Year: 1874

the Banking and Finance bill painful fact
forces itself upon us, altogether independent
of the character of the measure, which we
do not at present purpose to discuss. 1t
is not little singular that in the pro-
tracted debates of the present session every
speaker has missed one Of the most important
functions of o sound currency, and conse-
quently one of the most cogent arguments for
an early return to specie. 1t is narrow and
misleading treatment of this great subject to
conine attention to the Office Of the currency
in facilitating domestic trade. To discSss the
currency without reference to foreign COM
merce is like leaving Hamlet out of the play of
that name. There has apparently been no
thought among our Congressional orators and
financial schemers Of remodelling the currency
with view to anything beyond its domestic
uses Nobody has attempted to frame bill
for putting our foreign and our domestic
trade on the same monetary basis, although
it is 80 easily demonstrable that the most i'm
portant function Of money Is the self-acting
process by which it links foreign and do
mestio trade indissolubly together, and SO
regulates home prices as to perpetually bring
back foreign commerce to its fundamental
idea Of barter of equivalent values Of COM
modities. It will not suffice merely to re-
duce our currency to the same volume that
would circulate on gold basis, if it is, never
theless, to consist wholly of paper. The
reason is obvious. The paper has no intrinsic
value, and cannot be exported. It is impos-
sible to detect by its oscillations whether the
country is exporting too much or too little.
It's amount Is susceptible of neither increase
nor diminution by any possible state of
foreign trade. An irredeemable paper cur
rency, or, which comes to the same thing,
paper currency redeemable only in other
paper-is adapted only to o country sur
rounded by an impossible Chinese wall and
content to relinqu;sh the gains and advantages
of foreign commerce. If the country is ex-
porting too little of the products of its indus
try to pay for what it buys in foreign markets,
such a currency is not self-contracting. It
does not regulate domestic prices in such
way as to enable the country to pay its foreign
debts by increased expectation of commodi-
ties. That is to say, it fails to discharge the
chief Office of a sound currency by regulating
trade and prices.


The reason why this great defect and evil
has not been brought home to the national
consciousness is that since the close Of the
war we have been settling our international
balances by the sale Of our bonds in foreign
markets. It is too evident that this process
must stop. Our gold bonds, having risen to
par, are no longer q tempting object to
foreign spectators. Moreover, the supply
for expectation is nearly exhausted. Nearly
four hundred millions are necessarily
retained in the country to secure
the circulation of the national banks
The savings banks and trust companies
also need large amounts, and many pri-
vate citizens prefer them to any other securi-
ties for permanent investment. We have gone
nearly to the length Of our tether in running
in debt to foreign countries by the sale of
bonds. The panic of last fall was one of the
symptoms of this check. We seemed in
state Of swimming prosperity SO long as we
could procure every year enormous amounts
OF foreign goods and settle the account by
the expectation of paper obligations. The
time has come when we must make real pay
ments in the products OF our industry. We
must not only pay for our imports, but meet
the annual interest on our bonds held abroad,
enrich foreign shipowners for carrying the
commodities we buy and sell, and ultimately
discharge the enormous debt which we have
been accommodating, equal in amount to the
principal Of all our government bonds and
railway debentures held abroad. These
great and inevitable drains upon our re-
sources can be met only by expectation
Of American products, and our cur
rency seems likely to remain in such
state as to cripple the country in every joint.
There could hardly be q more stupendous
blunder than the attempt to legislate on cur
rency without reference to TIE necessities of
our foreign trade and the close connection be-
tween it and our domestic prosperity. Our
rulers having failed to perceive by foresighA,
must now learn by their experience the vast
difference between keeping creditors easy by
meeting debts with paper evidences of other
debts, and actual payment when this resource
is exhausted. 1t is our mischievous, delusive
currency that has SO fatally blinded both the
country and the government. If we had
wisely returned to specie soon after the close
of the war we should have better understood
our true condition and, what is more i'm
portant, we should not have piled up such
mountain of foreign Indebtedness to be dis
charged out Of future earnings. Had we re-
turned Immediately to specie there would in
deed have been much complaint Of low prices
but low prices would have checked imports
and increased exports, and the country would
be richer by the difference.


By our insane policy of sundering all di-
rect connection between our currency and the
precious metals we have made this Tho yooot