The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-05-15
THE FLOW OF GOLD.
EFFECT OF THE RUSSO unKrsH WAR ON COM

EFFECT OF THE RUsso-TURK1sH WAR ON conf
MERcE AND THE SPECIE CURRENT.
The following communication has been forwarded
to US by Nr. Wendell Phillips and Is published at his
request
To THE EDITOR OF THR HEEALD:--
There Is in Europe. The current OF gold which
a little whilc ago setting toward our shores Is
turned back aad We are exporting gold IN large
masses every day. stl business is revlving and
merchants are buoyant with hope We expect, and
without reason, to make money The troubles OF
our neighbors across the Would this be so if
our banks were to-day on gold basis ana our hnan-
cal method was thus part OF the European SYSTEM
We affirm that II would not DO possible. II to-day
banks were required 10 pay gold bushes houses
would be crippled, and Instead OF helping this
European war would complete ruin The fact that
cur currency is non-cxporablc our banks
free from the old bondage gold is all that
to-day Tho advantage of such monetary independence
OF other nations was very clearly shown at the time
OF the great financial crisis England in 1885, when
hundreds Of what had been considered the strongest
business houses ruined and widespread distress
prevailed. |; will DO remembered that all through
that terrible financial crisis our currency being
cxportabc one and entirely independent OF that OF
Europe, our domestic operations suffered no incon-
vcncncc from tho trouble abroad We were able 10
ship god TO England at profit, and thus 10
itself Now again, we have another striking ius:ra-
tcn OF this same law in the effect which the present
war in Europe is having upon the business interests
OF this country II must DO apparent to every ono
that at the present time finances, were upon a
gold busis tho effect OF the present war in Europe
would be TO disturb our finances 10 such that
the banks In sc-deIence and for their own safety
would be obliged to lessen largely wholly Withdraw
accommodations 10 their customers. This would
sary tor merchants to employ all their efforts
70 protect themselves from rum Instead Of
able TO take advantage OF every opportunity max
ing money offered them by their less fortunate
neighbors across Tho Does not this show that
there IS safety and profit in currency liable
affected by the financial movements OF other nntionsY
Let the clamorers Tor gold as the only legal tender
compare experience in 1866 and to-day with tho
disaster and embarrassment we should have ic then
and nov II our banks had been gold basis and In
face OF let them deny they can that tho
safety aud profit Of largely debtor nation like
consists o,ha avoiding eaangns monetary alliances
ness was often interrupted, anu TO the extent oil panic
whenever England had occasion to call for gold
But twenty or thirty years ago foreign in
deotedness was comparatively nothing TO what II
IS At the present time. II on the oasis the
hnaDcia disturbances abroad which have again turned
the Hood oil gold toward Europe would compel the
banks immediately TO contract thoir rotations
III order TO prevent the necessity Of suspension the
result would be such business engagements through.
out this great country that tho loss would
hundreds II not thousands, OF millions oi dollars
We owe present independent financial position to
admirable national bank system, which has proved
adequate TO an business requirements Is sound IN prn-
cipe and proof against foreign disturbances. What.
ever change we may hereafter make in our financial
arrangements one thing is certain namely, that the
such immense advantages merely to adopt the old
gold system again. The bonds deposited with the gov
ton are worth a large premium in gold.
The law also obliges the national banks
Il ss II
below gold. Let the government resume specie pay
mcnt tho legal tenders and the banks will have in
gold funds nearly double their circulation. The gold
value oil thor bonds deposited with the government
added TO their legal reserves furnish this; hence
there IS no imme,nte necessity for their resuming
specie pay mcnt. Should the banks resume gold pay.
mcnt II would nccessitate the dividing OF tho gold Of
the country small parcels among our 900 banks,
and leave each too weak to meet any sudden
demand Tor gold. II the government resumes on the
legal tender, that would keep tho gold in Que mass in
the hands OF the government, which would then DO
able 10 meet such demands tor gold. This would be
substantially the present French system, which
the head OF the commercial world in the
financial strength OF her government aud
tender by the government will settle the financial
question: as far a. 1t Is safe and practicable to do
NJ present. This done confidence would be restored,
and with revival OF business ho banks would require
the large part OF tho Tor their and
The government can easily keep tho balance at par
with gold France, from the close Of her war 10 the
present time has kept much larger sum OF legal ten
ders ut par by receiving and paying them out gold,
and has gradually accumulated gold during the whole
period. Let our government do the same. II is no
experiment France has proved its pracucapity and
safety unGer much less favorable circumstances. In
the present state OF public opinion tho national
bank system must form Tor q long
the basis OF tho future financial system of
this country. Its strength Is In the fact
that It's currency is national, good in
Texas as Ia Massachusetts; iuiIy secured and proof
against foreign financial disturbance. WhiIo It admits
OF boing increased reduced with the demands oil
trade It's weakness is tho dlshonored legal tenders
once let these be honored by the government the
banks require but little gold leaving that
in the hands OF the government, which needs IL
The present reduction Of currency Is made
great loss and cost 10 the whole trading community.
This is no tine Tor hazardous experiments for pro-
longcd wrangling over theories. The course pro-
posehat Is Tor tho government TO simply redeem It's
legal tenders and leave everything else as II stands
does not commit any party to any policy. While II sat
isles the advocates OF gold basis by moving step
in their direction, 1t at the time avoids offence
the greenback party by leaving tho whole question
still open for final settlement by the people.
BosToS, May TO- 1877. II. N. BEARCE.