New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1896-09-27
ONE CAUSE OF PANICS.
MR.. COFFIN THINKS SUDDEN INCREASES
IN THE VOLUME OF CURRENCY
PRODUCE THEM
rny TELEGRAPH TO THE rRIBUNE.l


Washington Sept 26-"1t is not a popular state
nent Just now but 1t is none the less true" said
caorge NJ Coffin Acting Controller OF the Cur
rency to Star" reporter to-day. that the sud-
den addition of large amount OF money 70 the
volume Of circulation is not good thing, and TINS
Is true whether the addition represents the best
money the worst"
what facts have you 10 sustain this dsseiuoh'
ne asked
1--WE have the facts Of the financial history OF
the United States for the last fifty years to sup
mort H." replied Mr.. Coffin. "One OF the worst
financial panics the country ever had was that OF
1877 occurring about seven years after the vast
discoveries of gold in California and Australia
An Investigation Of the causes OF this panic and
depression undertaken by the Boston Board OF
Trade In 1855 showed that OF the chief OF these
WAS the large volume of gold coin added to the
supply Of money. 1t operated in this way: The
m,ne-owners had to invest these enormous
amounts and favorite investment was the build
ing OF fast-sailng clipper ships for ocean trade.
This was done to such an extent as to increase the
tonnage OF the United States by 80 cent between
the years Of 1916 and 1850
..The natural effect of building more ships than
were needed was greatly to cheaper ocean freight
rates and this bore fruit in the Importation Of
foreign goods into the United States for which
there was demand, and which were sold at a
ruinous sacrifice. Extracts from this committee s
report will be found in the report Of the Commits
OF Labor Tor 1870 on i''PessioHS.
The panic and business depression OF 1873 was d.
rectly due to the same cause. with the exception
that the increase consisted OF deprecated paper
money instead OF gold
'In 1861 at the beginning OF the civil War the
total money in the United States was estimated at
sac 900 Co., OF which $40 900 was specie and SO2
600 900 was bank circulation BY 1866 the total
money had Increased to s770Oo00oo and in 1879 when
the panic occurred S74.O00o0. This Increase
consisted almost entirely OF greenbacks and Ma
tionaI bank notes. only $2500ooO0 being represented
nv specie as gold and silver were at premium
a nd not in circulation. Again the panic Of 1893
attribute chiefly to the same use-undue imitation
of the currency-and official figures bear out this
view In 1873 the total money was sT4.0O0o. and
nv 1899 this had increased 10 the enormous sum OF
20 ,2s 600 90 This great increase was represented
Nv The restoration OF gold to current circulation.
dine 70 the resumption OF specie payments by the
limited States by the large coinage OF SILVER ~
Treasury notes issued under act OF July H. isso.
for the purchase OF silver bullion. but redeemabe
"This WAS the straw that broke the camel :
ma in 1892 for not only did this act add S56OoW
70 the volume of currency In little more than
three years time, but the unscientinc metnod OF
The increase shook public confidence In the ultimate
Now II there Is any rational conclusion TO DE e
drawn from these facts Of history. IL Is that unoer
the operation Of natural law any sudden ana iarge
increase of the volume OF money Is sure TO induce
speculation, and speculation az certainly causes
panic and depression OF values.