The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1866-03-27

port of this theory of specie payments, and the
foundation upon which 1t has really rested in
1tiInes past, i will compare the amount of cur
rency afioat and the amount of specie in the
country at five different periods since 1880.
10 We had in 9aaa9ss = 4aGshof1 i1Fllf
si.7 .iii SHiiasslz' Specie. circulatiou 1
mid 1880, goaI lpo nioI $2a, fis,oi7 ss~i ~ isas,Sas
~ iS49,t a.-sTgs- ldi & a3,10t,155 o6,96s,572
tfc iszS' iszS' zo,5 OF .ls-l ss3S9sS0s ss,Sss,sos
1850, so1is1 sS;Ss:sss ISL aSs ioa IN
~ Thus It win be seen that at no time during
this period, except In 1913, did the banks ever
have specie enough to redeem one third Of
their circulation. 1t should also be borne in
mind that the banks having the least specie
had the largest circulation while the banks
which held the largest amount of specie had
little circulation, it would undoubtedly be
within the truth to say that S150,OO0,000 Of
the circulation of 1860 rested upon a specie
basis of less than $30,00O,OO0. This proves
eonclusively that the paper circulation Of the
country never rested upon an actual Specie
basis" but on the confidence Of the communi-
ty; and whenever this was shaken. the whole
Try never rested on SO solid foundation, and
was never so strong in the confidence Of the
country, as to-day.
1t is assumed that because we have more
than three times the amount of paper In cir
culation than we had in 1880, (S2O7, 900, ,OOO,)
the business wants of the country, and tends
to unsettle values and initiate prices. think
the fallacy of this theory is in assuming that
we had in 1860 all the currency In circulation
that could be profitably used in the business
of the country. We had, undoubtedly, all that
the banking capital of the country at that time
warranted, and much more, as has been shown
than could be redeemed in the promised spe-
Gle. But the fact that we are now using four
the country, and with less speculation In mer-
chandise than at times when our circulation
was one quarter the amount, is conclusive that
we did not then have all we required and could
prohtably use. The fact is, the business OF
the country is only limited by the amount of
capital available to transact it. The banks,
with their $300,0O0,000 of circulation, have
supplied the old business, while the disburse-
ments of the Government have gone into hum
dreds OF new channels, have reached new
classes, and have placed the means of doing
business within the reach of more men than
possessed them before.
II is assumed that the redundant currency
is the cause of the nigh prices of merchandise,
and that reduction OF the currency will
bring down prices and also enable us to return
to specie payments. But the fact Is that gold
has fallen from $50 to 130 while the currency
has been increased, and merchandise which,
according to this theory, should have both adj
vanced with the increase of the currency and
fallen with the decline in gold, has upset both
theories by following gold down for time,
and almost Immediately returning to the point
at which it stood when gold was at its high
est, then falling again until it approximates
old values. Is 1t strange that merchandise,
the product of labor, should command high
prices in view OF the enormous decrease IN
the productive industry OF the country for the
last four years. In nearly one half of the
country, the entire South, the population was
during the war almost wholly changed from
producers to consumers and destroyers; and
in the North more than two and half million
men, or more than twelve per cent. of its pop
ulation, were absolutely Withdrawn from the
work OF production and added to the army Of
consumers; and in addition there has been to
an extent very great, though incalculable,
diminution of the productive industry OF those
who have not been taken from their plows,
their looms, and their anvils, caused by the
suspense, anxiety, and excitement Of the civil
war. shles'isin hs'e 80 i-N t.l'l-,. :
4 In these four years the surplus production
of the country has been exhausted, and tie
current production has not supplied the cur
rent demand. 1t Is neither redundant cur
rency nor excessive speculation that has kept
prices at so high standard. Look at the pres
ent condition oftrade in the great markets Of
the country, merchandise and the premium on
gold both rapidly declining, but with a posi-
tive increase OF the currency. What is the
true cause of this decline which all unite in
saying is not the result Of a sudden fuctua-
ton, but promises to be permanent? Is y not
simply the fact that the supply is increasing
and the demand is falling OFF? The great ar
my of consumers is being added to the class
of producers, and prices Of merchandse ana
food must always be primarily ana cmeny SUD
ject to the great law of supply ana demanu..
1t can scarcely be doubted that prices would
have beer still lower and that domestic man
ufacture would have supplied much OF the
~ arch ayfjise imported from abroad had not
The faa1 IF A eight money market" withheld
and diverted millions from the channels Of
nroductiye industry to swell the bank deposits
n the great financial centers of the country, to
be loaned on call, and kept within reach
against the day when contraction should give
Il more power and value. Men would not
convert their money into cloth and iron and
ships and railroads when all these products of
labor were to be cheapened, while the money
had only to be kept ON hand to realize an adj
vance in price. iu2-' tei-.'' te'
Another fact which goes to show that high
prices have not been caused mainly by the IN
crease of the currency is that lands have ad-
vanced no more in the last i've years than IN
the five years preceding, showing that the ad-
vance OF prices nave chiehy anecVeu bne Prou-
ucts of labor. ... - ...f ,-....,...-........
In connection with this matter ofcontraction
I wish to press another point, and 1t is this;
that whenever you reduce the currency or
tighten the money market you first strike at
| the price Of labor. Labor is the first element
in productive industry that is affected by it. If
money becomes scarce and dear the demand
for the products of industry falls off. The man
| ufacturcr not only reduces the wages Of his
L bxIt ho ha ofh hiQ
| productions by putting his employees upon half