The Portland daily press., 1875-12-08

the producer of domestic articles is constantly
subjected to loss in exchanging mis- products
for such articles Coffee tea, sugars, and
other imported goods which enter into daily
LII this connection it should be
borne in mind that greater volume of cur.
rency is required for the transaction of bust
ness when 1t consists of inconvertible paper,
which does not circulate abroad, than when the
in general use is gold, which flows
through every artery OF commerce. The sta
tstcs OF our foreign trade illustrate this propo-
sition. For every imported article the con-
sumer must pay to the importer besides the
cost ia gold, Increased by hi percentage of
profit, as much more as the difference between
gold and the currency with which payment is
made. This difference, commonly called the
premium on gold, increases by many millions
the total amount which would otherwise be re-
quired to complete all such transactions.
The proper office of currency, whether it be
gold or paper, is to serve as medium of eX-
change foT the adjustment of transactions be-
tween buyers and sellers. When it is sound
and stable, receivable in all parts of the COM
mercial world. the amount which actually
passes from hand to hand in business transac-
tons is far below the volume Of business. A
small per cent. thereof is adjusted by the actual
handling of money Exchanges are, for the
banks and other agencies. Wherever exchan-
ges and business transactions are conducted
on the basis Of coin, and paper convertible into
it, the volume will be regulated by natural
causes. Money, like merchandise, will 90
where ere is demand orit, and where some
it. When the financial panic of 1857 created :
demand for gold in this country, a ready and
continued supply came steadily from abroad to
meet the necessities OF our people, and brought
speedy relief. Now, the enforced use Of in
convertible paper currency not only obstructs
the flow of gold from abroad, but drives from
the country the precious metals yielded by our
Mines
Good and bad currency cannot be retained in
anything like equal proportions in a country
having commercial relations with other powers
and peoples. The latter will drive away the
former. Gold and silver will flow steadily to
those parts of the commercial world where
business is done on the basis of an unyaryiug
standard of values, and where every issue Of
paper is convertible into the precious metals at
the option of the holder, because they are need
ed there. Such is the inevitable operation of
the law of supply and demand; and the present
limited and inadequate supply of coin in this
country is chiefly due to this cause. Gold has
become commodity of trade, the price Of
which from day to day depends largely upon
the will of those who have combined to control
the market This presents a serious obstruc-
ton to all productive industries and commerce,
and introduces into business transactions an
element of uncertainty, which often unsettles
the most intelligent calculations, and tends to
destroy confidence, without which there can be
no real or permanent prosperity. Apparent,
but fictitious prosperity has often followed
large issues of irredeemable paper currency,
but no result is more certain to flow from
given cause, than disaster and financial distress
to follow period of imitation of business and
credit caused by excessive issues of paper cur
rency. The philosophy which teaches by ex-
ample, as we'll as the deductions of reason, es-
tablishes conclusively that there is no effec-
tive remedy for the evil but the removal of its
cause.
The circumstances attending the issue of the
U. s notes now in circulation impose upon the
government peculiar obligation to provide for
their speedy and certain redemption in coin.
They were issued in the exercise of power
which can be called into use only in a time of
supreme necessity, and were paid out for the
support OF an army composed of brave and
patriotic citizens who had responded to the
call OF their country in the hour of its extreme
peril. 10 suffer promise made at such u time
and under such circumstances to be dishonored
by subsequent indifference or non-performance,
would be little better than open reputation,
and would affect injuriously our national name
and credit.
1t is worthy of note that for the most part
those who now oppose the redemption OF legal
tender notes. and who ask for further issue
and continued and indefinite reissue of the
notes now in circulation, were most strenuous
in their opposition to such issues during the
civil war The acts authorizing such issues
were denounced as in violation of sound prln-
ciples of finance, not warranted by the Consti.
tuition. Their constitutional validity was re-
sisted at every point, and subjected to the test
OF judicial decision in almost every court in
the country, both state and national. The su-
preme judicial tribunal OF the nation upheld
the acts as measures of necessity in a time of
great exigency but it has neither decided nor
intimated that such power may be exercised
by Congress in time of public tranquility. In
deed it is fairly lnferaole, from all the court
has said in the various cases in which the
question has been before it, that the issue OF
such notes in time of peace is not within the
constitutional power of Congress. The Ian
guage and argument of the court leave no rea-
son to believe that it would sustain the claim of
power to increase the volume of such issues or
to reissue such as have been redeemed in
obedience to law, when the public exigency no
longer exists. Those who opposed such issues
at time OF supreme necessity, and insist upon
further issues when the emergency has passed
away, put themselves in the attitude of oppos-
ing war measures in the midst of war, and adj
vocating them in time of profound peace,
Congress carefully confined the operatssn OF
the act to the period of necessity by authoriz-
ing "the reissue from time to time, as the
exigencies Of the public interests shall require"
The government is bound, not only by eco
nomic considerations and proper regard for the
interest of the people, but by express and re-
peated promises, to provide for the redemption
in coin of all its issues of legal tender notes.
The original legal tender act was regarded and
treated at the time of its adoption as tempo
rary measure, made necessary and jus.ifable
only by the exigency of war, which taxed all
the re sources and energies of the nation.
The Secretary enters into the history of the
legal tender legislation and the declarations of
Congress relative thereto, showing that 1t has
always been the purpose of Congress to return
to specie payments and redeem the legal tend
ers in gold. He also quotes the declaration of
the Supreme Court to the effect that legal
tender notes are obligations of the United
States and that the United States engage to
pay dollar in gold for each dollar of paper.
" F..
1t is among the first and most important
functions of government to give to its people a
sound and stable currency, having a fixed rela-
ton to the standard of values in general use
among nations. The true matter with which
government has to do is notso much a question
OF volume as of soundness and stability of the
currency. When it has established CURRENCY
of fixed and stable value, having known rela-
ton to that of other powers, and furnishing
uniform medium of exchange, the volume may
and should be left to be determined by the
wants of trade and business. Natural causes,
aided by individual effort and enterprise, will
regulate the volume of currency far more WISE
ly and with greater safety to business than acts
or congress imposing artificial limits, subject
to increase or dminution at every session. The
existing provisions of law making United
States notes legal tender for all debts, both
public and private, with certain exceptions re-
lating to transactions with government, is an
artificial barrier to the use OF gold and silver,
tending not only to prevent the flow of gold
toward this country, but promoting the ship
ment abroad of our own production of the pre-
cious metals. For this reason Congress should
abolish the legalte tender quality of the notes, as
to all contracts made, and liabilities arising
after fixed day. The first day of January,
1879, being already fixed by law as the time
when the redemption OF United States notes
then outstanding shall begin, it would be prop
er and safe to provide that such notes shall not
be legal tender for contracts made or liabilities
incurred after the first day o. January, 1877.
Such an act would not too suddenly change the
value of the notes, and would not affect injuri-
ously either debtors or creditors, but would re-
move present obstruction to the retention of
our gold and silver production, and create a
demand for the return of gold now abroad, thus
promoting final resumption by preparing the
country for it.
In furtherance of the purpose of the act of
the last Congress to provide for the resumption
of specie payments, the Secretary recommends
that authority be given for funding legal-ten-
der notes into bonds bearing a low rate Of inter-
est. Such bonds should run for longer period
Of time than those now authorized for refund
ing the interest-bearing debt, and should be
made available to national banks for deposit to
SECURE their circulation and other liabilities to