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

called.the s.Sub-treasury Bill" By tn
terms of that law the President was required
to withdraw the government deposits iron
the State banks, and place them in the Gus
tody OF bonded officers of the government.
The passage of that law at once disclosed
the weakness of the State banks. They hat
been doing business on q false principle
They were unable to meet the demands upor
them. and in May 1887, every bank south o.
New England. suspended specie payment
Then followed the old process OF stringent
contraction, after extravagant expansion
The inflated currency, like a full blown
bladder, pricked by pin, collapsed. Nom
inal values shrunk to almost nothing. Nom
ina. fortunes vanished Ii bubbles and wide.
spread ruin and bankruptcy were the fruits
OF this mischievous policy. The disasters
which followed the Revolutionary war, and
the war of 1912, were in some measure at
tributable to those wars, but the crash which
came Oh the country in 1887, was the result
Of partizan prejudice and unwise statesman
ship. issa
Nor were the mischiefs of this revulsion
confined to private citizens. The govern
ment OF the United States was reduced to a
state of insolvency. Its resources were in
the hands of broken banks, and it was left
without the means of paying its current ex
penses. On the 3lst of May, 1871, took
my seat in Congress, as the representative
vi the District Of which Augusta then con-
sttuted a part, and remember that there
was not money enough in the treasury OF
the United States to pay the members OF
Congress the eight dollars per day to which
| they were entitled for their services. And,
worse still, when Congress sought to bor-
row the insignificant sum of five millions of
dollars, TO meet the immediate wants of gov
eminent, the National credit was so low,
that tue loan could not be effected without
pledging the proceeds of the public lauds as
security for Its payment.
The Wing party under the lead of Mr..
Clay, sought to give relief to the country by
the mode which had proved successful on
two former occasions, viz the charter OF a
third Bank OF the United States. The two
houses by respectable maiorities passed the
bill, but, unfortunately, John Tyler who had
succeeded to the Presidency on the dea tn OF
President Harrison, under the influence Of
bad advisers, vetoed the bill, although he
had himself been an active agent in framing
it.
All that could then be done for the relief
of the country was to pass the tariff of 1912,
which replenished the Treasury, revived the
public credit afSd gave great impulse to
industry, in all its departments.
Thus, after nearly seven years Of travail,
the third great financial difficulty was over
come.
From 1913 to 1861, Notwithstanding many
mistakes of policy, which retarded our ma
tiOnal advancement and were attended with
some disturbances, the country was in con-
dition of comparative prosperty-the cur
rcncy had been bought to the specie stand
ard, in particular lOca Titles, but business OPP
erations were seriously impeded by the want
of circulation of uniform value in all parts
of the Union and by burthensome rates OF
exchange.
] think, from the above narrative that it
must &c obvious to all unprecedented minds
that have not erred in stating that the i'm
mediate cause of financial revulsons is the
contraction of currency which is the neces-
sary sequence of undue expansion.
THE PANIC OF 1873.
come now to the consideration OF the dis.
tressing condition of money matters, under
which we are now suffering. 1t will be
found that it presents no exception to the
general rule which have stated.
OF the secession of the Southern States,
in its political aspects, [ have nothing to
say ; nor do propose to dwell on its conse-
quences in a moral. social, or industrial point
OF view-my remarks will be confined to its
financial consequences.
During the four years war which followed,
it became necessary for both sections to in
cur large debts, by the sale of bonds and the
issue oftreasury notes. AS the war pro
crossed these issues increased, and with
each emission their value decreased. AT
one period in the North dollar in gold was
worth $3.50 in U. S. Treasury notes, and in
the latter part OF 1864 in the South, dollar
In gold had purchasing power equal TO
$6O i'll Confederate States Treasury notes
Bargains made with reference to this kind
OF currency were, in substance, gambling
| contracts-mere Wagers on the result OF tile
terrible conflict which was in progress.
When the war ended by the defeat of the
Confederate armies and the overthrow OF
the government, hundreds of millions oi
Confederate bonds ard currency persisted in
the hands of the holders. In this wav,
| thousands Of those who had been over san :
guine OF the success OF the Confederate cause
were reduced to insolvency. or the amount
OF the issue of Confederate Obligations in
their various forms, it is unnecessary 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
| Union have become our obligations.
| In the progress of the gigantic struggle
the resources and credit OF the United States
government were sorely tried. Besides the
expenditure of all current resources, it be-
came necessary to incur debt, which, in
| its various forms, of Bonds, certificates an(
treasury notes, amounted, in the aggregate
to two thousand eight hundred and forty
five millions of dollars. or this amount, one
thousand two hundred and eighteen million;
dollars, was in the form of United State
bonds. The residue amounting to sixteer
hundred and twenty odd millions of dollars
was in the form of negotiable paper, wlicl
possessed many of the qualities Of money
and filled the channels of circulation.
CONTRACTING THE CURRENCY.
In order to estimate correctly, the magni-
| tude of the difficulties which the government
of the United States has had to encoun
ter since 1865 in bringing the currency bacl
to a sound condition, it is necessary to as
certain exactly how much paper, having
most Of the properties OF money, was in cir
culation at that date. If we then ascer
tain the amount now in circulation, tn
difference will represent the contraction
which has been effected within twelve years
The Comptroller of the currency, in hi
report, made on 3rd December, 1877 (pag'
l64), says: s'Of these obligations 1854, 1873,
959 were legal tender in payment Of al
debts public and private, except custom du
ties, aud interest on public debt" This /:
doubtless correct. as far as it goes, but
fails to give us full account Of the tru'
amount OF paper money in circulation. to
there We're other classes Of paper, which
while they were not legal tenders, yet en-
tered into and constituted parts of the cur
rency of the country. In a tabular state
ment to be found on the page just referre'
to, the Comptroller thus describes classes o
paper:
Certificates of debt .......... ss5, os3, Oo
Five per cent. legal tender notes, 33,954, %
notes. - sl7, oa4.1e
i e,o,,,, tl.;..,,,.~t.,. Gao 000j 00