The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1878-08-08

: Fractional currency, ."........... 1884, i
| Making the enormous aggre-
gate of..".. .........-.."......S1,6 25, SIG, 81
But to get at the true amount
of paper then in circulation
we must add the amount Of
National Bank notes, viz: 176,213,95
Which swells the sum total to l,SO1, 100, al
\ Thus it will be seer, that in 1865 the as
gregate of paper in negotiable form which
practically formed a part OF the currency
amounted to the prodgious sum Of
EIGHTEEN HUNDRED AND ONE MILLIo
OF DOLLARS.
This was an imitation which greatly exceede
anything ever known before in our history
70 redeem this paper at once in speci
would have required all the coin OF tn
world. Immediately redemption was there
fore impracticable /; it must be the work O
time. 70 prepare for it, it became neces
sary to resort to vigorous system of con
traction. To effect this, two modes wert
adopted; LIST, by funding, that is by exchang
| ing bonds for outstanding notes and certifi
Gates, and I'd, by retiring and cancellins
such as were paid into the Treasury anG
were not necessary for current expenses
These processes have been carried on with
great energy and success, as will be pres.
emily stated. AS the process Of contraction
progressed, the value Of the government pa
per, relatively to golc, steadily increased,
or in other words the premium on gold de.
clined.
In 1865 the premium on gold was A cents
on the dollar. Recently it was but one
fourth of one per cent. 1t is true that
within few weeks past the premium has
increased to one per cent. but that is due
to temporary demand fo9 gold, created by
the sale, by the government, or fifty mil
lions of A per cent. bonds, for gold. When
these bonds are paid for. the demand will
cease, and gold again decline, and it is
confidently expected that on or before 1st
January, 1879. greenbacks will be of equal
value with gold, and provision has been
made for their redemption in gold at that
date.
Having thus ascertaineG the aggregate Of
currency in circulation at the close of the
war in 1865, the next step in our inquiry is
so that, by deducting one from the other,
we can ascertain the amount OF contraction
which has been effected.
The Comptroller OF the Currency, on
page l64 of his last report, informs us that
the following items composed che paper
money then in circulation;
U. S. legal tender treasury
notes. .......................... S30l ,340, lSS
Old demand notes............. 63,7O2
Fractional currency......... 1S,043, 1920
Aggregate of U. S. Notes --7-
of all kinds .................. $3.50, 447 ,O1O
Add bank notes in circula
tlon.. sou, G3l ,7I9
Aggregate OF both classes
of rrency........-......... SCOOPS, 729
Now, if we deduct this amount from the
entire volume of paper in circulation in
1865, it will be found that the aggregate re-
ductiOn in the volume Ut currency, within
little more than twelve years, has been
s'eleven hundred and eleven millions of dol
lars - or at the rate Of nearly one hundred
millions i'll each year +; or, to state the prop
osition in another form, nearly two-thirds
of the whole currency has been Withdrawn
from circulation within that brief period,
and we have now but six hundred and nine
ty millions Of currency to meet all the de-
mands of business, instead of eighteen hun
dred and one millions.
Here then, we have plainly revealed to
us the cause of the scarcity of circulation
the pressure in the money market, the hard
times and the Inability of the people to
meet their engagements. No just COM
plant can be made against the government
for adopting policy OF contraction. 1t
was a stern duty it is true but, nevertheless
a duty. Without contraction, it is obvious
tt ttnt hn md
nor could business be placed on sound and
healthy basis-gold and silver are the cur
rency Of the world-they are the only rec
ognized measures or standards OF value
among all nations of the earth. For us to
attempt to ignore this fact and to carry on
business with different standard, would
be to isolate ourselves from commerce with
foreign countries.
THE CONTRACTION ENDED.
In your letter to me, you substantially en-
quire when is this system of contraction
to cease and what is the prospect of an i'm
proved condition of our financial affairs
am happy to respond that 1t has ceased
To use homely, but expressive phrase, s'we
have touched bottom We have seen the
worst and confidently predict that at an
early day we shall witness marked revival
of business and gradual but sure return of
prosperity.
These are not idle words prompted by an
over sanguine temperament. They are the
results of careful consideration of unques-
tionable facts, which willnow place before
you, that you may Judge how far they justi-
fly the conclusions which have drawn from
them.
think we may safely assume, that if a
steady contraction IF the cur. ency, re-
lentless turning of the screw in the line OF
pressure, has led to great financial distress.
gradual expansion of the currency, re-
verse movement of the screw will produce
an opposite effect. This is just what we are
now about to experience.
That the process of contraction has gone
as far as it ought to 20, is demonstrated by
the fact that United States treasury notes
are now almost, and in a few months will
be altogether equal to gold. The object OF
the curtailment was to effect this result, and
it having been attained, there can be no "a
tional motive for continuing it further
But, if any were disposed to apprehend
further danger in this direction l need only
say, that within the last ten days Congress
has by law forbidden any further contrac-
ton.
We have then the present amount OF
treasury notes and fractional currency esti-
mated at three hundred and fifty millions,
as ssfixed fact' in our future calculations.
We may also safely assume that the Ma
tional bands will not make any material re-
duction of the amount of their notes, esti-
mated at three hundred aud twenty mil
lions, now in circulation, because their in
terests forbid any such reduction. We may
then rest satisfied that the present volume
of paper currency, amounting dncluding
fractional currency,) in round numbers, to
six hundred and ninety millions, cannot be
reduced.
And here let me remark that every dollar
of this currency is equivalent to gold, and
after the first day of January next will be
exchanseable for gold.
PROSPECTIVE INCREASE OF THE VOLUME
OF CURRENCY.
Now. let us inquire whether there is a
prospect of an increase of the volume of cur
rency, which will minister to the wants OF
the people.
You will observe that in all my previous
calculations have had no reference to gold
and silver, as portions Of the currency. |
excluded them purposely, because since 1861
they have in fact constituted no part OF the
currency Gold was a commodity of more
value than paper, and was therefore hoard
Sinaa 1879 silvQr