The Dallas daily herald. [volume] (Dallas, Tex.) 1873-1887, 1878-01-30
FINANCIAL QUESTION.
GreenbgclIs the Cause OF UneNRmpled
EtDistress-The Gold nOIInr the Fun
blem OF Labor Behind Initiation
Stalks Caesar aud the Empire.
10 nc Ndltor Of INC Herald

stalks CAESAR nnd the Empire.
10 the Editor of The Herald
SIR, There is universal surprise ex.
pressed everywhere Mt the great mum,
Der # business failures, and that in the
midst Of uneXamplcd plenty we should
be surrounded with such uneXampled
distress.
Pradoxical as it may seem, the
bounteous haryests Of last year are one
cause of the great and Unprecedented
financial depression through which we
are now passing The wheat crop of
1877 exceeded 10y fifty million bushels
the yield OF any previous year, while
the corn and other crops were equally
large. The Turco- Russian war closed
Odessa and other great grain shipping
ports OF the Black Sea and, as con-
sequence we received a higher price for
our grain in Europe than we would
otherwise have done. Our large sur
plus of grain, with the enhanced price
received therefor greatly contributed
to increase the balance Of trade that
was already in our favor. The large
balance of trade in our favor has
brought gold down to | 4 per cent
premium, and this is the mighty lever
that has upset all values and caused
unnumbered financial failures.
In 1860 all property throughout the
United States had a gold valuation
When greenbacks were issued gold, by
a tacit but universal law, still remained
the standard, while greenbacks We're
made the unit of measurement of that
standard. Thus, to Illustrate In 1861
A had $4,000 worth Of property, gold
valuation, when gold went up to
81 % lie marked his property
up to So 800, and when gold
rerched 81 so he marked it up to $lS,-
900, while the intrinsic value Of greens
backs was only iitty-cents on the dollar
Thus when greelbacks were ut their
lowest valuation, his property had its
highest appraisement When the war
closed, industries revived and gold
came down, until in 1878 it stood at
81 10, or in other words greenbarks
appreciated until they reache 80 $40
cents; but A had not marked down his
property with he same alacrity that
he had marked it up. The $4,000 OF
fictitious value became Il large part OF
his capital. He had expanded his busl>
ness to that amount, borrowed money
ON it, and acted in every respect as ii
it was reality instead of fiction.
When the financial crisis of 1873,
brought on by oyer-production and too
great expansion of credit, swept over
the land like tornado, A went into
bankruptcy, his $4,000 OF assets would
not pay $4,000 of liabilities
The paper money in circulation in
1873 was $40 100000 National bank
notes; 1856. 100000 greenbacks and
S4l,7gQ 600 OF fractional currency, max.
ing grand total OF $40 10000, which
was the greatest amount OF paper mons
ev that had ever before been in circula-
ton in the United States. The amount
had never before reached SIOOOOOOOO
with the exception of three occasions,
which were in 1866. when it was sIOS,~
OBI. in 1861 S73l, $500, and in
1872, S73l $4,000; so the crisis of
1873 vas not caused by insufficient
money TO satisfy the demands Of CONS
merce." In the twenty-five years which
elarsad from 1885 to 1860 the paper cir
culatlon of the country, left free and
untrameled to expand itself, increased
from one hundred and three millions
to two hundred and seven millions, or
at the rate of 1876 per cent per annum
The newspapers Of Texas have eongraiN
ulatory articles or account OF Texas
having had a smaller percentage OF lall~
lures than any other portion oil the
Union, the Pacific states and territories
excppted. What is the reason that less
failures have occurred in Texas than IN
other states where greenbacks were the
circulating medium? Ii is not because
the bankers. merchants and business
men of Texas have any greater business
capacity, or any larger capital than
business men elsewhere; not at all Up
to the fall of 1872 Texas had q specie
currency, and gold alone was the stand
ard OF values in the fall Of 1872. Through
railroad influence, more than any other
cause, the people OF Texas adopted the
greenback currency; gold was then
81 10 premium. so the fictitious e1pan>
sion was only ten per cent IL Il one
of tue immutablc laws OF finance, as well
NJ in the science Of mechanics, that the
contraction is always the equiva>
lent of the given expansion.
Hence the contraction Of values