Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1865-12-12

VI No DANGER IN CONTRACTION.
ST Nor need there be- any apprehension
that a reduction of the currency less
or it he violent One-wiil injuriOusly affect
real prosperitv. Labor is the great source
be Of national wealth, and industry invaria-
Ibv declines on an inflated currency. The
n value Of money depends upon the man
" ner I'm which il is used. If 10 stimulates
productive industry it s a benefit, andt0
the extent only that il does this, il it "a
4 benefit. IL on the other hand % dimm-
i~hes industry, and % the extent 90
which 10 dlmiui~hes IL, il is AN evil.
Even IN the form Of thepreciOus metals, it
: may not prove 20 lie wealth 90 a nation.
ID The idea that country is necessarily
rich in proportion to the amount of gold
or silver which it possesses, is a common
and natural, but an erroneous one, while
/ the opinion that real prosperity is adj
Vanced by an increase of paper money
beyond what is absolutely needed As a
medium for exchanges of real value, is so
totally fallaeious that few sane men en-
terrain it whose judgmeBt is not el0uded
by the peculiar financial atmosphere
which an initiation IS 50 apt 90 produce.
An irredeemable paper currency may F.
he "a necessity, but it can scarcely fail, il f.
long continued, to bea calamity To any {
people. Gold and silver are the only .
proper measures Of value. They have .
been made 80 by the tacit agreement OF 7
nations, and are the necessary regulator
; Of trade the medium 10y which balances
are settled between different countries
ami between sections OF the sameCOuntrV.
As "a universal measure OF value they are
q commercial necessity. The trade
between different nations and between 4
sections Of the same country is carried
oH, bF an exchange Of commodities bat
g. never equally balanced by them and
unless credits are being established the
movements OF coin unerringiy indicate on
which side the balance exists. z
If the United States buy Of other ma
tiOns-a- they now and TOO generally do
more than they sell % them it Is evil
dent that a balance Is thus created which
must either be settled in coin OF continued
a. a debt.
PROMPT PAYMENT or NATIONAL
BALANCES.
That balances between nations should
be promptly paid is tho dfctat- of wis
dom. because bE prompt payment the
adverse current is checked before the
debtor nation becomes seriously involved: d
while, on the other hand, il they are per
miJted % accumulate, they may, when
the day Of payment can no longer be de 1
ferred. prove not only disastrous to the
debtor, but greatly disturb the business Of r
the creditor nation. Even with the vast 3
increase Of gold and silver which las %
taken place within size last quarter Of % d.
century, the specie which is possessed by ..
commercial natious is a very mc0usider-
able sum i'm comparison with their for n
eign and domestic property exchanges; Il
and no nation can afford TO continue "a U
traffic which leaves 10 with a heavy debt If
20 De paid an the precious metals, unless %
these metals are a part of lis productions, a,
and then only 10 the extent that they are
productions. When there are no artifi- 81,
cial Obstacles in the way, and balances "a,
between nations are promptly settled, III
the How of coin from one % the other .I
produces but little embarrassment 10 the to
debtor nation. The nation that loses ot
coin either diminishes its purchases, OF IA
by reduction of the prices Of its COM g,
modiIes which the loss occasions, be I
comes more inviting market than be- fi
fore, and by attracting purchasers rever- I "a
-es the current and draws again 10 Itself -
the coin Of which IL had been deprived h
All this Is well understood, and If trade a.,
between nations were carried on by an /.
exchange of products and a prompt pay +,
meut Of balances in specie nc nation .
would ever become indebted 10 another ="
TO an extent seriously % affect its pros
perity.
All serious embarrassmcnts growing =
out of commercial intercourse between "
the people of different nations, results 7
from failure in the prompt payment Of I
balances, and the carrying forward Of j.
these balances by extensions OF credits. 4.
INLAND TRADE. j..
