The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1865-11-30
Thursday Morning, Nov 80, 1866.
The Financial Discussion.
PORTLAND.

TO the Editor of the Press:
SIa:-As e. III. T. in his last commune
cation, denies that he is in favor OF perpetual
ING the present initiation ofthe currency, there
by taking away all important ground Of diler-
ence between us, and as he furthermore thiliAS
his previous article could not fairly be under
stood to implicate him in any such opinloh' Il
;s incumbent upon me first to explain how
came to misunderstood his position. mao
written an article entitled 1.-THE Financial
Paradox which, as it was in no way contri-
dctory to the views advocated iu your col
umns, you consented to publish as editorial
When the theoretical views mot the 'spirit)i OF
that article, became matter1of controversy.
you very properly declined to become involved
in that controversy, and my reply to FL Il. ~
was marked with an asterisk In accordance
with your suggestion in Tuesdays FfeSs' d.
fix to this communication special signature
The whole scope and aim OF my first artl-
Gle, named above was to show thaS Inc real
source of our present and prospective finan-
.ciaI d;sorders. is the undue expansion of the
cnrranov. and that the only cure is to be .ex-
pected through contraction of the currency
This opinion of mine is not very new; but
"aIthough," as Stuart Mill says, "this doctrine
has Though not till after the discussions OF
MANY years. been tolerably effeetually drum
med into the public mind, yet dissentients are
still numerous and projectors every now and
then start up with plots for curing all theTeco-
nonlical evils Of society by means Of an I'M
limited issue of inconyertble paper HppiE
there is great unanimity on this subject in the
quarters to which we naturally look for guild
ance., Not, only does the Harvard professor
of political economy prof. Bowen in the Bos-
ton Advertiser of Feb. ~ declare, that 'the
plain remedy for all the financial evils in
which we are now involved is a steady and
gradual contraction of the currency" but
Secretary McCulloch, no mere student but a
practical banker, in his brief inaugural address
to the principal officers of the Treasury De-
chief aim will of course be to provide means
to discharge the claims upon the treasury at
the earliest day practicable, and to institute
measures 10 bring the business of the country
GRADUALLY back to a specie standard" In
letter written soon after his accession to Of
flee, to Mr.. Henry G. Carey, and published in
the Philadelphia North american, the Secre-
tary says more explicitly, 81 have been, and
still am, of the opinion that the circulation
must be ,curtailed before a return to specie
payments can be effected" Everybody has
read his Fort Wayne speech. off Congress"
Il Ia, L.
sion authorize the funding of legal-tenders,
and the work Of reduction is commenced and
carried on resolutely, but carefully and prlii-l
IDENTIFY, we shall reach the solid ground of spe-
Gle payments, probably without serious en-,
barrassment to legitimate business; but If not,
we shall have a brief period of hollow and Sc
ductive prosperity, resulting in widespread
bankruptcy and disaster" These sound views
have been adopted and enforced by the New
York Chamber of Commerce and the Boston
Board of Trade, and their example ought to
to be widely followed. The former Of these
bodies enters its emphatic protest in advance
against every appeal to be<made to Congress
during the approaching session., for authority
to Increase the issue of National bank curren-
cy beyond the present limit, or the issuing of
single dollar more of paper money in any
form. -,t-N ~
These views, if sound, cannot be too vide
ly disseminated. The article entitled sThes
Financial Paradox" had no other purpose than
to maintain these opinions. 1t began by af-
hrming that Ethe prime cause" of our financial
difficulties is superabundanee of CURRENCY
1t concluded by stating that dit is duty, SO
far as in us lies, to make plain and patent to
all readers the fact, that contraction of the
currency can by no means be avoided, unless
we are to go on from bad to worse and end in
blank reputation" To this, e. II. T. replies,
"Why money is scarce, is not, certainly, be-
cause it is plenty, but because the, volume OF
currency is practically diminishing" and pro-
ceeds without further explanation to give his
reasons for believing in the practical diminu
ton aforesaid. Now in all courtesy and kind
ness, l beg E. FL. L. to consider, il such a re-
ply to such an article does not justify the in
ference that he attributed the present distress
of borrowers to incipient contraction and
would naturally oppose continuation of the
same process, as likely to lead to worse troub-
les. OF course, as he now says he s@did not
mean So" willingly accept his explanation.
But in this case, we both favor contraction;
and if so, why did he find it necessary to re-
yive the memory of Big Bethel by attacking
his own friends? kW gwrFgIH efVAg
The reason is undoubtedly because E. II. T.
did not pay sufficient attention to the differ
ence between primary and secondary causes
or rather the fault is mine, because I did not
make my meaning sufficiently clear to preclude
misconception. I said, ":he prime causen of
the scarcity of loans is the expansion of the
currency, which has SO enhanced prices that
more capital is needed for business than the
market can Misunderstanding by sthe prime
cause" the condition of things which has led
to this result. No, answers E. I'll. r., money
is scarce because the Secretary of the Treasury
has just funded $5O,0o0,O0O of compound inter
est notes. 1t is as il one should say, the prime
cause of the water rising in the pump is the
pressure Of the external air; and another
should reply No, sir, it is because the small
boy wag5 the pump handle. tFr,t,
II have never said that the funding of the
compound interest notes, the re-opening ofthe
Southern markets, and the prospect Of with
drawal of the State currency, have had no in
fluence upon the loan market. As immediate
or secondary causes, these circumstances have
operated to restrict loans, in other words to
produce scarcity of money to accommodate
borrowers; and l expressly say in my former
reply to E. ii. t. that "the loan market avas
disturbed" by the funding operation. I deny
however that the circulation of the country is
as yet sensibly diminished when it is. I,
shall look for decline of prices, and not be-
fore. gi-tht 7fjc 7 LII
The paper currency of the country now
consists of S428,0O0,0OO in greenbacks. soe