The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1874-08-15

Contraction.

Contraction.
eain we sre told by the representatives
OF the money power of the country 'na' u
order 70 bring about specie pa! ments . con-
,ran,;on Of the volume Of the currency " ne
.ossarx. The last issue Of the New LON
T,7bune. after giving to the world 'o''e :.
say on the SUBJECT, divided of INTO pt'p .,:r
,ions FIRST, second, and so on up ~ , ,.,,s
,aentb modes,ly expresses the hope 'ua' 80
article will, not be found too suops 'o' ~
atpestion,, OF its correspondents ihea"'.s
.h.r,h, - assert that whilst there co'''u NC
NO doubt as 10 The truih OF ''''
taught By the inexperienced you'"S W.
."ssy tho editorials for the Tribune, tnere
,,,ch, no 3 doubt as to whether the CORE
80 ,,orcsad could understand those
doctrines! ..
Alter ALL however, we make no particular
oh,ac,on 10 Sc me OF the teachings OF Inc sue
ccssor, Of MIR. GRfELtY, although they nave
tnrco, ten his instructions. A good currency
;saiwavs elastic II will almost always accom-
,nodo,e itself 10 the amount Of business
REQUIRED of it. A total volume OF currency
of five hundred millions OF dollars VIII 10
one year FIVE thou.a and millions OF dollars OF
bnsiness and the nextten Thousand millions,
or, If peed be, hundred thousand mi''iohS'
There is scarcely limit 10 the business 'na'
NAV &c done by that amount OF coca ana uh-
doubted currency. 1t calculates irce'y anu
MAY le used over and over again just as
often as may be necessary. But hecoh'rac-
ton theory fails to provide any safeguard
against panics. The amount OF money Cd
deposit in this country on any gwen Gay I'D
= time OF ordinary coLtidence IN the coln'
m,nity is ahout double rs much as there Is
in the country double as much as the "hoie
volume of The currency. If anybody wants
to know bow his can be, ne reply that IL IS
because SMITH deposits thousand dollars
today tomorrow it is paid out TO JONES on
acheek, and Jones deposits the same thousand
dollars: and so on with numoer OF other
deposilors. As long ss these deposltoFs
have confidence in the banks, things worK
smoothly enough, and there is plenty OF
currenc, in the country for all the purposes
tor which it is needed. The total amount is
not a very important matter. 1t may be
used twice in day if there is not enough
OF il. or thrice if need be, or say ten times,
and thus lis volume may be multiplied ten
fold, and bark notes and greenbacks appear
wherever they are needed. But let panic
come and PANIC is always possible
event in a community that has twice us
much money en- deposit as there is IN that
communicate uanic come, and let the
depositors make a simultaneous call for
their deposits, and what is the inevitable re-
suit! Unavoidable and irremediable ruin
to 10th the banks and the depositors. lie.
cause the currency Is withdrawn and sunk
hoardeG-put away for safe keeping ut home,
and there Is none left except the balance that
the banks always manage to keep by always
suspendipg payment when they lind that
the depo,itors will draw cut their money as
long as the banks will pay it out. The re.
suit is contraction that even the Tribune
wouldn't like to try to digest. And this
broken merchants, Impoverished families, and
everything that goes to make up commu-
nifty bankrupt in confidence and businesSaDd
currency. Ii matters not Que whit whether
the currency be paper or gold, the same re-
suits always follow run upon the banks.
Notes are protested, the best Of houses fail,
securities shrink in value, property canro!
comuaud morcy, and nothing but utter
luin stareS the whole business community
in the face. Only tie farmer saves the coun-
try from that absolute ruin.
No such re. ults % these follow expansion.
Prices arc sometimes lille tllted; but II
The currtrcy has a good basis such result
need not follow. EANprEBlLr's note is worth
its face even if it be for 4 million Of dollars.
WnlTELAw EEIL'S note for the sane sum
would be worth but q few cents in the dol.
lar. So OF Uncle Sans paper; it will be
worth its Gace in gold if Uncle sam is cor.
siGercd able and arilling to pay it all. He
has out rear two thousand millions Of dol
lars of paper that is worth more than its face
in gold. He has out also few hundred mil.
lions of PAPER (greenhackS) not worth its
face in gold. Why? Not because the
amount is large. The larger amount is above
rar in gold. There is some other reason.
But whatever the reason may be, it is not
because its volume is too large. Let the
Government redeem the greenbacks. IN
gold or pay interest upon them at the
rate of five per cent. per annum and they
would jump up to par at once. The bonos'
If smali enough, could be used as currency
without causing gold TO rise any hiSner.
Many itcts GO to show that the theory OF
contraction as a remedy for ON irredeemaoie
currency is an erroneous one. The amount
of currency now out is about sSO0,0o o,Ooo.
Upon the theory of the contractionists, re-
duction of the amount to 500, 100000 would
result in return TO specie payments. And
vet we hold that there is nothing more GER
tain than that if such contraction were
made gold would 60 up to 115, and perhaps
higher, and dire confusion would reign
throughout the country. The panic of 1873
was nothing but forced contraction of the
volume of the currency. The boarding o.
currency after its withdrawal from the banks
caused such contraction as we do not de
sire again to see.
But is there any method Of preventing
panics: None that We know Of, we confess
Mr.. GREELEY's interconyertibility scheme, il
is thought by some. would prevent suct
nanics as that of 1919 which would never