The trade between the different Sec- j.
tions Of the United States is subject tU D.
the same laws. If one section, iu the
course of trade becomes a debtor 10 an- t
other, the balances must DE carried iu L
the form of debt, always expensive and tu
generally dangerous t0 the debtor section, a.
or settled with money. II the measure In
of value Is "a convertible currency, and O.,
trade and exchanges are left TO the natu- s..
raj laws thar govern them, settlements r.
take place promptly ami without emhar- d
rasSmeut tU business. The banks of the %,
debtor section are drawn upon by their II
daD0sit0r~ and note holders for coin OreX- a
change. This return OF notes and with z
iraWal of deposits, if considerable Iu d,
amount, produce a contraction of dis
counts and this contraction eitherchcCks D..
over trading or SO reduces the price OF ).
products As To increase the demand for +.
them until the current change and the Is
eluilibrikn is restored. J.
The briJf statement OF the well known o..
laws OF trade not only illustrates the ne ..
cessltv of prompt payment of balances
between the United States and Foreign O
nations and between the different sections "a
of the United States, Lat the necessity OF r.
having everywhere the same standard of i
value. %
Il is admitted that on a coin basis there .
will be- periods Of expansion. Times of
the greatest expansion and speculation IN n
the United States have been, indeed, D
when the banks were nominmly paying
specie. This was tIe case prior 90 the re-
vul~iuns of eighteen hundred and thirty
three and eighteen hundred and fifty 81
seven, the expansion Of credits having, IN d
both instances, preceded suspension; but d
this does not initiate against the theory "a
Just stated. N
The great EXPANSION Of eighteen hundred
and thirty-iiye and six, ending with the d
terrible financial collapse OF eighteen hun $
dred and thirty-seycn, from the effects Oi [
which the country did not rally for years, i.
was the consequence OF extensive bank /
circulation AID discounts, and an abuse q
OF the credit system, stimulated IN the r
first place by Government deposits with Il
the state banks, and swelled by currency
and credits until, under the wild spirit Oi {
speculation which peryaded the country, {
labor and production decreased 10 such .
an extent that the country which should ,
have been the great od-pr3duclng c"uh-
try OF the world, became an importer oil S
breadstufls.
BALANCE OF TRADE.
The balance Of trade has been for 0
long time favorable to Europe and against .
the United States, aud also in favor Of ,
the commercial cities Of the seabOard and {
against the interior, bat a vicious system J
of credits prevented the prompt settle
ulput Of balances. The importers cstaD- | ,
iisbed large credits abroad, by means Of ,
which they We're enabled ~ give fav0ra- 1
bly terms 10 the j0bbers. The jObbers, in ,
turn. were thus, and by liberal accom- ,
rnodations ffOn the banks, able 10 give .
ntbeir own time" 10 country merchants,
who, IN turn, sold To their Customer ON
am Indefinite credit. IL then seemed 10
I,. more reputable o. borrow money than
10 earn H. and TlaasahieT, ana appa-
lsntIvslnore profitable, To speculate than
to work: and 50 the people ran headl0ng
iDto debt. labor decreased, productions ] g
fell of, and ruin followed t--..,-..
rho financial crisis Of eighteen hundred
and 6ftv-seven was the result oi a similar
cause, namely, the unhealthy extension
Of the various forms OF credit. but, a. ia l
this case the evil had not been seriously
diminished, the reaction, though sHaiP
and destructive, was n0t general DOR
were the embarrassments resulting from 4
it protracted.
Vow. I'M both these instances the eN-
pansions occurred while the business Oh
{ the country was upon specie basis pul
( it was only uOmiually 80. a lalse y sslsih
/ Of credits had mtervened, under which
4 payments were deferred, and specie as a I
measure Of value and "a regulator for lrade
was practically ignored. Everything
moved smoothly and apparently prosper
ously as long as credits could be estaD-
llshed and continued, bat as soon as pay
meEis We're demanded and specie was ~
requisitloh, dlstTnst commenced, and COLI
lapse ensued. In these instance the eX-
pansiuns preceded and cCn nractiOl y l0l-
lowed tho suspensions, but il will be re-
collected that while the waves were
rising specie ceased 10 be a regulator, 10y
reason Of a credit system which pre-
vented the use OF il.