New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1875-10-10

The probable effect of the law of last
winter providing for the resumption OF
specie payment on the first day of July,
1879, naturally occasions much speculation.
The following summary of the views ex.
pressed on the subject by an advocate of
contraction, pure and simple, will be read
with much interest. TIE writer is a gentle
man who has had large experience with
national finances, and one who has given
the subject much study and thought. and
his views are worthy of careful considera-
ton:
Ever since the famous "Bullion report
it has been accepted as an axiom of politi-
cal scit nee that q currency which ia at a
discount as compared with gold is redup-
dant, and that its redundancy is in direct,
though not exact, proportion to its depreci.
alton. Accepting this as settled, there can
be no question that the paper speculation of
this country is redundant, and that as q
consequence, specie payments Can not be
restored and maintained until the volume
of the currency is reduced to its normal
limits. Manifestly, therefore, the simplest
way TO have set about returning to the
specie basis would have been to reduce the
volume Of the currency until it should be
worth par IN gold. Congress. however, in
passing the act of January IA, 1875, pro-
viding for the resumption of specie pay
ments, adopted fsreDt plan, by which
it sought to obviate the difficulties and the
popularity of contraction. There is to be
no reduction in the volume of the currency
until January l, 1879, the day fixed for re-
sumption, when the entire legal tender cur
rency OF the country becomes redeemable
in coin on demand.
Authority is vested in the Secretary of the
Treasury to sell five per cent bonds to a
sufficient extent to provide gold for this
purpose. 1t was the declared expectation
Of many Of the advocates of tails measure
that the volume Of the currency would not
De materially rednced by its operation, and
coin for email portion Of the paper circula-
ton. This will prove vain hope. The
gold premium unDistaksbly shows that the
present currency is redundant and depre-
ciated, and In order to maintain specie pay
ments the surplus must be got rid of. This
might be accomplished by the present meas
ure, but at vastly greater expense and in
retiring the surplus currency prior to re-
sumption.
As the time for coin resumption draws
near, greenbscks will begin to be boarded
as an investment for the purpose of really
ing the enhanced value. If year prior to
resumption greenbaoks shall be ct dis
count OF ten, Or even seven per cent in gold
able investment imaginable, since the
source. BY simply, holding them, will be
sure of Q gold profit at the end of the year
equal to the discount. The banks especi-
ally, who must resume at the same time
that the government does, will hoard green
backs, not only as an investment, but in
order to prepare Themselves for the pay
ment of their notes. Their Issues are Re.
deemable in greenbaoks only, IL is true, but
~ soon a greenbscks become redeemable
In coin redemption In greenbaOks will be
equivalent to redemption in coin. 7-f
Fhis process will continue 90 long a. any
premium on gold remains, or, in other
words, until the circulation 10 reduced to it's
be subjected to all. the hardships of con.
tractioa without respipg any Of its benefits,
since the surplus currency, instead of being
redeemed and destroyed, will remain out.
standing in the hands Of the people and the
As soon a. specie payment ia resumed the
surplus legal tenders which have been
boarded in anticipation Of that event will
b suddenly inflated 70 the volume that it
possessed before greenbacks began to be
boarded. The only change will b the sub
ettution Of chin for portion of the legal
tenders. But If the currency was rednn-
dAnt when composed exclusively Of paper,
u VIII DO NO less redundant when composed
drndant, prices viii be higher here than
abroad. 8f 80
In other words, gold will be low a. COM
pared with commodities. The inevitable
result will follow. The poorer currency
will drive ont the better. Gold will be ex-
ported until the currency il reduced within
proper hnit.. Gold will fov abroad 70
other countries whore 1t u relatively dear
- compared with commodities, that il to
say, where prices are lower than here. Bat
gold can mot BE- exported without receiving
A equivalent for IT, Importation Of foreign
gcods will 20 stimulated, aud the sudden
lation And extnyagancs. No.
~ sum W, ~ SPesaaions Of the present
MEASURE WI Is q }bl1oWs:
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