Year: 1874




weight and iincncss, and Of the conditions to
be met and preparations to br made for the
attainment of that end, are widely different
from those of the authors of the compromise
measure Introduced in the Senate yesterday.
congressman will find that they can no more
compromisc with the laws which govern the
relative values of gold coin and deprecated
paper money than they can with the laws OF
gravity. A happy married life may perhaps
begin with "a little avrrsOn," but the
restoration of deprecated paper to its nominal
par cannot be aided by q preliminary inita-
tion. TO raise the value Of our paper We must
either decrease its quantity or provide more
extended uses for it. 1t is now proposed, on
t,c contrary, to diminish its USE and increase
its Quantity. If, moreover. specie is to form
any part, however small, Of orr currency, the
paper mist not only be restored to par in coin,
bnt after the discount has disappeared, fur
thrr portion must be Withdrawn to make room
for the specie. Otherwise there will be % new
depreciation, and specie will be paid out only to
| be exported. a paper currency, OstcnSiby con-
ycriblc but issued 30 freely rs to leave no room
for metal to circulate, il always threatening
to compel those who issue il TO suspend pay
mcnts. That was precisely tho situation OF
| orr banks from the close of the last war
with England down to their final suspension
in 1851 In less than forty years they sus-
pcndcd payments in coin at least five times
and inflicted immense damage on commercial
credit The complete success of "frce bank
"ingn would give us no better guarantee
against suspensions Of payments in coin than
we had in 1896. We do not believe in bal
| f,tn rhap
pagne bottles. No scheme of specie payments
which does not provide for specie in the cir
culation us well as in tho re ierveS Of tho
issuing brnks can he counted on to last Six
months, especially if tho foreign exchanges
are adverse.


We advocate, then, II system Of specie pay
mcntS under which specie shall form con-
siderable part, both of the actual money of the
| country and of the reserves set apart for the
payment of such paper promises IA may be
issued. We assert broadly that no system of
convertible paper money winch was not sup
ported by broad and solid basis of actual
metal ever was or ever can be Il good system.
We class aS bad every form of currency
adopted by the States of this Union and the
colonies ont Of which they grew, from the
earliest times to the present hour. We rccOg-
nizc rs the trUo principle that embodied by
! Sir Robert Peel in the Charter Act of tho
Bank of England in 1914, that the rule which
should govern the variations in quantity of Il
cOnv, itiblc paper currency is that tho cur
rcncy should fluctuatc. or at least tend
to huctuate, in tho samo way that it
would flurtuitc if it consisted solely of specie.
We consider gold and silver, save for tho in
convenience of handling them in largo sums
as the type of II perfect currency. We reject
the principle that banks should extend their
issues OF money just in proportion as the
mercantile community may fancy themselves
under the necessity of borrowing.


Having laid down the proposition that we
need gold and silver aud paper currency,
| convertible into coin on demand, which shall
not increase IA coin diminshes. as was the
fatal defect Of Our old State bank issues,
and is the avowcd principle of the
advocates of "frcr banking" but fuc-
tlato in value with gold, tending to be-
como scarce when gold is exported and plenty
when it is imported, precisely AZ the currency
would necessarily do if it consisted of coin
only, we will briefly examine the present
state of our currency. 1t is a well-known
principle that currencics of unequal value
| VIII nOb oiuC ny ohtNt Dtt til'
poorer currency will drive out the bet
ter The necessary consequence of this
principle is that gold and silver will
never become more abundant than they are
now in this country so long as the paper con-
tinues to be of less value than gold We do not
mean to deny that the Government may hoard
one, two, or three hundred million dollars in
coin in the Treasury, or that if an artificial
employment is created for gold, such as that
now existing for the payment of customs suf-
fcent gold will not be retained for that arti-
fetal use. The dentists and jewelers., for
example, will always be able to ret what metal
they need for their purposes But what
we do maintain is this: that undor no
favorable balance of trade will gold como to
this country as long as tho paper currency
of the country is deprecated below coin
value. In proof Of this important fact we
point to the present state of tho exchange be-
| tween Ncw-YOrk and London, and the recent
exports of coin to England and France.
| The result OF tho war with Germany
was to leave France with an adverse bal
ancc Of trade Of one thousand million dollars,
payable in coin to Germany. That immense
payment was made, but on tho first move
| ment of the Bank of France in the direction
of contraction Of its circulation. that gold be-
gan to flow back to France. and while tho trade
balance of that country for tho last thirteen
months has not been at all favorable, tho
specie reserve of the Bank of France has in.
creased more than ono hundred millisn dol.
lars, and the coin in use among the people
has also increased greatly. And whyf Sim
ply because the note circulation of tho Bank,
which on the 8lst Of October, 1878, was over