The New York herald., 1870-01-05
MO RrpUDIArION.

either.
The legal tender notes are promises OF the govern
They In the pockets OF the ab0rer and the far
banks part Of and security for the deposits OF
the people. which deposits constitute available capi
the federal Treasury. In the hour Of its need,
forced this lrredeemable paper on the people; u
matter OF simple duty now IN tne time OF ~ anana
the coin which was before IN use. The business
OF the country has adapted itself to the
and the people rely upon this legal tender paper
wnerewith 70 pay all ordinary debts; II Is the sub
IN which all thar vast aggregate or Indebtedness
known a. bank deposits is payable. ON TINS paper,
ness now rests aud upon It's soundness IS dependent
tho substantial prosperity OF tho people 1t IS bad
ialth 70 the people % lessen It's auaniy or to take
THR CONTRACTION THEORY.
When com occupied the same place 10 our money
system which is now held Dy the legal tender notes
any serious withdrawal from whatever cause, or
the gold then In use from the genera! circulation In
yariaoy produced financial trouble. The With,
drawai OF legal tender notes now must be followed
by like trouble. The theory OF those who
tender notes shall have been reduced to $3.50 600
or some other theoretical sum the government Will
Pc able TO make tn snls reduced quantity reaesmasis
will be possible to put the lesser quantity at par by
making 1t redcemable, It is obvious that. wltn 2
redeemable ana put ut par; and this effort u due
from the government TO the people.
The federal governments ts bound to restore coin
to the place which it formerly occupied in tho
business Of 'ns GSunty and from which
placed it. 1t should be ready to substitute
coin IN the general circulation before u 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.
form f Of ready Id = money. suca Withdrawn would
lessen everywhere the resources for paying deoIa;
make all debts less secure, diminish confidence and
Two KINDS q money Of UNEQUAL value ,nsa,dr win mot
gaHs con take the pao n
lation Of any portion OF the notes VIM which may 6s
withdrawn until the ,,s notes are nrst RENDERED n m
making them redeemabie In coin on demand.
And It must be borne. in mind that TINS
specie payments. The banks are not IN a state OF
suspension; they redeem their notes and pay their
that that % lawful / money were to-day equivalent
to coin they would find themselves and
all their 1ssr psy1 whSt saT
distress. IL is the government, and the government
only. which has suspended payment; the legal ten
der notes alone which are irredeemable. When the
federal Treasury Is ready to redeem It's legal tender
promises In gold. as fast as the public are likely 70
present them, specie payments are thereby re-
ther effort on the part OF any one and
now W be tne proper time in the
paper; for such contraction can do no mschlel. IL
wlil in tact be no contraction. The Treasury may
and the notes being at par, the coin paid out OF the
Treasury win enter into the general circulation in
place Of the notes redeemed; and no dlminutl0n OF
the stock OF lawful money IN use VIII he forced on
the people.
Ts s, T Is q ssps Sar ss s s ss sa
1t Is not redeemaole; It is, for that reason. depre
cIated. A less quantity would as certainly be de-
preciated, If that less quantity continued to be
irredeemable. Even single note, issued by the
government or by any other debtor without pro-
VISION made Tor Its payment. would become de-
preciated. The remedy which wisdom suggests Is TO
make the notes redeemabie without pauslng to dis
s S IN s ngn IN ooSnr BACK we 's see @
when our money was good IN quality no apprehen-
sons were felt tnat too much or i would be used
the gold the people chose to have coined
Political economists aud statesmen may
necessary and proper for the business OF country;
but this Is question beyond their wisdom. X the
Il good, the people Will regulate the quantity to pe
il is the special duty Of the federal
bic paper has brought us to our pres.
ent condition, 10 see 60 1t that there Is an ample
iSgs al s 3u sss ss
| both easy and permanent IT seems obvious that
this supply Of gold should be In the federal Treasury
which is responsible for the only irredeemabe
| paper now afoat. so that the coin may be ready,
wien the proper time comes, to fow promptly out
Of The Treasury into general circulation IN exchange
~ WY ' aovERNMENr CREDIT
The first great duty OF The government Is to make
its legal tender promises as good as gold. Having
thus established its credit 1t VIII nnd no difficulty in
| negotiating loans az lower interest," and IN man
aging its bonded debt. 1t cannot, any more than
| private deblor, hope for high credit white paying
| some debts and ignoring Others
1t Is a deuSiOD TO suppose that the payment Of
| few Ct our bonds before they are due materially
helps the pubic credit: the Treasury Is not bankrupt
as TO Its bonds; Il paving the Interest according
needs to be helped The Treasury Is bank
fanAnr fnr IN lsyao
| to pay promise when 1t is due Is bankruptcy. No
debtor improves his credit by anticipating the pay
while ne neglects to pay those which are due. Nor
does the payment OF the bonds before maturity
Tend materially to lessen the burdens nso Of 1 the
| bonds In any year there would result an
annual saving Of interest Of $soOoooo. II, on the
other hand, we could reduce the rate OF interest
| our loans by only one per cent we should thereby
effect at once saving Of over $40 600 year ior
payment OF the bonds before maturity can be made
only out vi surplus revenuethat Is to say by Keep
| ing up taxation to q point far beyond the actual
| We must not forget that financial laws are self
! created out OF the circumstances existing at the
| We shall be most likely 10 avoid trouble by seeking
the natural solution OF our present difficulty which
| power which issued the irredeemabe paper, under
which we now suffer, should get ready to redeem it,
6ovERNMENr GOLD SALES.
Spasmodc sales OF gold from the Treasury impart
| no additional worth TO the legal tender notes. Con-
| fidence ia ability to meet Obligations Is the only
source or solid credit as well for the Treasury for
other debtors. Increasing public confidence III The
growing ability OF the Treasury TO meet The notes In
coin would operate not merely to AFFECT from day to
day. as these sales do. the speculative price or gold
| but towards the recognition OF greater intrinsic
value IN the legal tender note, and so 10 make the
| possible range OF gold speculations narrower.
1t Is obvious that sales OF gold out OF the treasury
| cannot have the ehect OF bringing legal tender notes
1 actually and permanently nearer To the value OF
| gold: Tor it would absurd TO maintain that the
Treasury. any more than any other debtor. can, by
| parting with coin made It's promises to pay com
| more valuable The Treasury sales OF gold have
simply the effect which Is always produced by throw.
ing upon any market supply OF al article Tor which
| there IL, In that market. a limited demand All
| DEBTS, with rare exceptions being now payable in
legal tender notes. the need OF gold for use In busl
| ness Is not general and therefore the demand for 1t
| Is confined to few, and il very limited one. In q
market SO situated very temporary and small over
supply may depress 1t much below Its true and cor
| rect value rs compared with legal tender notes,
which depends OBVIOUSLY the prospect OF the notes
| being paid In COIN Derangement Of business Is az
certain follow the artificial depression OF gold
| below this true value as It's elevation above 1t.
Such depression cannot be relied upon as lasting;
vN4ApA