Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1876-06-22
Contraction OF Tho CurreucT.

! IT is noticeable fact that, while the in
t1ationists are wildly clamoring for more
paper currency, as the sovereign panaces
for all the ills of trade, there has been q
voluntary retirement Of currency by the
spontaneous action Of the banks ever
since the passage of the Resumption Act
OF January 18th, 1876. The bank.n notes
outstanding at the time of the passage of
this act amounted to 1851 ,S61, 40. Be-
tween that date and May 1st, 1876, there
were redeemed and retired $24,S03, 7O6 of
National Bank-notes, besides $4,6S5,St7
of such notes surrendered; making an
aggregate Of redeemed and surrendered
notes amounting to $29, 489,5S3 Between
the same dates there were issued $14,-
! 1868, $50 of new National Bank-notes.
Thus the net decrease of such notes from
Jan. 18th, 1875, to May LIST, 1916, has been
| SO, 12O, 12S, leaving the amount outstand-
ing at the latter date to be 1886, FAC, 722,
against 1851 ,S61 400 at the former date.
In addition to this, there has, during
the same period, been aretirement ofS11,-
412, 124 of legal-tender notes under the
Act Of Jan. 18th, 1875, leaving the amount
outstanding May LIST, 1876, at 1870, 527,-
079. The total decrease in the two cur
rencies in Il little more than fifteen
months is, therefore. $26, 592, $50. Still
further, the Treasurer of the United
States, May 1st, 1876, held S29,O S3, 291 in
legal-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, 1915, amount
ing to $54, 676, 143 Greenbacks and
bank-notes outstanding Jan. 18th, 1875,
amounted to 1888, 1851 $50; and on 1st of
| May, 1876, their amount was 1919, 1885,
3O7-showing an actual contraction of
$54, 616, 143 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 IA, 1915, repealed all restrictions upon
that migh 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 depOsiting with the Secretary Of the
| Treasury legal tender notes equal to the
! amount of bank notes issued to them ON
| these bonds the former notes to be held
for the purpose Of redeemng the latter
BY this process the banks were enabled to
reduce their own cireulation and, as
matter of fact, we have, in a little more
than fifteen months, made such reduc-
tiCn to the amount of $29, 4S9 ,583, against
the new issue of $14, 1868, 655 of bank
notes, giving a net decrease of $15,-
120,728.
TIL laws of Congress simply provided
for the possibility of these results. They
made it 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
| probably employ. And this fact means
| that, in their jud gment, there was no active
demand among the people for the whole
volume of outstanding bank notes Had
such 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 infationists the
| fact that under free banking there has
| been an increase of National Bank notes
to the amount of $14,368, $50 in about
| fifteen months, and during the same pc.
Rod decrease of bank-notes redeemed
and surrendered to the amount Of $780,
4S9, 5S3; showing net decrease of $15,-
100, 128. 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 SIC, 0S3, 29l
in legal 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
rency to meet the wants of trade''? Not
at all. Such facts would not exist in the
presence of a deficiency. Currency un-
der free banking is a matter Of supply
and demand, and is quite sure so to regu-
late itself as to make the supply equal TO
the demand. The simple truth 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 7. Indepelld-
ent.
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