The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1878-08-08
Hon. A. H. n. Stuart's Letter.

esponsc to request from some prominent
itizens of Augusta county, and published
ONE months ago. We do this to fulfill a
Promise we made shortly after its appear
nee, and for the further reason that the
,eople are DESTROYS of obtaining as much in
as possible upon the question dis
ussed, and because Mr.. Stuart is looked to,
" many of our readers, as capable of i'm
parting knowledge on a subject of this char
lcter.
We confess to the want of satisfactory
opinion as to the effect of legislation upon
5he condition of the country as experienced
for the past five or six years. We at one
time inclined to the belief that the policy OF
imitation had caused the business prostra-
ton. But when we refer to its inception and
the immediate cause Of it, and also to the con-
dition of the finances of the government
at that time, we are driven from that belief
and to the conclusion that it was reckless
speculation, and not contraction which pre-
cipitated revulsion. Up to the time that
Jay Cookies paper went to protest, and the
Northern Pacific railroad scheme collapsed,
as the result, and the Credit Mobilier mon
strosity was exposed, the whole country was
on a business tension, every avenue OF trade
was inflated-credit was stretched beyond
any legitimate basis to sustain it-and a
wild deirum of excitement pervaded and
controlled all the channels OF enterprise
and adventure. The utter hollowness OF
this assumed prosperity-for everybody
called it prosperity-this mad passion OF ad-
venture and speculation-was exposed whe n
the collapse of Jay Cooke vibrated from
ocean to ocean and from the Gulf to the
Lakes-gathering under its disastrous in
fluence business of all kinds and penetrat-
ing every channel of endeayor. Then it
was that contraction commenced, not ofthe
volume of currency, but of confidence. The
currency was greater 10y $50,000,000 in
1873 than it was in 1868, as we find in an
official statement from the United States
Treasury, now before us, and this contr0c-
ton of confidence continued on an increase
of $50. 600, 900, through 1874. As an illus
tration of the illusory basis of the business
imitation that prevailed at the time OF this in
cipient revulsion, followed by the whole
fabric of inflated business..collapsiug, may
cite Jay Cooke s. Co., whose operations PEN
etrated every business centre and influenced
almost every business transaction OF impor.
lance. The adjustment OF the affairs OF
that house demonstrates that it did not have
one dollar to one thousand OF its operations
that it was a colossal fraud, operating
upon the confidence of the country, and so
soon as that was withdrawn, the who'll rot
ten structure went to pieces. In like man
ner enterprises OF less magnitude, conducted
upon like deceptive basis without any STAN
dard to measure and control, and indeed
without intrinsic merit, followed in the down.
ward plunge. There was no violent fluctu-
alton or contraction in the currency to JUS
tify this. The volume of currency was
greater in 1878 by slI3, AL, S56, when the
collapse took place, than it was in 1865, when
the general speculation was commenced.
There was nothing in the legislation of Con-
gress or policy of the government that PEE
cipitated the reYulsion in the affairs OF
Cooke. 1t was simply the spontaneous
combustion of an over inflated balloon
the withdrawal of confidence incident to
failure to meet obligations, and consequent
ly tie exposure of the utter hollowness OF
the whole business imitation Of the coun
try.
Mr.. Stuart's premise, from which he argues
that contraction in the currency brought
about prostration of business. is utterly fall
lacious, and therefore his conclusion is I'M
tenable, He assumes to correct the state
ment of the Comptroller of the Curr ency
that 1854, 13S, $50 constituted the legal ten
der circulation, by forcing into the channels
of business
Certificates Of debit. S., O93, 900
Five per cent legal tender notes. 81, 954 ,230
Compound interest legal tender
s.-........"..."............" III, Uz4, loO
Seven-Thirty otes. OBSERVATION-DISCLOSURES. o3O, 0O,UUO
U. S. legal tender nOtes........... 433. l6O, 3S9
Fractional currency ................ 26 ,344, az
National Bank notes, .............. lie, 2l3, 800
Making q total cf.............Sl, SOl, $780, 76
This is a very formidable exhibit, but it
does not bear scrutiny, when it is presented
as the currency in 1865, and entering into
business channels from that date. The fact
is, the compound interest notes, the five per
cent. legal tender notes, and seven-thrty
notes were never. but for very short time, re-
garded as currency. They were retained as
investments. just as the four and one half
per cent. bonds are now. Upon the hypothe-
sis that Mr.. Stuart claims the volume of cur
rency to have been over eighteen hundre d
millions of dollars in 1865, he ought now to
claim it to be nearly three thousand millions
by including in his calculation the various in
terest-bearing loans of the government
Currency does not bear interest. and moth
ing that partook of that character could be
regarded as currency.
The currency of the country in 1865, was
in amount 1922 ,256, BAIT. and at the pres
ent time 1854, 465, SOL, with a purchasing
power greater by 5000, 100000 than in 1865.
There had not therefore, been contraction
of the currency from 81, sol, 79O,955 in 1865
to SCOOPS, 729. at the time he wrote,
some months since. 1t was not therefore
from contraction Of the currency that
the panic of 1878 occurred, and influencing
up to this time, but a contraction OF conf
dence, dating with the collapse of the fraud
ulent operations OF Jay Cooke & Co., and
penetrating into all The avenues OF trade.
The official table before us, prepared in
the United States Treasury Department,
shows that on the Both of June, 1863, the
total amount of State bank, government and
national bank currency in circulation was
1903. GAG, O5661. On June 80, 1870 this
amount was increased to 500, 375, S99 .48
in 1871, to 1855, 751. 06; in 1872, to
S73S, $50, 9G3.52 and in 1873, to s750,O62,-
46s "a. This was the year of the collapse of
Jay Cooke and the commercial panic, dur
ing the four years Immediately preceding
which there had been steady increase in
the circulation of currency, amounting in
the aggregate to over s56,00Q,00O. In the
year 1874, the year succeeding the COM
mencement of the panic. there was further