Daily union and American. [volume] (Nashville, Tenn.) 1865-1866, 1866-01-23
FINANCE AND TRADE.
the Currency Question.

From HINTS Merchants Magazine for Deeem-
Der. edited by VIM. B. Danna, we extract the fol-
lowing remarks regarding gold and the national
currency:
In this connection we wish to say a word with
regard to tae common error that the premium
gold is an index Of the depreciation Of the curren
cy, and gold ranges lower -or higher, the pur-
chasing power of our grecnbacks Is supposed to be
greater or less. Ii is on account of this belief,
which is partly, right and partly wrong. that SO
much interest has been takensi regulating the
price Of specie. By keeping gold down. it was i'm
agined the value of the currency was kept up,
however large the issue of legal tenders. This is
much as II gardener ordered to keep bis con-
servatory st a given temperature should neglect
his fires and devote his chief attention to tamper
ing with the thermometer. Every one who has
learned the simplest fudinlents of financial sci
is aware that depreciation of the currency is
sign of redundancy. The shrinking of the value
of the paper dollar is caused by the fact that there
are too many paper dollars aioat. Ii this paper
were redeemable in coin on demand, the deprecia
ton could not advance beyond fractional limit:
as the notes would be presented for payment, and
the volume aoat would contract itself TO its just
dimensions. If however, the notes be not
deemable, there is no.such spontaneous limitation
of the issue. The elasticity with which a redeem
able currency adjusts itself to monetary exigen-
cies is gone And as these monetary requirements
vary greatly at differeIt times, the redeemahle
volume Of the currency from its rigid inelastcity,
may be insufficient toward the close of the year
and redundant three months later. Now, under
our paper money system, the price OF gold, II UNI
influenced except by the currency, might be a
true measure of the redundancy and depreciation
of that currency. But the trouble is that as gold
coin is our international medium of exchange, it
is from this and other causes exposed to number
of perturbing forces, which modify its price indie
pendently of the movements of our domestic cur
rency Hence, the price of gold would not be an
infallible measure Of depreciation in all cases.
But as we have said, there are other causes be-
sides the oscillations Of foreign exchange which
increases the incertitudc. Among these is the in
reference of government, which assists i'll pre-
Of haft.
dicator of the purchasing power of our paper cur
rency. We do not here discuss the general policy
of such interference, but simply point out the fact
The first time that public attention was very spe
cially called to this interference was in the sum
mer of 1863. when Mr.. Chase secretly and sudden
ly sold very large amount of coin. and took
The result was magical. Mr.. Chase had only to
show himself at the sub-Ireasury, andthe price
Of the precious metals at once gave way. Gold
fell swiftly = per cent. A few months later IN
Arril. 1864, the same experiment was tried again.
but this time it produced pane, the memory of
which will long live in. Wall street. Gold. instead
of going down, went higher than ever before, and
soon afterwards Mr.. Chase resigned. The history
of the numerous attempts made at various times
to control the price CT gold will be curious and
instructive; and since. with the close of the war,
the chief reasons for secrecy have passed away,
Congress will. il is hoped. order the facts to be
published as soon as consistent with the public in
Now. it is affirmed that the policy of controlling
the price of gold is not exploded and that the |
government sales of coin have been so adjusted to
the condition Of the market as to check any adj
vance. In confirmation of this view we are point |
ed to the fact that since July last the price has
been almost stationary the explanation being that
when the price shows a tendency to advance, the |
Treasury sales arc large, and when the price goes
down the Treasury sales are stopped. This ma |
and regulating the price OF gold makes
it artificial and prevents that price from being an
measure of depreciation. On the cur /
rene, itself this regulating process has no effect
1t does not enhance the purchasing |
power of greenbacks, or prevent the neeessaries |
was at $50. Indeed, sill schemes which, by tam
pering with the gold market to bring down prices |
wise and as efficient as would be the attempt to
control the temperature Of house by regulating !
the thermometer.