The Cairo bulletin. [volume] (Cairo, Ill.) 1872-1878, 1876-07-28

ulatOrs. 1t had frlghtful effect upon
many even Of the rich, upon men of
moderate fortunes and upon the artisans
and labOrers OF the kingdom and indeed
upon the whole productive classes as !
shall presently show upon unimpeach-
able testimony. We have lately had In
our own country a curious illustration OF
this same error Of confounding nomi-
nal depreciation with a real one. The
congress of the United States, not long
ago, legislated q fractional currency of
silver and wilfull debascd it below tie
nominal value, in the current paper
money.
1t was supposed that this debasement
would keep the new coins in circulation
since no motive could be foreseen for
taking them out. But greatly to the sur
prise and disappointment OF the resump-
tionists, these degraded and dishonest
coins disappear about as fast as the mint
can produce them, and Wall and Third
street brokers buy the m at premium.
Here Is dilemma from which our con-
gressional financial philosopher will find
some difficulty in extricating them
selves for their new silver, de-
graded as it is, will disappear as steadily
rs it Is issued, even II they were to issue
fifty millions year. and indeed. the more
they issue the faster it will 60 The reason
is simply. that the precious metals are
far more extensively deprecated in this
country than is indicated by the cur
rent premium on gold, the true depre-
citation being, probably. anywhere from
35 to 20 per cent; from which it neceS-
sarily follows that every effort to keep
them in circulation. until their real
value is fully restored, will prove utterly
Tan It ;- h..,, III.
and misleading fallacy to suppose that
the current premium on geld makes the
real extent to which our paper money
is deprecated. Il beg to say here. by
way of necessary explanation. that in
using the word depreciation. | do not
mean to imply that the money of the
country Is in discredit. There has been
a steady depreciation since the discovery
OF the Californian and Australian
mines, in the value Of both
gold and silver. but they are
not hereby discredited. What wish to
imply is. that the volume of paper
money being larger than ii would be if
gold and silver and convertible notes. is
of less value than if more limited in
quantity. | may add, moreover. that
the fact of depreciation. once established.
is not of itself necessarily an evil. if the
difference between the paper and gold
be due to the natural fluctuations which
take place in the value of the metal
and not to changes in the volume of the
paper which for the time being forms the
instrument OF exchange. In such a case
the fluctuations between paper and gold
may be likened to the fluctuations in gold
and silver In countries supporting a
double standard and that a double
standard has great and preponderating
advantages, Is proposition both by rea-
son and experience.)
There are three ways by which we can.
with and almost absolute certainty, ascer-
tain the extent of the contraction neces-
sary to be effected before a convertible
system can be established in this country:
LIST. BY ascertaining the total amount of
convertible paper-notes sustainable in
other commercial countries; ID. BY ex-
amples of contraction effected in other in
stances Of inconvertibility overcome and
cOnvertibility, either real or nominal. re-
established: and Sd. BY comparison of
prices in our own and competing nations.
1.-THE speaker here instanced the inabil-
ity Of the Bank OF England, France and
the German Empire. all great and opu-
lent countries, to support convertible
circulation reaching three hundred mil
lions OF dollars, and argued that the
United States, whose gold and silver has
a constant tendancy to take 10 themselves
wings and fly away, could not support
convertible circulation OF three hundred
and fifty millions. He touched upon the
history Of the four general bank suspen-
sions of the United States. which took place
in the years 1874, 1887, 1857 and 1861
respectively and of the three resump-
tions. with the widespread and universal
distress which followed in the wake Of
each Of them. which the literature Of the
several times painfully witnessed. In
these three general assumptions The aver
age contraction necessary to effect them
was nearly 20 per cent. lie cited finan-
cial crises in the history Of England and
France: when England resumed specie
payment In 1921, after a suspension of
twenty onc years. its whole note circu-
lation was contracted 80 per cent; the
contraction to be effected by the Bank
OF France to resume specie payment is 50
per cent, and these instances imply an
almost fixed law Of contraction. 1t has
already been shown that the United
States will have to contract the currency
80 per cent as an indispensable prelimln-
airy to resumption.
Now, there is no possible road to con-
vertibility except by that of unremitting
and relentless contraction. All the au-
thorities agree TO this; and the object of
the contraction Is to create scarcity of
the current money; TO create that intense
and protracted scarcity which may Justly
be called a state of monetary famine
which shall be so unremittingly oppres-
| sive that men will be forced to part with
their labour and property at steadily di-
minishing prices, no matter how earnestly
| they may struggle against the losses
| they are compelled TO suffer in cOnse-
qucnce. Recollect the powerful agency
OF money in all the complex affairs of our
modern civilization-its influence upon
the destinies OF the church, the state and
family-and you will at once see how
tremendously any tampering wit, its
value must affect all the relations of
| our social organization. Imitation is one
way Of tampering with it, but the worst
possible form Of interference is arbitra-
| rily to raise its value. Contraction is
the one potent method of doing this, and
Is always attended by greater or less
degree OF loss and suffering, because its
effect is to depress and destroy the value
OF all other commodities. whether labor,
or the products of labor, or the soil itself.
1t disturbs and deranges every opera
ton of industry aud commerce, and pro-