, 1866-02-01


The New York Cousbaafia. Caroatcb proposes
way to coutsnct the currency hy gadaa1ly exchans-
fnc 1t for compound Interest noic< filling due 1t
different tme* and these to be funded At maturity
The Chrontct thus describes The course oi the com-
pound intcrcst noics nrrt into gen e1a circulation
and then gradually Into rc1irac1; and On the cxpe-
raence ol the preyaops 1ssur, II "a. once becomes
the most powerful, The must satisfactory, and the
most clastle Of Ill the methods winch have ever
been des1sed for checking the tnaatlou and con-
tracing the volume Of depreciated currency.
These notce. wh.u n1st Issued, move u quickly
from hand to nand a. ordinary c1eenhzcss; bu, a.
interest accrue- they circulate slowly hsrapse they
ar legal tender only tor their Iace, and tie holder
y he PAYS them out, loses thc inierrr.. Amer a
lev months they accumulate In the vaults Of baks
AID elsewhere, and do not emerge from their re.
trs1t 70 join lht cunent Of the circulation except
when eon1e stEngcucy or preseurr in the money
market e!imrnohs them. And at length, whcu .hcy
ar sufficiently fat with interest, ihsy sanulbcr 10
and monetary el'a.m may be. Herr, thea. we
have the problem Ut contraction completely eolvet
We sec legal tender note passing shronsh ell the
etsgtr Of diminishing activity. mil at last tls for
all practical ruEposes- q. completely demoneti,nd
and fixed a The United States bonds themselves
uetr. tileuie thctmachtncry for contracting our
II has stood the tezt OF experience What temains
tofc done II to Use II w1kcly. Let the wno1e ma-s
oi ssssnesexs Be gradually, elowiy conve7ed iaio
dates. Letithere compound notes he funded into
long bnndr On liberal 1c.1us during thar third sear;
and tnaitt let the hanks continue to ne thtet.
1otek as aspar Of their reserve until maturity hut
not afeswartts- In other words Lex these nutes
cea,e 10 bc legal trndem at maturity
Cntu those notcs would cense to be legal tepdera
the contraction would not amount to much. The
banke would hold toen ~ they do now. instead Of
crenltscks reserye fnnd for redemntion pur-
poses. The currency cannot be contracted with.
oul Grating money pressure, and when that oc-
cust the rate of,nfereet will rise nnd tie compound
interest notct would come out Of their depos1toes
into cttruauon. Sill we admit that The scheme
lookH plausible, Anh might do something toward
ehecttne .Euaual contraction Of IT,. Currency and
n.sumpiioa oi rpceae pas ments within few years,
that bc detlEabtc- But many OF tho farmers nc
beginning 10 take the ground that contraction Of
the currency to The specie oasls would do far mnzc
mischief thzD good
-ln Cincinnati currency balances continue low.
and The demand for looms IL 4tl In e1ce.6 Of The
means al the disposal Of the hankers; consequent
" tic market rites cose, mud rates OF interest Ere
n1n Ut u 10 15 per cent. The exchange market was
nfm to-oax, hut no adrnncc mas formally estab-
lished. The bnlk ol the business WIS uoae NJ par
buying aud par tcntnE. The fau.e was 50 diS 0par
bny yine and parGD prem. selling. The tendency
at the close was upward. and the only thing that
Kept prices down Was the continued scarcity Of
currency. TIE supply Of exchange continues light.
The returns oi the Bank Of England for the week
ending Jan ID ermpa1e ~ follows with the state.
nent Of the previous week.