New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-01-18

so francs, or 10 dollars, ana the spccio
outside Of the Bank, in the hands OF the
public, was estimated TO amount to 600 OF 300 mil
lion dollars. No bank notes were permitted
to circulate except those issued by the BANK
Az we all know no sooner was the war
begun than the characteristic timldity OF the
French people manifested itself in run lot
gold and silver. After paying out 20 million dol
lars in specie, and nearly doubling its loans ana
discounts, the Bank was directed by the corps
Legisatif to suspend specie payments, though
1sI millions in specie still remained in its
vaults. or about twice the amount held
by the Bank of England at the same
date. The suspension was doubtless
justiliable under the circumstances. but
we wish to point out that 1t was
not compelled by any lack of credit or OF re-
sources on the eide Of the Bank, and also the
further fact that it has now been maintained
for four years and q half without n higher
premium on gold than two per cent, ana that
only for brief interval. The cause OF tins
exemption from an evil whose effects nave
been and are still severely felt by the Uni'eu
States is we'll worth looking into.
II was not because the Bank did not ex'
pand the circulation of its notes. The aggre-
gate of the note issue, when it reached itS
highest point-On the 3l,t of October, 1913,
when the last instalment or the indemnity
was paid to Germany-was Ga million dollars,
ar more than double the circulation previous
to the war. How can we account Tor the fact
that the paper, though doubled IN quantity.
was so little depreciatedf The explana-
ton lies in the fact that only SUI
fcient paper was issued to take the
place of the coin which was boarded or ex-
ported to Germany in settlement OF the M
demnity. Had the Bank formerly issued Its
notes in such quantities and denominations as
to Danish gold and silver from all ordinary
transactions, as had been done by the banks
of the United States before 1851, the course
which was afterwards adopted would have
produced the same effects that followed here.
The premium on gold would have risen euor-
mously and all creditors would have been
defrauded. OF the notes of tho Bank out
standing on the Goth of January, 1874, 100
million dollars were in denominations of 5, 90
and % francs, and those Of and 20 francs
had already been considerably diminished.
These notes merely replaced tho gold and
silver pieces in which small payments were
formerly made. Had paper already been sub
stituted for these coins it is evident that the
addition of fresh issue would have produced
exactly the consequences which followed Ill
our own casc-a real initiation of the currency,
and its consequent depreciation as shown by
the premium on gold.
No sooner were the Germans paid of than
faLpn hC the French
Government aud the Bank to restore the cur
rency of the country to its former condition.
No foolish talk was INDUCED in OF specie
payments without specie, and no pledges were
given of resumption at the end of four years,
every one having capital at his command to
be encouraged in the mean time to so into the
banking business, and by issuing notes of all
denominations, from one dollar upwards, to
make il impossible to retain specie In the
country. That folly was lett for the United
States. Two simple things were done to
restore the former basis: Cd the Govern
ment undertook to repay the advances made
TO it by the Bank during the war, and in
fourteen months reduced its indebtedness 90
million dollars below the sum OF which it stood
on the 23d of October, 1873, and further agreed
10 pay OIL lou nlllliDH uollilS uOiC ioui
years; ca the Bank used the money repaid it
by the Government and also that obtained
by d timely reduction of its loans and dis
counts, to contract its note circulation from
GA million to sos million dollars, and to increase
its specie from 145 million to 268 million
dollars, at the same time replacing all its
small notes with gold and silver as fast as
they came into its possession. During the
whole year 1874 specie has been flowing into
France from Germany, England, and America,
the excess Of imports over exports for the first
eleven months being nearly 40 million dol
lars. Yet French trade has not suffered, the
rate of interest has been low, and no disas-
trOus effects have followed these great opera
have been so effective in restoring the currency
of France to its former excellence have ne
kinship with anything Of late years attempted
here.
In addition to the work of recovering their
specie and giving it room to live in, which has
been so successfully accomplished by the
French, we have a more serious task before
us in getting rid Of real depreciation Of at
least ten per cent in our paper money. We
have at the most moderate estimate ten per
cent more paper money than we could retain
il it were all turned this night into gold and
silver. II some magician were to transform
every greenback and National bank note into
gold, be would simply leave us with an I'M
favorable balance in our foreign trade which
would only be righted by the expectation Of
enc tenth of nnf money 10 attempt to re-
sumo specie payments in 1879 without con-
traction of the paper during the interval, will
be undertaking TO get more water into pan
which is already OVERLOOKING. After Supp
IN, tba Cold poon, which Ia tho in tor,no ;o,v