Heft VI (1878). V. Exzerpte aus Amasa Walker und aus der Times

Nach der Handschrift, MEGAdigital (MEGA² IV/25).¹ Traducción al español

Amasa Walker: „The National Currency and the Money Problem“ New York etc 1876.

Erst erschienen in der amerikanischen International Review (sieh selbe f. 1875, 1876 etc)

Jan. 1861 existirten in U. St. 1601 banks, organized under the laws of 38 state and territorial governments; alle mixed currency banks; as a whole their currency usually 4 parts mere credits u. one part specie; 1$ in 5 in coin for the redemption of their issues. Gesetze über Verhältniss v. Notenausgabe zu specie in vaults ausnahmsweise nur in: »States of Louisiana«, die verlangten Reserve v. 33% upon circulation u. deposits; u. Massachusetts, welches, nach 1858, Reserve v. 15% vorschrieb. Ueberall sonst no legal restraint auf Note issues. (5)

Die Proportion of specie to circulation and deposits in 1860 war:

In Louisiana: 38.6%; Indiana 22.2; New York 15.6. Connecticut: 7.5. Vermont: 4.2. Illinois 2.3. (p. 6) Und average throughout the U. St. = 19%. 6 months after the attack upon Fort Sumter, banks u. government declared their inability to maintain specie payments. (l. c.) ⦗Die general production was large in 1860, the balance of trade favorable, and money plenty … finances des country in as safe a condition as they ever can be under a mixed currency.⦘ (l. c.) Obgleich die banks generally suspended ⦗bei den Unruhen im Süden, wenn Lincoln’s Wahl bekannt wurde⦘, the greater part resumed after a few months; nach den returns f. Jan. 1, 1862: 1492 banks gegen 1661 on 1st Jan. 1861. (l. c.) So stands als Chase (then Secretary of the Treasury ) brachte vor, on the assembling of the Congress in Dec. 1862, zum 2t mal sein Project für Errichtung eines neuen system of banks under the authority des general government. Die necessities des national treasury so gross dass Congress, nach Beginn der Feindseeligkeit authorized issue of $ Mill. 50 of Treasury notes, adapted to circulation, u. der amount had already been increased to 350 Mill. Die Circulation der Banks on 1st Jan. 1863, nach dem Financial Report des Jahrs, war 238 mill., machte zusammen mit den Treasury Notes nearly 600 millions of currency. Gold premium daher, which began to rise when the banks and government suspended specie payments on 31 Dec. 1861, had advanced to 75% in Feb. 1863, national credit rapidly declining; darkest period des war, überall disasters der loyal forces, hospitals at Washington filled with the wounded and dying; Federal troops unpaid for several months were lying under shelter tents in the depth of winter; in diesem inauspicious moment brachte Chase vor his plan for a National Banking system. (6, 7) Damals war alles »confusion u. alarm, so that even in the House of Representatives a measure involving etc was carried without debate, the previous question being called for almost as soon as the bill was introduced «. The Act passirte 3 Feb. 1863, aber die state banks then existing hesitated to accept national charters, fearing the consequences of being brought under congressional legislation; in October 1863 nur 66 banks had availed themselves of the privilege; ein Jahr später, number had increased to 508; in March 1865 an Act was passed imposing tax of 10% upon the circulation of all state banks; dies zwang letztere to give up their issues, or come under the laws of Congress. Wählten die letztre alternative, hence Zahl der national banks by the last part of 1865 had incresed to 1513, since then enlarged to 1976, not including some 50 that have gone into liquidation. (8, 9)

Chase’s Act war absurd: 1) Nation hatte $350 Mill. greenbacks (already issued) überall gern genommen; 2) Gvt. konnte diese currency ausdehnen, soweit als nöthig schien für public interest; 3) auf diese Gesammtcirculation hätte die Nation made a clear gain of 6% (p. an.) verglichen mit dem Plan of allowing currency to be issued by banks for their own profit; 4) Congress hatte Recht u. Macht to forbid all other issues of „bills of credit“ but its own; 5) da die State banks had already invested the larger part of their capital in United States bonds, there was no occasion (as some persons intimated) to make concessions to them to secure their loyalty; 6) die Schöpfung solcher Bankinstitute, mit Macht 300 Mill. $ Creditnoten auszugeben in Concurrenz mit dem national treasury , largely expanded an already too abundant currency, and greatly raised the price der commodities u. services which the gvt. was obliged to purchase in immense quantities for its prosecution of the war, so largely increasing the current national expenditure u. die final indebtedness des country. (8)

Die banks selbst machten gutes Geschäft. Nach Report des »Comptroller of the currency«: average semi-annual dividends upon capital v. 1869–1873 (incl.) 5.11% od. 10.22% p. Jahr. Die banks have accumulated a „surplus“, seit ihrer Organisation, von $120,314,499; ihre undivided profits betrugen $54,515,135, alles in allem $174,829,630 yet to be divided upon their original capital, – equal to 35.6%; and this after paying all taxes u. other expenses. Wahrscheinlich few, if any, departments of trade or manufactures, could show as favorable results. Bis September last (welches Jahr 1875?) (etc) die Carrière dieser banks nicht nur prosperous, sondern quite satisfactory f. mass der trading community. Manche jedoch betrachteten die Lage als äusserst gefährlich. Sie sahen Extreme pressure in the fall (Herbst) of 1871, als Mr. Boutwell granted an additional issue of 5 Mill. of Greenbacks as a temporary relief; seen still more severe stringency in the fall of 1872; daher waren sie vorbereitet to expect a dangerous crisis in 1873. Die Crise kam als eine unvermeidliche Consequenz of the immense expansion of credits, and the almost unlimited conversion of circulating into fixed capital, especially through the speculative building of railroads. Gvt. hatte in notes u. fractional [eine] Creditcirculation v. fast 400 millions; die banks a currency circulation u. deposits, von fast 1000 mill., wovon nicht geringer Theil geliehn in various forms to corporations engaged in promoting objects other than those connected mit dem trade u. industry des country. (9) Fall eines der ausgedehntesten Bankhäuser im Land gab a severe shock to credit; da die currency so greatly composed of that element, war die Explosion instantaneous u. die effects im höchsten Grad disastrous. Jeder Industriezweig paralysirt, Handel u. manufactures für Augenblick fast zerstört, tausende workmen of all sections of the country herausgeschmissen aus employment, laboring classes generally exposed to much distress u. suffering. (9, 10)

Grosse Masse der people überrascht durch die general suspension; die banks refused to pay their deposits in greenbacks or even in their own notes; both daher hoarded so viel als möglich. Notabene: the payment of deposits ist nicht garantirt durch das government, sondern nur das der circulating notes. There being, therefore, no security for the depositor, he draws out his funds in banknotes, or greenbacks if he can, and retains what he has in possession. Under such circumstances, therefore, deposits form even a more explosive element than under a mixed currency. (10)

