The New York herald., 1869-05-26
CURRENCY.
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LESSONS FROM THE OLD WORLD.
Austrian Currency as Compared with the Cur
rency System Of the United States
Objections to a Metallic Currency
as National Money.

Currency History of Austria from the First
Issue of State Notes, in 1852, Down to the
Present Day-FOrced Suspension Of Specie
Payments-Gradunl ACCOMPLISHMENTS
Illustrations Reliable Authorities Useful
VIENNA. May 0, 1869.
Two years ago you laid before the American pub
pc the pith and substance Of the currency expert
ences OF England; and these contributions OF yours
to the general stock Of knowledge on this rather
Abstruse and little popularized subject of currency
undoubtedly aided In changing the opinion of Con-
kress 80 as to make 1t hostile to the policy Of
traction and favorable to that advocated by the
HERALD, namely, 'letting well alone" Myself o
twenty years. student OF currency theories and ON
observer Of currency facts, have felt 1t pleasure
BILE duty to avail myself of the advantages which
the position Of your Vienna correspondent confers to
bet up Immediately for the journal am proud to
represent, and mediately for my fellow citizens
&t home, the valuable and little known history Of
Austrian currency and to throw into relief much
Of the same as has bearing upon the present our
fency situation Of the United States. Icame to the
subject prepared to find IL an instructive one. Now
that have fathomed it to the bottom can assure
the reader that the currency history Of Austria from
the first issue Of State notes to the present time is
richer and more diversified than that Of England
since 1797 and that In particular the currency
history Of Austria since 1S4S in its numerous revou-
t0ns and counter revolutions. in the multttudnous
experiments OF which it affords examples, exceeds
anything that any modern State has to exhibit In
this genre. When / say that in the eighteen
years that are included In the term OF
years 1886 there was a forced suspension
Of specie payments followed by partial resump-
tion in the autumn OF 1868, and that this
wa foil we'd nv q dauou
Sion in the spring Of 1882 and that in 1858 and 1866
steps towards second resumption had been taken
30 far as that the legal tender paper money had been
brought almost up to par with silver, and that this
eftuation had been scarcely reached ere 1t
plerey turned upside down by the war with Prussia
IN the summer Of the same year; that State notes
have been issued called in and cancelled and again
teissued during this period OF twenty years; that
there have been the while two separate breaches and
one renewal OF the Bank OF Austria's charter, have
given merely the baldest possible summary of what
ID contained in the third section Of my treatise.
tbs only fair to confess at the outset that am
Confirmed anti-bullionst and entirely share the
currency views of General Butler. / have two OBJ
jections to a metallic currency as @ national money
lsmail change always excepted and to paper money
convertible on demand into tine same. The first and
principal Of these objections is that the national cur
kency of q country ought not to be subject
70 contraction and ex panson in obedience to the
ebbs OF bullion from and the floods Of bullion to-
wards its shores; in other words, that national Or
domestic currency should not be sensbly affected
by the fact OF the balances Of International trade
being "actve" or passive" Or favorable" or
My reading has convinced me that every one of
the monetary panics which have periodically affected
cumstance that her currency and credit system
were land still are not proof against drain of bull
pon; while am equally persuaded that the immu-
pity from panic yea the power OF assisting panic
Stricken England) which the United States has
enjoyed ito the astonishment Of European and
American bullionists since the conclusion OF the
MAR, and especially In 1865, Is due to the circum-
etance that the American people have had paper
nurrency based on taxation standard OF vaiue ana
that gold bullion has been reduced 10 its proper,
g., commodity level.
MY second objection to bullion and bullion based
system ~ that 1t is uneeonomical and therefore un-
democratic. The positive part OF my creed Includes
the olowing points,
the State which evies taxation on Its citizens to fur
6ish the taxpayer with the means OF paying in q
particular form OF money, called taxation money,
and that this taxation money should furnish at least
the kernel of the domestic or national currency.
Second-That banking currency should should exist exist
government has right to issue lts notes as the
representative OF TAXATION Il Is not good to let u
such q monopoly In the hands OF statesmen being
very liable to abuse.
T6i,T-That gold and silver coin should be reserved
TO form an International currency and fund for the
payment OF the national creditors IN cases where the
Contract Is to pay in metal.
EnuTfh-That the slight fluctuations in value
which well regulated amount OF State notes Is
Subject to in times OF peace and security are much
less evil Than the tremendous evils (of which evils
rand and Immense fluctuations In the prices OF all
preperty and In the rate OF discount are only small
barr to which bullion system inevitably subjects
FlTh-That the remedy for the fluctuations in the
value of nsona or m be er
rather In the use OF Ia either metal contracts or tb
Of contracts quitable In paper but graduated on
metal prices, which latter form OF contracts are in
vogue with the Austro-lIungarian railway and tele-
graph companies; but such remedy Is not to be
Sought In the resumption of specie currency But
Assuming for the sake OF argument that q nation
bught 10 return to specie payments after having
once got rid OF them. then
Sirt-I prefer the plan OF those modern Duilionists
who seek TO reach the desired end by the "growlng
ppn and gradual process to the cruel and terribly
Vocated by the extreme bullonists.
Sepenth-On tine same assumption hold with the
moderate buIlionsts In favor oil small notes as being
preferable to coin, because the former are cheaper
Instrument than the latter, and help TO educate the
people into the true idea that their domestic ex.
changes can be carried on by paper media, and
although neither gold nor silver are In actual circu
ation. This u another point on which, happily, the
bulionists differ from each other.
Such are my principles, ana now to return to my
heme, which Is naturally divided into two sections,
bamely-First, the period from the issue OF state
hotes u7o1 TO the 1s4s revolution and secondly the
beriod from March, 1sls, to March, 1889.
rBK PERIOD FROM THE FIRST ISSUE OF STATE
tNoTEs tl56l TO THE OUTBREAK OF TUE 1s4S RE-
VoLUTION.
For most European nations the French Revolution
Dr the wars which followed so quickly in Its train
were the occasions which forced the state to resort
10 its sovereign power OF issuing paper money, but
h Austria the first issue OF treasury notes, state
notes or taxation money dates generation earlier,
hnd Is contemporaneous with the Seven Years. War.
IL is singular that II was q king OF Prussia who
Forced an ever unwilling ustran government TO
issue both Its nrst 769 and last Qs66) editions OF
state note, Wishing III to Austria, Frederick the
Great and wilhelm ]. thereby unwttlngly did the
State they sought to bring to the ground great
vice. They helped 70 reveal to Austrian statesm en-
Unused resource. The royal patent anthorizinr
She FIRST issue OF treasury notes or taxation money
Was dated June 15 1762. IL tried the experiment on
modest SCALE for 10 limited the issue TO 10 600 00C
horIns In notes, from nve forins upward TO one