The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-12-29


more IN accordance with sound policy: The great
falacy into which Mr.. Morton has fallen L. his
not cause It TO appreciate towards gold standard.
Like everything else dealt In by men, Is influenced
by me Law OF supply and demand coupled with the
credit OF the government bank that issues IT, He
Ike many others, has fallen into this error In conse
qaence OF gold being quoted at premium instead
OF paper at discount as in California and Canada
The value OF an irredeemable paper currency always
rises and falls, just like wheat or corn, according
It is abundant or scarce In the market. II 1t there
fore be desirable 10 get back to specie basis sooner
than can be erected by the.aws OF trade, which de-
cnat inc volume OF currency snail bear certain
money to pay it or. When this is done the whole
Just as certainly as II the government borrowed for
hundred millions and paid 1t out dollar for dollar for
Another very absurd and wholly impractcable
scheme has been propounded for getting at resump-
tion. II - neither more nor less than for Congress
TO pass an act to reduce the amounts OF all out
standing and unsettled contracts to the standard Of
gold at the time they were made and require
Of the constitution, which does not permit Congress
would be wholesale act Of population. Though
such plan might reach the cases OF contracts and
not DO any serious wrong between man and man. 30
lar as contracts are concerned how would 1t AFFECT
tne values OF property Of permanent kind, such Us
lands, houses and numerous kinds OF personal pro-
pertyf These values would be suddenly reduced
FULLY twenty-five per cent, and would ruin. vast
number OF persons: The plan. however, is imprac-
the true amounts to be paid in almost indefinite
number OF cases and also because the constitution
is against 1t.
The plan so tenaciously urged by the New York
Tribune, to appreciate greenbacks from discount
OF twenty-five per cent TO par at single bound, has
some advocates among the unlearned In monetary
science, and therefore requires notice. The Tribune
argues that all that is necessary to be done Ia Tor
Congress to instruct the Secretary OF the Treasury
to advertise that he Will commence paying par for
the government currency, and straightway the work
of resumption would be effected Concurrently with
government
already carrying gold interest, would rise from NJ
teen or twenty per cent discount TO par
Let rs seriously examine this proposition by the
Laws OF currency. We will assume tnat the govern
ment has sloo,0Oo,Ooo OF gold in the Treasury and
Congress authorizes and directs the Secretary 10
commence redemption. The first thing that will
happen will be gold panic. Everybody would rush
TO the Gold Room TO sell, and the price would mme
diately fall twenty or twenty-five per cent. This
would bring down the prices OF all commodities IN
iGf ne 'e ,oo afg Of
the country Is carried on by means or margins'' OF
about twenty per cent, these margins would al be
wiped out The value OF all kinds OF stocks, large
bulk or which are held on still smaller margins,
would fall still more and all the .bulls," botn Of
would be broken. This would all happen before the
Secretary would have time ITO prepare" for his
relentless WORK. OF devastation. Nevertheless he
would be obliged to go on, and instead OF nobody
wanting gold everybody that had greenback would
the Golfers would be drained dry speedily the
coin could be told out Then after oneseventh OF
The currency had been taken In, up would go the
would all be broken IN turn and up would 20 every
thing else in proportion. The government bonds
stead OF going up, would sink heavily, because rhe
government Itself would have lost prestige, and
would be for the time beng bankrupt. The sources
or income would nearly all be dried up and the cry
for reputation would spread like wlldhre Such IS
the clear. logical conclusion OF this plan, drawn
from the well established principles OF currency. .
From these considerations II Is impossible to con-
ceive that such project be seriously entertained
in Congress- and the plan may therefore, be DIS
missed as unworthy Of any more serious argument.
1t may be wen, however, TO note here that in discuss
lng tue subject have spoken In the populHF man
ner OF gold being at q premium. This is true of it
when measured by deprecated paper currency;
but scen6eay spea King goa l. s never either al
OF all other values. The celebrated Bullion Re-
por OF the British Parliament in 1911 fully settled
this view OF the question its true scientific basis,
and who has not studied that report and sub
sequent British legislation relative to the bank
authority in the premises The gross error in1o |
which the bank directors and nearly all the |
British merchants fell by assuming that the Bank OF |
England notes formed the true measure Of values Is
thoroughly exposed. We have bankers and mer- /
chants In abundance In this country stupid enough
to assert that the balance OF trade generally against
us because we export more gold than we import one
year with another as II gold was not leading pro-
duct and, as SUCH highly proper article for export.
This export is no doubt stimulated by our present
redundancy OF currency the result Of which Ia seen In
us AS dr,v S s inc enec
circulation. Everybody has remarked on the diner |
ence IN the value between gold and silver coins,
which, before our paper deprecated, were converti
bic into each other OF par. As soon, however as the
paper fell eight len per cent below gold the value
limit OF the difference In the actual value OF the two
kinds OF coinage, or which marks the relative
amounts Of adulteration Last Of all the copper and
II. therefore, depreciation is the evidence OF re-
dundancy there are only two methods OF getting
back to a specie basis-lrst, to withdraw portion
OF such redundancy, or, second to wait TILL the IN
crease Of business which In country like this Is
SO rapid as not 10 make the plan Objectionable, |
shall require the whole Of outstanding govern
ment and bank currency. If the volume OF currency
was so excessive az TO threaten results similar to
those which followed the issue of assignats and
other descriptions OF notes in France, and our own
revolutionary issues o. paper the policy n
nently wise. But we have no sach excessive
issue and as our commercial business and indus
double ABOUT every ten years. 10 may fairly be as
sumed that we shall grow up' to specie payments
serious perturbation OF values. Congress should
therefore let the currency severely alonen and con-
tent itself with the assurance that y is and ever VIII
be regulated by .higher law" than any legislature
can enact. What 1t can do Ia what have pointed
out. 1t can do something TO limit the range In the
fluctuations OF gold. will conclude this part OF my
communication by the remark that IL appears by in
duction, from what has been established TO be an
crease in the same ratio with a paper currency the
latter VIII not depreciate Bu II the latter increases
In greater ratio than the former Its depreciation
all other things being equal, will be In the exact |
ratio OF such excess. II Is therefore, established
law OF nature that the values OF all commodities
Guiding the precious metals where measured BY such
vary ing standard rise and fall with the variation OF
the measure In the same manner as cloth would II
the yard measure shortened or heightened
IL Ia now time to allude 10 q Misrepresentation
prevailing among popular writers TO the supposed
difference between an irredeemable government and L
al irredeenable bank currency. To understand the |
subject at all We must find out what 10 Is that gives
value TO either II one kind OF inconverble cur
rency possesses higher degree OF security than the
other II will sustain less percentage or deprecia
uon II issued In superabundance or In excess OF the
wants OF trade and industry. 1t IL, therefore, /
III
hardly be necessary to enter into lengthy argu- |
ment TO prove. what everyday experience exempli- |
Hes. everybody prefers to hold greenbacks TO /
national bank notes, though the latter are Sc |
cured by government bonds deposited with |
the Comptroller OF the Currency. This Is |
certainly high order OF security; but |
1t Is not so high os absolute guaranty OF the |
government The bonds rise ana fall IN market |
value. but the pledges OF the government, though |
denreciafcd nm issne can a Yxaya