The Portland daily press., 1865-12-05

Court. with judges Oh oio hShest ieSdi CsuehI
and acouirements in the State, and with not
one half of the expense and delays now attend
| ing judicial proceedings. CUMBERLAND.
The Causes Of the Scarcity of Money.
To the Editor Of the Press:
Although e. H. t., after his second attack
upon me, "did not intend to say word more
upon this subject" he appears to have been so
utterly astonished by the singular circumstance
of my defending myself, as to have been betray-
ed into writing two more articles for successive
numbers of the Press. If he has finished what
he has to say at present, he will permit me to
congratulate him upon the marked improve
ment in his views He has freed himself
from the imputation of favoring permanent
ly inflated currency. He has abandoned the
untenable ground, that the impoverished COM
munities of the Southern States are anxious
% exchange their cotton and tobacco for curren-
cy rather than for goods-as if they could eat,
drink and wear greenbacks. He has come over
entirely to my view respecting the funding of
the compound interest notes, saying in so many
words, that sit makes no practical difference
whether they were withdrawn from the circu-
lation by the Secretary of the Treasury or by
banks and Individuals" and admitting that
the last he has seen paid out by the banks, vera
so paid out in November, 1S64-a year ago.
But if they have not been in circulation for
year, of course the recent action of the Secre-
tary has made "no practical difference" in the
volume of circulating currency. Finally, he
no longer pretends that the withdrawal of some
nsnn II l.I L
euum" which cannot be filled by the $780,
100000 of National bank notes now authorized.
and sure to be issued.
Driven thus from the three positions which
he had originally assumed in defence of his
theory, that money is scarce because the vol
ume of currency is practically diminishing"
he falls back in tolerably good order, and asks,
What reason can there be, then, for tight
money market, unless it be a contraction of the
eurrency?' This question is none the worse
for having been satisfactorily answered some
thousands of times. 1t implies a certain con-
fusion of thought into which inquirers in these
matters are sure to stumble, and out of which
they are equally sure to escape if patient and
logical. n -
The money market is like any other market
The price of money is the rate of interest, and
the fluctuations in this price are determined by
variations in the demand or in the supply
Unemployed capital furnishes the supply, and
suppose e. Fl. I. is not prepared to maintain
| that every addition to the volume of redun-
dant currency is an addition to the capital Of
the nation. Capital consists wholly of accu-
INFLATED savings. A new issue of United States
CURRENCY wOnl0 in tba al; +la
money market; for it would not in itself in
crease the amount of unemployed capital. The
contrary impression arises from the fact, that
we have been accustomed to see the volume of
currency increased by bank issues in the form
of loans. In such cases, there is a real addition
to the supply of capital in the market; but it
will not do to infer from this circumstance that
currency and capital are Identical The sup
ply of capital available for loans is subject to
little variation, except what arises from the
gradual process of accumulation, or especially
from expansion or contraction of credit. The
demand varies with the varying exigencies of
trade. And 'the reason for a tight money
market must be sought always in increas-
ed demand areduced supply, and never in
the state of the currency. Depreciation of
| expressed in the same currency.
| 1t may occur to f. H. r. to inquire what
would become of a new issue of United States
currency. 1t must go somewhere, and if not
into the money market, where then? 1t would
not go into the money market except as capital
to be lent Currency issued by the govern
ment in payment of its ordinary expenses is
not capital, and must accordingly go into the
markets for goods and raise the prices of goods.
And here let me finish by quoting passage
from Secretary McCulloch's report as Comp
troller of the Currency two years ago. The re-
port bears date Nov. %, 1863 and therein we
real -" Currency is reported to be scarce
throughout the country, but no one can be ag-
aorant Of the fact that this scarcity is in a
measure attributable to the high prices which
bank issues have contributed to bring about
1t is frequently the case that money is apparent
ly the most plenty when there is the least of it
in circulation, and the scarcest when it has at
tanned the highest point before a financial cri-
sis. An increase of the circulating medium
initiates prices. High prices require an increas-
ed circulation, and so they act and react upon
each other, and there appears to be no redun-
dancy of currency, no matter how vast the vol
ume may be, until collapse takes place and
what was supposed to be real prosperity is
shown to be without substantial foundation"
In accordance with these sound views, the
Secretary of the Treasury is now fully COM
mitted to policy of gradual contraction. His
policy has been endorsed by the New York
Chamber of Commerce and the Boston Board
of Trade as have already men Toned, and as
has since been reported, by the Chicago Board
OF Trade. In the great centers of trade, East
and West, there is but one voice in this matter
LII e. FL. I. opposes this policy, 1 am ready to
carry this discussion farther, believing that the
question is OF, sufficient Importance to be deba-
ted not only in Congress but all over the land
by the people, who must ultimately decide it.
If he doe not oppose this policy then it is of
very little interest to me, OF to the readers of the
Press, whether he estimates the amount of
currency now afoat at $7O0,0OO,0O0 or at $780,
100000, OF whether the latest issue of compound
interest notes was dated June or September
1864. Ht .,.. u R. w
Agassiz's Explorations.
Letters from Professor Agassiz from Brazil
are published in the Eoening Post of Friday
The Professor writes that the success of his
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