The daily Argus. (Rock Island, Ill.) 1873-1877, 1875-09-20
EVILS OF PAPER MONEY .
81 - sf- -r-'t
a Letter From Ex-Secrstary Mccul-
loeh.
European Opinion Of Inhation-ove -Produc-
ton one Cause Of Financial Depression
The Experience Of the United
States with an Irrsdeema-
BILE Currency.
TO the Editor Of The N, Y. Tribune.
(Concluded.)

TO tie Editor Of The N, Y Tribune.
(Concluded.)
THE LOSS OF A BAD CURRENCY.
Secondly: A Redundant and Vicious
Currency. Redundant. because when the
war terminated there was no legitimate de-
mand for so large circulating medium
vicious, because it substituted legal but
artificial measure of value for the true
measure, thereby violating the higher law
which makes gold aud silver the standard
"a law which has never yet been violated
without commercial disturbance, nor, if
the violation was continued without nation
al disaster.
That the legal tender notes and the
notes of the National banks made the cir
culating medium redundant is proved by
the artificial prices they created and sus-
tanned, by their great depreciation, and by
the uses that have been made of them.
Their viciousness is made manifest by the
facts that they were and are irredeemable;
that they have familiarized the people
with dishonored obligations which they
have been and are compelled 10 treat as
money; that they were and continue to be
constantly huctuating in value, making
business gambling, and business men
gamblers. That an irredeemable currency
is tax upon industry and fruitful source
Of decentralization requires no argument to
establish. If the truth could be arrived
at, it would be discovered that deprecated
paper money has been heavier burden
upon the industrial and producing classes
Of the United States than all the taxes,
direct and indirect, to which they have
been subjected, and that it has done more
to debase and corrupt the public sentiment
than all other causes combined. The
substitution of inconvertible notes for coin
is an old game of distressed monarchies.
1t is no new experiment. It has been
frequently resorted to by bankrupt nations,
and always with the same disastrous re-
suits. 1t was resorted to by the United
States, under the pressure of what seemed
to be great emergency. That it should
be adhered to so long after the supposed
emergency had ceased and still have in
telligent and honest advocates is difficult
of explanation, in view of the fact that
over-issues of paper money have been the
cause of every financial crisis, every deep
rooted financial disorder, that has occurred
in the United States. Let US glance at
our previous experience.
INITIATION IN THE PAST.
The bank note circulation in the United
States was increased from SCI, 100000 lin
round numbers) 1880 to $l49, 100000 in
1887; bank deposits from SIS, 900 to
$l57 ,000,0O0; loans from 5000, 100000 to
$5OO,OO0,O0O Then came the crash which
many of US still remember, and by which
the country was Frustrated for years.
b. Again, the bank note circulation,
which in l843 was $5S,0OO,000, was
run up to $2l4,OO0,OOO in 1857, bank
deposits within the same period from $780,
10000 to $3.50, 100000, loans from $780,
100000 to $3.50, 900, 900, Then the second
great crisis occurred, which, although
sharper, and for the time it lasted more de-
structive, was of much shorter duration
than the former one. In 1860 the bank
note circulation was $207 ,000, 00O-at the
present time the circulation of legal tender
and bank notes is and for some years has
been upward of $70O,OO0,OOO, while the
deposits and loans of the banks have been
increased to q still greater ratio. 1t is as
serted, know, that bank deposits and
bank loans and not paper money have been
the chief cause of our financial crisis, but
an examination OF the bank returns will
show that bank deposits and bank loan:
have only about kept pace, as they natu
rally would, with the parper circulation
And now with over $70O,000,000 Of paper
money outstanding, more than half d
which consists of legal tenders, there are
thousands of people complaining of scare
ity Of currency; some of the leaders of 9
great party are advocating larger supply
ofit. In the early days of the west Gallo
mel was considered by a set of self-styleC
doctors q specific for all complaints, anC
when they had brought their patients
some of them naturally strong and vigor
Gus men-to the brink of the grave by lib
eral prescriptions Of this mineral poison
they were quite sure to administer more o.
it, exclaiming when their patients died, al
they generally did under such treatment
Poor fellowsl They have gone; but il
would have been all right with them if they
had taken more calomel." Are not oul
imitation doctors disciples OF the same
SCHOOL,
THE LEGAL TENDER BILLS.
No one, admit, can say with precision
how much currency is required in coun,
try like ours for legitimate business, bu
there are always indications of an exces:
which cannot be mistaken. Between 1885,
and 1887 it was indicated by speculation in
wild lands and town lots, by large importa
tons, expanded credit, and visionary
schemes of internal Improvements. Be
tween l843 and 1857, by extraordinary &C
tivity in trade-the reaction from Ions
period of stagnation, and another unhea[
thy expansion Of the credit system. From
1865 to 1873, by continuance of the high
prices which were unavoidable during the
war, by extravagant expenditures, by gam.
bling of all descriptions, by mania fol-
sudden enrichment, and by imprudent out
lays in railroads. There has never been
again remark, financial crisis in the
United States which cannot be unmistaka-
bly, traced to excessive issues of paper
money. The existing financial malady i!
wider spread and deeper rooted than any
which has preceded it, because the propel
ling cause has been greater 1t is more
difficult to cure, because large part of the
currency is of a different character from
that which has heretofore existed. iii
were only bank notes we had to deal with
the main cause of our troubles would soor
be removed, for the people wonld not Ions
tolerate irredeemable bank notes. Unfor
tunately we have q currency issued By
the government which, in opposition to al