The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1867-12-14
WHAT CAUSES FLUCTUATIONS IN the PRICE Of ea0

To rpE EDITOR os THE HERAI.D:-
The fluctuations In the price OF specie result
ing from the OF fixed basis FOR the currency sug-
gess the inquiry whether efficient steps might be
adopted TO establish the currency upon fixed basis
Having witnessed for ten in Brazil tho operations
s( currency analogous in principle and in practice
currency Of this country will state the causes
ons in the premium Of gold In shat country These
raions tho premiums raceahle exclusively tothe
foreign exchanges and thesa foreign exchanges were
influenced by the varying prices Of coffee. sugar and
son tho leading articles Of export from that country An
advance tho prices Of these goods In Europe and The
United States leads decline In the price Of gold in
Brazil whereas decline 10 seir vaiue in Europe leads
70 corresponding advance in the prcs Of gold Brazil
The deductions 10 be drawn appeared shs following
Ia country whose currency paper gold rnsrch ant
commodity, and a. such, Its premium s dependent
upou the varying values OF the leading articles OF expo
shat the rate Of foreign exchange tho barometer or in
dcator OF the balance of trade, and that such
rcncy be brought tn specie basis by the simps
operation Of natural causes unless materially aided by
There may possibly be some who doubt the inllrencs
OF foreign exchanges on gold and silver II such there
are refer them the commercial panics 1897 and
1853 The facts developed BY each Of these monetary
established the axiom that the adverse or
foreign exchange drained the country specie and
caused. necessary consequence tho suspension Of
specie payments five search still further for the sd-
current Of foreign exchange during these periods
OF the banks. stimulating speculation and tho lmpora.
OF foreign uxuro and thereby increasing tbs for
Inc chsIactsrisic Of the old system Of banking was
the entire absence Of any axed plan BY which regulate
he same both in donselv peoplsd and isolated mun
IIas 10 well peopIed country like thia No have sen
tho results will endeavor y show how "a oed system
operated 10 isolated community. ] will assume that
bank cstablsbod with 900 900 capita suddenly
spt Of speculation arises and DISCOUNTS are required
70 the extent OF iva ak millionz The bank grants
these scounLs gradually, and as consequence
thing dou bies in value Ono extreme gsnoray fol-
loved by another extreme and excessive contracon
follows tho excessive expansion OF the osYrsncy, and
prices suddenly decline 70 one-third Of thor previous
rates The picture may appear too highly coiored. bat
Il nevertheless true statement Of wnss occurred in
Eastern Australia In lt42 sheep which sd previously
eight cents, and few belonging 10 Captain Piper,
near Bathurst. were sold ~ iow as t~eniy1ve esos
specie twelve and a half pcncsl Adversely. however,
sheen cauyod them he boiled down for taow the
price Of sheep months Afterwards regulated ~ tbs
dollar
The evidence OF facts with regard tho old zystem
Of banking clearly demonstrates the axiom tha; where
there nxed basis for the circulating nedian the
results have described follow naturally cause
ADD eisc. Tes Question sar .ri,ss can any bs.ser
nations bank, fixing the maximum o. ule issues
OF notes. would eGectusiy accomplish al that can
be deslred aud NIL that DO required from crcuiat-
ing medium. Take tho population OF the cguntry ss q
basis for nxnv the maximum Of the paper circulation
slor. and tbs accoun, would stand - loloss:--
Thirty million people At $40 Per head, 5000 0o0, o10
EsHmating the interest Of nouey ~ six per cent and
dsaucting per cent for agemsnt aud srpervs.
STOP, The net gam 10 tho county pared with the
rrcssot banking currency would bs $4,000, COO per
nDum.
This plan would give W Uniform currency, wh,ch
would Do available throughout the 6ngth and breadth
the land without being subjected TO hscoanunR or
/" shaving II would ereciraiy pat q chocI 10
that sprng which psrmsates all Commercial socs.y,
and which Ike ambition frequently oye6lesrs ilaef By
saying "lhus far shall expansion 20 snd no further
Assuming that some such national hank a. Issue vas
established, with 500 600 600 gol6 In ME treasury,
specie pas ens might gradually ba Yesumei By enact
ing after certain date one.third should be taken
OF from all debts contracted In the deprecatst cur
rency or other words, The person who ows1 $3.50 in
currency should pay $40 In gold Ascension eskbshss
the rule o. opsthrd or onsquArer specie Ia proporcA
70 the paper circulation, dsorstonAy pows TO draw
upon London Or Paris 10 meet ptsgois contingencies
seerns demanded. To resume = spccla basis without
svng The debtor an equivalent for the change IN vsias
would b equally 40 unjust ~ unressonsble.
The object Of legislation should undoubtedly % the
well being OF ALL and national bank OF ISSUE vita The
maximum OF issue regulated by Gysd laws, weuld un-
doubtcdly be 10 The vass majority great boon have
endcAvorsd 70 state a. clearly A. am able the resu OF
observations made during . rssidesos IN Brrti Or
Australia Lot m<n who have visited other regions ol
tho globe come forward and bring the f1n p0wer ol
their minds 70 bear upon ths subject From these
bLnod statements may least derive ths advs Atsxsf
IL the clearses exposoos Of What II 70 b con isned
aad Of what V BE- approved Ia as uaosSsu al Of shs
l vkiS& sursaSsN y ~ gssss