Year: 1868

| dAj 1OOO,
Ho" Shall we Reach Specie Paymea,,.


1t is in vain to think of making so great
change in the standard of values without en-
countering some evils. But by taking advan-
tage OF natural laws instead of defying them,
the operation of those evils which cannot be
entirely avoided, may at least be restricted
within the narrowest possible limits.


1t settled principle of political econo-
my that when an irredeemable paper cur.
rency becomes redundant, variations in its
volume do not produce a corresponding
change In its aggregate value. The latter may
remain nearly constant while the volume va
ries greatly. The demand is limited, and any
expansion beyond the limit is counter-bal-
anced by depreciation that makes the addi-
tlonal amount necessary. On the other hand,
II currency be contracted to its normal vol
ume, 1t rises to par Having tried to reach
specie payments by contraction we are pre-
pared to pronounce upon the merits of this
method.


1t is indeed true that contraction in the
volume OF the currency is followed by such
| an appreciation in the standard of value, that
the residue of the currency in the end be-
comes sufficient to transact an amount of
business as great as was formerly transacted
by the whole circulating medium. This effect
does not however take place Immediately.
The withdrawal for the moment creates a
vacuum. II before contraction there be lust
enough currency at given valuation of the
financial unit, there must be, for time after
contraction, not enough. During the time
that must elapse before the reduction ia the
volume of the currency is counterbalanced
by corresponding rise in the value of the
paper dollar, there is stringency. The lack
OF currency thwarts the plans of business
men and in great degree ,paralyzes theiroper-
ations. Industry grows lsngud because the
stimulus ofrapid exchanges to take off the sur
plus products is wanting. The repetition of the
cause by continued contraction is attended
by corresponding repetition of the effect.
Here we have an explanation of the fnan-
elai depression recently experienced in this
country. Other causes, it is true, were pres
ent to add to our difficulties, so that the effect
OF contraction alone cannot be fully estmat-
ed. Besides, the uncertain, unsy stematic man.
ner in which currency was withdrawn, aggra-
Vated the evils inherent in the system of con-
traction. With these evils so fresh in or rec
oiiection, we shall not be disposed to repeat
the experiment even under more favorable
circumstances.


There is but one other method of going to
work to resume specie payments. That is to
accumulate coin in the Treasury till we get
enough to redeem greenbacks on demand.
10 DO this the government should so reduce
its expenditures that a portion of the annual
revenue may be devoted to this purpose.
Thereby laying aside the surplus as a specie
reserve for the redemption of greenbacks, we
may gradually and safely, yet surely, return
to specie basis. The National Banks
should be compelled to cooperate by retain
ing IN their vaults the specie paid to them as
interest on the bonds deposited to secure
their circulation.


Meanwhile the paper dollar would be con-
tinually approaching its par value. The vol
ume of currency required to transact a given
amount of business being in an inverse ratio
to the value Of the financial unit, less and
less currency would be required as the depre-
citation grew less. To absorb the notes thus
thrown out of circulation, greenbacks might,
at the option of the holder, be made convert
ible into bonds bearing interest, according to
Mr.. Lynch's plan. When resumption could be
safely commenced greenbacks and National
Bank notes would be as good as gold.-
The country would once more have a curren-
cy based upon specie. The ebbs and flows of
such currency are governed by those fatur-
al laws which are always the best regulators.
II there were too much in the country, the
surplus would quietly flow off to other coun-
tries till the equilibrium was restored. We
should probably have contraction, but it
would be natural, self adjusting contraction,
not one regulated by the arbitrary will of one
man, however wise or patriotic. Business
would not have to adapt itself to the supply
OF currency. The supply would be governed
by the demand. The circulating medium
would be the servant not the master of COM
merce. Those evils which result from a
change in the standard of value, are inevita-





ity OF currency, this plan promises to avoid.


But where is the gold to be had? We an
swer, from the worlds accumulated supply.-
From the three or four billion dollars in spe-
Gle now circulating in the world, few hun
dred million can be spared to redeem our dis
honored paper. The accumulation will of
| course first draw upon our home SUPPLY
None OF our ordinary currency will however
be Withdrawn. Ifnot enough gold is left for
special purposes 1t will flow in from other
countries till the vacuum is filled. The ac-
cumulation being gradual there will be no
scarcity. The laws of trade will! distribute
the precious metals as surely as gravitation
distributes the waters ofthe ocean. The rate
at which specie can be accumulated can
scarcely be greater than $10O,OO0,OOO or $780,
| 100000 per annum. The products of our own
mines will replace this amount, so that
the worlds aggregate supply will undergo no
diminution.


Another objection urged against this plan
IS that it leaves two or three hundred million
dollars lying idle in the Treasury when it
might and should las it is thought be in ac-
tive circulation. But gold used as reserve
to pay greenbacks would not be living idle.
1t would be producing an effect when stored
away In the Treasury by giving credit to our
now irredeemable and discredited paper 1t
would be performing the same Office as the
coin kept by every solvent bank to redeem its
circulating notes. 1t has never been consid-
cred by political economists, that the specie
so used was wasted. The government would
lose the interest on the coin Accumulated
But In whatever way specie payments are re-
sumed the questionable advantage of loan
without interest to the amount of the green
backs in circulation, viii have to be either
wholly or partially lost. The government
would abstract certain amount of gold from
commerce, but it has supplied in advance a
currency which win be as good as the coin
Withdrawn as soon as the government has
distracted enough to enable it to ray a dollar
in coin to every man who wishes to get one
in exchange for dollar in greenbacks In
short If we mean to have a currency that is
good for anything we may be sure that it will
cost US something. 1t is the attempt to ig-
more this fundamental truth that has led to
so many ingenious but delusive schemes of
finance.


This plan of accumulating specie to anrow
into circulation as fast as greepDacks are