Mexico weekly ledger., 1877-11-15
COMMUNICATES.



There are a great many who under
stand fully what the word contraction
means, when used in the usual course
OF conversation, but when We speak
of the contraction of the currency it
seems to mistify them. This is oc-
casioned BY a want of knowledge of
the basis of our currency. Assum-
ing that all can fully understand what
contraction of the currency means,
by exa mining into the basis on which
it is founded, / will proceed to show
what is the effect. of contraction on
our property and commercial trans
actions generally.
When the currency is in a state of
contraction, all products begin to de-
feline and the currency begins to rise
in value that is one denomination of
the currency in its contracted form
will purchase more of a product than
the same denomination would in its
expansive or original form. This
contraction would then, in no case,
injure the man who is clear of debt /;
because the currency in its contract
ed form has the same purchasing pow
er that it had in its expansive form.
If / had one hundred dollars five
years ago, and was in need of horse,
l had to give it all for a very ordinary
plug. But to-day if l am in need OF
a horse | can buy just as good a one
for fifty dollars as l paid one hundred
dollars for five years ago. Well if
this is true, what difference is it 10
me, whether l have one hundred dol
lars or fifty dallars? The whole has
to go for the object of my desire any
how. The same would be true OF
any other product. As the volume OF
currency becomes smaller, it's pur-
chasing power becomes greater in the
same ratio. Men loose sight of the
fact that wealth is not estimated in
dollars and cents alone, but accord
ing to the purchasing power of those
dollars and cents. We as a nation
would not be one whit Weather with
a billion dollars in currency, than we
are with our five hundred and seventy
million dollars. Whether or not it
would be better, as a matter of con-
~senience, to increase the volume OF
currency is a question that / will not
discuss here but will say this, that
if all parties were out of debt, neith-
er contraction or expansion from its
present state would enrich or impov-
erish any of us. But we are not all
out of debt apd this contraction is
greatly to our disadvantage, and to
somebody's advantage. This / will
show by illustration.
Ten years ago / bought q farm
from Mr.. A. and agreed to.give him
FIVE thousand dollars for it. L paid
him one thousand cash in hand, one
thousand in one year from the pur-
chase, and gave Mr. A. q deed of trust
on the farm for the balance of the
purcha3e money. The currency be-
gins to contract by act of Congress
ordering a resumption, and my farm
and products raised thereon, have
gone down until l can only pay the
interest on the three thousand dollars
balance. What am / to do? l can
not meet the demand of Mr.. A. when
ny obligation falls due, and my farm
almost half paid for is sold at public
vendue for two thousand and five
hundred dollars, leaving a debt Of
five hundred dollars hanging over
mel MI. A. becomes the purchaser.
He has the farm in an improved con,
dition, two thousand dollars of the
purchase money, all the interest OF
the unpaid principal, and o holds
a judgement yer me for five hundree
dollars the balance on the purchase
price of the farmi My ten year:
labor is gone. My two thousand
dollars is gone and l am now five
hundred dollars IN debt and nothing
in the wide world to show for it. Blu
suppose ten years ago | had bought
me a farm and paid two Thousand
dollars cash for it, let the currency
contract or expand as much as it vii
/ still have my farm; and although i
will not bring as many dollars as
gave for it, it is still the same farm
and worth just as much to me as i
VAS the day 1 purchased IL.
What is the effect of contraction OF
commercial transactions? Wheneve
products of any kind r constant,
diminishing in value, of ours th'
money is withdrawn from CONNER
cial transactions. Moneyed mel
would prefer to loan money out at
very low rate of interest, rather THAI
make any attempt at speculation
Men who do not think may borroy
the money and invest in land, o
some other product, as j did and the.
will reach the same inevitable result
if they buy on a credit and the cur
rency begins to contract. Contrac
ton is the highway to bankruptc.
and ruin to a people who are in debt
Imitation on the other hand is til