National Republican., 1875-07-21
THE COMPROMISE CURRENCY ACT.


proved June 20, 1874 has now been in operation
more than year. The obvious purpose of this
law was to add to the quantity of paper money
in circulation. II relieved the national banks
from the obligation to keep legal-tender re-
serve against their circulation, established the
five per cent. redemption fund in the Treasury
at Washington, increased the lawful legal-ten-
der circulation to 1885,, 200, 900, and allowed
the banks to withdraw their circulating notes
by depositing equal amounts of greenbacks
with the United States Treasurer. The actual
working of the law has bean very different
from what its supporters or, possibly, any one
else anticipated, for under the provision per-
mitting the withdrawal of bank notes no less
than S25 ,523 ,057 of circulation had been sur
rendered up to the close of last month, while
only Sll ,G01 ,S92 of new circulation had been
taken out in the same time. This gives a net
contraction of 81, ,92l ,165 in twelve months
This, however, is not all. The Sherman
Caucus Compromise se-Resumption-in-1S79 act,
which went into operation January IA, 1875,
provided for the issue of an unlimited amount
Of National Bank notes on condition that for
every $40 issued IS in greenbacks should be
retired until the aggregate legal-tender circu-
lation should he reduced to $500, ,000, 900. In
accordance with this provision SO, DDS, 400 Of
legal tender notes have been withdrawn since
January IA, 1875, being so per cent. of 81, 1885,
525 Of circulation issued to banks since that
date. This makes a total contraction of green
backs and bank notes during the fiscal year of
$50, ,149 ,5S5. II will be remembered that in
the fall and winter of 1884, ex-Secretary
Richardson added $26, 900 to the legal
telIder circulation, which had previously, for a
number Of years, remained fixed at $3.50, ,OOO,-
900. Taking the whole period from Septem-
Der / 1873, TO June 80, 1876, there has been
an increase OF nearly six millions in the aggre-
gate Of greenbacks and bank notes.
A few words on another points there really
q scarcity of money IN the country According
TO the proper meaning OF this phrase, we do
not hesitate TO answer that there is not The
panic of 1878 was not caused by scarcity OF
money. Had the banks OF this city, and OF the
whole country, for that matter, been possessed
Of hidden supply OF greenbacks equal In
amount 10 all they had on hand Just before the
panic, and had they paid them out 10 their de-
pOsitOrs or lent them 10 their customers, they
could at most only have postponed the catas-
trophe for short period. The trouble with
Jay Cooke 4 Co. and the numerous defaulting
railroad corporations was that they had wasted
and destroyed the capital that had been placed
In their hands. These hard times are the PEN
atty for waste OF capital, for the misconduct OF
speculator, for misplaced confidence, and for
financial acknowledgement OF various kinds. or
these abuses, or Of most OF them, the original
cause was making the legal tender money OF
the country (Which should be gold and silver
and nothing elsel too abundant and too cheap.
In 1850 we had, In round numbers, SlO6,-
100000 OF true constitutional legal tender ex-
elusive OF the specie In bank vaults, and $780,
100000 OF bank notes, payable In specie on de-
mand' This was money enough for thirty
million people, Our population may now,
perhaps, be forty-flyc millions, but our so.
called legal tenders, bank notes, and frac-
tional currency are more than $3.50, ,0O0, 900.
Thus, while our population In fifteen years
has increased 80 per cent, our money has In
creased $50 per cent, or three times faster
than our population.
money In September and October, 1873, that
scarcity was In the vaults of the banks. The
national banks OF this city on the 18Th of 0c-
tober, 1873, held but S5, l70, 800 In legal ten
ders, and all the banks in the city probably
not more than 90, 100000. The other day the
same banks held S73, $50 100, or twelve times
as much, so that the scarcity Of money to-day
scarcity which made so much disturbance In
September and October, 1873. II those with
whom money is now scarce will look at their
case candidly they will confess that they are
suffering from their own or from some one
else's misconduct, and not because there is too
little money in the country.
The Tribune fails to tell the whole truth
in the above relation of the workings of
the currency acts cited. For instance, the
surrender of the $25, ,523, 057 national bank
circulation released something like $685.
075, 1852 in gold-bearing bonds, worth upon
the average, say five per cent. premium in
gold in London and New York, or equiva-
lent to upwards Of thirty millions in the
greenbacks which the banks had been per-
mitted to substitute for them as security for
the circulation outstanding. Here, then,
was an absolute initiation of five millions by
the substitution of an inferior for a gold
bearing security.
In regard to the amount of circulating
medium necessary to effect the commercial |
exchanges Of the country, it may be said |
that ten dollars per week will be found 10
answer this purpose for the families Of the