, 1876-03-03

These figures exhibit enormous expansion
of loans, and at tho samo timo decreasing
amount Of idlelegal al-tantlers heldin reserve. In
1866 tho legal-tender reserves were out of all
proportion too large, for ut that time tho
bank-note circulation wn5 actually loss than
the amount of greenbaclss in their vaults. It
is perfectly proposterous for KELLEY to soy
TINT tho figures exhibit contraction of
money on tho contrary, thoro WIS too much
loancd and too much expansion all round.
Tho figures prove that tho panic was not tho
result of contraction Of money, but Of
m expansion Of bank credit. Nor is
thero the shadow of foundation
for his assumption TINT tho expansion
Of bank credits was duo to a contraction Of
tho volume Of currency. As We showed In
previous article, there was in 1sG5 circulat-
ing currency, including bank-noscs, of $685.
ooo, 200, with purchasing power of 's3s4,-
o00, 600 in gold, and in 1873 Of S7o1, ,O00, coo,
with q purchasing power Of $e20, ,o0o, ,ooo in
gold. The facts are that We havo Ind expau-
sion,-expanaion Of tho curroncy,-o1pansio
of credits,- expansion Of businoss, and, fast
and worst, expansion Of A1r. KE11R1fa flnau-
cial theories. Tho bank loans and discounts
were 54s7.ooo,0o0 in 1s65,-theso wore bank
credits redconable in money, aud with greon-
bncks at Gs hnd purchasing power in gold Of
nbout 1881, 1C0, 900. They roso by successive
gradations till in 1878 they were S944, 600, 900,
with purchasing power in gold Of about 81
cents md in tho aggregate $4,000, 900.
The capital aud surplus increased much less
rapidly than tho loans,-a proof OF the ten
doncy Of business to ovordo itself. Tho in-
dividunl deposits Increased from S5lo, 900, GOO
in 1860 to gees, ,000, 900 in 1879, or, express
ing thom in terms Of purchasing power, from
3373,82o,00o to $535, 7s0 000,-an increase
relatively considerably less than that in the
loans and discounts. All thcso facts point to
the true cause Of the panic, which wag, in q
word, over-tonling and oyor.specu1ation. The
banks, as they always do, yielded to tho in
tuences Of the period, and extended their
business as every ono elao was doing. nail-
roatls wero being extended In every direction,
and commercial and financial spoc,,lations
wero rife. Debta were piled up far beyond
any possibility OF paying them. Tho COM
munity was awaked to this state Of affairs by
tho failure Of jay CooKE j. c.. In September,
1873. Tho panic, md tho thousands Of CON-
mcrcial failures that have followed in each
succeeding year, ase tho results. How
preposteroua tho assertion is that the
contraction of tho currency was the
cause Of this speculation and its COL
lapse Jon would hare broken down
II his patience had been put to tho test Of
answering such folly. In the frat placs,
there waa no contraction Of the currency In
the second place, II there had been, 1t would
have checked over-trading aud over-apeoula..
tion, and the elements Of panic would not
havo existed. Mr. KEIlEY's disregard Of the
facts Of the currency question would DO sub.
lime II 1t did not 60 atep beyond, and into
the ridiculous. Like the colorcd gentleman
who applied for admission into ono OF tho
folds Of Zion, and pleaded, when charged with
having few honrs before plundered neigh
boris hen-roost, that ho didn't propose to
let one poor hen stand between him and Ills
Lord" KELLEY neyer let's any little facts
stand between him and his argument, He
treats facts with the liberality OF Lis master,
HEany g. CAREY, In ono Of whose volumes
Joua STUART MILL Is eail to have discovered
800 mlsatatements Of fact. We have e1posed
Als. KgII1z's misatstements with regard to
the contraction OF the currency, and must
apply to him the familiar principle, In
ons, false in nll