Year: 1869

portant practical bearing upon the problem
of resumption. If the currency is redun-
dant, the surplus not in demand as a part of
the circulating medium and not available for
exaortation, will at the moment OF resump-
ton, be presented at the Treasury to be ex-
changed for gold that will command its equi-
valent anywhere. The government cannot
safely commence paying its notes on demand
in coin until reserve is accumulated suffi-
cient to cover the surplus and and allow
considerable margin beside. Otherwise the
Treasury will be speedily depleted and we
shall be driven into second suspension. If
the currency is not redundant, the demand
for it as medium OF exchange will prevent
run upon the Treasury, and a much smaller
reserve will suffice to redeem the limited
quantity presented TOR payment.


Some insist that the currency cannot be
redundant because it is all in demand. But
this argument, so far from proving the con-
clusion intended, has no bearing whatever
upon the question, and betrays an entire
misapprehension of the real problem. The
whole volume of an irredeemabe currency,
be it great or small, will be in demand as
long as it circulates at all. Our currency
would all be in demand if its volume were
seven hundred billion instead of seven hun
dren million, on the somewhat questionable
hypothesis that such currency would circu-
late at all. The deprecated assgnats of
France never ceased to be in demand till they
ceased to circulate. 1t is an inherent quail
ty of an irredeemable currency that it al
ways depreciates enough to make room for
| any excess in its volume beyond the amount
| needed on specie basis. If therefore sur
| plus of currency not in demand be the true
test Of redundancy, it involves contradic-
| ton to suppose there Cali be such thing as
| permanently redundant currency. Cur
rency is redundant not merely when there
is an actual surplus not in demand, but when
there would be such surplus if paper were
as good as gold. Let us apply this test and
observe the result.


A dollar in greenbacks is quoted in the
market al about seventy cents in gold On an
average, and as surely as things that are equal
| to the same things are equal to each other,
seventy cents in gold will in general purchase
as much as the dollar in greenbacks. At the
same rate less than $5O0,00,000 in coin would
do as much work in exchange as our $780,
100000 in deprecated paper. These calcula-
tions, based as thes are upon the we'll known
operation offinancial laws, are more to be re-
lied upon than any results obtained by an at
tempt at direct observation. The sphere of
observation is limited and in matters occupy
ing so large space as The commercial trans
actions OF great nation, the results derived
from observation must inevitably be very i'm
perfect. On the other hand the chances are
few of our being deceived by the manifest
operation of recognized economic laws.


1t is not to be pretended that depreciation
mag not result from want of confidence In
the government. 1t was this without doubt
that during the war caused fluctuations IN
the gold value of greenbacks as sudden and
violent as the variations in the prospects of
the government. The question is not wheth-
er want of confidence in the government
mag but whether it does cause the deprecia-
| tion of greenbacks. Such cause does not
|
stances. There is scarcely doubt respecting
| the ultimate solvency of the government
| Currency is deprecated because it is redun-
dant. The surplus over and above what is
needed for the legitimate demands of COM
merce cannot escape from circulation and
therefore keeps the whole deprecated to a
rate at which it will all be used. If there
were no more in circulation than would be
needed on specie basis the depreciation
would be merely nominal. People would not
under these circumstances wish to change
greenbacks into coin and would not in prac-
tice esteem coin more for possessing this
merely nominal advantage. The ultimate
soundness of the currency being assured, its
convei tibility into coin is needed only to
make its volume self-adjusting. The parallel
| which Senator Morton and others have at
tempted to draw between the demand notes
of the government and those of private in
dividual does not hold. For no private indi-
vidual can, as the government does, monopo-
lize the privilege of furnishing the circula-
ting medium of the country. 1t is this Cir
cumstance which gives the notes of the gov
ernment so great an advantage over those of
private individual. The certainty that
greenbacks will ultimately be paid, by giving
them general currency would keep up their
value provided the amount were not excessive.
They would be in fact redeemable. Every
man who wanted money would be ready to
redeem at par. the greenback in his neighbor's
hands and give an equivalent. Hence the
conclusion that unless our currency were
redundant it would not be deprecated to
any considerable extent.


The conclusion derives confirmation from
comparison of the past with the present
state of our currency. In 1887 che currency
of the country amounted to $17.61 per head.
After the great financial crisis that followed,
rapid collapse took place till in 1843 we had
but $6.18 per head. From this time the
amount gradually increased until in 1857 it
stood at $3.50 per head. Then came an
other crash and another collapse which
brought the amount down to S11.55 in 1853.
Now allowing our population to be 81 100000,
we have $3.50 per head-an amount greater
than we have ever had in times OF the highest
expansion. Past experience shows that the
legitimate derands of commerce require but
very slow increase per head in the amount
of the circulating medium. Can it be that
we now need far any legitimate purpose be-
tween 80 and 10 per cent more currency per
capita than we did ten years ago?


In view of these facts it is impossible to
avoid the conclusion that sooner or later che
country must dispose of 5000, 100000 or $780,
100000 of its paper circulation. AS we pro-
gress toward resumption, greenbacks will ap-
preciate in value and smaller volume meet
the demands of commerce. The surplus not
in demand will overflow from the channels ol
commerce if an outlet is provided. The alb
sorption of this surplus may be provided fol
by making greenbacks convertible into bonds
bearing interest, thus dispensing with the ne
cessity for accumulating a corresponding
amount of coin and making the descent to
the terra frma of specie more gradual and
safe by leaving the volume OF the currency
self-adjusting. ID. +. b.


Dominion of Canada.


THE INTERCoLoNIAL.


The Commissioners of the lntercolonial
Railway have gone to New Brunswick, and a
| Al a;r Il IN, o;4~