The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1873-12-06
Inflat;on-A Conclusive Answer.


InHat!on-A Conclusive Answer.
The Chicago Journal Of Commerce is
very intelligent journal. 1t is especially SO
on the subject Of the currency and finance.
The New York Nation, representative Of
the hard-money gradgrinds," has at
tempted a reply to the Journal Of Com
merce, but failed entirely. 1t, however,
provoked q reionder from that paper, which
is conclusive as to the bugbear Of imitation
and on the subject Of resumption. We copy
the text of the Ndhon's criticism of the pro-
posed interconvertibility Of greenbacks and
national bonds, which it calls ga scheme for
| imitation" 1t says:
What, then, are the objections 10 The proposed
plan? IT. as many sood judges think, we arc sui-
ierng from scarcity Of iezal-lcndcrs, what is the
harm Of issuing more of them, II we provide the
means of natural contraction when they are III c&-
cess? The answer 10 the question Is, 1t seems 10 US,
obvious and IS an answer which Is u be found on
every page financial! history. The PROPOSED Issue
would Dt lnlaliun pure and simple. and would. III
spite O; the convcr;iI,lity into bonds, have MI the
con equehccs ofniaton. The bonds would. IL fact
s.rve other purpose than that OF supplying liG
country banks with place OF ic deposit Tor their
uncmylOycd balances during the hot weather. ana
might thus, in some slight degree, restrain specific
ton In Wall street. II would do nothing what
ever 10 prevent or mitigate The fall ana winter
string neg. ami for the simple reason, waicll al! ~
latiuniss overlook, that all issues ol lrrc@enanic
,apcr ARE 1T once absorbed irrctrievt1iy by the
consciuen rise i'll prices ana that oncc lley nave
entered into prices there Is no means of extracting
Them hut forcihle cnntr ici II. suppose we nave
now S4OO.OOU,CUO greenbacks aloIl, aud We add
10 this S50 600 900 more. The new issue Al once
raises prices, and aims renders S1G0.OUu,OuU rs
necessary to The discharge of The ordinary pusl-
ms; OF the country is the S4O00OO,000 were
previously. In Other words. every man needs
II 80 10 produce the result Which lc had previously
produced wiki four dollars ana TINS process once
accom- lislcd. The notion that your Soo.uuu,oou
win ever 20 hack into bonds is y chin.ia, and
one Of very dangerous sort waich has brena hill-
GrCd times exposed anu whch, ntSerthei,s' So Is
cont iuualIy rel roucod rs the basis Of new schemes
Of Imitation. Five million or len million dollars
might possibly every summer for year or two &"
back to Washington in the dun SEASON, but ne
trade on the currency limits would he speedily is
great rs ever, and the demaud for further eAp1n-
sioI-ibat is for more gr,unbickS and more bonds
~ol!d he as loud in four or live years as now, and
would DC supported by the saine arguments Ths
llienomcna Of the financial sitnttiot would he the
samc is now; the fever Of speculation, excite 10y
the prospect of sndeinte, never ending imitation.
wouid Dc higher ihaa il mas ever bec aud IN very
short ime sc would have TO seek rcliei IN general
'wIpi OUT or in other words, national bank
fuIcE."
TIE reply Of the Journal Of Commerce to
tbi, is SO clear and concise that we copy it,
and from its Importance we give to it place
In the editorial department of our paper:
To the investigating and rejecting mind
il is evident that the Nation does not know
what It's talking about. a simple appeal to
everyday facts viii completely upset lis
prctcntiuu, theory. According To the finance
rcpcrt tor 1872 the amount of legaltenderS
outstanding Oh June 80. 1868, was $751;,
G46,5S9; on June 30, 1864, was STAT $780,,
2u3 on June 80, 1863, was S45l ,CG6, 421
and on June 80. 1866, was $500, 80 800. On
consulting the Chicago Board Of Trade re-
port for 1863 we lind that the price OF
e;;ring.wheat flour per barrel ranged on
July ], 1863, from $4.j0 to $50; Oh
July l, 1861, from S7.i5 to $40; on July
l. 1865, from 1925 to $3.50; and
on July /, 1866, from $3.50 TO Sll.
Here we see that the volume of le@a-tendcls
had increased in 1854 by S59,G53,Gl4. or
about 10! per cent, while tue price OF Hour
increased 724 to "A per cent; that legal
tenders in 1866 had been reduced by Sl8,.
263,7I6, or about 81 per cent, while
the price Of flour tell 325 TO 35 per
cent. and that legal.tendels in 1866 had
been further diminished by s30,2s6, 122, or
u per cent, willie the price OF -four adj |
vanced 10 to 81 per cent. Will anybody be
SO foolhardy rs to claim that these facts sup |
port the theory that expansion or contraction
of the currency affects The prices Of com.
modities in the exact ratio Of the increase or
decrease of the volume OF legal tenders Can
the Nation explain, on its hypothesis, why
it was that prices advanced 20 and 81 per
cent. in the teeth Of contraction of green
backs to the extent of a per cent? Or, can
that authority explain why it was that pur-
chaser of flour in 1864 had to pay s7.75 to
go per barrel, when, according to theory,
he should have been able to buy for 1913 to
$G.6S-- that is 10 say, l55 per cent. more than
in 1868?
II the reader will take the trouble to eX-
anime prices current Of staple ccmmoditles
during the series OF years ABOVE speclueo
he will lind an abundance OF discrepancies
between the Nations theory ana the reaii-
ties OF the case, such us we nave polnlea
out. Had we space for the purpose, we
might adduce column alter column Oh eN-
amnles to show cOnclusivey that there is
az utter want OF correspondence between
the prices of the markets and the Increase
or the decrease Of the volume OF the cur
rency--that this is the fact not only as re-
CARDS part of decade, but as regards Il
whole century Of consecutive time, US has
been abuudautly established by Dir. Tooke,
in his History Of Prices; by Mr.. ColWell,
in his Ways and Means Of Payment; by Mr..
Gibbons, in his Public Debt Of The United
States. No fact in the experience of none
tary influences is more securely established
than tia. "the quantity Of the currency is
not Il controlling regulator Of prices, these
being mainly determined by facts and cir
ruulstauccs peculiar 10 the various commo-
ditics whose prices arc affected; and that
these circumstances do frequently operate
with such force as to reduce prices i'll the
face Of IN expanding currency, and to all
vance prices when the currency is diminish
Ing" In view of this fact, ii is somewhat
amusing to fiud the Nation giving vent to
such utcrauces Us these: "What we are
say ing here IS not, we beg our readers to re.
member, any theory OF our own. Ii Is an
inference from the experience Of many ages
and many nations. II Is Grmly inbedded in
financial science, ind we most earnestly