The New Orleans bulletin. [volume] (New Orleans [La.]) 1874-1876, 1875-12-19
TIE PROBLEM OF DE2RECTATT0S.
To the Editor of the Bulletin

| TO the Editor of the Bulletin:
Ia an arncle in your paper OF this evening, on
resumption, you say: What causes the deprc
| ciatiop of paper 10 not go much redupd&ne cur
rency is It's I1conYertlble character and the I'M
| certainty that It viii ever be redeemed.'
Ii Is not my purpose to enter upon discussion
| OF tins question Of the currency which has been
approached III such spirit Of pGrtisanship and
under the influence OF such powerful class in
terests 10 render its intelligent solution almost
| Impossible. think, however, that it IS impor-
tant that the people should have correct ideas of
| It's fundamental propositions, and it is for this
reason that [ desire 10 point out that in the
above statement you have precisely and com
plately reversed the truth You greatly err in
taking the organs of the Wall street maggates for
your guides, and permitting your intelligence to
be stted by their arrogant claim of exclusive
knowledge on the subject. The fact is, that these
are questions which require different order OF
intelligence from that of the mere money changer
and stock Spectator.
David Ricardo WAS d London banker whose
hllHsOphlc mind rose above the mere details of
his business to clear comprehension Of its theo-
retlcal principles, which his genius did much to
develop and illustrate. We presume that his
opinion Is quite as valuable as those OF Cornelius
Vanderbilt, Jsy Goul1, or that Christian 1nancier
Hugh McCutoch, who is shoJted at the dsh0nor
brought upon his country by the grecnback,
while he sees nothing disTepGtabla in Illegally
and dishonesty abatractiDs money from the pub
lie treasury TO sustain his OWL rotten and totter-
ing credit.
IN his Political Economy CHI II, speaking
OF paper money, Mr. Ricardo says Though il
has 10 intrinsic value, yet, by limiting its
quantity, its value III exchange is as great as
an equat denomination of COIN
ION the same pTinciple, too, namely by imi-
tatOn Of lis qUsntity, debased coin would circu.
late ct the value it should bear, 1T were OF the
legal weight AID fineness, and not at the value OF
the quantity Of metal which it actually
contained I'm ha ~ 4to Pr /
coinage we fad, accordingly. that TIE
Currency was never deprecated in the
same proportion that it Was debased; the reason
of which was that it nover was increased in guam
f nig IN vI proportion to s' diminished in
principles it will DO seen that it is not
necessary that paper money should be payable in
specie TO secure Its value; 1t Is only necessary
that Its quantity should be regulated according
to the value Of the metal which IS declared To be
the standard" < "a currency il in
its most perfect state when it consists wholly OF
paper money, but of paper money OF an equal
value with the gold which il PROCESSES to repre-
sent
J. Stuart Mil, a strong advocate Of converti-
bility, Gays: That even in the case Of a metallic
currol cy, the immediate agency in determining
Its value Is 1ts quantity : " The quantity
OF paper currency not convertible iuto tina
metals al the option Of the holder can be srbi-
trariy fixed; especially if the i-suer is the SOW
erei3n power OF the StAte. The value, therefore, |
Of such currency is entirely arbitrary" Polti-
cal Economy, Blk. 8, Oh. 13, /.
j. L. McCu!lJch SAYS: " Thus it appears that |
whatever may be the material OF the money Of
any country, whether it consist Of gold, silver,
copper, iron, leather salt cowries or paper, and
however destitute it may be of al Intrinsic value,
1t Is yet possible, by sufficiently limiting it's |
quantity to raise its value in exchange to any
conceivable extent" Essays, p. 90
Ar. Calhoun Works, vol. 3, p. 306) says: 81
now under axe to sflirm, positively and without
me least fear that can be answered-8hat here
tofore haze but suggestal-that paper issued |
by government with the simple promise to re- |
celve 1t in all it's dues, leaving its creditors to
take it or gold and silver, at their option would
TO the extent that it would circulate form per-
feet paper circulation which could not be abu ed |
by The governments; thai It would be as steady |
and uniform III value as the metals themselves: |
AND that if, by possibility, it should depracate |
the Loss would fall, not On the people, but on the
government Itself; for the only effect OF depreci-
stlon would be virtually to reduce the taxes to |
prevent which the interest OF the government
Would be sufficient guarantee"
1hus Il Appeals that the true cause OF the de- |
preclAtlOn of currency is its redundancy, and |
not the want OF intrinsic value, and it is not until
mat redundancy has attained conside able dimen-
5ions that depreciation takes place. those who
Ire familiar with the elementary ideas OF po,iti-
5al economy can see this subec;, whicb can hardly
De compressed within the cOumu OF a newspaper |
ully elucidatcd IN Mr.. Ricardo's chapter on |
currency and banks, from which I have quoted.
Those who do not possess that famliarity will
nave TO take 1t upon trust, contenting themselves
With Its vefltcation by reference to historical
acts. Mr.. Ricardo as the close of his Chapter,
efers to one instance Of the operation of his |
shall speak here Of another.
In 1877 the Bank of England, under an order
If council, stopped payment, and did not resume
Until 1921. In al that time the currency of Eng
ar ID was an incOnvertible one, and according 10
our principle, it should, at once, have depYec-
ted. What happened? The issue beng at first
'ut slightly increased, bank notes, until 1901
we're at par with gold. In that year and the fol,
owing they sank to and per cent discount
tut by moderate contraction were brought
gain to "a, at which they stood from 1903 to
$40, when the bank, and to still greater degree
he country banks, commenced pouring ont
'aper, which quickly sank in value, until In 1914
reached 25 per cent discount.
The failure Of about two hundred and fifty of
he country banks in that year, and the conse- {
uent withdrawal Of their paper from circulation,
eYersed this action, and it rapidly rose until in
$40, tie discount was iess than two Ter cent |
nd wnen the bank resumed it was nearly I
n level with gold. Now 1t is evident that these
acts are perfectly inexpcable upon the theory
,hlch, you present, while upon that Of Nj.
'lcardo they ale easi understood. II is strange
hat this failacy should be entertained and in
sted upon IN face OF the fact that at this mo-
lent France has an nconvertbe currency which |
Tiers scarcely at all from the par Of gold
December -, 1875. p