The sun. [volume] (New York [N.Y.]) 1833-1916, 1898-02-21
HnzrWEoNsro rHs onsExBAox.

market. and the absence OF anything like a
general apprehension OF n panic. After thu
great and almost unbroken rise which has pro.
vailed since December q reaction would seem TO
be likely at any moment; but, thus far. 1t has
failed to occur, except in one or two stocks, and
in them It has been the result Of special causes.
so much money IL awaiting investment, and 40
few holders are compelled to sell, that prices ara
not only we'll maintained but exhibit a marked
resistance to efforts to deprcss them.
| The advocates OF the Substitution, for thu
present Government note currency, OF notes IA.
sued by banks. either with or without other 90.
curity than the banks own assets. have lately
revived the argument that the Government
notes issued during our civil war and known a.
Eroenbacks, wero even then both costly and un.
| necessary, and are, therefore. In time Of peacs
altogether reprehensible. They say. and with
truth. that the depreciation Of the greenhack,
compelled the Government to sell It's bonds at a
| heavy discount in gold. and. while nominally
paying interest on them at o per cent. to pay, in
fact, moro than double that rate. Hence, they
| assert. Il would have been cheaper to have con.
Quoted the war on q specie basis and not to have
resortcd. as we did. to the issue Of irrodcemablo
Government paper.
This argument assumes a. indisputable a prom.
osition which It In impossible to prove. and
which. therefore, may. with reason. be denied.
1t IN by no means certain that IL the Govern.
ment had not issued the greenbacks, 1t could
have borrowed the enormous sums II needed for
the expenses of the war at any rate of ~interes,
whatever. and It is quito certain that IL 1t could
have borrowed them ut all It would have had TO
pay on them much higher rates than those 4,
did nominally agroo to pay. How much, there.
foro. the nation actually lost by selling 8 and
7.30 per cent. bonds payable in gold, for par in
deprecated greenbacks. 10 q matter of pure con.
lecture. We know. however. that in December,
1850. four months before the firing on Fort
Sumter, the Government obtained with diff.
Guilty at IL per cent. per annum. $780, 600 out OF
an authorized loan OF $40. 600. 900, and that in
January. 1861, It agreed to pay over 10 per cent
for q loan Of $5. 900. 900. 1t Is true, that in Febru.
airy, 1851. under improved prospects OF maintain.
ing the Union. IL succeeded In selling So, 200, 900
of 9 per cent. bonds at from 9ol, to 90. and, in
April, 49, O0, 900 moro at %; but as soon as the
war actually broke out. these same bonds fell to
80. and oven at that price only %. 1000 900 found
takers. The Issue of $4,000 900 in demand
notes, not legal tenders, but receivable for Gus.
toms, tided over the emergency. but these notes
were soon exhausted. and after the defeat al
Bull Run, the only means the Government had
of getting money was by borrowing from the
banks on tho pledge Of bonds. This expedient
yielded $3.50. 600. 600. but 1t so stripped the
banks of their reserves, that they suspended
bpCSAC phy u NJ ttO III VI Iuo y0bT.
Thus. the year 1862 opened with the resources
both of the banks and Of the Treasury exhaust.
Cd. We had no credit in Europe, the capitalists
Of Great Britain and France being convinced.
by our defeat at Bull Run. that the disruption
Of the Union was inevitable; the war was cost.
ing US fully g. O0. 900 q day. and we were on
the verge of national bankruptcy. 1t was I'm.
der the pressure of the inevitable. therefore,
that. on Feb. 25. 1862, the issue Of legal tender
adopted the measure with reluctance. and that
they justified It az only q temporary expedient,
10 not to DO denied, but it was by no means tho
colossal financial blunder which some represent
10 to have been; and that its consequences were
not altogether mischievous. but, on the con.
trary, In many respects beneficial, Is capable Of
satisfactory demonstration.
To begin with, the greenbacks, altogether,
provided the Government with S45O, 900, 900 free
Of interest, in an emergency in which 1t was
unable to obtain money upon any terms from
any other source. Tho first $780, 900, 900 OF
them yielded the equivalent of nearly par in
gold; for the next $3.50. 900. 600. the value Of
about rs cents on the dollar In gold was OBJ
tanned; and for the last $50. OO0.O 900, one Of
about 20 cents. When It is considered, that,
the previous year. the Government had been
able to sell only 500 900. 900 of 8 per cent. bonds
at from 80 down to SO. the sale Of $3.50. DOC. 900
OF obligations bearing no interest whatever. at
an average OF 81. must be allowed TO have
been. at the outset. profitable. Only after
these obligations had deprecated further, fall.
Ing. first to 70 cents on the dollar in gold and
then to go. 80. and at one time. in 1864. 10 less
than 40 cents, did the issue of them result
In loss. When the war closed in 1865. the
outstanding bonds Of the Government amount.
ed to 1881 $50. 294, of which more than 81, 600.
100000 bore interest at 6 and 80 per cent
For the greater part of these bonds greenbacks
had been received. on an average. when they
were worth about so cents on the dollar in gold.
90 that the bonds were really sold at half their
par valne. There was thus an apparent
sacrifice OF 81. Oo0.O 900. 900. due to issuing the
,greenbacks. without reckoning the losses su-
tained by private citizens. whose debts were
paid to them In this deprecated currency.
IL Is easy TO be wise after the event, and Ills
easy for people who do not know the facts. or
who have forgotten them. to expound their
views OF what ought to have been done under
conditions which they create In their imagina.
lions. Such people insist that the Government,
instead of issuing the greenbacks to pay the e1.
penses Of the war, should have sold bonds for
gold on the best terms attainable and should
have maintained gold payments from the be.
ginning Of tho war to the emo of it. S~uppo.inE
1t had attempted to do this. what would have
been the RESULT The banks. at the end OF sol.
had emptied their vaults OF nearly all the gold
they had; the private citizens who had any were
boarding 1t or sending it 10 Europe for safe
the money lenders OF Europe were
selling American securities. instead OF buying
them, and but for the Rrcenbacks we should
nave had TO recognize secession as an accom-
plished fact and consent TO a disruption OF The
Union with all It's dreadful consequences.
Not only. too. were the Rrcenbacks An ur
necessity, but In the juncturc IN
which they were issued they became an clement
Of positive financial strength. Adding as hey
did $45o oO0 to the circulating mCtiGmot
The %country. they stimulated everywherc enter
prise and speculation, and furnished means for
paying not only our soldiers and sailors, but the
army OF workmen who supplied us with the
OF war. The country became ono
great beehive OF military industry. and he
millions in tho field and on the sea were rein.
'orced by other millions in factories and WORK.