Es wurde auch beobachtet, dass während mixed currency banks, when obliged to suspend specie payments, at once enlarged their discounts u. made money plenty, under present system bei ähnlicher Catastrophe das circulating medium disappears rapidly to the great disadvantage of trade u. business; ferner rates of interest viel mehr onerous under the present than any previously existing currency obgleich paper circulation has been far greater than ever before known. (10)

Die Uebel natural dem present »National Banking System« sehr intensificirt durch die blunders des Act (10)

Erstens: no provision for a Central Clearing House or office of redemption, where the notes of all the banks might be redeemed when presented. Diese Omission absichtlich \nicht accidental, denn it »was noticed when the bill constituting« the banks was under consideration. Der Comptroller, in his Report of 1867, sagt, es müsse so rasch als möglich etablirt werden, u. fährt fort: „The circulating notes of the National Banks are well secured by a pledge of U. St. bonds. Their ultimate redemption is established beyond question. It only remains to make them convertible. This can only be done by making them redeemable at a common centre.“ ([10,] 11) »Until that is done, sagt Walker, the banks cannot be controlled, whoever may be called Comptroller.« Nur indifference des Congress verhindert establishment v. solchem central office. What causes this indifference and consequent neglect, it is not difficult to conjecture – the banks as a body do not desire it, although the best managed banks do. (11) (?)

[Zweitens:] Der Act v. 1864 provides that „every association in the 16 redemption cities specified shall have on hand in lawful money (that is in greenbacks or specie) at least 25% of the aggregate amount of its circulation and deposit, and all other banks a reserve of 15%“; aber f. die banks in the redemption cities, nämlich: St. Louis, Louisville, Detroit, Milwaukee, New Orleans, Cincinnati, Cleveland, Pittsburgh, Baltimore, Philadelphia, Boston, Albany, New York, San Francisco u. Washington City wurde vorgesehn, dass they might hold ½ of this lawful money reserve in cash deposits, d. h. in bank balances in the city of New York; während alle andren banks were permitted to keep 9 of their 15% reserve in these same balances: so dass praktisch die former [were] required to hold but 12½% in lawful money, u. die latter but 6%. Under the operation of this law, we have by the Report of the Comptroller of the Currency, Sept. 12, 1873 the following results:

Dies die actual strength des entire System of National Banks eine Woche vor ihrer general suspension. Ausser diesem amount of reliable reserve, hatten die Banks zusammen folgendes:

Dies die facts in general; aber the most dangerous element was found in the relation der redemption to the non-redemption banks. Die Non-Redemption banks hatten

Diese figures zeigen schlagend die dependence von 1747 banks upon their redemption agents, d. h. the city banks, in case of any severe pressure for funds, since for 91.3% of all they owed, they must, so far as their own resources were concerned, rely upon their deposits in the redemption cities. Wie weit diese redeeming agents, or banks, zuverlässig to respond to the calls of the other 1747 banks? Nach dem Report des Comptroller:

Auf dieser Summe v. $86,399,716 ruhten nicht allein alle liabilities dieser redeeming banks, sondern 91.3% der liabilities aller andrer banks of the nation; denn all over this amount reliance was placed upon mere bank balances. (13)

Mit Bezug auf diese bank balances: können sie, was object der reserve, give strength u. reliability to the banking system generally in order to meet all »unusual« demands upon it? Unterstelle A schuldet B gewisse Summe, u. beide owe C a like sum; ist C’s security besser in Folge der Verschuldung v. A an B? What A can demand of B certainly reduces B’s ability to pay C as much as it increases A’s ability to pay C. Daher the ability of both taken together is no greater because one owes the other; u. dies precisely the case mit diesen banks. Suppose the country banks make a run upon the redemption banks, is the whole system any more safe than if no such balances existed? Andrerseits, the larger these balances, the greater the disturbance to the money market occasioned by a demand for the payment of them. Statt dem System Stärke zu geben, sind diese balances an element of weakness, the most explosive element in fact, as has been abundantly shown in the late disastrous panic. Dass demand of this character might arrive, war zu anticipiren, da such a panic häufig unter der mixed currency der U. St. Warum daher diese balances permitted, at all, as a part of bank resources? Why, especially, were they permitted to form the greater part of those resources which were to give stability to the entire Banking System? Aber had these so-called resources consisted of actual available means, of coin u. legal tender notes, so nicht sufficient in amount. (13)

Die hazards necessarily attending such an extended system of credit currency noch mehr increased durch den fact, that the chief strain is brought to bear upon the banks of the great commercial centre of the Union. New York City is the natural focus towards which the financial movements of the nation converge, and where all final balances are adjusted. Hier vor allem sollte besitzen die currency »the greatest strength and power of resistance to any momentary pressure which may be brought to bear upon it«. (13, 14)

⦗Times vom 2 Nov. 1878

»The „hard times“ … for the Americans … have repaired in a great measure the losses of the reckless and abounding period that preceded them … Wanton waste of capital in the U. St. before 1873, when it seemed as if Europe would never tire of lending or America of borrowing … . States and municipalities, railway corporations, coal companies, and industrial enterprises of every sort had the free handling of what appeared a limitless supply of borrowed money, and in handling it great numbers of unscrupulous men levied toll for themselves and their favourites. … but the U. St., though much had been wasted, had something solid to show for the expenditure of capital. Years were required for the development of many of the enterprises that had been rashly undertaken before 1873, and in the interval bankruptcy engulphed some of them, while others managed to survive under new management. The bondholders, mostly European capitalists, were the chief sufferers, and for them probably there is little reward or recompense to be expected now; but the railways and other undertakings on which bondholders’ money was spent remained and they are beginning to rise with the rising tide of business … Change aided by the bounteous corn and cotton crops of the last seasons, and the production of the towns no longer overbalances the consuming power of the country. … everybody (in der schlechten Zeit) diminished his personal expenditure … began to look carefully after small savings … The rapid increase of prosperity in the agricultural districts of the West has quickly affected commercial and industrial interests in the East … The confidence … among traders may be expected soon to release real estate from the paralyzing influences to which it has been in bondage for the last 5 years. Farms and house property have been almost unsaleable, and it has been in many instances impossible to realize money lent on mortgage even at a heavy loss … the compulsory frugality of the „hard times“ … has created a large amount of capital, now in the hands of the Americans themselves … Diminution of the public burdens. A large proportion of the debt paid off, and an equally large proportion refunded at a low rate of interest . In 1873, the revenue raised was 333 mill. $; in 1875: $287 mill., in 1878 $257 mill. The reduction of taxation is so sensibly felt … Ausserdem Americans themselves hold now ¾ of the proportion of the bonded debt which before the crisis was held by foreign investors … Excess of their exports over their imports [by] Secretary Sherman selected as a proof of their prosperity.«⦘

Welches [ist der] state dieser Metropolitan institutions die die deposits der andern banks halten? Nach dem citirten Report des Comptroller: 19 Sept. last year (1875?) indebtedness der banks der City v. New York war $201,074,700, ihre Reserves of Specie, legal tenders u. U. St. certificates of deposit $46,864,341, nur 23.3% of their immediate liabilities. (14)

Die Erfahrung des letzten halben Jahrhunderts hat gezeigt, dass sobald die banks der City v. New York suspend, the whole currency suffers a collapse. (l. c.) Grössere reserves, indeed, »would make them … less profitable to stockholders « (l. c.)

