Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1897-03-07
MckinIey's Financial Policy.

To the Editor of the Dispatch:
Contraction. which means the calling in
and destruction OF currency. brings inevi-
table and permanent disaster; nstriction,
which means the tieing up of currency
causes temporary, but none the less. GER
tain loss. 1t seems almost impossible for
our people TO learn from experience the
lessons taught by its past history, how
ever recent that history or however dis
astrous that course in the past has been.
Take the year 1880 as point from which
to take an observation both backward
and forward, and we may learn something
by which 10 guide our financial course
now. In the year 1880, looking back for
four years, we see a construction of the
paper currency. which had a deadly ef-
feet on all values, except on bonds and
stocks payable in gold. This construction
was caused by the resumption act, passed
i'm 1875, which promised TO redeem green
back" notes i'm gold i'm 1879. This paper
money was at a discount of 10 per cent.
The first thought of even plain people,
who had this currency, was that IL II was
held FOR four years they would make 2 IL
per cent a year, and get gold for their
paper money. But the better Informed
holders of this paper money, the bankers
and brokers and financiers, knew that
be much greater than 10 per cent, for 1t
was inevitable that lands and manufac-
tured goods. and ships and farm products.
tobacco, cotton. corn, wheat &c, would
rail- III price uIQtf the necessary nDdAhlhB
and withdrawal from use Of paper money.
which would pervade the whole country.
And so IL proved; for, by 1873, when paper
and gold met together with equal pur-
chasing power. each Of them, paper and
gold would buy nearly 100 per cent. more
of every class Of property named above
than either Of them, gold or paper, would
buy IN 1875.
Now. that was indeed making a pretty
penny by a simple enactment OF law IN
the interest Of the ready-money class.
But the damage was done; every interest
had been sacrificed TO resume specie pay
ments on $3.50 000O00 OF government paper.
A loss almost incalculable mad been
wrought on the landed property or The
country But, then, the credit or the
country had been upheld, and what Is 70
some the same thing, the promoters OF
specie resumption and those who knew
what they knew had become milllonaires.
And thus we see in 1880. one year after
resumption CT specie payments there pc
ing no longer hope OF further proht Dy
boarding the paper issue of the country,
which was about S600O00,O0O. and there be-
ing no premium on gold, which was also
about e00OC0,O 900, these two currencles,
which heretofore had been boarded, came
forth from their hiding places and money
became easy-in fact, 1t sought for bor-
rowers and sought for bargains as eager
" as 1t once had sought TO hide itsen
from the marts OF trade, and Tor ten
years we had an easy money market am
great ptosDerty. and il was the result OF
The coming forth for use Of the green
backs. which had been held 70 obtain the
promised gold, and OF the gold which had
been withheld on account Of the premium
which. until 1879. il brought In the market.
The ligatures had been taken of. the
construction no longer existed, and the
life blood Of trade and commerce flowed
freely and BEAUTIFULLY through the arte-
ries OF business.
Taking the general opinion Of what the
incoming administration INTENDS 70. 90
with our currency. and there Is presented
a more fearful picture than the past pre-
sents. for whereas there was construction,
now we are to have contraction. II the
preenbacks are 20 be called In and de-
stroyed: If the sherman purchase notes
are TO be redeemed. $o0O00e0 Of money
is TO be taken from use. IL viii be I'M
nossible simultaneously to replace these
notes with other paper currency; years
will he necessary to accomplish II, and IN
The mean time our need OF money where
with 10 carry on business will be so great
that even where money now seems plenti-
nj I'm the cities, there vii be a dearth or
funds. and everything again. except gold
and gold bonds, VIII have 70 suffer fear
fnl shrinkage of value. We have heard
much Of the danger of expansion OF the
currency. but trust I'm some way we may
be saved from the horror OF contraction.