The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1933-01-18
IS
CYCLIC EVENT
Booms and Slumps Make
up History of National
Currency
e. THOMAS L. STOKES
United Press Staff Correspondent

WASHINGTON. Jan. IS. tUP).
Only Is years ago tho federal
reserve board. banker; and econ
oinistS were pudding their brains
about how to check an initiation
which had grown naturally from
the high industrial and financial
tension OF the war.
Today there are over 50 bills
in congress. jealousy sponsored.
seeking initiation.
This illustrates forcefully the
recurring cycle manifest in the
currency history Of the country.
is only repeating itself.
The arguments raised for AID
against Initiation are spread across
the pages of the Congressional
Record back to the beginning of
the nation.
Ire 1920 boom collapsed in
short-lived depression and the de.
flation occurred. helped some
what by the policies Of the fed
eral reserve board. Another
speculative mania 10 years later
has ended in 4 depression much
more deep-Scated. Prices hmtled
downward. Now many in cou~
greSs and outside would raise
them by cheapening the dollar.
increasing currency, monetizinG
silver.
Not worth a continental" is ii
phrase that springs from our
first initiation. continental
hpteS" authorized by the con-
tinental congress to finance the
Revolutionary war were printed
in increasing volume with no
other backing than the fiat Of II
and disOrganized gov
eminent so that finally they were
redeemed at 100 for one. Laws
any one traitor who
would not honor them were lit
effectual against the hard Yam
kee instinct.
After the first United States
bank ceased operating in 1912,
leaving the country without a
central banking system. there
was a period of state bank in
flation. There was another be.
tween 1887 and 1916 when the
''red dog" and wild cat" bills
issued by Michigan became
synonymous for the cheap cur
rency that flooded the country.
The second United States bank
was suspended in 1886.
Financing of the Civil war
brought the now famous green
back era' whose repercussions
extended over 10 years to reach
a climax in the famous "free sill.
yer" campaign of William Jen-
nings Bryan in 1896 and to end
with passage of the gold stand
ard act of 1890. The money
question was deeply imbedded in
politics all this time.
Among other measures taken
by Secretary of Treasury Sal
mon 2. Chase to finance the
Civil war was the issue of notes
which came to be known as
''greenbackS." They went down
to 40 cents on the dollar at one
time. One of. those paradoxes Of
history was a decision later by
Chase as chief justice holding his
issuance of greenbacks -uncOnSti-
tutional. .....
A total of $35G,OOO,OO0 in
was issued. Despite
pledges to contract
them, they were actually increaS-
ed after five years. A period of
speculation and initiation ensued,
ending in the long-hved 1922
depression. The great agricul-
tural belt in the south and west
was the prime mover for cheap
money and silver all during this
era. During Grants administra-
ton "A bill was passed fixing the
greenbact issue at $400,000,000
Grant vetoed it and a substitute
was passed fixing the limit at
$3S2,000,000.
During 1877-7S q formidable
silver movement developed, risinG
simultaneously with a green
back" party which went into pol
itics and elected few members
to congress. This cheap money!
resulted in 1890 in
passage of the Sherman act re-
quiring purchase of 100000
ounces annually designed to
create $50,OOO,0O0 annual in
flation. This act has Il milder
and more carefully guarded
counterpart today in the Pittman
bill for purchase of 100000
ounces annually, one of the
numerous bills now pending in
congress.
Gold began to leave the coun-
try. The depression of 1898 was
an incident. There was diff
Guilty keeping a treasury gold
balance above $100,000,000.
Silver was pouring into the vaults
to displace it. The situation fl
nally became so dangerous that
President Cleveland one day call
ed in J. P. Morgan and arranged
& loa nto stem a tide that had
very nearly drained the gold re-
series of the treasury. The pres
ident was roundly criticized for
his act. ..... .."
Bryan carried the "free sill
Yer" cause to its zenith in the
frenzied, almost evangelical CAM
paign of 1896. His defeat by
McKinley-and not by a very
substantial majority--ended the
silver movement for the time be-