Year: 1875

portions of it, the local circulation they
represent debt, and debt only, while bank
notes represent bonds which have been
deposited with the Government for their
redemption-the capital of the banks and
notes and bills under discount-in other
words, business transactions.


THE REMEDY.


The remedy we seek then, is to be found
and in my Judgment to be found only
in the gradual retirement of the legal ten
der notes and in fixing time after which
they shall cease to be legal tender
Whatever is done should not be done hasti-
ly, but the time for temporizing has ceased.
Action, and decided action, upon a matter
of SO great importance ought not to be
longer postponed. If | were a member of
Congress, my first act would be to intro
duce a bill making tile United States notes at
once convertible into bonds bearing interest at
tile rate Of or 4! per cent in gold, aoHh
prorision that bank notes to an amount equal
to the notes uhicA may thus be retired may be
issued, if required By TIE banks, and that
from and after the first day Of January,
! 1878, the United States notes shall cease to be
legal tender. Should there be at that
time, or at any time, an excess of bank
note circulation, the excess would be of
short duration. What were not needed for
use would be sent home for redemption.
If the banks were unable to redeem them
they would go into liquidation, and their
notes would be redeemed at the United
States Treasury. The passage of such an
act would, in my Judgment, tend at once
to prevent coin from flowing out of the
country and to restore confidence in the
future. 1t is dsheartening to think that
the products of our mines, averaging from
$7O,0OO,OO0 to 500, 900 per annum,
| have been going steadily out of the coun-
try since 1S4S, with SO little to show for
them. Unless steps are taken to prevent
it, this outflow will still continue. Let it
be understood that the specie standard is
to be restored within the next two or three
years, and this outflow would cease, or be
rapidly diminished, not so much by dimi-
mutton of imports as by restoration of
confidence, and an increase of enterprise
and production which would so enlarge our
exports that coin would not be in much
demand for the payment of our foreign
debt. The golden opportunity for return
ing to specie payments was lost at the close
of the war, when individual and corpora
tion Indebtedness was small in comparison
with what it is at present. Nothing can
be gained, however, by further delay in
getting again upon the right track. On
the contrary, every days delay renders the
return to it more difficult. l know that
one difficulty which shows itself is the large
amount of our bonds, Federal State, and
corporate, which are held by foreigners;
but Europe is rich. Her capitalists need
our solvent securities, and all that is neces-
sary to prevent their being returned when
we are not prepared to receive them in con-
iidence on the part of the holders that the
interest will be promptly paid. Nothing
will do SO much to create this confidence AS
an honest currency at home.


THE POLICY OF CONTRACTION.


A gentleman in New York, who is pre-
sumaby sane, as his friends have not sent
him to an asylum, has recently published a
pamphlet containing copy of letter said
to have been written to me in 1865, with
comments, under date of July last, one of
which comments is as follows: "Is it not
a historical fact that the Honorable Hugh
McCulloch did of himself knowingly do
the deed and will not the curse of the
hundreds of thousands whom his policy of
contraction hurled from aff1uence to power
ty enshroud his name with ignominy for
ever?' If this is not the rawlings of a mad
man, what is it? did, of my own accord,
without, as it is alleged in succeeding COM
ments, the advice of my highly valued and
very able friend, Mr.. Laner, or of any one
else, ask Congress, in my first report as
Secretary of the Treasury, to authorize
me gradually to retire the legal-tender
notes, until they should become equal in
purchasing power to coin, and now, after
long reflection and careful observation of
the effect Of such notes upon business and
the public morals, my only regret is that
Congress prevented me from carrying out
the good work so auspiciously commenced.
Had the policy OF contraction been sustain
ed, the country would, long since, have
been on the full tide of prosperity, and the
bankruptcy and ruin which this writer at
tributes to contraction, would not have oc-
Cured. There has been, in, fact no cur
rency contraction, as the withdrawal of
greenbacks, as has been before stated, has
been more than made up by an increase of
bank notes. The contraction of the green
back circulation in no wise affected busi-
ness. Indeed the public would not have
known that it was in progress, but for the
monthly statements of the condition c: the
Treasury. If l am charseaDie with the
panic of 1879 and its consequences, ought
! not to be credited with something for the
good times which were boasted of, after the
s44, 0O0, 600 Of greenbacks had been re-
tireda


No ono can fail to be anxious as to the
decision which will be made at the next
Presidential election in regard to this most
important question. There are many who
will regard the election of Gov. AIlen as
very decided Indication that the people in
the Wost are in favor of an increase Of
what is called lawful money, if not of ulti-
mate reputation. l think otherwise
Thousands of hard-money Democrats viii
vote for him while they spit apon the cur
rency PLANK III .ne platform. A few, per-
maps many, like Mr.. Groesbeck, will stay
at home or vote for his opponent. but the
mass will vote the party ticket. His cleo
ton, if he IS elected, may be claimed as
triumph OF the intlationists, but it will not
be. If it should be in fact such triumph,
victory to the party would be wor@s for 1t
than defeat. No party uan .urn its back
upon its tiFne- -honored principles and ignore
,he teachings of its former great leaders
without loss of reputation and of strength.
The election in Ohio may lie significant,
but it will net alieet the Presidential cleo