Legislation, bisher, sowohl State als National, assumed that banking must be made as profitable as possible, whatever the results to the public; that paper money issued by banking corporations is so far indispensable to the trade, industry, and general prosperity of the country, that its circulation must be assured at whatever hazard, cost, or inconvenience. ([14,] 15)

Report of the Clearing House in the City of New York, recently published; zeigt, dass 10 weeks prior to the 6th Sept. last , the average deposits der 60 banks connected mit dieser institution = $232,228,000; diese wurden suddenly reduced to $143,170,000; total reduction = $89 Millions drawn out during a few weeks of the panic. Einige dieser banks far more reckless in their movements than others, would have failed outright, the more prudent banks come to their rescue by making common cause … to avert a universal catastrophe (15)

Die recent suspension der banks quite analogous der in October 1857. The New York City banks then succumbed, weil nicht able to meet the drafts upon their deposits, made by the country banks. Nebensächlich das Uebel attending the operations der National Banks doubtless geschuldet der absence of Clearing House Regulations, want of adequate resources u. unlawful payment of interest upon deposits (15)

Unmöglich ordentliche Regulation der operation of Banking institutions issuing a paper currency, ob, wie früher, mixed currency od. wie jetzt consisting of banknotes redeemable in the credit issues des government. Beispiel England. (15) In kurzen Zwischenräumen, v. 1794 bis jetzt die B. o. E. has suspended specie payments (!!) 100drs of jointstockbanks failed in 1825; u. seit Peel’s act v. 1844 British gvt. hat 3 × suspended its operations, erlaubt der B. o. E. »to issue its notes, ad libitum, which being lawful tender, have served to relieve the pressure, and restore confidence«. Cobden gab mit Recht vor der Parliamentary Commission of 1840 (Report on Bank Issues, p. 31) seine opinion that „the regulation of Bk. issues was quite impossible“. (16)

Banks may suspend specie payments, and the public still accept their promises as freely as ever, for the sufficient reason that they have no alternative. The banks violate the law and forfeit their charters; doch haben sie dies oft gethan hier od. in England with impunity, because the necessities which the banks themselves have created override all constitutional u. legal enactments. (17)

Most pernicious error – confounds banking with the issuing of a paper currency … Banking, in its legitimate and proper uses, is the business of establishing a fund for loan, receiving deposits, negotiating bills of exchange, making collections, paying checks etc. Banking is essentially the borrowing and loaning of capital. Funds not wanted for immediate investment are deposited with the banker, who contracts to pay a given rate of interest. These he loans to his customers at a higher rate of interest than he pays, the difference constituting his profit. (17) Diese function – durch private individuals or joint stock Cos, who issue no circulating notes, bildet: the greater part of all banking in Europe; more profitable than our mixed currency banking. (18)

Etwas ganz andres [ist »]the issue of notes for circulation, so far as they exceed the coin held for their redemption« … ist »the substitution of credit for value in the general monetary circulation« … dies credit element »always liable to be withdrawn suddenly«, ist stets so »to a large extent«, wenn »severe pressure for money«. »In such a case circulating notes must be taken in as fast as possible, and not put out again until the unusual demand has ceased« »at a time when money is most needed« (18)

System of »Free Banking« nur zulässig soweit banking getrennt v. »manufacture of currency« (18)

Government hat mit Bezug auf currency normal nur zweierlei zu thun:

1. to coin the precious metals deposited in the mint by its citizens for that purpose; 2) to receive those coins and issue certificates for them in sums best adapted for use as a circulating medium, holding the coin for the redemption of the certificates, as is now done to a limited extent by the Treasury of the U. St. (18, 19)

Our National Currency besteht jezt [aus]:

1. Gold coins, jezt nur used für the payment of customs’ duties, and the payment of interest for the national debt; diese currency also jetzt nur required »for transactions« mit der »National treasury«. Silver coins are a legal tender to the extent of $5 only. (5 dollars)

2. Legal tender notes issued by the National Treasury („greenbacks“), bei law limited auf 400 Mill. $, v. denominations v. 1–1000$. Zur selben Categorie gehören 40 od. 50 Mill. $ of fractional currency, in sums v. 10–50 cents.

3. National banknotes, issued by nearly 2000 banks, located in all the states u. territories of the Union.

4. Coin-Bank Notes. Durch Act des Congress vom 12 July, 1870 war der Comptroller authorisirt to issue to: „any National Banking Association depositing the bonds of the gvt. bearing interest payable in gold, circulating notes of different denominations of not less than five dollars, to an amount not exceeding 80% of the par value of the bonds deposited; which notes shall bear upon their face the promise to pay them in the gold coin of the U. St.“ (19)

Associations können gebildet werden unter dem Act vom 12 July 1870 ohne any limitation; nur soll keine Bank grössere Circulation haben als 1 Mill. dollars. These are known as „Coin-banks“. (19, 20)

Free Banking, mit Bezug auf diese Coin-Banks, existirt daher; they may be formed anywhere u. to any extent; sie sind »required« to keep „at least 25% in coin“ (= ¼ ihrer issues) upon their issues; so in all important respects selbe wie die mixed currency banks früher existing under the State governments, except that the final redemption of their circulation is guaranteed durch das National Government. Die deposits dieser associations, wie die der National banks, are at the risk of depositors. Bis zum date von des Comptrollers Last Report, nur 3 dieser Sorte banks existirten, alle in City of San Francisco; ihr aggregate capital = $2,800,000; circulation: $1,400,000; Deposits: $3,100,000; total liabilities: $4,500,000; reserve of $760,000, about 17 cents on the dollar. (20) Das immediate result in Californien ist Expulsion vom Theil des gold coin, welches dort sonst circuliren würde, machen basis upon which business conducted … more unstable. … bisher war California, by reason of its purely specie circulation, exempt v. revulsions (nämlich monetary ones) (20)

Handelte es sich blos, wie Vorwand war um »a more convenient medium of exchange«, so hätten sich die bankers v. Californien nur zu suppliren mit den »gold notes des National Treasury«. (l. c.)

