New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-02-17
THE STRUGGLE WITH INFLA7YON IN
THE SENATE

| THE SIKUUGLE WIN IhFL1 ffON IN
| THE SENATE
| The question now under discussion in the
| Senate over Mr.. Sherman's bill providing for
! the withdrawal of circulating notes from the
National banks of New-England, to be taken
up by the South and West, has nothing to
do, at least directly, with the amount of
paper money in circulation in various parts
of the Union. All calculations intended to
convey the impression that because Rhode
Island has certain number of banks issuing
certain extraordinary amount of notes,
therefore the number of dollars of paper
money per head circulating in Rhode Island is
greater than in the other States are meaningless
absurdties. The National bank note, once is
sued, circulates az freely throughout the whole
Union as the geenback. Both go where they
are needed. Practically one is as irredeem-
able as the other. One debases our money as
| much as the other. By issuing twenty-five
millions more in National bank notes we shall
depreciate our paper money just as much as
| though we had issued that amount of legal
! tender. Should our National bank notes be-
| come worthless, after the manner of the
French dSsignatS, Continental money, and
Confederate notes, the calamity would be
| greenbacks had deprecated to zero.
If all the banks of Rhode Island, Massachu-
sets, and Connecticut could be transferred
instantaneously to the State of Illinois, the
effect would be just the reverse of what some
honorable Senators suppose it would be. The
Illinois people, having now bank in every
village of thousand inhabitants, would use
less paper money than they did before. and
the New Englanders, being deprived of bank
ing facilities, would probably require twice as
much money as they have been accustomed to
use. The circulation of legal tender and bank
notes per head would therefore be diminished in
the West and increased at the East. The
truth of the matter is that what is wanted is
the bounty which the National banks derive
from the circulation of irredeemable paper,
which, once issued, spreads itself over the
whole country from Maine to Louisiana and
Minnesota. And this is the reason why what
IS called free banking, so long as the United
States refuse to redeem their legal-tender notes
in gold, is the most dangerous kind of inha-
ton.
In our opinion no system OF redeeming
National bank notes with greenbacks will act
as the slightest check on initiation through free
banking, 80 long as the greenbacks themselves
are irredeemable. The real check to the in
fation and consequent depreciation Of bank
note currency redeemable in gold is the
foreign exchanges. This check could not act
in the case supposed, since greenbacks will
never be wanted for expectation. The bub-
bles OF 1887 and 1857 were pricked when the
imitation had so deprecated our currency and
stimulated importation as to cause the ship
ment abroad of large proportion of our lin
tied supply of gold to pay for foreign goods
and settle foreign debts. But even this rough
check is wanting to the proposed unlimited
circulation of bank notes convertible into
nothing more valuable than greenbacks. If we
are to have initiation we much prefer 1t In the
shape of legal-tender notes, being convinced
that On increase of twenty-five or fifty millions