Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1876-03-23

These figures exhibit enormous exnan-
SION OF loans, and at the same time de-
creasIng amount OF idle legaI-tenders held
IN reserve In 1865 the legal tender re-
serves were out Of all proportion too large
Tor at that time the bank note circulation
was actually less than the amount of
greenbacks IN their vaults. 1t is perfectly
preposterous for Kelley to say that the
figures exhibit a contraction OF money.
on the contrary, there was too much
loaned and too much expansion all round
lhe figures prove that the panic was not
the result OF a contraction of money. but
OF am expansion of bank credit Nor is
there the shadow of foundation for his
assumption that the expansion of bank
credits was due to contraction of the
volume of currency. AS we showed in a
previous article, there was in 1860 a cir
culating currency, including bank-notes.
OF 5000, OO0, 600, with purchasing power
OF 1884, 200, 900 in gold, and in 1878 of
$12l, O0O,0 900, with a purchasing power
OF $620,000,O00 in gold. The facts
are that we have had expansion
expansion Of the currency-expansion
OF credits-eXpansion Of business-and.
last and worst, expansion of Mr.. Kellcv's
financial theories. The bank loans and
discounts were $487 100000 in 1865
these were bank credits redeemable in
money, and with greenbanks at sixty
eight had purchasing power in gold of
about 1881 10000. They rose by sue
cessive gradations till in 1878 they were
S944, 900, 600, with a purchasing power in
gold OF about eighty-six cents, and in the
aggregate $812,000,000 The capital and
surplus increased much less rapidly than
the loans-a proof of the tendency of bust
ness to overdo itself. The individual de-
posts increased from $549, OOO, 900 in
1865 to 1923, 100000 in 1878, or, express
ing them in terms of purchasing power,
from 1913, 1920, 900 to $535, $50, OO0-an in
crease relatively considerably less than
that in the loans and discounts All these
facts point to the true cause of the panic.
which was, in a word, over lending and
r-speculation. The banks, as they al
ways do, yielded to the influences of the
period, and extended their business as
every one else was doing. Railroads
were being extended in every direction,
and commercial and financial specula-
tions were rife. Debts were piled up far
beyond any possibility of paving them.
The community was awaked to this state
of affairs by the failure of Jay
Cooke q Co., in September, 1873.
The panic, and the thousands of CONNER
cial failures that have followed in each
succeeding year, are the results How
prepOsterOus the assertion is that the con-
traction of the currency was the cause Of
would have broken down if his patience
had been put to the test of answering
such folly. In the first place there was
no contraction of the currency; in the
second place, if there had been, it would
have checked over trading and overs spec
ulation, and the elements of panic would
not have existed. Mr.. Kelley's disre-
gard of the facts of the currency question
would be sublime if it did not go step
beyond, and into the ridiculous. Like
the colored gentleman who applied for
admission into one of the folds of Zion,
and pleaded, when charged with havinga
few hours before plundered neighbor's
hen-roost, that he didn't Z" propose to let
one poor hen stand between him and his
Lord" Kelley never lets any little facts
stand between him and his argument.
He treats facts with the iberality of his
master, Henry G. Carey, in one of whose
volumes John Stuart Mill is said to have
discovered 500 misstatements of fact. We
have exposed Mr.. Kelley's misstatements
with regard to the contraction of the
currency, and must apply to him the ia
miliar principle-False in one, false nall.
Chicago Tribune.
SOME men keen savage dogs around |