The Washington union. [volume] (City of Washington [D.C.]) 1857-1859, 1858-07-07
DIR ApMIRABLE TREASURY SYSTEM.

OUR ADMIRABLE TREASURY SYSTEM
Among the chief objects of the sub-treasury law
of ls46-one of the most important measures of le-
gislation ever enacted in this country that of
checking over-trade and speculation by withdraw
ing specie from the banks and accommodating it in
the federal treasury pari passu with the undue ex
pansion Of commerce--thus checking the over-issue
of bank notes by the twoold process of creating an
increased demand for specie nproportion to the I'M
due expansion Of mportations, and depriving the
banks at the same time Of the command of large in
staments Of that which constitutes the basis of their
paper issues.
It is impossible to over estimate the value Of this
measure to the country during the fury Of specula
ton which grew out Of the gold discoveries in Cali
fornia and Australia. 1t is true that the abundance
of gold neutrazed to most material extent the pc
cular effect Of the system the object Of which was
to prevent the accumulation OF specie in bank vaults
as the basis Of inflated issues Of paper money but,
while it failed to prevent the speculation, it imposed
the most effective and salutary check upon it that
was imposed at all.
II the immense California and Australia products
Of gold had not occurred it perfectly clear that
vented q recurrence Of such a commercial revulsion
as the country experienced in 1897 40-a revulsion
which was the result of an enormous imitation of
paper money and credits. Before these gold discov
eries--in l847-the amount Of specie in the country
was supposed to be only about hundred mil
lions Of dollars. The operations of the treas
ury were then about thirty-seven millions a year,
the amount it kept on hand being never less than
Ave millions 1t may very readily be seen with what
absolute control system dealing in forty mil
lions, could operate basis of specie in the
try amounting to only one hundred millions 1t is
Just as apparent that it would lose this control to
very large extent. if the general basis Of specie in
the country should swell from one hundred to two
hundred and sixty millions, it has done under the
influence Of the new discoveries of gold. While the
competency Of the system to prevent mutations Of
bank issues and paper credits was perfect while
the amount Of metallic currency was one hundred
millions Of dollars, it Of course became only par
tial when that amount had swollen to the enor-
rnous figure Of two hundred and sixty millions.
But, while tho control exerted by the system on
the business Of the country was thus most materially
impaired by the immense increase which occurred IN
the gold currency Of the country it is very easy to
see how salutary its influence upon trade continued
to be, notwithstanding. The foreign trade of the
country--export and import-suddenly expanded
under the gold influx from $305,000000, in ls47 to
S725 100000 in 1857 and Of course the internal
trade Of the country expanded in like proportion.
The new gold product went into the banks in very
large amounts, notwithstanding the constant de-
r ll.. n..ltxu
stitutiens from the control exerted by the operations
OF the treasury and enabling them to feed the fever
of speculation excited by the gold with enormous
issues Of paper money based upon their plothoric
suppiss Of gold.
We all know the resultle While the specie coin
in tho country rose from one hundred millions
or theresbouts, in lS47, to two hundred and
sixty millions In 1857 the issues Of notes by the
hanks rose from sl06 900 900 in 1s47 to $214, 0oo,
Ooo q 1887. No wonder that the foreign trade Of
the country ran up under this imitation from three
hundred to seven hundred millions 1t is true that
under this enormous expansion of our foreign trade
treasury receipts also up from ss7 100000 to
S69O0O, 900; but it is no wonder that q system
which dealt in and controlled the movements Of
specis 10 the extent only of sixty-nins millions be-
came unable to control the banks, which were deal
ing upon basis of specie in the country amounting
to two hundred and sixty millions.
The history Of the enormous imitation shows,
however, that the sub-treasury, while it could not
control, yet exsrted most salutary inAuence in
checking tho spirit Of speculation and mitigating
the calamities which were brought in the end upon
the commercial world. The vast iGsuo of bank
paper adding AZ il did moro than two hun
dred millions Of paper currency to the two hundred
and sixty millions OF specie which the coun-
try possessed, produced an aggregate Of currency
amounting to nearly five hundred millions of dol
lars; an abundance, plethora, gorge of money,
in tho business Of this OF any other
country In the world. The result was, Of conre,t ~
make money cheaper with us, in comparison with
merchandise than in any ohcr country in the world.
And the consequence Of that unhappy cheapness
was. 70 cause our cheap money TO flow out Of our