The New York herald., 1921-01-08

SATURDAY, JANUARY s. 1921.
Our Gold Circulation, 1928.

OuI AOl0 SuCuldShOh, A0OS-s Os
At the beginning of our civil war,
In 1861, there was in circulation In
the United States nearly a quarter
Of billion of dollars of gold and
silver coin; to be exact, $246, 100000.
Upon the issue by the Government of
irredeemable legal tender notes, known
as greenbacks, this stock of metallic
money disappeared from circulation.
Honestly and wisely, Congress pro-
vided in the acts authorizing the issue
Of this paper money three things:
First. That 1t should take the form
of notes, each containing the express
promise Of the United States to pay
definite number of dollars.
Second. That the greenbacks, though
legal tender for other purposes. should
not be legal tender in the payment of
the principal of or the interest on the
national debt, all of which continued
to be paid in gold.
Third. That they should not be re-
eeivable in the payment Of duties on
imports, which continued to be col
lected in gold.
The banks, which Of course had
been forced by the Governments ac-
tion % suspend payments in specie,
and Jur people as well acted honestly
and wisely in freely admitting the
fact mat gold was at q premium when
bought with paper money. In New
York a market was opened at the
Cold Exchange, where that COM
modity-for such 1t had become-was
freely bought and sold.
Az the war went on and as further
issues of greenbacks were made their
value deprecated rapidly and enor-
mously, the price of gold rising at one
time to 2S5. But 1t was never sought
to disguise the facts under the cloak Of
adverse foreign exchange" nor even
to minimize the extent of the depre-
ciation by quoting the percentage Of
gold dollar which the currency dollar
would buy. On the contrary, the quo
tation was ever of the premium Of
gold over currency. When gold was
quoted as selling at 1873 1-3 the de-
probation of the paper dollar in terms
OF gold might well have been stated
rs % per cent, by no means so alarm
ing a figure
The Statistical Abstract of the
United States shows that throughout
the seventeen years of our suspension
OF specie payments, 1S62-1s7S inclu-
sive, there was only $25,OOO,OOO of
gold in circulation in the United
States. That official publication fur
ther shows, however, that in those
years there was paid into the Treas
ury in gold as duties on imports
$2,54OO77, ,250, and out of 1t as interest
on the national debt 81, ,703, ,970,894.
In addition to this our merchants
paid in gold during those years for
imports Of merchandise S7.267, ,S42,341.
They also paid in gold further vast
sums of which we have not the rec
ord for marine freight and marine
Insurance on those imports and on our
exports as well. In those years gold
and silver were exported to the value
OF 81 s,173,906, of which 1887 .992,.
097 was in gold.
Throughout that period all transac-
tions in foreign exchange were made
in gold. Hence exchange continued to
be quoted at or near the parity Of the
intrinsic value of our gold coins in
their relation TO those of foreign ma
tions, and the markets for exchange
were in no way disturbed.
All Of this was accomplished by Dor.
rowing from Europe at exceedingly
high rates of interest, and the close of
the civil war left the Government and
the people of the United States dc ply
in debt.
Throughout the eighteen months
from January /, 1864, to June 30, 1866.
the average price OF gold exceeded
200, and $1,000 of the 9 per cent.
gold bonds of the United States could
then be bought with $1,000 In gold.
From this the buyer realized currently
in gold II per cent. per annum as in
terest, with at least 10 per cent. per
annum In gold added thereto-maklng
In all % per cent.-through the re-
demption OF those bonds nj par in
gold within ten years Of their issue.
The process Of borrowing needed
capital from abroad on promises to
pay In gold continued for fully n gen
Grafton after the close of the civil
war at gradually diminishing rates
of interest.
But on the breaking out Of war in
Europe In the summer Of 1914 what
did the belligerent nations thereof do7
Throwing aside all the experience OF