Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1875-04-24
THE CTRRENC !.

rency. There appears now to be no lon
ger any doubt about the matter. The
practical working of the law has settled
the question, proving that it contracts the
currency, as the most of those who favor
steps to return to specie payment argued
il would. The New York Tribune Of the
2lst had an editorial in which the practi-
cal working of the act of June 20, 1874
and Jan. IA. 1s75is discussed. In that ar
ticle the Tribune says:
According to the best estimate we can make
the Treasurer holds six million dollars more in le-
gal tender notes. deposited for the purpose of re-
firing bank circulation, than he held six months
ago. There has been direct contraction of legal
tenders to the amount Of eighty per cent of the
new bank circulation issued, being nearly three
million dollars up to the III Of this month Final
y, there are two and one.half million dollars less
Of bank notes outstanding than there were at the
beginning Of November. The aggregate of these
amounts is eleven and one-half million dollars
constituting an absolute, unqualified contraction
of the paper money to that extent. In regard to
the first mentioned of six million dollars, not
dollar of it can be put in circulation until re-
leased by the redemption and destruction OF q
bank note, except in one contingency. 1t may be
that the Solvent National banks which have sur
rendered their circulation and deposited green
backs with which to redeem it, may redeposit
bonds, withdraw the grecnbacks, and resume their
circulation. We are not aware that anything of
this kind has yet been done, but 1t may be done
under the laws now in force. Nearly twenty mil
lion dollars have, up to this date, been deposited
Cor the withdrawal Of bank circulation, and there
appears to be no abatement of the current in thai
direction"
As to the permanence ofconlraction the
Tribune declares it has not reached po-
sitive conclusion. but the facts and reason
ing which it presents are favorable to the
idea that the contraction will continue
providing the present laws are not dis
turbed by the next Congress. The effect
upon gold and bonds is stated as follows
by the Tribune:
With the volume of the paper currency dimn-
ishing the tendency Of the gold premium is neces-
sar1y dewnwards, and there is consequently a
temptation held out to banks to withdraw bonds
and sell them at from fifteen to twenty per cent
premium, rather than hold them subject to the
risk Of specie payments and redemption at par in q
currency equal in value to coin. Such currency
Is promised US on or before Jan. l, 1879, and if
we get it in accordance with the pledge, it will
probably be within the power of the Government
to borrow at four or four and onehaf per cent, in
- a. g., I'D IL ~ ..aJ
States would be called in and paid off, the means
of efecting the conversion being obtained by
loan at lower rate of interest. Except the cur
rency six per cents all the outstanding bonds
subject to be called in for redemption in 1881.
That the natural tendency Of the rate of interest,
following the rate of profit, is now strongly down
ward, is shown by many indications, and the ulti-
mate success Of the Syndicate in selling the re-
mainder Of the authorized issue of the five per
before July they will find the market for bonds
good as they could wish for, and long before 1879
there ought not to be = six per cent fve-twcnty
bopd drawing interest"
The Tribune of the 22nd contains a COM
munication from John Thompson. which
cuOWS tuC SOutt uStiOi W w iiiOiC lubH tuN
editor Of that paper represents it. That
communication is as follows:
"Ia your article on the State of the Currency
Of this morning, was highly pleased to see that
you are posting up the public in regard to the con-
traction now going on. have only one error to
You say: 1T may be that the solvent National
a L. i a.
and deposited greenbscks with which to redeem
It, may redeposit bonds, withdraw the greenbacks,
and resume their circulation. This is incorrect.
Banks that have surrendered their currency by de-
posting United States notes cannot reclaim the
United States notes. They can only regain their
former position by redepOsiting bonds and taking
out National currency, and against that reissue Of
National currency the so per cent Of legal tenders
must be withdrawn, until the outstanding green
backs fall to $3OO,OOOO 900. This lays the founda-
tion for more active and positive contraction than
would take place under the construction Of the
law which you give. Banks that have deposited
legal tenders and withdrawn their bonds can re-
sumo their position only by taking out new cur
rency.
To place the question simply before the public
hand you table Of the positive contraction that
has taken place since the passage Of recent acts of
Congress, made up on the LIST of April, as follows
April l..
National bank notes contracted by d.
posting greenbacks Sl7,296,O37
Less new National bank circulation is
sued up to April 1879 3,556,GoO
Ltt Sl3,739437
Add greenbacks retired, viz. 10 per
cent on 81, $50, 900 new National bank
ist 2,s45, 2s0
Absolute contraction from June ~,
1874, to April !, 1878 Sl6,5S4,7l7
Since the ist Of April there has been an active
continuance of the same movement, and at this