New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-12-03
CONTRACTION OF TIE CURRENCY

W ltn tlt IcIp Oh Tie bldlis'lcS CbHtiiN" III
Controller Kuox's report on the National banks
we shall attempt in this article to show the
changes which have taken place III the paper
circulation Of the country since june 80, 1874,
period of seventeen months. The result
is contraction which we think will surprise
large part of the public We shall classify
The changes under several heads, i'll order
that any Of our readers whose views do not
accord with our own may make tier own cal
culations as to the net result.
L. The legal-tender money issued directly by
the Government, was,
On LIST OF July, 1874. .......$ 3S2, 100000
On 1st of December, 1870. 3I2,41l,T2
Decrease. $9,52S,2 2S
The above decrease is to compensate for the
issue since Jan. II, 1875, of $11,91O,36O
additional circulation to the National banks.
II. The fractional currency outstanding was,
On 1st of July, 1874. 50, S8d '296
On 1st of December, 1879. 42,3o6,lo1
Decrease Observation-Disclosures. $3.525,191
H. The National bank circulation outstand-
ing was,
On june 20, 1S74.......-...%319,89l,182
On Nov. !, 1ST5............. 11,JSG,3O2
Decrease ........... $i,30T2S0
". The process of retiring bank notes from
circulation under the Act of june 90 1871
is for the bank wishing to divest itself of
responsibility for its notes to deposit with the
United States Treasurer an equal sum il
greenbacks, which the Treasurer accepts and
pays ont III redemption Of the notes as they
are caught from time to time at the redemp-
ton bureau. The elimination from the ciTcu-
lati0n of the country Of the notes OF al lnsOl-
vent bank, on OF a bank which for any other
reason has thrown on the United states The
responsibility OF paying IT. notes by deposit
ing grecnbacks and taking away ITS bonds, IS
one which takes several years. Meanwhile the
grecnbacl,s lie in the Treasury, waiting for the
bank notes against which they are held 10 he
presented for payment Ii is evident ,hat any
increase in this deposit OF grceIbackS i, in
every respect equivalent 90 u reduction of the
currency. Ii is Il contraction of The grecnback
currency until the bank notes are found and
destroyed, and after that, tlie gtecnbach7
being paid away to the owners OF the bank
notes. tine contraction finally takes The shape
Of a reduction of bank notes. the amount OF
lcgal-tcHdor notes remaining on deposit with
the United States Treasurer for the redemption
of bank notes was,
On Nov. /, 1S75..............%2O,23 s,6l2
On jane 20, 1S11............. 3,slj,Gl1
Increase. S16, i24,967
Y. The Act of june 20, 1874, cOmpcls every
National bank to have on deposit with the
United States Treasurer greenbacks To the
amount of Ave per cent of its circulation.
This is a boRd .fde contraction Of the currency
TO that amount, since this deposit can never
be made use OF for any other purpose than the
redemption of bank notes. IL can in no case
be made available for the payment Of depos-
itors, though allowed by an absurd provision
of the Act to be counted as part Of the reserve
against ordinary liabilities. The amount OF
this deposit with the Treasurer was $l6,233,-
1872 at the date of the last general statement
by the banks of their assets and liabilities.
VI At all times, the volume OF paper money
being supposed the same, the more the banks
have in their vaults as reserve the less there
will be in active circulation among the people,
and rice rersa. The total amount of bank
notes, fractional currency and greenbacks
owned and held by the banks was,
On June 2G, 1874. PA
On October |, 1S7J........-. 146,393,2l3
Decrease. S0V,1o i,O%l
Between the end Of June and tho beginning
of October il is usual for the banks 10 pay ont
about $l5,0OO,0OO to "moye the crops" SO that
$4,000, 900 of the above decrease may fairly
be ascIIbed to this cause, and the other 3d.
800, 900 to greenbacks taken out and depos-
! tied with the redemption bureau. In the view
of the question which we are now taking the
real decrease in the bank reserve will very
nearly Offset the special deposit made for the
support of the redemption bureau, the banks
! having supplied the capital for that institution
without drawing the money from the people.
! VII. Finally, it is clear that, the volume of
money remaining the same, the greater tho