The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-08-27
The CRY for More Currency.

laws in monetary science relative to the
amount of currency required by any country
where commerce and industry are free and
active. Of these laws, one of the most inn
portant lies at the foundation of what is called
the theory of contraction. 1t may be expressed
as follows;-"The value, or purchasing power,
of paper money varies inversely with its
volume" If you increase the volume of
paper dollars aAoat you reduce the value of
the paper dollar, and, conversely, if you want
to augment the value of the paper dollar, the
only way of doing so is to lessen the aggregate
in circulation. In other words, deprecated
paper currency like ours can be raised to par
with gold by no method we can possibly adopt
so long as we do not bring into play the
principle of contraction. An eminent au-
thority on practical banking questions
gives another view of this subject. "The
only MEANS" he says, by which
specie payments can be reached, is by
retraoing the steps by which specie was
abandoned as the standard. AS prices were
advanced by the manufacture of hundreds of
millions of paper tokens called by law money,
swelling thereby the volume of the currency,
and decreasing its value as compared with
fixed property, so prices can only be restored
to natural values by recalling the paper tokens
issued under the pressure of the Rebellion.
AS the legal-tender paper is cancelled, market
values will recede, and by no other process
can this desirable result be attained. Upon
this financial authorities agree, and the only
point Of difference is as to the time when this
withdrawal of legal-tenders can be made most
safely" Redundancy of the currency then
brings depreciation and depreciation brings
high prices. Consequently, to depress high
prices we must correct the evil which has
caused them, namely, redundancy of paper
money. And the obvious way to do this Is to
call in and cancel the over-issues.
The second great law to which reference was
made is that "the money Market" as it is
called, that is, the movements of capital be-
tween lender and borrower, is disturbed with
every disturbance of the volume of the cur
rency." If you augment the currency you
stimulate the movement of capital and "money
becomes easy" If you diminish the currency
ahoat, you arrest or check the movements of
capital between the lender and the borrower,
and "money becomes stringent" In this re-
ciprocal interaction between the volume of
the floating paper money and the move
ments of capital in the loan mar
ket, we find an explanation of the great
activity of business of all kinds during
the extravagant initiation of our currency in
1868 and 1864, and of the depression and
gloom which we sometimes suffered by the
slight contraction which has been effected
since the war. Those acquainted with the
commercial history of England during the
second and third decades of this century, will
call to mind frequent illustrations of this
principle. For almost invariably the alter
nate depression or activity of business re-
sponded to the enlargement or diminution of
the bank issues as certainly and as regu-
larly as its correlative effect in the domain of
physical science.
From all this it follows that if we could at
,NIaa tho aI1rp SI1Ai cant1yy
might resume specie payments Immediately,
and that the chief if not the only reason why
we cannot Immediately call in and withdraw
one hundred millions or more of our currency
SO as to make the outstanding greenback dol
lar worth par in coin, is that before we had
gone far, before we had.withdrawn more than
a few millions, the money market would be
thrown into confusion, the movements of
capital between lender and borrower would be
paralyzed, business would be at a dead lock,
and the policy would have to be reversed
amidst the execrations and the upbraidings of
the whole nation. To adopt such policy,
and to attempt to carry 1T out If such an
attempt could in this country be carried to
such lengths we have supposed, would infict
mischief on our trade compared with which
those resulting hitherto from our paper money
imitation are comparatively small and in
nocuous.
A third law relative to the currency, to
which, at present we need only refer briefly,
is that "COntractiOn of the currency must be
slowly, and gradually, and skilfully done, OF
it cannot be done at ALL" Under despotsm,
indeed, where the decree of the master is
everything and the groans of the people are
nothing, such a policy might be carried tC
great extremes, but the failure of Russia some
years ago to reform her currency is memo
rable example that even by an absolute sove
reign financial laws are too strong to be re
sisted, and will claim their rightful homage
however they may be ignored.
There is, however, another law about the
currency which we must not omit, as it ha
been very much abused and misapplied. II
tells us that "the value of paper money varies
with the demand and the supply" Thus
deprecated paper money may appreciate
the demand is increased, even if the suppl,
should remain stationary. We well remembe
how, after the battle of Gettysburg, and ate
several other decisive events of the war, tn
price of gold went down, and kept down 70
a considerable period. The reason was no
found in the smaller volume of the cur
rency, but in the larger field for the us
of that currency. In this law we fin
an explanation of the fact that gold is nc
now selling at 200, although the volume
our currency is twice as large as before the wal
More currency is wanted now. The field fo
the use of currency is larger. The wealtl
the commerce, the activity of the countr
REQUIRE more currency to fulfil the function
for which money is used. From this law til
deduction has beer made that the best way
specie payments-although 1t be the longe
way--is to grow up to them. The advocate
of this view maintain that we should not COZ
tract the currency, but should keep i
4 oh ite Ia,y