The daily gazette., 1877-11-13
THE RESUMPTION ACF.hs
The suspe.siSn OF 1914, 1887. 1857
Y liAi o and 1851. .ailu sN- Hr
Vie,os Of Mr.. Shtickers-IHe Impossible
sty Of Restoriag the Specie Standards
on January l, 1879. efi 4l'wh ioa.

To the Editor of the N. Y. Herald:
In his speech made at Mansfield on
the 18th Of August last Mr.. John Sher-
man said that unless prevented by the
repeal Of the resumption act he certain
'ly could and would restore the specie
standard by the 1st of January, 1879. .fte
Let me call your attention to the fact
that no commercial nation in the world
has ever yet been able to support con
vertible paper circulation Of $500, ,OO0.-
600. The active paper notes of Great
Britain do not exceed at this time S270,-
100000; those of the German Empire
are less than $500, 900 900 in amount. The
largest convertible circulation ever sup
ported by the Bank Of France was $780,
000, 900, just prior to the breaking out of
the late war with Germany, and was so
excessive that suspension took place
within fortnight after the beginning
OF hostilities, and the largest nominally
convertible circulation ever aAoat in the
history OF our owA- country was in 1857
just before the memorable explosion
OF that year-and that it was excessive
the fact Of the ex piosion and the severi-
ty Of 1t abundantly proved. Those ex-
amples are pregnant with instruction.
They seem conclusive that we cannot
sustain in America o really convertible
IL
$3.50, ,000. 900 for il France with 81, ,4e0,-
OO0. .0O0ior 81, 900, 900 600 of gold and sfi-
yer among her people and in the vaults
of her national banks if England with
$700,000,000 or $800,O00,00O within her
borders il Germany, with alikeamount
at the command of her banks and peo>
pie if neither of these great and Opu-
lent empires can support a convertible
circulation amounting to or exceeding
$500, 100000, what shall be said of the
power Of these United States to support
1000, 600, the constant and necessary
tendency Of whose gold and silver is to
take to themselves wings and fly aw " /?
Can we do in America what long expe<
rience proves to be i'm apostolic In France,
Germany and Englandp Assuredly not.
The laws that govern the distribution of
the precious metals and convertible cur
rencies among commercial nations are
as fixed and irreversible asithe lawsthat
govern the physical universe, and so
long as the obligation of the issuer of
paper notes 10 redeem them in coin is
real and not merely nominal, the sum of
such notes possible to circulate in this
or any other commercial country is ex-
ceedingly limited, relatively speaking,
and cannot be exceeded without danger.
The present paper circulation Of the
country is 100000, 900, of which more
than $5O000O, ,0O0 are In constant, active
use. 1t contr action must be carried
down to $3.50, 100000 as experience will
prove it must be, can Mr.. John Sher-
man effect so vast u diminution in PEE
riod of seventeen monthsp a-,. ,..I Of, Hs
But in further proof that contract on
must be carried to $3.50, 100000 l beg to
call your attention and that of your read
ers to some remarkable facts. We have
had in these United States four general
bank suspensions ofspecie payment and
three general assumptions. The first tsus-
pension took place in 1914, when the ag-
gregate note emissions were about $780,
100000. The banks promptly seized
upon the opportunity to expand, and by
the end of 1916 had managed to increase
their circulation up to so, ,000, 900. A nom
inal resumption was effected in 1917
through the action of the Second United
States Bank, which establishment made
large importations of silver, but it could
not last, of course, and upon the disap-
pearance of the metal thus artiticially IN
Groduced into the circulation by the bank
which had taken place by the middle
of the year 1878 the inevitable reaction
set in, and the whole banks, national and
State, set to work to save themselves
as they always do in such cases--by ruin
ing the commercial industrial colnmuni-
ty and by the end of 1919 had reduced
paper circulation from 500, ,000, 900 in 1917
TO $45, 700, 900 at the latter date, con-
traction of tifty-four per cent "The
cause of the specie leaving the county,"
says Gouge in his "Shoru History of
Paper Money, was "that the excess of
paper money still continuing to operate,
the specie was exported by individuals as
fast as il was imported by the bank. The
result would have been the same had the
bank imported $70,000,00U instead of
81, ,O00,0UO. If we had mines as rich as
those of Potosi, and paper should be in
excess, we should not be able to retain
the silver to keep IL convertible" Again
in 1880 the banks began new career of
expansion Their whole circulation at
the close of that year was about S60n,-
OOO, 900 they steadily inflated, until 1
May, 1887, it was $1i9, 900, 0,009.
The second universal coll tpse took
place in that month and year, and in-
volved all the local banks, aud ais the
Bank of the United States. No sooner
was the explosion complete, however,
than the banks were seized with the
customary spasm of virtue, and set about
the work of "resuming" and attained
condition of honesty In 1913, meantime
reducing their circulation from $l49 000,-
900 at the date Of the collapse to S58, ,0O0,-
600 at the date of the resumption, con-
traction of Vi ixty three per cent. In Sep
tember and October, 1857 another collapse
took place, the paper circulation being at
that time $215, ,000, ,000-the largest pro-
Tossing to be convertible into coin upon
demand in our monetary history. Re-
sumption again became the business of
the banks; in q period of about four
months they contracted their issues down
to S155 900, 900, or nearly thirty per cent,
and again the commercial and industrial
classes sustained the loss and suffering
inflicted upon them by bank cupidity and
mlsm,anagement. In d;' aooi n,s lou,.n tanS anu
place (thouGh in 1873 the national banks
Suspended payments even In "worthless
ragsl" fact the country will do we'll to
remember); and how aud by what mea-
sures resumption is to be effected is the
supreme question of the hour;: 1t will
not take place in January, 1879, however,
Mr. John Sherman aud Squire Wood
| ford to the contrary Notwithstanding;
but when it does take place, If it ev