New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1870-01-26

When, on the contrary, the currency Is td
money rs not diverted from its legitimate channels ana
prsne that while an expanded currency in process OF
recession that the interest rate should pe "a
creased for men are compelled 10 meet their indebted
ness at sacrifice, and pressure is created IN our
own there is another important eemen, 10 DC con
sidered The Government paying high rate OF inter-
upon its loans. and individual loans are largely
regulated by IT. From these particular faets ana general
considerations, IL Will be apparent that the prevailing
rate interest evidence whatever OF the made
quacy OF our circulation.
HOW TO MAKE PAPER AND GOLD EQUIVALENT
shall make attempt. as have already stated. to
determine the exact amount OF currency required by the
country Once started upon the right basis this prob
lem will solve itself 1t is important, then to ascertain
II can. how can make our paper currency ana
gold equivalent how the necessary pro.
portion between the amount OF gold we can command
and the amount OF currency 1t is to make redeemabe
and shall hold the gold which essential TO the
maintenance of the specie basis The bill under con.
sideraon does not retard In material respect ana
result The three per cents are indeed equivalent to so
much currency; but It will be in practice that while
another the $5 900 of will be found far more
difficult rid OF than the same amount OF certificates
There difficulty In the currency question save that
which grows out Of appreciation with the consequent
decline OF prices and increase OF nominal nuepteuess
How does the community, let inquire feel an Increase
or decrease currenoyl Simply In the depreciation
appreciation Of values simply IN the rise or the de
cline Of prices and the consequences Moving IRON the
the other Neither contraction nor initiation Is felt
in the mere operation itself 1t is felt only IN its effects
and IL those effects could be accomplished In any other
way the influences and results would be precisely the
same During the past few years our gold ana goa
bonds have been steadily flowing abroad In the lasV
year alone over S 100000 specie and balloon ndepen
dent Of interest obligations, nave 1een ehp1roeui
Could the precious metals possess higher value else
significant lessons Of history upon this point
THE UNITED STATES BANK
In 1916 after the Bank OF the United States re,
chartered it rapidly and improvidently expanded It's
circulation. In single month its discounts increased
from three twenty millions The result of this man
agement that prices speculation greatly IN
creased and in the language of the history which de
scrbes the event. gold left the country IN shpOad we
the world tending to eGuaize itself every where and
passing readily from nation to another IL flowed Dy
irresistible law To lands where Tor the te IL
higher value, and 1t kept flowing until ehange oi con
don arrested the tide The same TACT mas Dee fePeaeu
several times within the recollection Oh many Senators
who honor with their attention.
The history OF other nations furnishes illustrations no
less striking and suggestive During the prolonged sus
pension of specie payments in England at the beginning
OF the present century, the paper currency was asey
beTed 2O in 1893 had increased to nearly 1000 in 1914 The
Bank of England also, had greatly enlarged 1s own CIR
the volume of currency reduced TO nearly half the
amount of 1874 Corresponding this the premium on gold
IL rose the next year full two and half What de-
sire to show Mr. President is that even upon this small
of the pa currency the tendency Of gold was to How
away from the country and transaction OF that very
wear supplies q most forcbe Illustration. In 1877 the
bank though the suspension continued paid out several
millions Of gold upon voluntary obligations But tal5
onditon on the contrary it speedily departed from the
country and Robert Peel III referring TO the SUBJECT at
Of that treasure had attended With good the
b issue bad been acco@psSs By simultaneous reduction
the gold would dad Ia way to those places where there was
Il seems to me that these words strikingly app
cable to the situation in which our nation Is to-day.
IL can hardly fail TO be OF interest and value 10 trace
the history OF those times little further since they bear
an obvious analogy TO those III which we live AS be-
fore stated there larger reduction OF the crcula
tion in 1916 Thereafter depreciation exceedingly
in order TO overcome even this slight barrier without
atng disturbances the great currency measure OF 1919
mept between 1914 and 1922 100000 of currency
duced dollars had been Withdrawn from circulation
10 expected though the CONFUSION usually associated
with this event did not occur until 1872 and may be
traced 10 an entirely different The undue strD
gency and suffering OF 1922 were the result OF dspro
portionate and over rapid contraction -.,o ,.s M,
been clearly studied all notes under the OF
the law was passed a7 1920, nearly third Of the
entire circulation of the Bank OF England which was
then sa5i26 ZOO consisted OF under the denomina
ton of IS The proportion of small notes in the crcula
ton Of country banks was probably stil larger,
though have found no exact statement OF the case
Fhus is that in February 1921 the aggregate ercua
ton OF the Bank OF England had fallen ~ slSGG5S5O,
atons OF the country banks doubt In proportion
conclude, then, that the reduction, nnder the con
erred was far greater than required to overcome
small depreciation of four and ha per cent and IL
was contraction that chiefly caused the dis
tress OF But in that very year. when the dlfcuy
partly realized, the country banks were authorized
TO renew the OF under 1--WE pounds and at
once the currency began to expand BY 1925 It had in
creased foy o. per cent h same 9nVaryns
less rage OF bubble speculation large surplus even III
manufacturing England OF imported goods; rapid now
of gold abroad, all eliminating III the memorable dis
asters 1926 by the return to specie payments but
by violent departure from the principles upon when
resumption had been effected.
RELATION BETWEEN THE VOLUME AND VALUE OF CUR
REsCY.
The record which have thus hastily presented to your
attention suggests three points Of vital import
ance In the first place 10 illustrates the law Of relation
between the volume and the OF the currency and
equally the point more immediately involved In the dis
cusslon OF the mpossbility VI retaining gold upon re-
dundant currency have referred the fact that
balance Of trade always attends such con-
diton The latter point deserving special consdera
ton as having an important bearing in our
upon question OF resumption. The secretary OF the
Treasury Justly urges that favorable balance OF trade
state in which our exports exclusive OF public
es shall be equal to our imports Is essential to return
Tie good effect OF increasing the cotton crops to ,say
nothing OF Others obvious in this connection But In
view of the facts already stated the question recurs
whether after ALL resumption instead Of being the effect
Of favorable balance is not itself the necessary
duse that condition. Should II not be said that IL Ia
the arrangement Of our currency that deranges our
trade Is not the depreciation Of currency with
a poor market buy in but good market sell inf
Aud II this is true not the adjustment OF the
rency necessarily precede the adjustment OF trade II
seems II we wait for the former until we secure the
latter We shall wait an indefinite period Our excessive
low increase OF currency Permit me- Mr.. President,
aude the cOncden Increase In the two most notable
periods OF expansion In our history nothing Of the
bearings OF the tariff because does not touch this point
and i'm the amount OF currency given embrace both
the circulation and deposits, as Ia obviously just
Amloi currency. Aml0i Imports
4 1886 900 900 4l49B95 ia
9g4l0B
Observation-Disclosures. 276OOOO liOg3g2T
NEUTRALITY-SUSPICIOUS.. 28OOOOOcO Ii37I7414
$40
1886. 1tbJ5yN
AI..... 10
The affinity observable in this table IS broken as will
be SEEN only in single instance and that Is capable OF
special Iplanation. II TO examine the Stats
ties export for the periods should perceive