Shenandoah herald. [volume] (Woodstock, Va.) 1865-1974, 1876-08-10

4
balances, and as a guaranty against
transient drains artifcially created by
panic or by speculation. 1t has also TO
/ provide for the payment in coin Of such
fractional currency as may be presented
for redemption. and such nconsiderable
portions of the legal tenders as indivi~
duals may from time to time desire to
convert for special use, or in order to
lay by in coin their little stores of mons
ey.
RESUMPTION NOT DIFFICULT.
To make the coin now in the treasury
available for the object OF this reserve,
to gradually strengthen and enlarge
that reserve, and to provide for such
other exceptional demands for coin as
NAV arise, does not seem to me work
of difficulty. If wisely planned and
discretely pursued it ought not to cost
anv sacrifice to the business of the
country. 1t should tend, on the contrary
to a revival of hope and confidence.
The coin in the treasury on the Both OF
June, including what is held against
coin certificates, amounted to nearly
seyenty-four millions. The current OF
precious metals which has flowed out
of our country for the eleven years from
July |, 1865, to June 80, 1876, averaging
nearly seventy-six millions year, was
eight hundred and thirty two millions
in the whole period, of which six
hundred and seventeen millions were
the product of our own mines.
To amass the requisite quantity by
intercepting from the current flowing
out of the country and by acquiring
from the stocks which exist abroad,
without disturbing the equilibrium Of
foreign money markets, is result to
be easily worked out by practical
knowledge and judgment with respect
to whatever surplus of legal>tenders
the wants of business may fail to keep
IN use, and which in order to save
interest will be returned for redemption.
They can either be paid or they can be
funded whether they continue as cur
rency OF be absorbed into the vast mass
of securities held as investments, is
merely question Of the rate of interest
they draw. Even if they were to remain
in their present form, and the governs
ment were to agree to pay on them a
rate of interest making them desirable
as investments they would cease to
circulate and tax their place with gov
eminent, State, municipal and other
corporate and private bonds, of which
thousands of millions exist among us.
In the perfect ease with which they
can be changed from currency into
investment lies the only danger to be
guarded against in The adoption OF
general measures intended to remove a
clearly ascertained surplus, that is the
withdrawal of any which are not a
permanent excess beyond the wants Of
business, Even more mischievious
would be any measure which affects the
public Imagination with the fear OF an
apprehended scarcity. In a community
where credit is so much used tlnctations
in values and vicissitudes in business
are largely caused by the temporary
beliefs Of men even before these beliefs
can conform to ascertained realities.
AMOUNT OF NECESSARY CURRENCY.
The amount of the necessary currency
at a given time cannot be determined
arbitrarily, and should not be assumed
in conjecture. That amount is subject
to both permanent and temporary
changes. An enlargement of it which
seemed to be durable happened at the
beginning of the civil war by a
substituted use of currency in place of
individual credits. 1t varies with GER
tain states of business. 1t fiuctuates
with considerable regularity at different
seasons of the year In the autumn,
for instance, when buyers of grain and
other agricultural products begin their
operations they usually need to borrow
capital or circulating credit by which
to make their purchases, and want these
funds in currency capable of being
| distributed in small sums among numer-
Gus sellers.
The additional need of currency at
such times is FIVE or more per cent OF
the whole volume, and if surplus
hey ond what is required for ordinary
use does not happen to have been on
hand at the money centres, scarcity
of currency ensues and also stringency
in the loan market. 1t was in reference
to such experiences that, in discussion
of this subject in my annual message
to the New Y ork Legislature OF January
5, 1875, the suggestion was made that
the federal government is bound to
redeem every portion of its issues
which the public do not wish to use.
Having assumed to monopolize the
supply of currency and enacted exclus-
ions against every body else, it is bound
to furnish all which the wants of bust
ness require. The system should passive
ly allow the volume of circulating credits
to ebb and flow according TO the ever
changing wants of business. 1t should
initiate as closely as possible the natural
laws of trade which it has superseded
by artificial contrivances; and in a
similar discussion in my message of
January 4, 1876, it was said that
resumption should be effected by such
measures as would keep the aggregate
amount of the currency self-adjusting
during all the process without creating
at any time an artificial scarcity, and
without exciting the public Imagination
with alarms which impair confidence,
contract the whole large machinery of
credit, and disturb the natural operations
of business means of resumption. Public
economies, official retrenchments and
wise finance are the means which the
St. Louis convention indicates as provis-
ion for reserves and redemption.
| The best resource is a reduction OF
the expenses of the government below