5. Goldnotes, furnished by the government to any extent to all who are disposed to deposit coin for that purpose with the Treasury of the U. St. in denominations v. 20$ upwards. Diese notes sind receipts for gold – all notes should be – are held for the benefit of the depositor and the public. Verbinden convenience of paper mit security of coin; a currency that must from its perfect adaption to the wants of both internal and external commerce, sooner or later be adopted throughout the civilized world. 40 Mill. $ dieser Noten have been at one in use, but the amount has varied with the wants of business men and bankers. ([20,] 21)

Evil effects of a local currency: (d. h. of a less value than that of commerce) Das gvt. paper money ist ganz local in its circulation u. nicht affected durch die operations of international traffick. Wenn redundant, local prices über general prices throughout the world; besserer Markt daher für products of other lands als dort wo Metallgeld; exports diminished, imports increased. Domestic products of all kinds enhanced in cost, aber such as are produced in excess of home consumption, and must be exported, will not be raised in price correspondingly, if at all; daher die agricultural staples der U. St. jezt so low in price wie vor dem Krieg, sage in 1861, während andre home productions in general are advanced by 50–75%; so, a few leading articles:

Daher suffering of farmer; his products bring him no more, while all his expenditures largely increased. Agriculture daher in the U. St. much depressed. Muss dauern bis agriculturist can buy u. sell at the same standard, was jezt nicht. (22)

Andrerseits manufactures suffer durch raising the cost of production at home, erschwert competition with foreign labor; (den inneren Markt sichert ihm gvt. durch protective duties) Vor Krieg dehnte sich export of American cottons v. Jahr zu Jahr aus, had reached in 1860: 11 Millions of Dollars; für Jahr 1872 der amount wenig über 2 Millions; a difference caused wholly by the state der currency. Dasselbe gilt allgemein f. alle domestic fabrics, ausser denen of which the country enjoys a natural monopoly. (23)

Einer der largest manufacturers of cotton goods in New England lieferte dem jezt † Amasa, folgendes: „Our foreign shipment before the war was of great value. We sold our tea-merchants in great quantities; but the trade is now lost to us. American shipping loses the outward freight of our goods: teas, silks etc are now purchased and paid for in coin, or its equivalent, and brought to us in British bottoms. The trade we once had has gone to England. Her manufacturers imitate our styles and labels, and their exports the last year were 250,000 bales against 4000 bales sent from this country. This is owing to the increased cost of our fabrics. Labor, we find by the most careful investigation, costs us 56 p. ct. more than in 1860, and our supplies outside of cotton, such as leather, iron, steel, oil, coal, cord, clothing etc, cost us also on an average 56% higher. When we build a new mill in the most economical manner possible, it will cost us 50% more; that is, at the lowest, $25 per spindle against $17 per spindle in 1860, and many mills at the present time $35 per spindle“ (24)

Simultaneously, mit vermehrter Production v. Gold u. Silber (seit Californien u. Australien) immense enlargement of der paper circulation; diese stieg in U. St. von 131 mill. in 1850 auf 700 Mill. in 1873 , increase v. over 300%. Ditto in France, Germany, Austria, Russia, Italy etc the enlargement of paper issues sehr gross, ditto in India u. South America. Dieser increase aller mindest = dem of gold u. silver coinage of the world; the decline in value of gold, alias the advance of general prices, whatever it be, halb seinem extent nach zuzuschreiben der substitution of paper for specie , or credit for value, in the monetary circulation of the world. ([24,] 25)

American tonnage that entered the ports of the U. St. war, 1860, in excess of that of the foreign by 3,577,370 tons; 1869 der excess of foreign tonnage über American war 1,924,090 tons. (25)

The popular idea of an „elastic currency“ fully endorsed durch Congress Resolution of 10 Dec. 1865, declaring that „the paper circulation of the country should be flexible, increasing and decreasing according to the requirements of legitimate business“. Secretary of Treasury, in Report of Nov. 20, 1872, said, in recommending a reduction of Banktaxation: it „should not be grudgingly made if the result shall be to give elasticity to the currency“. To this idea the President has also given a recent endorsement. (26)

By »flexibility« or »elasticity« … meant, dass currency expanded or contracted at the pleasure of those to whom its management is entrusted; assumed that this is especially required when the time comes to „move the crops“. Dies last assumption [ist] der chief reason given why the currency should be made elastic (27)

Betrachte d’abord »the natural exchanges required by the varied products u. wants der different sections der U. St. « Z. B. cities des seaboard supply foreign commodities u. domestic manufactures. Zu diesen cities merchants, v. allen Theilen des country, resort for the purchase of their periodical supplies. Diese purchases mostly made on time, u. belaufen sich in the aggregate auf millions of $ jährlich.

Andrerseits, z. B. State of Illinois; dort immense agricultural product to be transferred to the Atlantic cities for consumption or export. Die merchants v.\Kaufleute in Chicago z. B. kaufen f. 100 Mill. $ eastern merchandise im spring, payable in 6 months. At, or near the expiration of that time, the produce-dealers of the East repair to Chicago to make their annual purchases. Wie diese mutual obligations to be discharged? Greenbacks dazu nöthig to be actually transferred? Not at all. Checks of the Eastern upon the Western banks all that is needed, and these the former can furnish in abundance; weil they have already discounted the notes of the Western merchants given for Eastern purchases, and are glad to get them home again. (27)

Mit diesen checks od. drafts the Eastern dealers may repair to Chicago u. other points and make their investments with great facility. (27)

Hat West so viel gekauft im Osten – sei es für immediate consumption od. für investment in improvements – als der Osten wishes of Western products, so die ganze Transaction zwischen den 2 Sections adjusted without the transfer of a dollar. In der Hauptsache, exchanges, throughout the world made by bills drawn upon values forwarded v. one place to another; die Bilanz paid in money geschäzt zu nur  1/25 des whole body of exchanges. Also auch, the extra amount legitimately required for „moving the crop“ must be small. Es existirt etwas increased demand for funds when the crops are to be brought forward. Dies arises meist von speculative dealers, who if they can obtain large sums can forestall the market, and hold for an advance. To accommodate these, ist money in large amounts needed in connection mit „the crops“, which in fact move themselves to the seaboard, as certainly as the merchandise of the East moves to the West. (28)

Haben die banks managed their affairs well, so sie stets im Stand zum extent, worin es convenient u. desirable, to furnish additional facilities when the crops are to be brought forward. Während der Sommermonate ist a natural accumulation of funds, d. h. of their own notes, in the banks, u. wenn nicht loaned out to speculators, there will be a plenty womit to meet the demands of legitimate trade. Anders of course, when banks u. bankers, regardless of the wants of business men, place their resources in the hands of stockjobbers. Private bankers mögen thun was sie wollen, aber public institutions, authorized by government to issue their own notes as money? It is to meet the artificial demand described, that a periodical clamor is raised for an elastic currency. It is in truth, to hold, not to move the crops; to monopolize rather than to distribute them that its loudest demands are made for currency. (28) In compliance mit such a demand, an issue was made – im Herbst 1872 – durch das National Treasury – of 5 millions. Was war result? … final withdrawal caused more distress than the issue had relieved … in [der] That, this extraordinary act Seitens Treasury raised the price of speculative stocks alone to a far greater extent than the amount issued, so dass thatsächlich Geld nicht gemacht more plentiful, sondern umgekehrt. ([28,] 29)

Metall currency besitzt wahre elasticity; when in excess, exported; wenn deficient imported until the vacuum filled. (l. c.)

