Grant County herald. [volume] (Lancaster, Wis.) 1850-1968, 1862-01-15
Why Specie Cannot Become
Scarce.


Commenting on the suspension of the
Eastern Banks, the Cincinnati Gazette
shows very clearly that it is almost an inn
possibility: that specie should become
scarce under the present financial condition
of the country. We quote the portion Of
its article touching this point particularly:
1t would have been better had the run
been checked at the outset, by applying
the only available remedy, which has now,
after a drain Of some fifteen millions in gold
been adopted. What has become Of this
gold? It has not gone 20 Europe. A
large proportion of it has been brought
West, and much of it Is held as special de-
posts in New York. Our bankers have
at least 100000 in coin. Western
banks have largely increased their specie
strength. Private individuals have also
been boarding extensively, and it is safe to
say that there is 200 per cent. more gold
in the West than at any previous time.
There is also 6O,000,000 morein the coun-
try than on the 1st Of January, 1861.
There was imported during the year. from
Europe, $36,00O,O0O, and from California
$25,0O0,000. The total amount of coin
in the country is estimated at $275,o00,-
600. Of this the banks Of issue in the
loyal States hold over $lo0,000,000. The
people cannot afford to hoard this capital.
Cannot afford, We say, for boarded gold
produces no dividends, and for purpo YES Of
profit, it is worth no more than an equal
bulk in stone OF iron. What, then, IS to
be the effect of the general suspension of
specie paymentss Temporarily it will
cause an active retail demand for specie,
but in the course of week, gold will be a
drug at small premium. Bankers who
have large supplies Of coin, expect to sell it
at handsome profit. They 1onot expect
to hold it. They cannot afford to bold it.
Third street is losing in interest, on the
gold held there, at the rate Of 100000 a
year. 1t cannot be used as currency. It
IS therefore, as SO much dead capital. The
majority Of those who have been buying
gold, in small lots, fearing that something
terrible was about to happen, will also be
forced to use their coin; and thus the mo-
ment the excitement begins to subside, gold
will be thrown on the market in large
quantities, and it will rapidly accumulate
again at the commercial eenters, strength
ening the banks and rendering Suspension
mere nominal thing. If there were a
foreign demand for gold, it might be difisg-
ent; but there is not. Trade is largely in
our favor, aad while we export twice IS
much domestic produce as we import Of
foreign goods, which we have been doing
for a year past, it is plain enodgh that it
must so continue. La the meantime, Cali
fornia will continue to add to the supply
Of metallic currency, at the rate Of $780,
100000 a year, and, in the event Of peace
with foreign countries, we shall probably
import twenty Of thirty millions from
Europe in 1862. A gold famine, there
fore, Is not probable But it is neyerthe-
less likely that business will be conducted
upon paper currency while the war con
tinues. The banks viii hardly, under any
circumstances, resume, at the risk Of anoth-
er run. The commercial exchanges of the
country viii, therefore, for some time to
come, be effected upon the basis of bank
paper and demand Treasury notes, and the
standard at the West viii be the value OF
New York checks. This will be governed
by the course Of trade.
The balance is now in our favor, and It
is constantly working in this direction.
Exchange, therefore, must rale low ID the
future, as it has forsone months past. All
IL
same relative position as they did previous
to the suspension, the refusal to pay specie
cannot effect the exchanges. The business
Of the country has been transferred bodily
from a specie to paper basis. There is in
this danger Of initiation; but even in that
event the various suctions would still be
working on the same level.