The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1865-12-06

exists that the effect OF such policy must necesW
be 70 mako money scarce and TO diminish ''' p'''f"
Il is well estabaished fact which has not ESCAPED .ns
attention Of al intelligent Observes dsanoe OF prcesI
for money increases (by reason OF an NY ~
with the supply and that this denanu - ~ - ~ rg
most pressing when the volume ~ c,minaiins point
est and imitation has reached inc ,,In,s
Money being an Improbable article to hold very no
withheld from active Ass Ina hand reduction of
vso s - ICES and as prices reduced the demand
for n falls OH; that paradox cal as II may SEN
ninut,on of the currency may fact increase the sup
Nor need there be any apprehension that reducuon
NJ the currency-unless II be violent ohe-M ilJ.
% saecl al prosperity Labor is the great source
M national wealth. and industry invariably declines on
sse mannrr in which il is used II stimulates pro
ductive industry is benefit ana 10 the extent only
S.nd u mnIsbes industry and the extent to which
II diminishs Il, it an evil Even ~ 'no FORM oI .no
precious metals II may not prove 70 DO we.I 70 ma
ton The idea country IS necessarily rich IN pro-
norton 10 the Of gold or silver which II pos
sesscs is and natural but an erroneous one;
while opinion that real prosperity Is advanced oy an
increase of paper money beyond what Is absolutely
needed as a medium for exchanges Of real values IS
40 totally faacious that few men entertain whose
Judgment is clouded by the peculiar nanc al atmos
phere which an imitation Is apt 10 produce.
GOLD SILVER THE ONLY pRorhR MEASURE OF vMuM
but scarcely fail, long continued to be caa-
nifty to any people Gold and silver are the only
so by the tacit agreement OF nations, ano
the necessary regulator OF trade me r me,
countries and between sections OF IN same country AS
universal measure of value t are commercial ne
cessity. Tho trade between different nations ana ne
TIVE en- sections OF the ny Is carried on by an
exchange Of commodities but Is never cqnaiiy paihceu
by them ard unless credits are being estapshna .he
movements OF coin unerrngly indicate ON which SIDE
the balance exists.
III the United states buy of her naiionsas they now
and TOO generally domore than they sell TO them, !, IS
evident thai balance is thus created which must either
b, settled in com ontinued as u debt
balances
paid is the dictate OF wisdom, be ause BY prompt pay
m NJ the ivere current cce.cd before the debtor
nation comes scrionsy inv vcd; le, ON the other
band I they permitted 20 Accumulate, the! may
when the day Of payment can no Ion ier be deisffe,i
prove not only disastrous 10 The debtor but greatly
disturb siness OF the ditor nation Even witn tn
vast increase gold and silver VIII oh has taken pia
within The quarter OF century tbe spe &c which l.
possessed by Commercial nations Is very incon siderable
in comparison via their iorei aud domestic
property exchanges and no nation can afford TO con nuo
traffic winch leaves u with hea deDl 70 he laia ~
the precious metals unless these metals part o. It's
productions and then only To the extent that they
productions, When there ar, heal obsiaccs in
the way, and balances between nations are promptly
settled the flow Of coin from one 10 the other produces
but little eiubal r.ssmcnt to tae debtor nation The
nation that loses coin either mins' its purchases, or
by reduction OF the prices Of rs commod Ties wa en- the
loss ons becomes moro inv market than be-
FORE and attracting purchaser, rcvers.s the current
and draws again itse the coin Of which 1t had been
deprived
All tins is well ind rstood, and If trade between ma
tions carried by exchange If products and
prompt pay mcnt OF balance N specie no nation would
become ndebt 10 aothcr 10 an extent seriously
70 Affect is prosperity
All embarrassment growing out of comm re al
intercourse between the people Of different nations re-
suits from failure the prompt payment oil balances, aad
the carrying onward Of these baances by extensions OF
credits.
DOMESTIC 7 ADJ IANcEs.
Tho trade between tho dir Mt SEC Ions o. the Uns ed
States Is subject to the same laws II one section u the
course trade, becomes drOior 10 anothor thc
balances must be carried in the rm Of debt, always
expensive and generally dangerous TO The DEBTOR sec
convertible currency, and trade and exchanges are
left TO the natural laws that sov'rn thcm, se,tie-
mens take place promptly and without embarrassment
TO business. The banks the '1'or fcction drawn
upon b. their dcpositors and no, holders FOL .on
ex banee THIS return hoes nd Withdrawn of de-
posts, derabc in amount produce g ntiaction
OF discounts; and this conratio. either checks over
trading so duces the pricc products Increase
the demand for them until the current change and the
% lbr;um is res ored.
This brie statement OF tie wei known laws Of trade
not only illustrates the neccss ~ II prompt payment OF
balances between United atos aud foreign nations
and beiw the erent sections OF he Tn ted states,
but the necessity o having everywhere the same
standard OF value
ABusE or TnG CREDIT system tn; cAusR OF FINANCIAL
COSvr sn,s.
II is admitted that ON u con there will be periods
Of expans on Times Of tho expansion and spec
ulaon in the United States been, indeed when the
banks 'minaI,y payn specie. Til was the case
prior % the reyusons ~ lSS rnd 1884, the expansion
Of credits having, ~ both f,ances pre- eded eisen.
but this does ml.Le against the theory just
stated
The great expansion Of 1888 1885, ending with tho
terrible lnanc al COLLAPSE o. is3S, from the elects O.
which the country did not rail for years was the cons"
quencc OF excessive bank crciion aud discounts, AMI
an abusc credit system, stimulated in the fra
place By gnvcrBcn deposit. tho State banks, ind
sweled by ulreLcy and rs UNTIL under the wild
Spirit Of speculation which pei ndd the country labor
and product decreased t. slca an extent that tho
country which should have bees no great food prod &C
ing country Of the world BEGAN al Importer OF bread
stufs.
The balance OF trade had been 'or long time favera
bio ~ Earopc and against the GncG ctatcs and also in
favor Of the commercial cit es IL W scaaoard and against
the I'M eror, but vicious system OF credits prev ted
the prompt settlement OF balances The importers es-
tabshcd large credits abroad hy means OF which tlny
enabled To give favorb vrs 10 the jobbers The
Jobbcrs ia turn, thus and BE- liberal accommoda
tions from the banks able to gifo thcr time to
country merchants Who turn snd 10 their customers
on indefinite credit IL then comcd 10 be more 70.
putabe 10 borrow han IL, aud pleasant
err and appa, emily pro ah 10 speculate than 10
work; and 80 the ople III iloDE INTO debt labor
de rcascd production fell on, ant ruin followed.