Year: 1873

A French Idea 81 American Finance.


The following translation from the Economiste
Francdtse describes, from French point OF view,
the late monetary crisis in this country ra


In the United States, as in France and wherever
the paper money OF q country is nconvertible into
pension Of payments, we see the same popular ex-
pectatOns reproduced. There Is sure TO come a
moment when, reluctantly however, recourse Is
had to further issue OF paper, which, though 1t
appears for time to calm the mischief, In reality
greatly aggravates 1t. True, the government or
the United states may be less interested than those
OF England and OF France in main tanning the sol.
vency OF the banks, since 1t is It's own banker,
and does not deposit its funds with other banks,
except in very limited degree; still 1t
also finds itself reduced to intervene in the
embarrassments OF trade when they assume sucn
land 1t is not only since the act OF 1914 that the
State has come in aid Of the banK-whether as in
1897, when suspension was authorized OF specie
payments, or at subsequent period, when there
was an issue OF Exchequer bills-there is the gov
ernment always ut hand to save so fragile an edi-
nee as tnat Of Danking credi. ron aiilng TO pieces
duct TO be pursuedY To sustain those that are in
bad credit is but to injure those that are in good
eventual support will encourage people to put
themselves In the most perilOus positions The
rigorous course Is consequently in theory the one
which ought to be followed but practice Is found
not TO admit Of IL. The stoppage OF affairs which
the sinking or banks brings along with 1t, rings in
society that Il is very dinicut for any government
TO remain impassive 1t is pressed on all sides to
do something. 10 abstain from interference would
perhaps be wsest; but when government Is the
creature OF election how can II resist the wishes
OF the electorss M4 MNHt1 "9ftHWF q


At the mercy OF such dIfnculties President Grant
endeavors to pursue q modified or middle course.
1t must not be said that he does nothing, but he
State engagements, and, consequently, the bank
notes for which such engagements are guarantee,
are not depreciated stilI the legislation Affecting
ha han kQ has a lp ffacf
opinion through the negligence with which pre-
scrbed rules have been dlsregarded. The banks
were bound to hold q reserve In an expressed
relation to their liabilities, and as soon as it was
perceived that they had arrived at their limit, or
had passed IT, forth came the panic. The evil at
that point had been aggravated by the publication
OF accounts. To remedy this u was professionally
allowed to put aside the law and not publish the
proportion OF the bank reserves, although nobody
doubted that they were below the legal figure.
And 80 IL Is that since this indulgence


THE NEW YORK BANKS


no longer publish their monthly returns. Thence,
the conclusion which the public would naturally
draw az to the level Of the reserves becomes part
OF the mischief which s yet further extended, and
the only true remedy Is defeated by the recircula-
ti0n OF greenbacks previously and authoritatively
withdrawn. Discriminate quantity OF paper
money cannot MAINTAIN itself In the presence OF a
rapidly increasing commerce without such money
becoming dearer or, what IL the same thing, with
out the various products IN relation TO II becoming
depressed In price. Hence it Ia the measures
taken by the government that have brought about
the difficulties against which the people, are con-
government TO allay them. II Is the scarcity OF
the greenback which bas,raised IL almost TO q level
with the metal ITSELF and that In the midst OF the
co-existing embarrassments The obvious remedy,
but not the true one, would be TO put more paper
into circulation; but what proportion would the
feeble good which certain class OF persons might
derive from IL bear TO the evil which later on would
be inflicted by II on the whole community All
the financial disasters Of the United states are
traceable TO Na.Ne E.NeNN1t


THE CIRCULATION OF PAPER MONEY.


For long time heretof0re men who understand
the mischief " produces have INDUCED themselves