The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-11-12

distribution OF the precious metals and convertible
currences among commercial nations nrc as fixed and
ireversibc us the laws that the physical uni
verse, and so long as the obligation Of tho issucr 81
paper notes to redeem them in coin is real and not
merely nominal, tho sum OF such notes possible TO
circulate this any other commercial country Is
exceedingly limited, relatively speaking, and cannot
be exceeded without danger Tho present paper
circulation OF tho country is $7o0 600 ooo Of which
moro than $500 900 arc in constant, active
use II contraction must be carried down TO
$3.50, 000,0 900. experience will prove II must
bo, can Mr. John Sherman effect vast q diminuuon
in n period OF seventeen monthsf
But further proof that must be carried
10 $3.50 600 beg TO call your attention and that OF
your readers TO some remarkable incts Wo have had
specie pay and three general The
first suspension took place In 1874 when tho aggregate
promptly seized upon tho opportunity TO expand and
by end OF 1916 had managed TO increase their CIR
saln,iSn up to si9'co nominal rssu gnnOa
United States Bank which establishment madc large
importatons OF silver but II could not last of course,
AND npon the d,sappcarance OF the metal thus artn-
ciay introduced into the circulation by the bank
which had taken place by tho middle Of the year 1873
the inevitable reaction set in and the whole banks,
national and State, set to work to themselves
they always do In such cases-by running
the commercial and industrial community and by the
end OF 1919 had reduced the paper circulation
from sos, 900 In 1917 to $45,0 900 at the
latter date. contraction Of nty-four per, cent
sThc cause OF the specie leaving tho country" says
Gougo in his "Short History OF Paper Money was
'that the of paper money still continuing to
as it imported by the bank. The result would
have been tho Same mad inc bank imported SO 600
as those OF Poos and paper should DO in excess we
should not be able 10 retain tho silver keep con-
vertlble." Again, in 1880 che banks began q new
steadily ny in Inflated until in May 1881 !. WIS
took place In that month and year, and in
voved all the local banks, and also the Bank
OF the United stalcs No sooner was tho expo-
with the customary spasm OF virtue and set about tho
work OF "rcsuming'' and attained condition OF
honesty in 1S43 meantime reducing their circulation
from $l49,00 600 at tho date OF tho collapse to
S5s,OoOoOO at the date OF tho resumption, con.
traction Of sixty-thPoe per cent In September and
October 1857 another collapse place. the paper orr
cuatlon being at that time $2i5 0o0. 00o-hc largest
our monetary history. Resumption again became tho
business OF the banks period OF about four months
nearly thirty per cent, and again tho commercial and
industrial cassee sustained the loss and suffering
inflicted upon them by bank cupidiiy and msnanage-
men, In 1861 fourth and Dnal suspension OF specie
payments took place (thoush In 1873 the national
banks suspended payments oven In WORTHLESS raGs!"
q fnct the country Will DO well to rcmembcr); and how
and by what measures resumption Is to be effected Is
the supreme question OF tho hour IL will not take
place January, 1870 however, Mr. John Sherman and
Squire Woodiord 10 the contrary Notwithstanding;
but when II docs takc place, II 1t docs. the pro-
ductvc classes will foot the bill and to tho utcrmost
farthing That is the one sure thing in the midst OF
many that are uncertain But our own country docs
not afford tho only examples worth tho public at
of Great Britain suspended specie payments In 1907,
aud remained IN suspension Ill 1S21-a period sub
passed an act compelling resumption before June.
1898. at that time the whole potc circulation being
$3.50, 0oO, oo0 Az the date Of The resumption (which.
owing TO the powerful and vigorous measures Of tho
Bank OF England, took place In 1921 II had been
ducod to $l20 600 000-a contraction, substantially OF
my per cent Tho last example is that OF France.
The Bank OF France, under The pressure Of war, sus
pended in 1870 when i's circulation was
n 1
1878, they aggregated $614, 000 900. When the war
with Germany and he Commune had come to an end
and the indemnity had been provided for the bank be-
gan TO set It's house In order preparatory TO resump-
tion, which It is under legal obligation to accom-
tmo slightly under $500, 600, 900, a contraction Of
about twenty per cent; but until they arc reduced to
her o natural limits, which venture 10 NIX a.
ing the presence In her vaults OF 600 Of the
precious metals. Tho contraction 10 be wrought by
the Bank of Franco is, then fifty per cent
We must not BIO deceived by superficial appearances,
many II Is widely supposed that tho low pre-
MUM on gold indicates thst we upon the verge OF
resumption and that, in tho language OF Mr.. John
Sherman, at Mansfield, VIC are but tnreo or two do
grccs removed IRON its nnal attainment This isa
plausible, but mischievous and most misleading, faI
lacy The proof hore:-In the years 1918, 1919 and
1870, while tho American banks were contracting their
actual convertibility, their notes werc during
tho whole time, nomtnaly at loast, converts
yo S Contraction Of fifty per cent took place.
Whom tho Bank Of England began iiAwerk OF resump-
tion, in 1919, tho premium ON gofG Was but nve por
cent, yet contraction of my per cent OF the whole
issues OF England necessary before convcrtbiity
was finally effected. Tho highest premium TO which
gold and silver attained during the resumption period
between 1887 and 1843 10 America was seventeen per
cent and yot contraction OF sixty-hrce por cent
necessary restoration Of the specie standard. Dur
ing the suspension In tho latter months OF 1857 the
premium gold ana silver was merely nominal-it
did not exceed pcr ccnt-an6 yet tho banks con-
tracted their circulation nearly thirty per cent before
they able resume. The premium on French
bank notcs since the suspension In 1870 at no time
reached three per cont but contraction Of
per cent has already been effected; but the bank has
not resumed, and few months will toll whether tho
Bank OF Franco cannot do 80 without producing
serious ind danger pressure upon the French
people.
assume, from these examples that until the paper
in circulation reduced to $3.50 000 600
sound resumption these United States Is utterly out
OF the question But if be true that contraction Of
than $3.50 000000 is still TO DO effected Is II not
clear that Mr.. John Sherman has OH hand bigger
operation than can be accomplished In seventeen
months from tho 17tn Of August iastf No doubt Mr..
John Sherman la giant, but 10 bore holc In the car
or put a ring In tho nose OF Lcvinthan good deal
transccnds HIS powers, even though aided by Squire
Woodford. Your obediont servant,
NovEMBxR TO- 1877 J. w. SCHUCKERS.