Buchanan County bulletin. [volume] (Independence, Iowa) 1869-1891, 1878-09-06

measure Of April H. 1866, because they
believed that, under it. Secretary Nc
CullOch would have power to retire too
rapidly the paper circulation then in
existence.
This legislation of 1866 continued in
force until the 4th of February, 1868.
In the meantime, as shown by the re-
port of the Secretary of the Treasury
in December, 1867 there were retired
under it short obligations of the govern
ment amounting in all to $708, 100000
of which $46,000,000 were greenback
currency-reducing the volume to 1885,
100000. Our greenback friends insist
that the whole of this $70S,OOO,OOO-
consisting of $33 100000 of five per cent.
notes, $136, 900, 900 of compound interest
notes, $493, 100000 of seven-thirty notes
and $46,0OO,O00 greenbacks-was con-
traction of the circulating money of the
country; and that in this rapid contrac-
ton, at that period, is to be found the
source of all the woes that we have suf-
fered since.
Moreover, our greenback friends un-
dertake to hold the Republican party
responsible for this contraction; and the
Democrats, supposing that this history
OF the past would never be resurrected,
join in the cry-when in fact, it was the
Democratic party, under the lead and in
pursuance of the policy of Mr.. McCul-
loch, who were chiefly instrumental in
this legislation, and mainly responsible
for it. Therefore, whatever denuncia-
tions are hurled at the old political par
ties for this measure should be leveled
at the Democrats at least as much as
the Republicans. But I must come to
the defense of the Democracy to some
degree; because, with the exception of
the $46,OOO,OOO of greenbacks retired
during this period, there was really no
considerable contraction of the paper
money of the country. There was some
contraction, but must say that the ef-
feet OF this legislation has been greatly
exaggerated.
1t can not be truthfully said that the
seven-thlrty notes, amounting in all to
$3.50, 900, 900, and which were all retired
under this legislation of 1866, and the
previous act of March 3, 1865, constitu
ted a part of the circulating medium of
the country. These notes were convert
ible by their terms into fve-twenty
bonds. These fve-twenty bonds were
at a premium in legal tender notes dur
ing 1S65-6-7, and the seven thirty notes
being convertible into these bonds at
the option Of the holders, of course
were in the markets, only fraction
lower in price than the fve-twenty
bonds. OF course they had a ready
market value in every part of our coun-
try, because they were sought for as an
Investment; but as this market value
was above par nearly all the time, these
seven-thirty bonds were bought and
sold, and were as much security dealt
In, as the fiye-twenty bonds are, or as
our four per cent. bonds are now. And
they were no more currency" at any
time, than are the four per cent. bonds
which our government is now issuing
from day to day. The compound inter
est notes were notes payable three years
after date, interest and principal payable
at maturity; the interest compounded
every six months. Although they were
legal tender at their face value. it is
not in the nature of things that after a
half-years interest, or three months in-
terest even, had accumulated. they
would ever be used as currency; for no
one would pay out, at it's face value,
what was worth at the time three per
cent. more than its face; at least this
would not occur SO long as there was
any ordinary legal tender money acces-
slble: The same would be true of the
smaller number of five per cent. one and
two year notes. Now by this law of
1866 all these compound interest notes
were made convertible into five-twenty
bonds. So that from that time forward.
at least, but very few of them could
have gone into general circulation as
money. But inasmuch as these notes
were legal tender for their face value,
and national banks could count them as
part OF their reserves, and thus relieve
an equal number of greenback notes, to
that extent they may be fairly counted
as currency. But including all these
compound interest notes, the contrac
ton OF legal tender money proper, be-
tween the passage of the act of April
II, 1866, and that of February 4th, 1868,
there was total contraction or diminu-
tion of circulation, amounting to only
$40, 100000.
Currency is that which measures pro-
perty and conducts exchanges, and not
that which is bought and sold in the
markets. Now, if you will look at the
pricelist during all these periods, you
will see that the thirty notes were
bought and sold in the market; they had
a price and therefore were not currency.
Again: So far as the seven-thirties are
concerned, $6OO,0OO,O0O of them were
authorized by the loan act of March Sd,
1860. They were Immediately put upon
the market, and the whole 100000, 900
were sold before the first of August,
1868. SO that, if these notes were used
as currency, there must have been an
expansion Of the currency, from March
3, 1865, to August l, 1865, of $600,000,-
O0O, or $12O,OOO,000 per month. And
yet it is notorious that, during the whole
OF this period, gold was at less pre-
MUM than it was two years later, when
these notes had been retired at the rate
OF $5O0,OOO,OOO in less than two years
or at the rate OF about $50,000,000 pei
month. 1t seems to me that the most
careless observer and the greatest nov
ice In finance would be able to see from
this that these notes never entered into
general circulation, or became a part OF
the money of the country.
repeat that, even admitting that the
compound interest notes were currency
and were so used, as also the one and
two year five per cent. notes, the tota
contraction under this law of April II
1866, amounting in round numbers tC
but $l4O,OOO,OO0 This was regarded by
the great body of the people at the time
as too rapid contraction of the volume
OF legal tender paper. Because only
$3o6, 600, 900 of legal tender notes were
in existence, when the act of February
4, 1868, was passed, and the debates al
the time show that it was only the pur
pose OF this law of 1868 to stop the con
traction of the legal tender notes no
bearing interest, as no amendment was
offered looking to continuation in Cir
culatlon OF the remaining SAG, 100000 Of
compound interest notes at that tim'
not retired. Thus l have shown tina
the total contraction under the law O
1866, counting everything that can b.
properly counted as money, did not cx
ceed $140,000,0O0.
When Congress convened in Decem
Der, 1867, the Republican party deter
mined to reverse the policy of Secretar.
McCulloch, and come to specie pay
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