Perrysburg journal. (Perrysburg, Wood Co., O. [Ohio]) 186?-1965, 1876-06-16
Contraction of the Currency.

1T is noticeable fact that, while the in
hationisls are wildly clamoring tor more
paper currency, as the sovereign panacea
for all the ills Of trade, there has been a
voluntary retirement of currency by the
spontaneous action of the banks ever
since the passage of the Resumption Act
Of January 14th, 1875. The bank notes
outstanding at the time of the passage of
this act amounted TO 1851 ,S61 $50. Be-
tween that date and May 1st, 1876, there
were redeemed and retired S2l, l,S03, ,7O6 of
National Bank notes, besides "a, ,6S5, SIT
OF such notes surrendered; making an
aggregate of redeemed and surrendered
notes amounting to 500, ,4S9 ,5S3. Between
the same dates there weie issued S14,-
36S,S of new National Bank notes.
Thus the net decrease of such notes from
Jan. 18th, 1916, to May 1st, 1876 has been
$40, ,l2O, ,72S, leaving the amount outstand-
ing at the latter date to be 1896, TAO, 1872,
against 1851 ,S61 400 at the former date.
In addition to this, there has, during
the same period, been aretirement ofS11,-
4I2, 124 OF legal.tender nate3 under the
Act OF Jan. 14th, 1875, leaving the amount
outstanding May 1st, 1876 at $370, 527,-
$40. The total decrease in the two cur
rencies in a little more than fifteen
hAOAltllo lS1 bllOlNlOlOf p-U,OOS, ,CDG. DIlIl
further, the Treasurer of the United
States, May 1st, 1876, held $2S,OS3, ,291 in
legal l-tender notes, deposited with him to
retire an equal amount Of National Bank
notes, and which will be paid out only as
the latter notes are retired and DESTROYED.
The result is an actual decrease of paper
circulation since Jan. 14th, 1919, amount
ing TO $54,616, 143. Greenbacks and
bank-notes outstanding Jan. 14th, 1915,
amounted to $133, ,S61 ,450; and on 1st Of
May, 1876, their amount was $G19, 1885,
307-showing an actual contraction of
$54,676, l43 in the paper circulation OF the
country.
This has occurred not because the Gov
eminent has forced the decrease upon the
people, but as the result of purely spOn-
taneous action. The Resumption act of
Jan. IA, 1915, repealed all restric lions upon
the aggregate amount OF bank currency
that IN ght be issued, and, in effect, pro.
vided for free banking. To the repeal
was added the provision that the Secre-
tary of the Treasury should redeem and
retire legal tender notes to the amount OF
eighty per cent. Of the new bank notes
that might be issued The banks, by
previous law, were privileged to with
draw their bonds from the Government
by dcpositlng with the Secretary of the
Treasury legal tender notes equal to the
ann unit of bank notes issued to them on
these bonds; the former notes to be held
for the purpose of redeeming the latter.
BY this process the banks were enabled to
reduce their own circulation; and, as
matter of fact, we have, in. a little more
than fifteen months, made such reduc-
tion to the amount of $20 ,4S9 ,5S3, against
thp iGsn1n of DF IL
notes, giving a net decrease Of $15,.
120.72S.
The laws Of Congress simply provided
for the possibility Of these + suits. They
made il possible for the banks to increase
or decrease their circulation; and under
the laws of trade the banks have chosen
to do the latter, and are still continuing
the process. We grant that the motive by
which they are governed is that of self
interest; yet the fact conspicuOusly shows
that they had larger paper circulation in
the form of bank notes than they could
profitably empl,y And this fact means
that, in their judgment, there was no active
demand among the people for the whole
volume of outstanding bank notes. Had
such q demand existed, there would have
been no reduction of volume; and not
only SO, but there would have been an in
crease of bank notes in proportion to it.
We present, then, to the intlatonists the
fact that under free banking there has
been an increase of National Bank.notes
to the amount of S14, 1868, $50 in about
fifteen months, and during the same pe-
riod a decrease of bank-nOtes redeemed
and surrendered to the amount of $780,
489, ,5S3; showing net decrease of $l5,-
120,728. We present to them the further
fact that this decrease Is still continuing,
and that on the 1st of May, 1876, the
United States Treasury held $2S, ,093, ,201
in legal.tender notes deposited there by
the banks to redeem and retire like
amount Of their own notes Does this
look as if there was deficiency of cur
rcncy to inject the wants of trade"? Not
at all. Such facts would not exist in.the
presence of deficiency Currency un-
der free banking is matter of supply
and demand, and is quite sure 50 TO regu-
late itself as to make the supply equal TO
The demand. The simple ruth is, there
is more paper currency in the country
than the business demand requires, and
this is the economical reason which has
led to the reduction OF bank-nOtes during
the last fifteen mOnths.-N J. IRdepend-
ent. c.sar.. % .-tr