Wenn die policy of arbitrary expansion and contraction adopted, eine Person – Secretary of Treasury oder aber Comptroller of the Currency – mit authority zu bekleiden to carry it out; the fortunes of his fellow citizens placed in his hands etc (29)

Banking institutions may and should expand their loans and extend their credits, so far as consistent mit safety, in those seasons des Jahrs, when the demands of trade are most pressing; aber das money or currency, in which they deal should be perfectly stable … incapable of arbitrary expansion or contraction, so that it can be increased or diminished by the undisturbed operations of the laws of value. The only truly elastic currency is one composed wholly of coin, or of coin and goldnotes. (29, 30)

Currency eines Landes braucht nicht zu wachsen im Verhältniss zum Wachsthum der Bevölkerung u. von trade. Great Britain z. B.; die ganze paper circulation aller banks des U. K. jezt nicht grösser als von 1820–25; aber population fast verdoppelt, commerce, exports u. imports, increased v. 100 Mill. £ St. to 487 Mill. £ St. Für letzte 50 Jahre , in the aggregate, die circulation aller banks in England, Wales, Scotland, Ireland im Durchschnitt f. die letzten 50 Jahre, about 37 Mill. £. St. od. 185 Mill. $; v. 1844–1853 (10 years) was 36 Mill. £ St., v. 1854–1868 (15 J.) 38 Mill. £. Und auch seit der Zeit kein essential variation in der circulation des U. K. Diese uniformity in the volume of paper currency f. Periode of half a century merkwürdig bei so rapid advance in wealth during that period, u. der vast increase in British commerce. (30) Klar, however: if production be enlarged only in proportion to the increased rapidity of circulation, exchanges may be indefinitely extended without any addition to the circulating medium. (l. c.) Rapidity of transportation by sea u. land ist mindestens so sehr gewachsen wie production. Steam; ferner, for all practical purposes, durch electric telegraph, millions are transferred v. continent to continent in a moment of time. (31) Ausser dieser more rapid circulation, verbesserte contrivances introduced for dispensing with the actual use of money; checks; dann balance between the banks themselves – their mutual indebtedness – discharged without the intervention of money, durch Clearing House. Sir John Lubbock , in paper read before the Statistical Society, June, 1865, analysis of 19 mill. st. paid into his banking house in a few days:

Checks and bills … £18,395,000 = 97%; B. o. E. notes £408,000; Country notes £79,000; coin £.118,000, zusammen die 3 letzten items – 3%. (31) Dann die Saving banks in almost every civilized community, contribute largely to the activity of money; kleine accumulations once hoarded against occasion for personal use, now placed immediately in bank, whence they are again put in circulation by being loaned to the public. (l. c.)

Die folgende table commences mit 1834, weil keine reliable data anterior to that period.

Table showing the Proportion of Population to Circulation v. 1834–1870.

Dies statement zeigt dass average circulation per capita 273% grösser in 1870 als der average v. 1834–1860. Vergleichen wir nun increase of our national wealth mit dem of circulation:

Die aggregate immediate liabilities des gvt. u. der banks sind 1350 Mill. $; present circulation ist 700 millions; nicht über 350 in Circulation zu erhalten, sobald currency convertible; paper circulation daher to be reduced auf ihr natural volume, sei dies 350 od. andre Zahl; dann reserve v. 100 Mill. gold for beginning mehr als genug; wenn die circulation nicht > normal amount, kein wish for gold; paper then unusually preferred on account seiner grösseren convenience. Mit circulation v. nur 3[00] or 400 millions, specie payments could sofort be resumed, wenigstens mit selber Sicherheit als under the old mixed currency vor Krieg; wenn dann wise enough nur Goldnoten Circulation zu wollen, the additional amount of gold required could be accumulated from month to month, u. v. year to year, ohne disturbance u. ohne considerable sacrifice. (33)

Contraction must precede resumption. In 1837 circulation 149 mill. when the banks suspended, reduced to 83 mill. before resumption; dies contraction of 44%; 1857, when the banks again suspended, circulation (obgleich much less redundant verhältnissmässig to wealth u. population) amounted to 214 mill.; dies diminished by 59 mill., equal to reduction of 27½% before specie payment was restored. (33)

Recently introduced in House of Representatives bill for establishing a Central Clearing House for the National Banks; doubtful ob es law wird. ([33,] 34)

Seit assembling des Congress in December (1875?) od. (1876?) several propositions made for the issue von s. g. „interconvertible bonds“, d. h. bonds that may at any time be exchanged at the Treasury für greenbacks, u. when the latter no longer needed be reconverted into bonds at the pleasure of the holder. Dies favorite project in certain quarters; it would afford great facilities for all speculative operations; besonders those conducted upon an extensive scale. To invest in such bonds from time to time drawing interest at the rate of 3.65%, as proposed, and hold them bis Moment am günstigsten for an intended movement, u. dann at the shortest notice convert them into money womit to flood the local market, in [der] That as great a convenience to one who is operating „for a profitable corner“ as any Wall street speculator could desire … it would in truth only make bad currency worse (34)

In Senat Sumner proposed »the substitution of compound interest notes for greenbacks, at the rate of 20 Mill. per month, convertible in 2 years into 10-40 five % bonds «; dies würde sichern gradual withdrawal der government issues; doch wäre besser 10 mill. monatlich statt 20. Dann 3 Jahre required to put these notes in circulation u. 5 Jahr (statt wie bei Sumner 3½ J.) required before they could all be converted into bonds. (34, 35)

Andre wollen withdrawal der National Bank Notes statt der greenbacks issued by gvt.; aber solche Massregel wenig prospect of success v. wegen der formidable opposing interests. (35)

Expansionists: die activsten partisans dieser views meist engaged in speculative operations – men whose vocation is to purchase property, personal or real, and hold for an advance. So lange circulating medium is made plentiful by expansion, prices will be constantly appreciating; folglich, die Käufer in anticipation of a rise, sind ziemlich sicher of realizing a profit. (37) Wohl nie [gab es eine eindrucksvollere] Illustration des Excesses solcher operations, in consequence of currency expansion, als in U. St. von 1861–1867 (während welcher Zeit Currency (papercirculation) expanded v. 170 Mill. to 700 Mill. selbst to 1100 mill.), wenn included jede Art of issues then more or less used in making exchanges. (37, 38) Als Consequenz finden wir »a large increase of millionaires as compared with the increase of wealth and population. The few had extraordinary means for amassing immense fortunes at the expense of the many.« Diese class of men hat »great influence upon legislation«, know how to wield their money power. (38) It was this description of persons that induced Congress to stop the gradual contraction of 4 millions per month, commenced by Secretary Mc Culloch . (38)

Quietists. Wollen avoid all action etc (l. c.)

