The New York herald., 1870-01-05

| either.
The legal tender notes are promises Of the govern
ment to pay money-tnat u, gold coin-0n demand.
They are In the pockets Of the lab0rer and the FAR
mer, IN the ts OF tradesmen, In the vaults OF the
the peODle which deposits constitute available cap
tai essential to daily business.
The federal Treasury, In the hour OF ttS need,
forced this irredeemable paper the people; Is
matter OF simple duty now, In the time OF ~ abund'
can 70 before in
OF the country has adapted Itself sn onax TO sns
and the people rely upon this legal tender paper
whcrewith TO pay all ordinary debts; 1t IS the sub.
stance too, In which bank notes are redeemed. and
known as bank deposits Is payable. On this paper
therefore, the whole structure OF our internal busi
ness now rests aud It's soundness IS dependent
tho substantial prosperity OF the people. 1t is bad
falth 10 the people to lessen Its quantity or to take
from It Its legal tender quality until It Is paid
THs CONTRACTION THEORY.
When com occupied the same place IN our monev
system which Is now held Dy the legal tender notes
the gold then IN use from the general circulation In
variaby produced financial trouble. The with.
BY IKE trouble. the theory OF those who
advocate contraction Is that 80 soon as the legal
or some other theoretical SUN the government Will
be able to make this reduced quantity redeemable
~ com and 80 put the notes as par with gold II 4
making 1t redecmable, 1t IS obvious that with
little more effort the present quantity can be made
redsemao,e ana pus a. % par; % snd sh' eo' due
COIN AND PAPER MONEY.
The federal government is bound to restore coin
to the place which is formerly occupied in tho
business OF she country. ana from which
ns Should Ss own esag o
coin in the general circulation before II undertakes
TO withdraw legal tender notes; otherwise the with
drawa OF the paper amounts to an absolute destruc
ton OF SO much Of our stock Of lawful money, and.
practically OF SO much OF Lhe peoples capital IN tue
lessen everywhere the resources for paying deora
make all debts secure, diminish confidence and
Two kinds OF money Of unequal value will not
circulate ogether The government. therefore,
make coin take d ths sn n msg oc i.
withdrawn until the notes are nrst rendered
equivalent 70 coin; This can ~ only DO done dom.ny ~
And It must be borne in mind that this
Is all that necessary to done to restore general
suspension they redeem their notes and pay their
other debts in the lawful money OF the country; u
that e oa nwu they Would nd sna
all their customers paving specie without
any effort on their part and without any
distress. IL Is the government, ana the government
only, which has suspended payment; the legal ten
der notes alone which are irredeemable. When The
promises In gold. as fast as the public likely TO
present them, specie payments are thereby re-
%ed cSrt M over tae sne ps any one nd
without Inconvenience 10 the people. Then, and
not now. VIII be rhe proper time for taking IN the
paper; tor Buch contraction can do no MISCHIEF. IL
will in tact be no contraction The Treasury may
then cancel every note soon as Is pad for gold
Treasury win enter into the general circulation in
place Of the notes redeemed; and no dminutiOn OF
the stock OF lawful money in use Will be forced on
The .ssseptlal sv'l Of our present lawful money is
to be found not In It's Quantity but IN the fact that
1t Is not redeemaDle; 1t is, for that reason depre
clated. less quantity would as certainly be de-
preciated, If that less quantity continued TO be
Hredeenab.e. Even single note, issued by the
governments or by any other debtor, without pro-
VISION made Tor Its payment. would become de-
, Tas mcS to @ 20
cuss the question Of how much money the people
ought TO have in use. In looking back we see that
e q would be
The government passed through its mint al
i%s PUtlcai cS ,s econo@sts a and statesmen may
speculate, as they do. as to how much money IS
@ and 1e isee 81 G
government VIII lake care that the money 1t issues
Is good, the people will regulate the quantity to be
it is the special duty Of the federal
Treasury, the issue Of whose irredeema.
ent condltion, 10 see TO 1t that there Is an ample
iGt transition from onf present currency to GOLD
this supply OF gold should be In the federal Treasury,
which is responsible for the only lrredeema6le
| when the proper time comes, to flow promptly out
OF the Treasury into general circulation IN exchange
~ 'i' A'''' covEHNMEsr CREDIT.
The first great duty OF the government Is to make
It's legal tender promises as good as gold Having
negotiating loans at lower interest, and in man
aging it's bonded debt. It cannot, any more than
private debtor, hope for high credit white paying
1t is a deusloD 70 suppose that the payment Of
few Ct our bonds before they are due materially
helps the public credit: the Treasury Is not bankrupt
10 its ponds; 1t Is paying the Interest according
70 contract ana the principal is not yet due.
needs meet to III be G helped ped. The Treasury US Is bank.
rupt on It's legal tender notes; for failure
promise Wv wea Is "a que Ky NO
ment OF some Of his obligations which are not due
while ne neglects to pay those which are due Nor
does the payment OF the bonds before maturity
tend materially to lessen the burdens Of the
people. Were we to cancel $1oo, 600 OF
annual saving OF interest of So 1000 II, on the
other hand, could reduce the rate OF interest on
our loans by only one per cent we S should thereby
| the whole time the debt may run. Moreover, this
payment of the bonds before maturity can be made
only out vi surplus revenuethat Is to say by keep
| ing up taxation to- point far beyond the actual
needs or the government
We must not forget that financial laws are self
created out OF the circumstances existing ut the
period. They cannot be constrained by legislation.
We shall be most likely TO avoid trouble by seeking
the natural solution OF our present difficulty which
natural solution Is, as it seems TO me, that the
power which issued the lrredeemabe paper, under
which we now suffer, should get ready TO redeem it,
GOVERNMENT GOLD SALES.
~Spasmodic sales OF gold from the Treasury mpart
no adultlOnal worth TO the legal tenuer notes. Con-
fidence Ia ability TO meet obligations Is the only
OF solid credit well for the Treasury as FOR
other debtors Increasing public confidence III me
growing ability OF the Treasury to meet The notes In
coin would operate not merely to Affect from day TO
day, these sales do. the speculative price or gold
| but towards The recognition OF greater intrinsic
value In the legal tender note, ana SO 10 make the
! possible range OF gold spcculatiOns narrower
1t Is obvious that sales OF gold out Of the treasury
cannot have the efect OF bringing legal tender notes
| actually and permanently nearer TO the value OF
| gold; Tor it would De absurd to maintain that the
Treasury, any than any other DEBTOR, can, by
| parting with coin, made It's promises to pay coin
| more valuable. The Treasury sales OF gold have
simply the effect which is always produced by throw.
ing upon any market supply oil an article Tor which
| there ls, In that market. limited demand. All
! depts, with rare exceptions being now payable in
legal tender notes. the need Of gold for use IN bus
Is not general, and therefore the demand for 1t
Is confined to few, and is very limited one. In q
market SO situated very temporary and small over
supply may depress 1t much below It's true and cor
rect value compared with legal tender notes.
which depends OBVIOUSLY on the prospect OF the notes
being paid IN coin. Derangemcnt Of business Is az
certain follow the artificial depression OF gold
! below this true value as It's elevation above It,
Such depression cannot he relied upon as lasting
IN 1 guarantee h.