The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1870-08-27
IF the stampede occurred, all the banks

of the stampede occurred, all the banks
Instantly ceased to lend money AMI sent
home for redemption the otes Of other
banks; thus alarming all note holders,
who knowing there was but one dollar
to pay four, run on the banks just as the
banks were running on each other.
Depositors seeing the crash coming,
called for payment Of their deposits in
gold, and thus the 81 ecie liability OF
the banks became TEL, twenty and
sometimes thirty times greater than
their specie reserve. OF course sus-
pension followed, and depreciation Of
issues from ten to ninety per cent de-
pending on Wall Streets notions of
the degree of each banks insolvency
the greater part Of the loss on this ac-
count falling Of course on the West and
South. Hence creditors were compel
ed to pay two, three or four dollars Of
the same currency for each one dollar
borrowed. In other words, the only
currency in use had shrunk in few
days to half or greater its former effec-
tive volume, and with il almost all prop
erty. Consequently the debtor class,
which comprises nearly all the business
men of community, were sacrificed
to pay debts incurred in the ordinary
course of solvent trade; and their
hard earned property was taken by the
creditor class at quarter to half its usu-
al value. While this went on all indus
tries languished for want Of capital,
and confidence, and because the en-
barrassed men Of enterprise had ceased
business and were struggling for
plank from their shipwrecked fortunes.
LabOrers lost employment and means
of subsistence; and all society was
grievously distressed except those who
controlled money and available credits.
The aggregate Of unnecessary and un-
deserved losses from these causes CON- .
bined would doubtless foo up IN two
years following such panic from Eve
hundred to a thousand millions Of dol
lars-from three to Eve times the whole
value of the currency, the alarm over
which inflicted the mischief.
Two or three years of prostration,
with scarcely any currency-two or
three more Of gradual revival of indus
Try and trade, with scanty but toler-
ably secured paper currency-two or
three more Of prosperity, with the bank
ing on the old basis Of one to four
then another tremendous crash. at is
a mysterious periodical fatality" says
one man. "a providential affection
for our SINS" says another. "Over
trading" says third. 'tOver produc-
lion," says fourth. you're all wrong
gentlemen, You don't understand f.
NANCE" says Wall Street; ''the cause is
imitation of the currency the results are
over production and overtrading; and
therefore the crash, and the necessity
Of producing and trading less until we
get back to a specie currency" That
il if the attainable volume Of specie is
We must not change he currency but re-
duce the business. BY the same rule,
when, IN the State of Franklin, now
tennessee, the volume of "OOonSkIn"
currency became inadequate 10 the
growing business Of the people immi-
grafton, production and trade should
have been checked, and made to keep
pace with the natural increase of the
'Coonskin" currency.
In speech made in Congress and
reported in the New York Tribune of
May 20, 1868, General Garfield, Chair
man Of the Currency Committee Of the
House, attributes All the panics 70 reck-
less expansion of the currency, follow
ed by ''orer trading" and says cat the
beginning of 1857 the paper currency
of the country reached its highest point
Of imitation. Up to that time there tO0s
nearly two hundred and fifteen mil
honsr Estimating the increase Of
population and business since 1857 at
forty per cent, an equal relative infia-
ton now would be 1901 100000. But
our present paper currency is $69l ,0OO,-
900, nearly two and athird times great
er, relatively, than the currency, TO the
undue quantity of which the conductors
Of our finances attribute the tornado Of
1857, and the terrible disasters which
followed in its wake. I'm the state
ment / leave out specie which was not
current then TO any large amount, and
is not current now at all.) Yet not one
business man in ten in this country
thinks we have a dollar too much cur
rency now and the House of Repre-
sentatives last session insisted obsti-
nately on General Garfeld's hill 10 in
crease the currency fifty millions, while
the Senate only asked to let 1t stay
where il is. As our currency, by gen
eral coa=ent, is not too large now; it's
volume was entirely too small in 1887 E;
and therefore iDfation and consequent
over trading" did not exist in 1857 or
cause the panic.
1t seems to me obvious that these
repeated attempts and disastrous fail
ures to make one dollar redeem four
were forced on Us by our imperative
need on the one hand Of larger and
more convenient currency than the coin,
and our stubborn superstition on the
other, that coin only could be real mo-
ney.
The war relieved us Of this monstrous
conglomerate system Of State Banks.
After the legal tender issue had been
determined on in 1865, the Government
apparently to conciliate the State Banks,
arranged the National Bank system
and thenceforth itself made or author
lied all the money Of the people. 1t
expanded the paper circulation from
less than two hundred and two mil
lions IN 1862 to nine hundred and
seventy-nine millions in ls64-5, and IN
1861, when the business of the coun-
try was highly prosperous and fully
adapted to this unusually large volume
# currency, and the suppression Of tbs
rebellion had increased the demand for
il by quarter or third, il reduced
the volume near three hundred millions