Year: 1869


which Is based upon the theory OF permitting the
country to absorb the excess by natural develop
en ine instead % @ rs INDUSTRY oy n
merctal prosperity. second conclusion is also
equally inevitable and should constitute leading con-
sderaton OF the financial policy OF the future IL is
that an average depreciation OF twenty per cent
measures the extent to which the price scale can be
lessened during any given year consistent with sound
principles OF commercial economy, and that with
any increased percentage OF depreciation disaster is
sure to tread upon the heels OF disaster; and any
at a more rapid rate than for the past 1t
would be unwise and disastrous 10 press
upon the mere hobby Of speedy resumption;
convertibility are couple OF financial fgments
which, insisted upon in influential quarters, have
done moro to damage trade than the hedging 1t In
with taxes upon taxes In every direction.


The December disasters Of 1868 serious as they
may have been, have been due rather TO the Novem-
Der monetary arrangement than to any other
Within three months ending with the last OF No
vember, unusual fuctuatonsi In the gold premium had
e r. to ana
ing frequently gone as high az ten points Consider
able variation In monetary values followed as con-
sequence. Unfortunately thus far the suspension OF
coin payments has operated to produce strong
speculative interest," which has been able by COM
oination. to control @ ,ne money market, az & g the
ests OF trade. The propositions to which this
speculative interest in gold has developed may be
Illustrated by reference to Its statistics. For con-
tracts payable in gold for the payment OF duties and
for bills foreign the demand for coin Is not In ex-
cess Of per week on the average and these
figures are therefore, representative Of the actual
commercial demand for gold This amount. however,
represents not more than opetwenty fifth ofthe week
ly transactions at the Gold Roomthe total business
OF the Gold Exchange Bank having for a single day
in the month OF November ranged as high as
$780, 600, which involves the turning over OF the
whole amount OF gold on hand at least eight times
per day. This was an exceptional case but as a
rule, these transactions exceed daily average OF
yember footed up to the enormous aggre-
gate OF $3.50, 100000, which was equal
to the turning over OF the whole amount OF coin on
hand about five times daily. 1t may be taken into
consideration also that upon the majority OF these
transaction commission ranging from one-six-
teenth to oneeghth per cent Is paid and that large
and the importance OF this speculative interest
and its power to embarrass trade are under
involves the creation OF the widest pos
slble fluctuations OF the gold premium; and, with
the facility for extensive combinations always at
hand, 1t s clear that an even range OF the premium
Ia quite impossible to mantain and hence trade is
perpetually baiied by unnecessary risks occasioned
by the fluctuation Of monetary values, while COM
merce is rendered unduy speculative ana uncertain,
and generalization, more or less extensive, results
as a logical sequence


two months affords the best possible Illustration Of
the effect OF this vast speculative interest in de-
ranging the natural sanity OF commerce. Importers
in September and October, anticipating fall in gold
after the November election as result OF the cleo
ton and Of the free expectation OF breadstufs and
cotton postponed their remittances instead OF remit
ting Is the rule after realization upon their goods
Holders OF gold taking advantage Of this fact, used
every expedient after election to maintain the
premium. A resort was then had by the importer,
many Win Decline an 70
again, he was baffied by combination to render
gold arti1cialy scarce for the purpose OF exactng
high rate OF interest on loans. The fall movement
Of breadstufYs was prevented In similar way.
fall OF ten per cent effected by combination In the
price OF gold was brought TO bear In order TO produce
corresponding fall In the price Of grain which far
naturally resisted by Withholding their stocks.
western dealers also held their stocks back rather
tenaciously: and the result was an accumulation OF
grain at the lake ports considerably In excess OF
decline in prices and consequent injury to dealers.
This efiectually stopped the export movement Of
October and November. diapponting the expecta-
tion OF importers and compelling them either TO buy
gold at an artificial premium or to borrow 1t at an
exorbtant rate OF interest. Jne cotton trade was,
movement or man9uvre, In the carrying out Of
which in couple OF instances the funds OF large
corporation to the extent OF several millions OF dol
lars, were used IN buying up gold, to DO held with
view to compel borrowers under the pressure oil
tue necessity To remit, to pay. as high as two
per cent per day for the use OF the needed coin.


The ructuation In monetary values caused by
these manRuyres, have, during the year, very
greatly increased the risk Of business enterprise,
besides tending TO prevent the full use Of capi-
tai in the industrial and commercial recuperaton OF
the country: and in this fact Is found the key to
the exceeding ACTIVITY h ven IN real estate move
a. late as the middle OF December; the
uncertainty OF realization In commercial and manu-





sion Of large amounts OF capta-wnich would
otherwise have been absorbed In the development OF
commercial resources-from trade to real estate
operations 1t Is seen therefore, that the December
disasters OF 1885, have been due to causes very diff
ferent frcm those which produced the depression Of


The T remedy for this state Of affairs. II is urged
would be found In resumption at whatever cost;
and II seems TO be useless to pro to these imprac-
not but 90 worse than the disease. by killing out.
right patient OF whom a more conservative treat
ment would erect a recovery. Besides, with cur
rency nominally at par, 1t Is dif1cut understand
by what means the fiuctuation would be prevented
so long as the enormous speculative combinations to
force up the price Of gold which have marked the
financial operations OF the past six years possi-
BILE and just possible they would be In the one case
as the other unless the national banking system
notes at any time when called upon. On the other
hand the age OF gold as circulating medium
seems to have substantially passed. and 1t
may be doubted whether, with rigid convertbility,
II would ever take Its place again side by side with
the more convenient currency. In fact IL may be
suggested that the present decade in some measure
represents transition period from the age OF gold
TO more flexible and philosophical financial
economy, wirh a circulating medium based
as its representative, which is the pre-
sent theory OF finance In nutshell.
Certain 1t Is nat there is descrepancy between the
theory and tie practice Of the age which, in any
case could not but produce occasional monetary
earthquakes. While in theory all currency is based


s basis Is sound credit: and this practical basis lies
At the foundation Of the commercial system
Now credit is the representative, not OF
gold, as II should be were the theory
ef the age logically carried out, but Of value directly
and unequivocay; and that this fact should have
eluded the scrutiny OF financial writer's proves not
the non-exstence Of the fact, but the stupidity Of
the writers themselves II has not escaped the no
tice OF practical thinkers that gold has been for a
quarter OF century, at least, gradually losing its
place as representative OF value and as gradually
assuming the position OF mere commercial com
modify to be bought and spd. and barrained for and


specuiated upon like any oiher commodity, and sub
ject 10 similar laws and conditions. The. apotheo-
sis Of gold took place In an age when
gold had q sort OF ideal value, Ike that
OF the diamond. Assuming labor as the productive
element OF civilization or as that upon which
value 10 based, the scheme OF finance was:-
Value. represented ideally BY gold and gold repre-.
sented practically by currency-cf which for
mula convertlbIlity is . necessary sequence. A
century OF commercial experience, during which
trade has become the governing element OF the
world, seems to have practically nulllned the forum
Ia vet 80 gradually That the thinkers OF the
century have scarcely noted the successive steps OF
the process. Labor, which In the old economy was
written down a. the sole productive power has
been forced to share its honors with capt.
tall and the combination Of the two now
practically represents the productive agency;