The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1875-02-13
David A. Wells on tho Currency
"rhs Cremation Theory OF Rssump-

treaung special questions OF deep puoilc IN
terest, the HERALD lays before its readers this
morning the most enlightened discussion Of
the question of resuming specie payments
which has as yet been presented to the Ameri.
can public. 1t is by Mr.. David A. Wells,
prepared by him at our request, and is an adj
mrable specimen of the joint application OF
scientific principles and wide practical knowl-
edge to the solution of great problem. Mr.
Wells is almost the only American writer on
this class of subjects who has acquired Eu-
ropean reputation and is quoted as high
authority by foreign economists. Besides q
fondness for this kind Of inquiries, founded
on strong natural aptitude, he has devoted
his whole time and all the vigor OF his mind
for the last fourteen years to Investigations
connected with our financial system, pursuing
his researches not like a mere scholar or
theorist, but by going abroad into the world
and making diligent personal inspection of
the practical working of our banks, our great
manufacturing and mercantile establishments,
our principal railroads, our systems of taxa
ton, both State and national, our mining in
dustries and our foreign and domestic
exchanges. 1t is this practical cast of his
facts, not taken at second hand from books,
but acquired by original observation and con-
slant intercourse with every variety of men in
the higher walks of business that have given
to the labors of Mr.. Wells their great value
and reputation.
1c ,uovN IN 20 ovon ~ "
Wells elaborate communication without doing
it injustice. To present his mere conclusions,
separated from the copious array of facts and
arguments with which he supports them,
would deprive them of their persuasive and
convincing character, and merely crafty a
curiosity to know what he says instead of
enabling readers to see what he has proved. AS
this great subject is likely to occupy public at
tenton for several years it is orth the while of
all who would really understand it to bestow
on Mr.. Wells paper very attentive perusal,
which will exempt them from reading, or
teach them to despise great deal of the cur
rent trash on this question.
Mr.. Wells amusingly chrstens the views
he advocates as the cremation" theory of
resumption. The process he recommends is
for the Secretary of the Treasury to burn half
q million Of greenbacks every week, making
twenty-six millions year. According to his
estimate it will require something less than
four years to bring the currency to par by this
method, making q gradual reduction of the
premium on gold OF 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 most,
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 tor the accomm odation of the
business public, and would therefore have q
compromising advantage. There is at present
superabundance of money in all our COM
mercial centres which can be had on call
loans at an almost nominal rate Of interest,
and yet it was never so difficult to
borrow money for considerable period.
The reason is that capitalists have
no confidence in the future and
tear that long loan might be repaid in cur
rency so depreciated as TO eat up great part
of the interest But gradual and certain
approach to specie payments, extending over
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 bust
ness and starting productive enterprises The
gradual contraction which Mr. Wells advo-
Gates would therefore have strong tendency
| to set the wheels of legitimate business again
| in motion by re-establishing the confidence
| of capitalists and making it for their interest
| to extend liberal accommodations to the bust
ness public
The idea that steady contraction on the
| gradual plan Mr.. Wells proposes would oper-
ate 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 currency
| by thousand million francs, or two hun
dred million dollars of our money, and yet the
business of that country has not perceptibly
suffered by want of pecuniary accommodation.
Mr.. Wells shows that the great outcry
which caused Congress to arrest the
contraction policy pursued for several
months by Secretary McCulloch was
the result of their imagination and visionary
fears. 1t is fact, now first made known tc
the public by Mr.. Wells, that there was nc
actual contraction of the currency during thai
period, and that it was all q mere matter O
bookkeeping entries in the Treasury ledgers
| The fact that no commercial Inconvenience
was experienced from the causes which
changed the value of the currency between
1865 and 1873, bringing down the price Of golt
from 1873 to TO- is an additional proof that thu
dangers feared from contraction are chimerical
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