Staunton spectator. [volume] (Staunton, Va.) 1849-1896, 1878-06-18

will be found that it presents no excep
ton to the general rule which I hay
stated.
i Ofthe secession of the Southern States
in its political aspects, have nothing t
say; nor do 1 propose to dwell on it
consequences in moral, social, or in
dustrial point of view-my remarks will
be confined to its financial consequences
During the four years. war which fol
lowed, it became necessary for both sec
tlons to incur large debts, by the sale O
bonds and the issue of treasury notes.
AS the war progressed these issues in
creased, and with each emission thei
value decreased. At one period in tn,
North dollar in gold was worth So. 81
IN U. s. Treasury notes, and in the lat
ter part of 1854 in the South, a dollar il
gold had purchasing power equal t,
$6O in Confederate States Treasury
notes
Bargains made with reference to thi,
kind of currency were, in substance
gambling contracts wagers on'th,
result of the terrible conflict which wa.
in progress. When the war ended by
the defeat of the Confederate armies ane
the overthrow of the government, hun
dreds of millions of Confederate bond.
and currency perished in the hands @
the holders. In this way, thousands Of
those who had been over sanguine o1
the success of the Confederate cause
were reduced to insolvency. Of the
amount of the issue of Confederate oh.
legations in their various forms, it is un.
necessary to say anything, as, with the
close of the war, they ceased to be of any
practical Importance.
The matter which concerns US now is
the amount of the obligations of the
United States, which, since the restora-
ton of the Union have become our obi
cations.
In the progress of the gigantic strug-
gle, the resources and credit of the UNI
ted States government were sorely
tried. Besides the expenditure of all
current resources, it became necessary
to incur a debt, which, in its various
forms, of bonds, certificates and treasu-
ry notes, amounted in the aggregate to
two thousand eight hundred and forty
five millions 0fdollars. Ofthis amount,
one thousand two hundred and eighteen
millions of dollars. was in the form of
United States bonds. The residue
amounting to sixteen hundred and twen-
ty odd millions of dollars, was in the
form Of negotiable paper, which Dos
sessed many of the qualities of money.
and filled the channels of circulation.
CONTRACTING THE CURRENCY,
In order to estimate correctly, the
magnitude of the difficulties which the
government of the United States has
had to encounter since 1865 in bringing
the currency back to sound condition,
1t is necessary to ascertain, exactly how
much paper, having most of the proper
ties of money, was in circulation, at that
date. If we then ascertain the amount
now in circulation, the difference will
represent the contraction which has
been effected within twelve years,
The Comptroller of the currency, in
his report, made on the 3rd of December.
1877, (page 164, says :-"Of these ohliga.
tions 1854, 19S, $50 were q legaS tender in
payment of all debts, public and private.
except custom duties, and interest on
the public debt" This is doubtless cor
rect, as far as it goes, but it fails to give
us full account of the true amount of
paper money in circulation, for there
were other classes of paper which, while
they were not !sgas tenders, yet entered
into and constituted parts of the curren-
oy OF the country. In a tabular state
ment to be found on the page Just re-
ferred to, the Comptroller thus describes
the classes of paper
Certificates of debt s5raa 900
Five per cent legal tender notes 33c54230
Compound Interest legal tender
notes, 2l7,0A, ,1so
seven thirty S3O000O 900
q. s. legal tender notes.. ....,.. 433 16O, $50
rractlOnal currency. 1854, ,142
Making the enormous aggregate ofsl, ,e25. .57e, sol
But to get at the true amount of pa
per then in circulation we must
add the amount of National Bank
notes, z:-....~,,,......--........ I76,2lS, ,955
Which swells the sum total-.....Sl, so, ,79O, ,456
Thus it will be seen, that in 1865 the
aggregate of paper In a negotiable form
which practically formed part of the
currency, amounted to the prodigious
sum Of
EIGHTEEN HUNDRED AND ONE MIL
MILLION OF DOLLARS.
This was an imitation which greatly ex-
ceeded anything ever known before in
our history.
To redeem this paper at once in specie,
would have required all the coin of the
world. Immediate redemption was
therefore impraotlcable it must be the
work of time. To prepare for it, it be-
came necessary to resort to vigorous
system of contraction. To effect this,
two modes were adopted list, by fund
ing, that is by exchanging bonds for the
outstanding notes and certificates; End,
by cancelling such as were paid into the
Treasury and were not necessary for cur
rent expenses. These processes have
been carried on with great energy and
success, as will be presently stated. As
the process of contraction progressed,
the value of the government paper, rel
atively to gold, 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-fOurty 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
for gold, created by the sale by the gov
ernment of fifty millions of Al 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 of Janua-
ry, 1879, greenbacks will be of equal
value with gold, and provision has been
made for their redemption in gold at
that date.
Having thus ascertained the aggre-
gate of currencyinc circulation at the close
Of the war in 1865, the next step in our
inquiry is to ascertain the amount now
in circulation, so that, by deducting one
from the ether, we can ascertain the
amount of contraction that has been eff
fected.
The Comptroller of the Currency, on
page l64 of his last report, informs US
that the following items composed the
paper money then in circulation -
U. S. legal tender treasury notes... 1851 $40 1Ss
Old demand notes..-..................... 63, ,70l
Fractional currency 1S043, ,O2(
Aggregate Of U s. notes of all kinds $3.50 AL. OH
Add bank notes in circulation...... 800, ,63l us
Aggregate of both classes of currency, $500 O7S
Now, if we deduct this amount from
the entire volume of paper in cireula-
ton in 1865, it will be found that the
aggregate reduction in the volume oi
currency, within little more than
twelve years, has been eleven hundred
and ezeve,s n1Ssoss Of dollars! or al
the rate of nearly one hundred millions
in each year; or, to state the proposition
| in another form, nearly two thirds Ol