The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1869-01-05
THE NATIONAL FINANCES.

be Safely Donc-Currency Statistfcs-The
Circulation of COMA Plan for Solving the
Financial Problem.
NEW YORK, Jan. 2, 1869.
Hon. ROSCOE CoNKLING:-
DEAR SIR-Again awaiting myself Of the standing
privilege you have accorded me- herewith submit
for your consideration few thoughts on the present
aspect OF our national finances. Since I last ad-
dressed you on this subject a new administration
has been elected virtually pledged to the following
financial policy
First-That specie payments shall be resumed at
he earliest period consistent with the healthful &C
SecoSd-That the bonded indebtedness Of the gov
eminent shall be paid in coin or its equivalent.
Third-That o1icial corruption shall be suppressed
the government.
Folrth-That taxes shah be equitably distributed
current expenses OF the government and accruing
interest on the public debt. together with small
annual instameEt OF the principal OF that debt.
This, though not the letter, is clearly the spirit Of
the financial platform which the dominant party
stood at the late electons for it is only through
policy like this that the sentiments expressed in that
platform can be carried into practice Should you,
however, doubt the correctness of this interpreta
ton OF the financial issues OF the late canvass am
sure you will agree with me that the four PROPOSE
lions have given EXPRESS true financial policy.
For it seems to me that no other line of policy will
30 well protect the national honor from reproach,
strengthen the public credit tighten the burdens OF
taxation and secure for our country prosperous
future.
Assuming that this general line Of action either
has been or should be definitely decided upon, 1t
only remains to inquire by what measures 0ngress
can most eectualy and safely carry 1t into practical
considering the subject under four distinct heads
The first will embrace all questions relating to legs-
pSc to the
enue economy and retrenchment; the fourth, to
The questions which properly come under the
nrst head transcend In Importance and intricacy all
the others combined. I SHALL therefore, for the
sideraton leaving the other three classes OF ques-
lions for brief discussion in q subsequent communi
First, then, 1t devolves upon Congress to decide
upon the proper time and the best means Of return
ng to specie payments This is the great financial
apon its proper solution, and such solution is con-
coded TO be as difficult the question is important.
II VIII require the wisdom Of Congress to decide
1t Alright The public mind is alive to its Importance
and tie press Is teaming with suggestions on the
ton with our present inconvertble currency. Some
are ready to hazard the consequences Of immediate
within six or twelve months, and SO on up to two
or three years. The last named period seems to be
me maximum chat public sentiment is now disposed
You are aware that do not share in these senti-
mens. No one more strongly desires the earliest
convertible currency. But must again express to
you my conviction that all efforts to secure that end
by immediate or early resumption must prove abOr-
tive Our currency Is yet too redundant to attempt
It with any hope OF success. We have to-day CIR
culatng medium, exclusive Of bank deposits Of not
less than SIT to ! OF population This is about 10
per cent In excess Of the volume OF convertible
rency kept adoat in this country. 1t 10 per
cent excess Of what the natural laws OF trade WIN
permit OF such currency, as will proceed to show.
Before entering uron the discussion, however
u the circulating medium. They perform the ONCE
Of money as effectually as coin or bank notes. and
fnpf of Iu than fhaR n1.nu Inv
ployed IN concentrating the larger or wholesale
transactions Of commerce, while coin and notes
lions simply the resale Of commodities that have
been first sold by wholesale Dealers 1t follows that
ea OF these other words me es aross
amount OF bank deposits Is always about equal to
the gross amount Of circulating notes and coin. Ny
simplify the discussion Of subject that il intri-
cate enough without that useless addition.
lts Office Is to effect the exchange Of other property
and to measure Its value by being gwen in exchange
IS deemed by the parties thereto to be an exchange
Of equivalents. When money consists OF coin alone
BY n az 2 Saw
II will exchange for other things in proportion to
their relative cost Of production. True, the law OF
supply and demand keeps The market value OF coin
rs does that OF all other things constantly uctuat
fng. we all know that when supply OF any given
article exceeds the demand for IL Its market value
falls, and that whenever the demand exceeds the sup
ply IL rises. Coin is no exception to this rule. But
metals, ike the producers OF ali other commodities
ply their vocation for the sake OF gain and that they
win abandon or slacken the production whenever
their Efforts prove unremunerattve. Consequently,
whenever the market value OF coin becomes through
over supply, depressed below the point Of average
remuneration portion Of Its producers desert the
and enter Into other pursuits This, OF coure,
lessons the supply OF com, and thereby enhances its
market value or purchasing power So, on the
other hand, whenever q deficient supply OF coin SO
enhances its purchasing power to bring the profits
4
tion through which the demand and supply are
again equazed.
OF com Is measured by ITS cost. In other words 1t
exchanges, on an average, for other things Of an
equal cost In the light or this fact we may readily
perceive the principle or natural law that governs
the volume OF a circulating medium consisting OF
les than is sufcient TO effect the exchange Of ali
other property in search Of q market the prin-
cple Of true equivalents or equal cost Of produc-
taon This Is the point TO which Its volume ever
tends. When temporarily driven from II by varia-
lions In the supply and demand principles which
back.
circulating medium consisting Of coin and con.
verible paper is subject to the same law and is Of
precisely the same volume as II IL consisted OF coin
. one. am aware that this assertion is not in har-
mony with the general belief but It Is true neverhe-
less. This IL obvious from the TACT that In mixed
currency Of coin and convertible paper the pur-
chasing power, or value In exchange, OF the coined
dollar greater than that Of the paper dollar The
TWO exchange for one another and eacn will purchase
equal quantity OF other articles Now, II the coin
portion OF mixed currency did not as II does In
metallic currency, exchange for other things In pro-
port 70 their relative cost OF production IL Is ev
dent that Il could not be retained in Joint circulation
with paper at all. IL would yield no profit to its
producers, and hence II VI uld soon be Withdrawn
RON circulation where its value Is deprecated by
It's connection with paper money, to be used where
Its value is equal 70 It's cost, either In purely
fnilic currency or In the manufacturing arts Its
withdrawal would, OF course divest the currency
Of which II formed part Of the attribute OF con
vcriibllty. In word the issue OF convertible
paper merely changes the form OF money without
afyp ia N Ia urchn cin
drives from the channels Of circulation 10 bank
vaults and the arts an amount Of coin equal 10 Its
own nominal value. The paper money meanwhile
cnlaiing medium. o.. +. - :.
The t6fftcines OF these views Is amply verified by
our bailkin experience Whenever our banks have
extended their issues above the ordinary level there
has quickly ensled an enhancement Of prices In our
hOnle markets, which Of course yifed enlarged
imports ana checked exports. and thus promptly de-
veloIed an adverse balance In our foreign uae. The
shipment OF coin 20 pay such balaNcG has never