Resumptionists. Differiren über modus operandi.

• a) banks and treasury shall be compelled to commence specie payments on a given day. Vergessen, dass gvt. u. banks zusammen owe, for circulation in deposits, some 1400 mill., all due on instant demand. (39) (während their joint fund of coin nicht über 100 millions)
• b) Partial funding of Greenbacks. (partial conversion, say of 200 mill. into bonds.)
• c) Accumulation of gold. (durch government) (was nöthig nicht accumulation of specie, but reduction of paper issues)
• d) Withdrawal of banknotes instead of greenbacks. (bes. diese demand in Western States.) Sagen weil currency superabundant, banks zu zwingen to take in their notes; da paper money used, sollte sein das des gvt., worauf das ganze country das interest gewinnt, statt corporations die daraus Profit machen. Aber solches wird kein Congress ratificiren. (40)
• e) Greenbacks to be funded by a gradual process until at par with gold; 1) entweder, durch direct conversion into bonds, at the rate of so many millions per month; 2) od. by substituting compound interest notes by monthly instalments. (40) In Folge dessen viele bills brought before Congress last year (1874 od. ? ’75); geschah nichts. (41)

Apprehensions wegen der Folgen. „Upon Debtors“. Those largely indebted by speculative operations would – as a general rule – be injured. … When the expansion took place, many creditors suffered greatly … The Western farmer, suppose, encouraged by the high prices of his products a few years since (at one time about 100% higher than at present) purchased land for his own cultivation, for which he is still indebted. Aber andrerseits what will be the effect of contraction upon him? His expenses will be greatly lessened by the fall in price of all he purchases, while everything he sells will bring him as much as now. Wird haben greater net income, daher better able to extinguish his debt. … Was für farmer, gilt für alle producing commodities the surplus of which must be exported; u. in fact für alle (?) indebted for property they occupy or improve themselves; speculative classes must suffer, productive classes will be largely benefited. (43)

Giebt dann: Increase des Reichthums nach dem Census

Nach Census v. 1850, wealth des country = $7,135,780,228; nach Census v. 1860 (slaves included) $16,159,616,068. Increase during decade v. 1850–60 = $8,925,481,011; Rate of increase = 126%. Total wealth in 1870 = $30,068,518,507. Increase = 13,908,902,439; Rate of increase = 86%.

Zieht man slaves in 1860 ab (in round numbers = $1,500,000,000) so bleibt as Wealth = 14,500,000,000 für 1860; ziehn wir dies ab v. den 30 Milliarden in 1870, so bleibt als apparent gain v. 1860–1870 die Summe v. 15,500,000,000, = 107% gegen die 126% der vorhergehenden decade. Aber nach statement des Superintendent des Census v. 1870 (in his volume on „Industry and Wealth“, p. 8, dass die „statistics v. 1860 so defective“, dass seiner Ansicht nach „20–30%“ des apparent gain v. 1860–70 is owing to „ignorant and heedless statement“ im Census v. 1860. (44) Dann wären at least 25% abzuziehn v. den 107%, leaving but 82% als apparent gain. Aber sagt superintendent: „allowance must be made for the general advance in prices due to the condition of the currency“; nach ihm allowance v. 30–40%. Nehmen wir wieder mean rate = 35%, as the advance from this cause, so 82 – 35 = 47% as actual gain v. 1860–70, less than half the apparent gain f. jene Decade, u. nur about 37% of the rate of gain v. 1840–1850. (l. c.)

Also large falling off in the rate of actual increase. (l. c.)

a) Products, wovon U. St. must create and export a surplus; dies die great staples of our agriculture; = cotton, corn, wheat and other cereals; beef, pork and other provisions, tobacco etc. In der production davon bulk of our population … engaged. »They have no choice, and of necessity create a large excess over domestic consumption.« Dies large surplus »must find a sale in other markets, and its value in gold for that purpose will determine the price of the entire product« … »the export allein f. wheat (u. flour) im Jahr ending June 30, 1874 über 130 Mill. $«; u. dies nur about ¼ des »whole export of agricultural products«. Excessive issue of paper money raises price of labour etc für farmers, but »does not advance the price of agricultural products«. Bewiesen durch fact, that the great staples, flour, corn, beef, pork, lard etc on an average werden nicht höher in letzten 4 Jahren als v. 1857–61 f. i. Nur durch return to specie payments »farmers will make their purchases and sales, as they ought, by the same standard«. Sie leiden meist, durch a mere local currency, wie die jezt in circulation, weil ihre commodities, their products, [are] cosmopolitan, ought to be measured by currency equally cosmopolitan, whether consumed at home or in foreign countries. The american people … a nation of farmers and planters. (45)

Natürlich Theil der Abnahme in rate der increase of wealth geschuldet der waste u. destruction v. 4jährigem civil war. (46)

Ebenso wie f. agriculture, gold u. silver mining injured v. der overcurrency; the cost of production being largely increased, while the commercial value of the precious metals can not be enhanced at all. (46)

Dies einer, obgleich nicht Hauptgrund, warum Goldproduktion in Californien so bedeutend abgenommen in den letzten 10 J. (l. c.)

b) Manufactures; those we may export, manufactures of cotton, woolen fabrics, boots, shoes, furniture, carriages, machinery, cutlery etc. Diese exportirbar, so weit wir concurriren können mit foreign producers in foreign markets. Cost of production enhanced durch die paper currency; solche articles daher gar nicht exportirbar od. nur at greatly reduced profit. (46)

Cotton fabrics: Export davon bis 1861 rasch u. constantly increasing; sent to any foreign market in competition with all Europe; wegen ihrer bessern Qualität waren fast driving the productions of England out of the Eastern market; jezt dieser trade well-nigh extinguished. (47)

