Evening star. [volume] (Washington, D.C.) 1854-1972, 1896-09-25
INCREASE OF MONEY
It Has Been the Cause Of the Panics in This
Country.
Acting Controller of the Currcncy
COfnn States the Reasons for
This Assertion.

ct is not popular statement Just now,
but 1T is none the less true said Mr..
George NJ. Coffin, acting controller OF the
currency, to a Star reporter TO-DAY, that
the sudden addition of a large amount of
money to the volume of circulation is not
a good thing, and this Is true whether he
addition represents the best money or the
worst
What facts have you to sustain this as
sertion?" he was asked.
1--WE have the facts of the financial his
tory Of the United States for the past fifty
years to support it, replied Mr.. Coffin.
''One Of the worst financial panics the
country ever had was that of 1861. occur
ring about seven years after the vast dis
ooveries OF gold i'm California and Aus
tralia. An investigation OF the causes OF
this panT and depression, undertaken by
the Boston board of trade in 1858 showed
that one of the chief of these was the
large volume of gold coin added to the
supply Of money. 1t operated in this way:
The mine owners had to invest these enor-
nous amounts, and a favorite investment
was the building of fast-sailfng clipper
ships for ocean trade This was done to
such an extent to increase the tonnage
of the United States by 81 per cent between
the years Of 1916 and 1856. The natural ell
feet of building more ships than was need
ed was to greatly cheaper ocean freight
rates. and this bore fruit in the imDoria-
ton of foreign goods into the United States
for which there VAS no demand, and when
were sold at ruinous sacrifice. Extracts
from this committees report Will be founo
in report Of commissioner OF labor Tor JOS"
on industrial depressions.'
More Recent Panfcs.
The panic and business depression of
1913 WAS directly due TO the same cause.
with the exception that the increase con-
sisted 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 $452.oW.Oo. of
which S2JOO00,OOO was specie and sao2WD.-
900 was state bank circulation. BY 1867
the total money had increased TO SiTo.vVp.
co. and in 1873. when the panic occurred.
was s774.Ooo000. This increase consisted
almost entirely Of greenbacks and national
bank notes. only $23.ODo@0 being repre-
| scented by specie. as gold and silver were
at premium and not in circulation.
Again, the panic of 1873 attribute chiefly
to the same cause-undue imitation of the
currency-and official figures bear out this
view. In 1873 the total money was STA
Np.U0O, and by 1893 this had increased To
the enormous sum of s.. ;25.O1O0. This
great increase was represented 10y the res
toratiCn OF gold to current circulation due
to the resumption of specie payments by
the United States. by the large coinage OF
silver from 1878 to 1870, and. lastly, by the
issue of $I.v6.s1OU0 treasury notes issued
under act July IA, 1890, for the purchase OF
silver bullion. but redeemable in gold. This
was the straw that broke the camel's back
in 1S.E;. for not only did this act add $lyi.-
nn.Ub to the volume of currency in little
more than thee years time. but the I'M
scientific method of the increase shook pub.
lie confidence in the ultimate stability OF
our currency and FASTENED disaster.
Now. il there is any rational conclusion
to be drawn from these facts of history. ii
| is that under the operation of natural law
any sudden and large increase of the vol
une of money is sure to induce specula ton
ana speculation as certainly causes panic
and depression of values"