The Burlington weekly hawk-eye. [volume] (Burlington [Iowa]) 1860-1876, 1863-09-05
The Southern Financial system
RObt. TOOmbs' Letter in full.
WAsH1saroN GA. Aug. r. 1863


mutable as the laws which govern the plan
etary system. At the beginning of this
struggle we had large national resources
and unequaled elements of public credit
we borrowed gold at par for our bonds
wealth laid its treasures at our feet, anG
poverty itself claimed it as privilege tc
augment our resources with its mite. Fol
ly has mainly contributed to the drying uI
of this living fountain of public supply
The first great errer was in attempting tc
carry on great and expensive war, solely
on credit, without taxation. This is the
| first attempt of the kind ever made by a
civilized people; the result of the expert
ment will hardly invite its repetition. Dur
ing the first year of its existence, the pre-
sent Congress neither levied nor collected a
single cent of taxes, and postponed the col
lection OF those levied for the second year
to period fatally too late to support our
| currency. The second error naturally re-
suited from the first, and consummated the
destruction of public credit. This error
was the use of the public credit almost ex-
clusively in the form of currency. The
natural result of this policy was plain, in
evitable, overwhelming. 1t is well-set-
tied and sound principle in currency, that
a nation which has sufficient quantity OF
circulating medium properly to answer the
| wants of it's trade and commerce, can not
add to the value of that currency by any
further addition to it's quantity. In the
| ordinary state of trade, any excess of the
proper quantity exhibits itself in the form
of the expectation. When, from any cause
whatever, the operation of this law is pre-
vented, any redundancy of currency must
necessarily depreciate the whole, mass, and
| this depreciation will exhibit itself in the
rise in price of all commodities which it
circulates. 1t is also true, that if this re-
dundant currency exists in the form of pa
tvNn ,nt nrto I,1 iy,fr, moi, f,n
will of the holder, the measure of this de-
probation is the difference between the
| standard or mint price of bullion and the
market price when paid in this currency.
Tested by these plain and sound princi-
pies, the solution of the cause of our pres
ent financial troubles is easy. When this
revolution commenced, our currency was
in excess of the wants of society. The
proof is that nearly all of the banks with
in the Confederate States had suspended
cash payments, and their notes were de-
preciated, therefore the first treasury note
which was put into circulation added its
| nominal value to this excess, each succeed
| ing issue enlarged it, and increased the de-
| probation of the whole mass. This de-
probation soon began to manifest itself in
the rise of commodities, yet the Govern
ment has unwisely continued daily, by a
forced circulation to add to this excess,
increase the depreciation, and enhance the
price of all the commodities which it is
compelled to purchase, and isthus exhaust
ing the national resources in the ratio of
geometrical progression. This ruinOus
policy would have long since run it's
course, but for the fact that law, intimida-
ton, and above all, the ardent, sincere,
honest, but mistaken patriotism of the peo-
pie have been invoked to uphold it. But
the principle being radically wrong, no hu-
man power could uphold it long, and in
of all ~ g.,
tional currency is deprecated more than
one thousand per cent. below gold and
silver, four hundred per cent. below sus-
pended bank-notes, and the prices and
payments are rapidly adjusting themselves
to the memorable facts. Many unsound
reasons are given for this state Of things
by the supporters or apologists of this per-
persons affirm and honestly believe that
from the peculiar circumstances which
surround US bullion is no longer a stand
ard Of value, or a true measure Of the de-
probation Of our currency. This error
has produced infinite satisfaction. b
1t is true that silver and gold do rise and
fall in value like, but in q much less de-
gree than, other commodities, and it is
mainly by this reason that they have been
adopted by mankind as the standards of
value, and, however they may rise or fall,
that in no degree affects their value as a
test OF the depreciation of inferior curren-
cies; they certainly still remain, if not the
infallible, yet the most correct measure of
such depreciation which the wisdom of
the world has as yet been able to discover.
This is no pleasant picture for us to behold,
yet this is better than the still more gloomy
one which a continuance in the paths Of
error will speedily present to our visions.
The consequences are frightful; let us pur-
sue them 9 little further. Let us suppose
that we have five hundred millions of
currency now in circulation, worth fifty
millions Of standard bullion; the issue Of
an additional five hundred millions of
such currency will not add a single dollar
to it's value. The thousand millions will
be worth no more than the five hundred
millions were before last issue, to wit:
fifty millions of bullion. The addition
has only deprecated the whole currency
by oae-half, and this depreciation will in
variably exhibit itself in the rise Of the
commodities for which it may be exchang-
ed. The Government, therefore, if tspends
the additional issue in commodities, loses
first the whole amount of depreciation ex-
listing at the beginning of the issue, also
all the additional depreciation produced by
its daily expenditures, and the notehold-
ers One-half the value of their notes. 1t
will, therefore, follow, that if the market
price of wheat is eight dollars per bushel
under the issue of five hundred millions of
treasury notes, it will be sixteen dollars
per bushel under the issue of thousand
millions, and the sixteen dollars will be
| worth no more than the eight dollars, and
will exchange for no more of other COM
modities. L...-....
This being the uniform law of currency,
when you fix an arbitrary price on any
given commodity and leave all other com
modities to the natural operation of this
law, you utterly destroy all sound princi
pies of exchange, and must in the end ruin
the producers of the regulated commodity
unless they abandon that business at least
to the extent of producing a surplus, This
must be the effect of this impressment, un-
less the law is throttIed by the wisdom and
power OF the people. But is this principle
true7 "That commodities will rise or fall
| in proportion to the increase or diminu-
ton OF money, assume as a fact which il
| incontrovertibe.'' This is the language OF
Mr.. Ricardo, and he is supported by Adam
Smith and all of the great writer's and
thinkers on currency who have fiourished
within the last hundred years. The same
great truth is daily pressing itself upon our