In woolen u. cotton trades haben die leading manufacturers recently met in convention u. decided »to run their mills but 4 days in the week«. (47) Warum dies? Production has been overdone; weil der unnatural impetus given to the business of the country has distorted industry, diverted capital from its natural channels, and finally produced a general paralysis from which the country can recover but slowly etc (47) the condition of the monetary circulation nicht einzige Ursache des present or previous derangement of business affairs in this country or any other, aber alle »natural causes of disturbance … increased and intensified« durch »the existence of a superabundant currency, whether mixed or unmixed, redeemable or irredeemable«. (47, 48)

Es giebt kein remedy ausser »Contraction«. (48) Existing obligations, so far as practicable, should be discharged under the currency in which they were contracted, u. daher reasonable notice gegeben v. Zeit wann Operation zu beginnen (48)

Die rate der contraction sollte bestimmt werden nicht nach Government Belieben, sondern durch voluntary action on part of public; dies bewirkt wenn Congress giebt opportunity to convert their surplus circulation into government bonds; das Publicum thut das so far als da ist actual redundancy; when at par with gold wird dann contraction cease (48, 49) Natürlich wäre das Banking interest nicht zu mächtig, so wäre [es] das beste wenn Congress required the banks to cancel their notes at a given rate, say 10 mill. p. month, until the whole were disposed of. Wenn das geschehn they would receive back their gvt. bonds, and hold them as an investment; od., if more profitable, dispose of them and loan the proceeds to their customers. This would give them real capital to assist the business public, in place of their credit in the form of banknotes. (49) In solchem Fall würden die Nationalbanks verwandelt in Depositbanks wie die joint stock banks of Great Britain, befreit v. legal restrictions as to their operations, and, of course, from all taxes upon their issues. Dann würden die Greenbacks (i. e. officiell: die Treasury notes ) die entire paper currency bilden, u. if in amount no larger than the natural demands of trade would, without any provision of law, be at par with gold. (49, 50)

Wenn f. withdrawal of greenbacks entschieden, in welchem Modus? Des nun † Sumner’s proposal in Congress, Dec. 1872 ; dies proposal: Ausgabe of notes (wie die issued under act of 1863) bearing compound interest at the rate of 6% u. zwar soll diese issue gleich sein in amount dem Betrag der outstanding legal tender notes u. fractional currency der U. St. Diese Notes v. different denominations, zum Betrag v. 10 Mill., to be dated on the 1st day of each month, commencing with 1st July next ensuing; afterwards weitere issue on the 1st day of each month until the requisite amount has been furnished. Diese notes to be paid out for all disbursements des Treasury, (ausser deren due in coin) so long as sufficient for the purpose. Secretary of Treasury zerstört jeden Monat legal tender notes equal to the notes issued. Die notes issued under this act, at the option des holder, convertible, nach End of 2 years, in sums of $100 or its multiple, into bonds der U. St., having no less als 10 u. nicht mehr als 40 years to run, u. bearing interest at the rate of 5%. Wenn, in execution dieser measure, legal tender notes have advanced to par with gold, u. so geblieben für 60 Tage, the further issue of interest-bearing notes shall cease. Diese Noten sollen nicht bilden Theil der Reserven der national banks. Die Treasury notes shall no longer be a legal tender when once at par with gold. ([50,] 51) Der Amasa sehr in favour of Sumner’s plan. dem people only permitted, in a gradual manner, to convert their surplus funds, first into interest bearing notes u. dann, at their pleasure, into 10-40 five % bonds, and the rate of interest upon the notes has been placed at that point which, while not excessive, is yet sufficiently high, to assure their gradual withdrawal from circulation. (52) Ein effect will be »the retention at home of our annual gold product, and a constant influx of specie from abroad, until the vacuum is filled«. (l. c.)

Andrer Vortheil dieses arrangements: the interest bearing notes, being paid out exclusively for treasury disbursements, will be diffused over all parts of the U. St., and be found, not in large masses in the hands of capitalists, bankers, and brokers in the cities, but in the pockets of the people generally, who will be certain to hold them for investment, as far as they are able, for the privilege of converting them into 10-40 bonds at the end of 2 years: or, of selling them at a premium when they become due. (52, 53)

Was das government angeht, so diese Verwandlung v. zinslosen Papieren in verzinsbare Oekonomie für es; es wird mehr als das doppelte des Zinses sparen jährlich v. reduced cost f. army, navy, civil list, arising from the fall of prices occasioned by the contraction of the currency to its normal amount. (53)

Ex Secretary McCulloch’s (late secretary of Treasury) would have the Treasury redeem 50 mill. p. an. of its notes with its surplus gold, and if this prove insufficient for the purpose, he would issue bonds for the balance. Da 442 Mill. to be paid in specie or converted into bonds (nämlich 382 Mill. + 42 mill. in fractional), würde erfordern at the rate mentioned 9 years for the completion des work. Zu lange Zeit of transition. ([53,] 54)

Eine Zweite Proposition Mc Culloch’s: Dass after „say the first of December, 1876, the notes shall cease to be a legal tender“. Government kann das nicht, bevor the greenbacks at par mit gold; es wäre partial, u. so far, actual repudiation. (l. c.) würde zudem greatly disturb the business interests; greenbacks hätten aufgehört legal tender zu sein, banknotes of course were not; womit die nation to discharge their indebtedness, tausende millions of dollars, payable only in Gold? ([54,] 55) Ausserdem ist dies »an arbitrary instead of voluntary contraction« (55)

The New Currency Act: an important bill, prepared in caucus, forced through the Senate without any adequate consideration, and through the House under the previous question, without debate, has become a law, entitled „an act to provide for the resumption of specie payments“ (56)

Der Act provides, first, dass „the Secretary of Treasury cause to be coined, as rapidly as practicable, silver coins of 10, 25, and 50 cents; and to issue them through the sub-treasuries, post offices etc, in exchange for an equal amount of fractional currency until the whole shall be redeemed.“ (56)

Dies silver coin nicht haltbar in Circulation ausser bei permanent decline in the gold premium (jezt 12%) (l. c.) Dies Silber would bear such a premium as to make it an article of merchandise; würde rasch in Hände der brokers übergehn, to be finally exported wie in 1862 (damals, as soon as the premium advanced to 2 or 3% all the small change disappeared) (57) Diese Clausel wahrscheinlich nur inserted to »conciliate those whose interests connected with the production of silver«, die »naturally« may be »expected to favor a measure that would cause a demand for more than 40 millions of their products«. (57)

die second section des Act’s provides »that the seigniorage of ⅙ of 1% hitherto charged for coinage of silver be no longer demanded«. (57) Dies favours hinwiederum »the production of silver« u. occasions »to the national treasury« a »loss equal to the whole cost of the coinage of silver hereafter«. (57)

The third section, nicht so einfach wie die beiden ersten, vielmehr »quite diverse provisions, massed together in strange combination «:

