New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-03-22
TO CREATE 4 T1fTTM.


Attempts TO initiate the circulation lave re-
pcatedy caused a deadly contraction. The
panic Of 1883. in its immediate origin, was Of
this sort. The trlk Of free silver followed by
Secretary Carislc'S grave discussion Of the pro-
prlcty of paying silver only for new Treasury
notes, prompted n withdrawal OF deposits
amounting to S2G0.0Oo0O0 from the banks. The
consequent shrinkagc Of credits Frustrated
business everywhere, though the effects were
largely due even then to the expectation that
the tariff would be changed. Before President
Cleveland suffers the Vacuum bill 10 become
law he ought TO consider whether ii will cause
another destructive contraction
The paper currency in use outside the Treas
ury is now about Sl.O19.O00.OOO. of which the
gold certificates. S1O000OOO the legal tenders
and currency certificates. S3i1 100000. and the
now Treasury notes 14l.000OOO in all Sb,2,-
100000 are directly rcdccmablc in gold. Few
Of the gold certificates ever appear in active
circulaton a larger proportion of the legal ten
dcrs. though they have long been recognized as
rcdccmablc in gold, and still larger proper
ton of the new Treasury notes. because 'hcre
has been some doubt about their redemption
More commonly thrust into circulation than
either are the silver certificates. because no one
wants 10 keep them. knowing that thcy are re-
decmablc in silver only. Out OF all payments
ut the Ncw-Iork Custom House in February
3d. per cent was in these certificates, although
they are in amount less than third OF the
paper circulation The legal tenders are also
about a third of the paper circulation, Dut only
2O.J per cent Of the payments were midc III
these The new Treasury notes are not II per
cent of the paper circulation, but were used III
10 per cent of the payments. These payments
show what part Of the currency people get rid
of first being least willing 10 hold
The Vacuum bill is an attempt 10 force people
TO take silver certificates in payment of sal
aries. pensions and all other claims against the
Government. II requires that silver coins or
thc certificates shall he used In such pay
mcnts, but no law 10 that effect would he want
ed if people were willing TO take them. The
attempt to force them upon reluctant creditors
would inevitably tend 10 increase the desire I"
hold gold and the notes expressly rcdccmaDie
in gold, and to get rid Of the silver c"rtiilcates
That state of things naturally creates pre-
MUM on gold. This tendency would be vastly
increased by the provision that the new Treas
ury notes shall be retired and new certificates
nut out instead Of them There was time In
August 1892, when over half the payments oil
customs duties were made in these notes, al
though they were then not tenth OF the paper
circulation. The same feeling would induce
people to present them as soon as convenient
and 10 demand the gold for them. The Treas
ury could not refuse TO give the gold without
starting n premium on gold AT once. and yet II
could not afford to pay ont gold because de-
plction of its redemption fund would soon start
a demand for redemption Of legal tenders ais"
The President knows, 1t may be presumed
that a premium on gold would mean Il trcmen-
dolls contraction Of the actual currency at once
II would instantly take from the volume ~
notes that are used and accepted freely the
whole body of gold certificates and lcgaltcn
notes. over SiOOO0O0OO in amount or 40 per
cent Of the whole. The contraction in the
money freely used Is simply contraction IN the
volume OF active circulation. The gold ccrti-
Gates can hardly he rcckoncd * active now cx-
cent for transactions between the banks. but
besides these there would be- about s3il 100000
Of legal tenders rendered inactive, because pco-
pie would hoard them or send them To the
Treasury in order to demand gold for them
If Mr. Cleveland does not realize that a prac-
teal contraction Of Il third in the volume OF
active circulation would be disastrous he should
consult the experience Of last summer.
The reason is that commercial credits would
shrink Immediately. in proportion 10 the shrink
age in active or available currency. Probably
there may be in circulation AT any time credit
PAPER such as bills. drafts and notes payabl"
at banks amounting 10 ten times the volume
of paper money. If the latter shrnkS, the cred
II paper ShrinkS Thus the same step which
puts SiI1 100000 Of paper ont OF free ana
active circulation would tend TO cut down com
mcrcial credits by S34lo0Oooo0 shrinkage
as great aud rs disastrous aS was experienced
last summer. The Vacuum bill, in short, tends
To create Il vacuum in the credits by which i'll
dusries are sustained, and in the means Of the
laborcrs who depend upon those Industries for
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