The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1865-11-14


The Currency Question.
II seems that the discussion of the currency
question must begin at the very foundations,
and we may as well take for a text the plan re-
Gently suggested by Mr.. John d. Van buren,
for resumption OF specie payments without
contraction" The plan is one OF the thou
sands with which the newspaper press is dali
" teeming, and is commended by the editors
of the New York Post, in which it appears, as
"an important contribution to the discussion
of the question" though they do not desire to
be understood as endorsing its positions. MIR.
Van Buren's scheme is, in his own words, as
follows:
First-Tbat the internal revenue be made sufficient
tomeet all the expenses of government and to paw ali
its interest including the interest which is payable in
gold The interest now payable in gold to be paid in
paper adding the premium on gold at the time of
second-That the whole Of the customs revenue for
the next two years, payable as in gold be pledg
ed to the redemption OF the ega-tender notes. After
the two years there may be or may not be small an
nusi APPROPRIATION say $40 900 600 each year TOR the
Third-That the notes be not actually redeemed as
fast as the gold comes in, but that the gold be Simply
set aside and retained by the government or IN .ne
Lands Of commission, pledged exclusively TO THIS
one purpose OF redeeming the notes.
Mr.. Van Buren adds, that the customs rev.
enue for two years would amount to S150,OOO,-
600, which may be taken for fair enough esti-
mate, and argues that this fund would be
enough to keep afloat the whole mass of $780,
100000 legal tender notes at par with gold.
Prices, he thinks, would be very nearly what
they are nosc IN gold
It is impossible in the present state of politi-
cal science to say precisely, or even to estimate
nearly, what amount of currency is needed to
effect the exchanges of a nation like this. The
exigencies Of trade vary largely, even from sea-
son to season. The amount of money reuuir-
ed for the fall trade, for example, is much
greater than the amount in circulation during
thesummer. Above all, credit is an element
so uncertain and variable, and at the same
time so potent in determining the amount of
money really needed to effect a. given volume
of business transactions, that for the present.
at least, every pretended estimate of that
amount is and must be the vaguest conjeet-
ure. AAa'e 600 'sf+ 40 '.-
Mr.. Van Buren,, however, supposes that
$450OO0000 is not too much for the internal
exchanges of the United States. Let us adopt
his supposition, and suppose that according to
his plan specie payments arc resumed, and
prices uniformly decline to their present
equivalent in gold. Gold is now selling at
about LAG, that is, the work which is now per-
formed by $3.50, 100000 currency, might be per-
formed by S30S, 100000 gold. If the legal ten
ders were redeemable in gold, still remaining
in circulation,it is plainly evident then, that
Sl42.0OO,OO0 of the notes would no longer be
needed, if prices actually declined as Mr.. Van
Buren, seems to expect. That they would not
SO decline, is as certain, as that $45O.OOO.OOO
would by the hypothesis, be in circulation in
stead of S30S,000,000. 1t is one of the first
and most obvious principles in the theory of
currency, that all goods seeking market
must be sold for all the money in circulation.
Other things being equal, prices will advance
or recede precisely as the amount of money in
circulation is increased or diminished.
Bearing this principle in mind-and it has
been sufficiently reiterated and illustrated by
all writers on political economy-let us SUM-
pose, for the sake of simplifying the case. that
$450,0O0,O00 Of legal tender notes constitute
the entire circulating medium of the country
for domestic trade Let us further sunnose
with Mr.. Van Buren,, that this mass of paper
Is redeemable in gold, anil what win follow
Prices will not decline. There will be the
same amount of money as before, and the
goods will still exchange for the money. Gold
coin, however, viii be arbitrarily reduced to
the level OF the currency, and will accordingly
have become cheaper than an equal weight of
gold bullion. 1t will therefore become an Oh
Ject to present the notes for redemption. and
nnelt the coin for resale as bullion, and this
process will continue until the whole amount
OF paper and coin remaining in circulation is
exactly S450,000,000, prices meanwhile having
suffered no change whatever % oW
The process will not stop here, however. So
long as prices remain unchanged, gold bullion
viii remain higher than the deprecated coin.
which viii be constantly withdrawn from tie
circulation to the melting pot. And SO we
come at last to contraction of the currency.
and to gradual decline of prices proceeding
step by step with the depletion of the cur
rency, and ceasing when with the general fall
OF prices gold bullion has reached and resumed
Its natural relations to gold coinage.
In order to exhibit the law more clearly. we
have left out of view all the complications of
bank issues and foreign commerce. The con-
sideration of these complicating circum-
stances would perplex the question, but would
not alter the law which underlies it. The
case we have been considering is simply an in
version OF the imaginary influx of paper Sill
peradded to metallic currency. treated nv
Stuart Mill in his chapter on an inconvert;ble
paper currency. The difference is. that Mr..
Van Buren would add metallic TO a naner
currency, and the disappearance of the nre-
cious metal is result necessarily flowing from
both suppoSitions. In whatever way we an
proach or look at this subject, we shall find
no resumption of specie payments feasible
without contraction of the volume of currency.
If gold payments are made, one hundred dol
lars in gold will do the work of one hundred
and forty-six paper dollars, and in one way
or another the forty-six must 60 out of ex-
istence