The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1869-10-13
TEE NEW YORK GOLD ExcnsssE.
To TIE EDITOR or THE HERALD

l u
time TO time in your paper An regard to the "Golc
| Exchange.n One OF them appeared about ten days
since, In which the Exchange Is characterized as
gambling hell,n ana the general government Is
called upon to close 1t up. IL so happens that all
your correspondents thus far have taken the same
| side-nameIy, opposition to the Gold Exchange.
Are you willing to hear the other sideY would moi
ask the favor OF being heard in Jour columns but
for the fact that have never as yet had the good
| fortune TO meet with Q single communication con-
corning the Exchange the character OF it's bust
ness that does not show its face utter want Of
any intelligent comprehension OF the subject.
As basis for what have to say IN defence OF the
"Gold Exchange" desire to recall In as few words
as possible, the facts and circumstances which led
to Its formation. l am fully persuaded that this
resume will demonstrate the vast utility not to say
| absolute necessity, OF some such organization.
Gold began to bear premium in New York In
January, 1882, nearly three years, as we shall
hereafter, before the ''Gold Exchangen was organ
tied. The buying and selling was then conducted
by private bankers over their counters. This state
/ OF things continued without much change In the
premium until the following June at which time it
became apparent that our exports were falling short
OF our imports and that the deficit must be made up
| by shipments OF the precious metals. Under these
! influences the price OF gold in the month OF June
| advanced 10 100. The war, too, by this time
began 10 assume serious and threaten
| ing aspect, and tho financial problem became
| the absorbing question OF the hour Business men
OF all classes studied It. The lawful money OF the
transactions, had itself become variable quantity;
aud by force OF this fact all kinds OF business took
on unavoidably speculative feature our
OF these facts aud influences grew up the
first general gold market known In New York.
importers and merchants, as wei as bank
ers and brokers; and the place selected for their
generally known 'the Coal Hoe.n From this
place, which was open to al who desired to buy
pin's News Room, Oh the corner of William street
and Exchange place. To this latter place sub
scrlbers were admitted for one year upon The pay.
News Roomn was merged into the more natural
designation OF ''Gold Room" The transactions
nom DAY 10 day III tins new place OF business were
very large, amounting to many millions; but SIM
there was no organization, no officers, no laws ana
no means OF enforcing contracts.
ltis proper TO remark here that the Gold Room Of
roundy abused as is tie Gold Exchange now. The
press abused It, The pulpit denounced it, Politicians
detained against It, Importers and merchants, who
were themselves In the daily habit OF sending large
orders to the Gold ROOM cried out against II. In
word, the whole country arrayed Itself against the
Gold Room and invoked the intervention OF the
general government TO close 1t up. The demand was
so general and lmper,ous that Congress did at
length intervene BY a solemn legislative act passed
by both houses OF Congress, and approved by Presl-
dent Lincoln on the goth OF June, 1864, all transac-
tons in gold, except for immediate delivery, were
forbidden, under severe penalties. The price OF gold
ut taat tluie was 1885, The next day the Gold Room
was closed and all purchases and sales were made
over the counters Of private bankers for cash. What
was the resultf
Before answering this question let US close tn e
volume OF history aud attempt It's solution on It's
own merits 1t was generally believed that The
breaking up OF the G ola Room would be followed BY
rapid decline OF the gold premium Some thought
l. would tai to the nelghbornood OF par. Why not
The Gold Room, II was argued, had stimulated
speculation, and speculation had caused the premium
TO advance; and now that the Gold Room Is dis.
hRn nftA ant ana. p1A
to bear premium. This, doubtless was the line or
argument that induced Congress 10 enact the law
question fheie we're those Wo held that haiti ihs COLI
Room was the effect ana not the cause Of the gold
premium, They held, moreover thai The Cod Room,
by reason OF the great magnitude OF It's TRANSACTIONS
impaired q degree OF steadlness the market. En-
tertaining these views, they predicted sudden adj.
vance Ia gold as the result OF dlsbanding the Gold
Room.
AZ matter Of theory it would seem that the right
OF argument was with those who held that the Gold
Room exercised conservative influence and pre-
vented violent fluctuations In the market. mo-
menl's reflection Will make this fact perfectly
obvious. When the Gold Room was in fun blast
there were always great many outstanding con-
tracts between the dealers who composed It, In
other words TO use the parlance OF the street, there
were always q large number long,n and another
large number short" II any great event happened
under these circumstances tending 80 depress the
market the shorts arrested the decline by pur-
chases to 'coyer.v And so, the other hand, If |
anything happened tending TO put the market up |
those who were 'longn always commenced realiz. |
ting, and their sales arrested the advance.
These are The two adverse theories put forward in
1854. Each had its advocates and both alike were
confident that the passage OF the law OF Congress
dtsoauding the Gold Room would prove theirs 10 he
the true theory.
Let Us now reopen tho history OF that period and
see who was right. Gold was selling as have
stated, when the law passed at 1888. The next
900, and the third day 1t rose to 2S0 And all
this happened the direct result OF breaking up
the Gold Room. Business men OF all classes saw
and acknowledged the error committed by Congress.
and those VINO had been loudest in demanding
nIufs..A tntnv
ask Congress to correct the blunder Dispatches
praying for the repeal OF the Jaw We're seat
to Washington by the thousand. The prayer was
heard. Congress confessed Its error by repeating
the miscbievous statute, ana in one hour after the
repeal was known in New York the price OF gold
There never was, in the history OF finance, more
thorough revolution In mems minds Turn back, If
you please to your files Of the date referred to aud
you VIII find that you even raised your voice In
favor OF the 'God koem;n and when the law was
repealed, and the 'gold gamblers were permitted
to resume business, you said Congress had done
well to sweep away the offensive statute.
The Gold Room was heneelorward regarded az the
most effective safeguard against the violent nuctua
lions III the market. THIS conviction led 1rst to
the lease Of larger building and finally on the l4th
Gold Exchange From that time to this the Ex-
change mas controlled the finances OF the nation
During the war there were tunes that the gold pre-
mum, but for the existence OF the Exchange
would have advanced to i've hundred, or possibly
higher inc credit Of the country, under such CIR
instead Of being triumphant SUCCESS might have
ended In disaster aud defeat.
It will be seen from this review that the Gold Elk.
change Is not responsible for the gold premium or
for gold speculations for the very obvious reason
that both or these existed long before the Exchange
was formed. There was, as we have seen, a general
gold market and experience had shown the neces.
sty of such O market. 1t was to meet this necessity
that the Exchange was organized 1t TOOK hold OF
the existing disOlganlZed elements aud reduced
them TO order, anu IN DONG 70 rendered service
greatly needed aud ut the time universally recog.
nIzed.
40 now have few words to say on the gene.
raj subject OF gold specuations. u has be-
come fashionable 10 speak Of gold specu-
latlons as gambling that / yerily believe
some OF your correspondents have come to
regard their nslpld SANDERS 'words Of truth and
soberness.n They seem 10 forget that abuse is not
argument. They regard speculation in goid' as a
4 eat crlme-as the worst species of gambliug-but
none OF them have ever attempted 10 point out the
precise distinction between specializing in gold and
| Specializing in corn, wheat, cotton, or any
oher article Of commerce. ] undertake to say that