The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1869-11-25
TIE TREASURY P0LICY.-. yHE MS TAKES.

To THE EDITOR OF THE HERALD:-
We may prontably look to the causes that acted
upon the business or England alter the termination
OF her great continental war and learn from her
trials ana mistakes how to avoid such caIamtes as
she suffered from unwise legislation for several
years. 1t Will be remembered that England had
been engaged IN war with France some other con-
tinental Power. with slight intermssions, for more
than thirty years prior to 1885, and that peace was
restored by the surrender Of Napoleon during the
month OF June of that year. For o long series OF
years suspension Of specie currency mad continued
and paper had uniformly taken Its place in all bus-
ness transactions. The peace Of 1915 found England
with no currency but bank paper. 1t entered INTO
all transactions, and gold was left free
to be controlled by trade and exchanges
with the Continent. In many striking par
ticulars the condition OF England at that
time was similar to our condition at the cose
Of our war, and particularly in this, that both had
adopted paper and given over gold to be exported
general complaint was made that bank paper had
deprecated and that IL was owing to redundant
paper currency. Here is very important fact that
should not be ignored ut this time because what
follows should be received as u lesson ana we VIII
see that bank currency had not deprecated, and
taat like our own coined paper, II had secured tile
pubic confidence. Peace the Continent was
FULLY established In 1916 aud the people or England
were relieved from the great dram O. gold to the
Continent tnaS had Continued for many years
through the agency OF the government VINO used 1t
10 pay troops and suosidze European nations.
THIS dram endei with the withdrawal OF English
troops, and u m0sG prominent and interesting occur
renee TOOK place IN the action Of tue exchanges. No
sooner was tho demand Tor gold TO be sent to the
Continent stopped than It's effect visible IN AL
parts OF the Kingdom. Confidence was established,
not In the Solvency OF the banks but In the ability
aud inclination OF the English nation to maintain
peace.
Tne effect OF this confidence was to induce all the
people who had been boarding gold Tor great num-
Der OF years to bring IL out from It's hidiag places
and deposit 1t in the very banxs whose paper had
been condemned as deprecated. The following tes-
tlmony was taken before committee OF Pariia-
ment:"n the latter cad OF the year 1916 aud IN the
beginning OF 1877 we had circu alton OF coin Tor
some months that had been hoardei during the war
IL cost the country banks OF Somerset at That period
nearly fl0O TO transmit the surplus quantity OF
coin TO London, OF which Iour-ifGnS IN value con-
sisted oI gold We could not get RID or II IN tao
country. Cur customers preferred our notes.n Mr.
uarman testified THAT 1t was moment Of tran
GUILTY., aud the people seemed indifferent about
Colds that instead OF coming to the bank for gold
they brought their gold TO the bank. This continued
until 1917, when France required gold. As soon as
this was talked OF the tide turned and gold rose IN
price,"
In July. 1917, the foreign exchanges became UNI
favorable as stated by Alexander Barng:-'it
appears by the report OF the French Minister that
the French mlnt received IN sixteen months
l2s 90 0Gof IN specie; OF TINS sum more than three.
fOurths was drawn nom England.n These quota
tons are mace to show That the banks OF England
did not resume specie payments by contraction OF
their issues, but they were compelled 10 increase
their issues TO the parties who deposited with the
This resumption IN 1916 gives positive evidence that
tIc difference between the price OF gold ana paper
aid originate in the abundance and depreciation
OF paper, but Was solely owing 20 tue demand for
specie for shipment, and as soon as that demand
ceased gold became q drug aud remained so until
the demand from the Continent again drew it away
from England. The people OF England preferred
paper and forced the gold upon the banks TO obtain
paper In exchange
How viii our contraction theory account for this
state OF Things in England from 1916 TO 1872 Here
was resumption OF specie payments without con-
traction, ana again q suspension without any adui-
tional bank issues. Neither OF these great causes
appears to have operated, and why did they opo.
rate? Because gold was not needed Tor foreign
exchange for more than twelve months. and was
therefore drug. AS soon as gold was required for
exchange By shipment the demand raised its price
SO mucl that 10 was taken from the banks and sent
TO the Continent Here then, we have III these most
sonaule person will require That the price of gold is
controlled by the foreign demand, and not by the
value OF good sound paper.
Contraction was not needed, because there was no
foreign demand for god. Gold came us 1t went,
upon the current OF trade. The law OF supply and
demand influenced Its price and Its movements
The Iteration ana relteraton OF facts ana arguments
In these letters s the result or desire OF the writer
TO cause truth to prevail in time to arrest any dlsas
trous legislation. We shall roler to the action OF
Parliament on the subject OF suspension In future
letter. As soon NJ we icel THAI the people are satis
ned that our coined paper has not deprecated, but
thnt our foreign debt has created demand Tor it,
we shall then propose plan TO utilize our pubic
urDt Tor the benefit of our inland trade.
JONATHAN OLDBUCK.