Daily union and American. [volume] (Nashville, Tenn.) 1865-1866, 1865-12-12

dermjning the morals of the people by en-
couraging waste and extravaganza, but is
striking at the root of our material prosperity
by diminishing labor. The evil is not at
present beyond the control of legislation, but
it is daily increasing, and, if not speedily
checked, viii, at no distant day, eliminate
in wide spread disaster. The remedy, and
the only remedy within the control of Con-
gress, is, in the opinion of the Secretary, to
be found in the reduction Of the currency.
On the 1st of January of the memorable
year 1887, the bank note circulation Of the
United States was $40, 1S5, $50, the deposits
were S127, ,397, 900, the loans S525, 5,115O00.
In January, 1857, the year Of the next great
crisis the circulation was '$211,77S,S22,
the deposits were $3.50, ,35l 900, the loans
S6S4, 10000. There are no statistics to ex-
hibit the amount of specie actually in circu-
lation in those periods but it would be IL
beral estimate to put it at S30,000,000 for
1887, and 50,000,000 for 1857.
These were years of great imitation, the eff
fects Of which have been already referred to
the revulsiOn of 1887, not only produc-
ing great immediate embarrassment but a
prostration which continued until 1913, at
| the commencement of which year the bank
| 10
deposits to S56 16S,00 loans S254, "a 1000
flour having declined in New York from
S10,25 per barrel on the first of january,
1887, to 81, go on the LIST of January, 1913,
and other articles in about the same pro-
portion.
The reaction in 1857 was severe but for
the reason before stated, less disastrous and
prOtracted.
On the Goth of September last, the dcpOs-
its of the national banks alone amounted to
| S544, 150, ,l94 their loans-estimating their
national securities as loan to the govern
ment-tO 1913, ,04j, ,629 both of which items
| must have been increased during the month
of October; while on the 31st of that month
the circulation, bank and national, had
reached the startling amount of upwards of
| S1O0,0O0,0OO. Nothing beyond this state
ment is required to exhibit the present in
| tiation, or to explain the causes of the cur
rent and advancing prices. If disaster fol-
lowed the expansion of 1887 and 1857, what
must be the consequences of the present ex-
| pansion unless speedily checked and re-
| duced.
1t is undoubtedly true that trade is car
ried on much more largely for cash than
was ever the case previous TO 1861, and that
there is a much greater proper demand for
money than there would be if sales were
made, as heretofore on credit. 1t is also
| true that there is larger demand than for
merly for money on the part of manufac-
| lures for the payment of operatives But
making the most liberal allowances for the
| increased wholesome demand arising from
these causes, and from the advance of the
| country in business and population, it is ap-
parent from the foregoing statements, if the
advance in prices did not establish the fact,
that the circulating medium of the country
Is altogether excessive.
OBJECTIONS To CONTRACTION MET.
Before concluding his remarks upon this
subject, it may be proper for the Secretary,
even at the expense of repetition, to notice
briefly some of the popular and plausible
objections TO a reduction of the currency
First. That by reducing prices, it would
operate iniuriously, if not disastrously, upon
trade, and be quite likely to precipitate a
financial crisis.
To this may be replied, that prices of ar
ticles of indispensable necessity are already
so high as to be severely oppressive to con-
sumers, especially to persons of fixed sand
moderate incomes and to the poorer GLASSES.
Not only do the interests, bit the absolute
necessities, of the masses require that the
prices of articles needed for their use should
decline.
Nor is there any reason to apprehend, by
any policy that Congress may adopt, so rapid
a reduction of prices as to produce very seri-
Gus embarrassment to trade. Tho govern-
ment currency can only, to any considerable
extent, be withdrawn by a sale of bonds, and
the demand for bonds will be so affected by
the state of the market that rapid cOntrac-
ton will be difficult, if not impossible, even
if it were desirable There is more danger
to be apprehended from the inability of the
government to reduce its circulation rapidly
enough, than from too rapid reduction of it.
1t is, in part to prevent financial crisis that
is certain to come without it, that the Secre-
tary recommends contraction. Prices are
daily advancing.
The longer contraction is deferred, the
greater must the fall eventually be and mere |
serious will be its consequences. 1t is not |
expected that a return to specie payments |
will bring prices back to the standard of for |
mer years. The great increase of the pre-
ciOus metals and the high taxes will prevent |
this; but this consideration makes it the more |
important that all improper and mnecessa-
ry influences in this direction should be re-
moved.
Again II Is uTHGu Il Vi INC
currency would reduce the public revenues. |
1t is possible that this might be the imme- |
diate effect, but it would be temporary only. |
The public revenues depend upon the devel- |
Opment of our national resources, upon our |
surplus productions; in other words upon Ia |
Dor. The revenues based upon false stand |
ard of value, or from interests that can only |
flourish in speculative times, are not those |
upon which reliance can be placed for main |
trining the public credit. What a healthy |
and reliable business requires is a stable ba- |
sis. This it cannot have as long rs the coun- |
try inflicted with an inconvertible currency, |
the value of which, as well as the value of |
the vast property which is measured by it, |
is fuctuating and unreliable, and may be in |
no small degree controlled by speculative |
combinations.
1t is also urged that the proposed policy |
weuld endanger the public credit, by pre-
venting funding and that it would compel |
the government and the people, who are in |
debt, to pay in dearer currency than that |
in which their debts were contracted.
The Secretary is unable to perceive any
substantial ground for the objection. He
cannot understand how the process of fund
ing is likely to be aided by the continuance
of prices on their present high level, or how
the credit Of the government Is to be res
tored by the perpetuation Of an irredeema-
BILE currency, especially as that currency
consists largely of its own notes While it
is hoped that early provision will be made
for the commencement of the reduction Of
the national debt, an early payment Of 1t is
not anticipated. Nor is it understood that
those who are apprehensive of the effects Of
contraction, entertain the opinion that the
present condition of things should be con-
tinued until a considerable portion Of this
debt shall be paid.
50 far as individual Indebtedness is re-
gar,led, it may be remarked that the people
of the United States, if not As free from debt
as they were six months ago, are much less
in debt than they have been iE previous
years, and altogether less than they will be
when the inevitable day of payment comes
| round IL the volume Of paper money is not
curtailed. A financial policy which would
prevent the creation Of debts and stimulate
the payment of those already existing, so far
from being injurious, would be in the high
est degree beneficial.
Il is further urged that a reduction Of the
government notes would enbarrass the ma
tional banks, if it did not force many Of them
| into liquidation.
To which it may be said, that it is better
| IL Al sbculd 10 arn barrassed now