The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1874-01-02
PAPER CURRENCY.

Successor to Plat Boyd.
PAPER CURRENCY.
The Three Nations Suffering from an
Ineonverttble Paper Medium.
From the Pail Mall Gazette.l
Three OF the great nations Of the world are at
the present moment simultaneously engaged in
the consideration OF one OF the most difficult ques-
tiOns which can come before any statesman.
France, Italy and the United States all labor under
the disadvantages which are inseparable from an
inconvertible paper currency. France, during the
pressure OF ner great war, was compelled to apply
to the bank for assistance; and the bank agreed
TO advance her sum OF ESQ, OOO O0O at the almost
nominal rate of one per cent, on condition that
the loan was repaid in annual instruments Of
&c, 900, and that the lenders were allowed
to issue notes OF value equal to the unpaid
portion OF the loan. The original debt to
the bank has been now reduced to
f44.000,0OO, and the inconvertible paper cur
rency has, therefore, been brought down
to the same amount. Italian fnanciers, in conse-
quence OF the extreme embarrassments under
which Italy has labOred, have Hooded their country
with an inconvertble paper currency OF 500 900
lire or f32 OOO, O0O made through the seven State
banks; while other banks have been allowed to
issue, on their own accounts, almost as large
quantity OF notes. Finally the United States ever
since her great civil war, has Deen suffering IRON
the consequences Of her deprecated paper cur.
rency. BY the law of 1854 Its total amount was
confined to $4OO,OO0,OOO, or rather less than
f1O0, OOO coo; and 1t decided that $44 OOO O0O
or II per cent of the whole sum- should be retained
unissued as q reserve Each of these three great
countries Is aborng, then, though to q very differ
ent extent, under the same disease The resources
Epnn oy,1f hoa tcee
convertible currency is speaking comparatively.
limited, that gOd at Paris has never stood
ton o e botn in the stetes
and still more in Italy, is very marked, and
imposes severe tax directly on the trading
classes, and indirectly on the entire population OF
the two countries. Such being the state OF things
in each OF these three countries 1t is worth while
contrasting the manner in which Che fnanciers OF
each are dealing with it. NJ. Magne in France,
Signor Minghetti in Italy and Mr.. Richardson in
America nave each OF them. in all probability,
1874 Is estimated to exceed the revenue by be.
tween f5,oO00oo and 60 00O, 900. Signor Minghetti
same sum13O 00O 900 lire. or f5, 600, while Mr.
Richardson plainly intmates that increased taxa
ton can alone I e prevent deficit in the United
clrcumstI nce that the American debt exceeds
now by more than 81, 100000 the amount at which
the end Of June. Though, then. the deficit in
the United states Is comparatively trintng,
tlon to the arising from ad an
incOnvertible currency, are also laboring under
the common disadvantage OF an insufficient reve-
lar greater than those OF either M. Magne or Mr..
Richardson The interest of the Italian debt Is in.
year. The increase is far more rapid than the
expansion of the ordinary revenue. Italian de-
fcits, in consequence, become larger and larger,
and Italian dnanciers, bewlldered with the diff
cultles OF the task before them, make effort to
contract the enormous issues OF paper money
which are running their country Signor Sella,
before his retirement. CONTEMPLATED addition n
the authorized issues OF currency; SgnOr Min
ghetti who mas replaced him, Is carrying the same
policy still further. In lieu OF an authorized issue
OF 500 900 lire Italy Is to have paper currency
authorized by the state Of 1,UOO, 900 600 re Is it
suit in the further depreciation OF the State notes.
and that 1t must impose an additional burden on
France is witnessing the exact reverse Of the
policy which we depOre in Italy, M. Magne could
easily establish an equilibrium between the debit
and credit side OF the account for 1874, II he
willing to revise the terms on which the loan of
1880 900, Oo0f. was advanced by the bank. The
deaclt in the o budget may 9s placed at ooo
ment OF the bank, 1t Is obvious that new
bargain between the bank and the State might
eddy creditable, both to M. Magne and to France,
that her Finance Minister should have, in the first
is by means clear that 1t would not, in the long
run, be wiser to reconsider the matter. An
inconvertible paper currency is q great
too rapid contraction would not involve grave
consequences. II country is compelled at any
time to suspend cash payments 1t will probably be
Their resumption, II the currency is deprecated,
involves, II must be remembered, an alteration In
the value or ali commodities and a consequent loss
to every debtor and gain to every creditor. 1t
can hardly be desirable that changes OF this kind
should be made suddenly-and France Is endeavOr-
ing to resume cash payments by essentially sudden
steps. No one would imagine that her financial
position would be weakened If she spread the
repayment to the bank or the outstanding
100. 0000O0f. over eleven years instead OF con-
centrstIng 1t In five years and half. Such a
policy would have the concurrent advantage of
materially reducing the deficit, against which N.
Magnes Skill seems almost poweress to provide.
Italy, then, Is increasing her ultimate difficulties
by issuing more and more paper; France Is adding
to her present embarrassment by apparently re-
ducing her currency issues too rapidly The United
State nor the improvidence OF the other. BY the
law OF 1854 the paper currency Is limited to
s4Oo,OoO,O00 OF which s44,00000O Is intended as
reserve. During the recent panic the Treasury
found Ii necessary 10 Issue the latter, and both
the President and the Secretary OF the Treasury
now insist that the reserve should be ressued,
but tnat the circulation should be confined to
the usual limit OF $356.000,0O0. 1t Is, no doubt,
preferable Tor the inconvertible currency OF the
United states In circulation to be limited to
$685. 900 than TO be swelled to S40O OO0 and
under existing circumstances, the government OF
do more. But 1t Is a mere deception 10 Imagine
that any limit OF this kind will ever pave the way
TO the resumption OF specie payments. so long as
huge mass OF paper Is noating through the
country, interchangeable, except at q heavy dig
count, Tor either gold or silver, neither the ex-
pansion Of trade nor the INCREASE OF population
Will facilitate the resumption OF cash payments If
American statesmen desire to re-establish specie
minds to contract their large issues OF in
convertible paper. 1t Is not necessary that they
should take the rapid steps on which France Is ap-
parently intent with this object, any more than 1t
Is desirable for tGem to initiate the possibly newt
able improvdence OF Italian fnanciers. But the
finances OF the United States will hardly rest on u
sound footing until American statesmen recognize
the necessity ior dazzling with an lnconvertlble