1. „All restrictions limiting the aggregate amount of circulating notes of the national banks are repealed, both in regard to existing banks, and all that may be hereafter formed.“ Also freebanking verbunden mit free manufacture of banknotes. Issue of such notes will dann nur be limited »by the amount of national bonds that must be deposited with the Treasury as security for ultimate redemption« u. da »some 1500 millions of these in existence«, the most ardent admirers of paper money will have the opportunity to test its advantage upon a very large scale. (57, 58)

2. (next § in this section III) Secretary directed to call in 82 Mill. of greenbacks as fast as the National Banks ask for additional circulation. Da 100$ of banknotes are to be given out for every 80$ of greenbacks taken in , the currency must be expanded by the operation to the extent of $20,500,000. National treasury wird daher verlieren Zins auf 82 Mill., at 6% = $4,920,000 jährlich, u. die national banks will gain an equal amount, u. die people must make up the deficiency by increased taxation. Dies alles clear enough, aber nicht, »how it will enable« – u. dies der angebliche Zweck des Act’s – »the Treasury to commence specie-payments?« (58)

3. (next § in sect. III) „that on and after the first of January, 1879, the Treasurer shall redeem in coin the U. St. legal tender notes outstanding; and for this purpose may use any surplus revenue in the Treasury not otherwise appropriated, and issue such U. St. bonds as have been heretofore authorized, to the extent necessary for the purpose.“ (58)

Während der 4 Jahre also – bis 1879 – is der Secretary »to be piling up his „surplus revenue“«; dann Neujahrstag 1879 soll beginnen die redemption der 382 Mill. greenbacks (die 82 Mill. to be taken in as the 102 millions of banknotes are to be issued nämlich »not to be destroyed«; and are just as likely to be issued again as were those withdrawn by Secretary McCulloch) Secret. Sherman expressly declined to say that the 82 mill. were to be destroyed, though pressed to answer the question; also klar dass intended by those who favored the bill, dass die 82 mill. should be re-issued if the Secretary of the Treasury should choose to do so. (58)

Und welche policy »of hoarding the surplus specie until 1879? Why not … redeem the legal tenders as fast as the gold accumulates and secure the existing gold premium? The saving thus made would amount to many millions … [und] zugleich effect a more gradual contraction der circulation.« (59) Keine Massregel im ganzen Act für specie resumption u. doch wollen seine authors glauben machen that „the act provides for the resumption of specie payments“ … Was provides it actually? … that the banks may indefinitely expand their issues; that 82 mill. of the legal tender circulation of which the Treasury has now the advantage, may be transferred to the national banks to increase their already abundant dividends; that the surplus gold of the treasury, instead of being used as it accumulates, shall be reserved till 1879; that the Secretary may then issue all the bonds necessary to redeem the balance of the greenback circulation. (59)

the banks understand very well that the business public is in their hands, and must have their notes to meet engagements, and that they can refuse specie payments, as a body, as they have done many times, with perfect impunity. They know their power and position, and the safety and success with which they can set the laws of Congress at defiance. Therefore they will not provide gold sufficient to enable them to announce resumption. So the whole matter will be postponed to „a more convenient season“. (59)

Nachdem bill passed the two Houses, the President affixed his signature a few days afterwards, accompanied with a message suggesting certain „further legislation as in his opinion essential to make the law effectual“ . First: „The necessity for an increased revenue, in order to carry out the obligation of adding to the sinking fund one per cent., now amounting to $34,000,000 annually“, also „to carry out the promises of this measure to redeem, under certain contingencies, $80,000,000 of the legal tenders; and without contingency, the fractional currency in circulation“. Dazu »President recommends the restoration of the duty on tea and coffee, and the repeal of the 10% reduction of the tariff on articles specified in the law of June 6, 1872.« (60) Soweit dies vorgegeben wird als nothwendige „Resumption“massregel Flause … »the people of the U. St. would be but too happy to convert all the legal tenders into gvt. bonds, directly, by purchasing them, or indirectly by the substitution of interestbearing notes of circulation, convertible after a [given] time into those bonds«. (60)

Second: der President proposes – what? … the entire annihilation of the gold premium between the present and 1st January, 1879. Dies die words der message:

„As the present law commands final resumption on the 1st day of Jan., 1879, and as the gold receipts by the Treasury are larger than the gold payments, and the currency receipts than the currency payments, thereby making monthly sales of gold necessary to meet current currency expenses, it occurs to me that these difficulties might be remedied by authorizing the Secretary of the Treasury to redeem legal-tender notes, whenever presented, in sums of not less than one 100 dollars and multiples thereof, at a premium for gold of 10%, less interest at the rate of 2½% p. annum from the 1st day of Jan. 1875, to the date of putting this law into operation, and diminishing the premium at the same rate until final resumption, changing the rate of premium demanded from time to time as the interest amounts to one-quarter of 1%. I suggest this rate of interest because it would bring currency at par with gold at the date fixed by law for final resumption . I suggest 10% as the demand premium at the beginning, because I believe this rate would insure the retention of silver in the country for change.“

Die »meaning« hiervon: for every $110 of legal tenders presented at the Treasury $100 in gold will be paid, alias, das Treasury will sell gold after the passage of the act at 110, as of date of January 1, 1875, less the interest upon the same, at the rate of 2½% up to the time of payment. Z. B. am 1st July 1875 a person presents $108.75 in greenbacks; will be entitled to receive 100$ in gold, which would be = 110, less 1¼% for interest 6 months. Am 1 Jan. 1876 the amount would be $107.50; am 1 Jan. 1877 $105; on 1st Jan. 1878 $102.50, u. 1st Jan. 1879 – par. This is an astounding proposition! Wo kriegt der Treasurer das Gold her? Und warum should he do it at the rate of 10% when the market premium is 12? Under such circumstances would he not need an amount of gold equal to all the legal tenders in circulation? Would they not be presented for redemption as fast as they could be collected? (61, 62) Diese policy as adverse to the interests of the Treasury, as to every branch of the national industry; da certain dass »the lower the premium on gold, while the volume of currency remains as it is, the less the protection intended to be given to manufactures, the lower the price of cotton, wheat, and all other exportable products. Every fraction of decline in the gold premium, takes an equal amount out of the pockets of those who produce such commodities. The higher the premium on gold, the greater will be the prosperity of the nation, except as that premium is reduced by the real appreciation of the paper circulation, which can only be brought about by the reduction of its volume until at par with coin. (62) Dieser fromme Wunsch der message »seems like an attempt to annihilate the natural premium on gold by an act of Congress«. (l. c.)

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1. Text nach MEGAdigital (Berlin-Brandenburgische Akademie der Wissenschaften), MEGA² IV/25, Lizenz CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/); der editorische Apparat der MEGA ist nicht wiedergegeben. ↩