundred millions will be
so locked up. By the last quarterly return the
banks held 82 millions of compound notes, and 121
millions of specie and other lawful money, making
an aggregate of 203 millions. But the reserve
which they were -required to hold was only 176
millions ; from which, it appears, that they relied
on the compounds for only 55 millions. Deducting
this 55 millions from the proposed issue 100, and
there is left 45 millions to go into active circulation.
But this is not all. Many of the country banks
now hold a much larger reserve in their own
vaults than they are required to hold. The law
requires them to hold only two-fifths, and per-
mits three-fifths to be kept in balances with their
redemption agents in the cities, who allow them a
small interest on the amounts. When they lose the
compounds they will, of course, keep no more idle
money than they can help, and the full three-fifths
will be kept on interest in the cities. In this way
the forty-five millions will be swelled to fifty, with-
out taking into account the falling off of the neces-
sary reserves, which will follow from a decline of
deposits as the process of contraction goes on. Let
the people understand, then, that their representa-
tives in Congress have, by a deliberate vote, at-
tempted to add fifty millions of irredeemable paper
to the sadly depreciated currency of the country,
thereby diluting it still farther nearly 15 per cent.,
and adding to every man's taxes, and postponing,
by at least a year, the possible return to specie
payments.—The Springfield Republican.

A CANNY SCOTCH LADDIE.—The following story
of the Scotch student in theology is taken from Dean
Ramsay :—" A simple country lad," he says, " went up for
examination previous to his receiving his first communion.
Tho pastor, knowing that he was not very profound in his
theology, began by asking him how many Commandments
there were, to which he cautiously replied, Aiblins (per-
haps) a huuner.' The pastor, of course, told the youth
that he must wait and learn more. On his way home ho
met a friend, and on learning that he, too, was going to the
manse for examination, shrewdly asked him, ' Wee], what
will ye say, noo, if the minister speers hoo irony Com-
mandments there are ?'—' Say ! why, I shall say ten to be
sure.' To which the other triumphantly replied, ' Ten !
Try ye him wi' ten I tried him wi' a hunner, and he
wa.sna satisfeed."