Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1875-02-16

David A. wells Advocates q startling
Theory OF Resumption we Must
burn Our Way Down 10 q Gold
Basis.

I
recommends is for the Secretary Of the
Treasury to burn half a million of
greenbacks every week, making TWEEN
ty-six millions a year. According to
his estimate it will require something
less than four years to bring the cur
rency to par by this method, making a
gradual reduction of the premium
on gold at the rate Of about three
per cent. per annum. As the greater
part Of business engagements
through the agency Of banks
mature at periods considerably less
than four months, debtors could lose,
at NEST, but one per cent. on each
transaction, or half Of one per cent. on
an ordinary sixty-day note. This small
gain by bankers and capitalists would
tend to make them more liberal in
granting loans for the accommodation
of the business public, and would
therefore have compromising advan-
tage. There is at present a super
abundance Of money IN all our CONNER
cal centres which can be had on call
loans at an almost nominal rate Of in
terest, and yet it was never 90 difficult
to borrow money for a considerable
period. The reason is that capitalists
have no confidence In the future and
fear that a long loan might be paid
in currency so deprecated as to
eat up a great part of the inter-
est. But a gradual and certain
approach to specie payments, extend
ing over a period of four years, would
not only insure capitalists against loss
but would operate as a small bonus on
loans and bring all the money of the
country into active employment.
Money is Borrowed on call loans chiefly
for speculative purposes, whereas long
loans are wanted for the prosecution
of legitimate business and starting
productive enterprises. The gradual
contraction which Mr.. Wells advocates
would therefore have a strong tendency
to set the wheels Of legitimate business
again in motion, by re-estabishing
the confidence of capitalists and max.
ing it for their interest to extend lib
eral accommodations to the business
public.
The idea that steady contraction on
the gradual plan Mr.. Wells proposes
would operate disastrously is refuted
and exploded by abundant facts In the
recent financial history of the world.
France, between October, 1873, and
December, 1874, contracted its cur
rency by thousand million francs, or
two hundred million dollars of our
money, and yet the business of that
country has not perceptibly suffered
by want of pecunlary accommodation.
Mr.. Wells shows that the great cutlery
which caused Congress to arrest the
contraction policy pursued for several
months by Secretary McCulloch was
the result Of their imagination and WIS.,
ionary fears. 1t is a fact, now first
made known to the public by Mr.. Wells,
that there was no actual contraction of
the currency during that period, and
that it was all a mere matter of book
keeping entries IN the Treasury ledgers.
The fact that no commercial inconve-
nience was experienced from the causes
which changed the value of the curren-
cy between 1865 and 1873, bringing
down the price of gold from l33 to 10,
is an additional proof that the dangers
feared from contraction are chimerical.
Mr.. Wells handling of this branch of
the subject IS very mastery and cJn-
vincing. but we cannyt repeat his facts
and arguments in detail
The assumed oppression of the debt
or class by gradual contraction is re-
duced by Mr.. Wells to its proper d.
mansions. He proves most conclusive
" that the great bulk of the people do
not belong to the debtor class, and are
precluded by their condition from en-
teringit. Capitalists are too prudent
and wary to lend their money except TO
people of pecuniary responsibility,
whose possessions of property is a
guarantee Of repayment. The mass Of
the community are incapable of get
ting in debt beyond a very moderate
amount which the wages Of the week,
or the month, or the season, suffice
for paying. The thrifty portion of
people of small incomes-a very large
class-areseldomi IN debt at all, and they
form the most numerous body of cred
itoTs IN the country. The eleven hun
dred millions deposited N the savings
banks show now numerous and wide
spread is the class of creditors as CON-
pared with that of debtors. Those who
borrow this moneyof the savings banks
are comparatively few, and are men Of
property, who can give the ample secu-
rity required by these institutions.
Hundreds Of thousands Of other people
IN moderate circumstances, who pos
sess property OF make savings, invest
them IN railroad bonds or other Becuri-
ties, and belong also to the creditor
class who would gain by an apprecia.
ton Of the currency. The debtor class
is really very small as compared with
the whole body of the community, and
the majority of it consistsof merchants,
manufacturers, miners and forwarders,
who would gain more by the increased
facilities of borrowing consequent on a
steady and assured appreciation in the
value Of the currency and therevival Of
confidence and prosperity than they
would lose in the difference between the
value of the money they borrow and
that in which they would make pay
ment. 1t is very important that the
nublic be educated To correct views on