The Providence news. (Providence [R.I.]) 1891-1906, 1896-08-22
What Experience Should
Teach the People.
The Folly of Issuing Irredeem-
able Paper Money.
What Washington Thought About
Continental Currency.

The people of the United States have
twice made an experiment in cheap fiat
money, but it is only just to them to
say that in both instances it was done
under tho imperious necessities Of war.
It is we'll at this time, when there is an
organized effort'to plunge the country
again into the cheap money slough Of
despair, to turn back and count the cost
Of the two experiments already made in
that line by our government.
When the people Of the colonies were
struggling to achieve their independ-
ence, they had no resources but their
own strong arms and patriotic hearts
to sustain them in the unequal contest
England studied to make them poorer
by denying them the right to produce
anything that could bo purchased in the
mother country, and when the ReYolu.
tion began the people had little money.
and the improvised government had no
basis on which to found credit for the
issue Of paper.
AS early as 1875 the continental con-
gress, looking to the impending Revolu-
tion, issued irredeemable notes, COM
monty known as continental money, to
tho amount OF 50, 900, 900. As there
was no specie to maintain their credit
they rapidly deprecated, and before the
| close of the year 1776 men were subject
! to mob violence, to social aud political
! ostracism and even to Imprisonment by
the military authority for refusing to
receive this deprecated currency in the
payment of debts.
Long before the close OF the Revolu-
tion continental money had SO greatly
deprecated that it was next to value
less, and General Washington is credit
ed with saying that a wagon load Of
money would scarcely bay wagon load
of provisions. BY 1881 tho whole mis-
cradle system was completely broken
down, and congress was compelled to
provide that all debts due to or from
the government should be paid in specie
or its equivalent At that time the con-
tinental currency had reached $242,-
600, 600. or $50 per capita. So utterly
worthless had the paper money of the
country become that in 1878 a single
Spanish dollar would legally pay debt
of 81, 400 in the state of Virginia.
The continental money was not re-
deemed for the reason that the 8,000,-
900 of people of the colonies were un-
able to pay in full to the holders of the
money, who had received it at mere
fraction of its face value and for which
the government had received but small
fraction of value. The cheap fiat money
issued to aid the independence of the
colonies was pardonable on the principle
of absolute necessity.
During our civil war tho people Of
this country were unprepared for the
enormous expenditure necessitated by
war of tho greatest magnitude. The
entire revenues of the government in
1860 wero only about $50, 900, 900 per
year, and for several years Of the war
its cost was fully double that amount
per month. The entire money of the
country in 1860 was S442, 600, 900,
1886, 900, 900 Of which was gold ana
silver, and tho remainder notes issued
by state banks In 1864, when the war
was ut the highest point Of expenditure,
we had nearly 800, 600, 600 of irredeem-
able paper in circulation, and gold that
year averaged premium of i03, clear
ly demonstrating that our issue of ire
deemable money, although legal tender
for the payment Of debts was reduced
in its Purchasing value over 80 per cent.
In other words, the man who earned 81
in 1864 could purchase less than 80
cents worth Of the neccssarios Of life be-
cause of the depreciation OF the cur
rcncy.
The aggregate cost of this deprecia-
tion of our currency daring our civil
war has been carefully estimated from
official fgures. and the total loss TO the
government of tho United States by rea-
SON of deprecated money was over 81.
zoo, 900. 600. In other words, the people
of the United States paid 81. 700, 000,-
GOO as the price Of the enforced cheap
money experiment neccssitatcd by tho
war for tno maintenance Of tho Union.
Notwithstanding the people of the
country were left with funded debt Of
over 81, 900, 600, 900 payable in gold,
after having Submitted 10 enormous
taxation for many years they stood mp
resolutoly. for the maintenance Of the
national credit The grccnback craze
then had It's tidal wave. like tho silver
craze Of today. IL partially swept the
Democratic national convention of 1868
away from its honest financial moor
ings. but that BODY. in declaring for the