Preface to third edition

When early in December last, this small waif was sent out, its mission seemed as hopeless as was that of Noah's dove.  The nation was submerged beneath a deluge of bankruptcies, and the air was heavy with others impending.  The productive powers of the country were stagnant, and the accumulations of more prosperous times were rapidly disappearing, partly by frauds so permeating high as well as low places as to seem a moral national epidemic;  partly by honest failures exemplified by the traditional row of bricks;  and partly by the enforced consumption of the savings of better times.

Government was paralyzed;  Congress was bewildered;  Statesmanship seemed to have fled the country; political economy appeared to be with the lost arts, and we seemed to be waiting the coup de grâce which should lay the republic in its last resting place, by the side of its dead predecessors.

Seemed, did I say ? --- I should say the executioner was ready with his legislative enactments, more subtle but not less deadly than the headsman's axe to drain the last drop of that vital fluid, which alone enabled us to still hold the banner of humanity and of the rights of man.

The blind sought guidance of the blind, and the pits were many and deep.  The lamb asked council of the wolf, and the wolf's interested advice was deemed the acme of science and common sense.

Such was the condition when Congress met.  Of those legislative doctors to whom had been confided the health of the nation, the writer of this could not count five, who having seen the sufferer prostrated by depletion from the most vigorous health, to this near approach to the grave, would acknowledge that a change of treatment was necessary.

The Sangrados had bled the patient almost to death, and persisted in their treatment with hardly a protesting voice.  Those whose sworn duty it was to see that the "republic received no harm" seemed either paralyzed or sold to its enemies.

But the nation was not yet to die.  A low rumbling of the peoples' indignation from the prairies of the West, and the Savannahs of the South, was heard, and the voice of that people as the "voice of God," was a more effective tonic than the "still small voice" of conscience hitherto relied on.

Congressman after Congressman aroused and thought for himself, and when, on the 19th day of January last, the House divided on a test vote, as to increase of currency, 135 voted aye;  98 voted nay;  53 did not vote.

When the House voted an increase of legal tenders, March 23d, $400,000,000, 168 voted aye;  80 voted nay, and 42 did not vote.

The latter vote did not show the strength of the expansionists, as several voted nay, deeming the concession so small as to be trifling.

The people ---the same people who created a State without a king and a church without a bishop, are now calling for an entire severance of the last shred of that umbilical cord which still connects them with their hysterical and spasmodic old mother, Europe [England];  I mean money affiliation, and they demand that we shall be, in fact, what we are in law, a free and independent nationality.

They now claim that the teaching of Washington to "avoid all entangling alliances," shall be applied to money as to other matters.

They now see that to follow the teaching of their past and would-be future disorganizers and spoliators, which would base our currency upon specie, of which we have not one single dollar in own right, and only hold what we have by the sufferance of our present creditors, would be to base all our productive and commercial interests upon a pivot, owned by foreigners;  our enemies in religion and politics, and our industrial competitors, subject to removal whenever their wants or whims suggest, ---followed by a downfall in the future as in the past of the superstructure; ---forever in the power of the old-world monarchists; ---subject always to the alternate fever and paralysis as we ever have been; ---resulting as it always has resulted in a total want of confidence in future stability, which has made us Americans have confidence only in to-day, and as a corollary rushing into gambling and speculations instead of the slower modes of accretion by productive industry.

The people are more and more affirming that such specie basis teachings, if not wicked, are undemonstrable and silly.  The lines of theory are now daily more and more sharply defined, and Congress may be classified in three parts, viz.:

1st.  Specie basis advocates.

The fallacies of this school are treated in the following pages, particularly from the 9th to 12th inclusive, but I cannot resist the temptation to quote from a letter, from the Hon. Oliver S. Halstead, Ex-Chancellor of New Jersey:

"I was surprised to learn from the introductory, that 'a year since you would have thought the idea of a currency without a gold basis a blasphemy.'  I have long --many years-- been of opinion that the so-called specie basis system is a sheer absurdity, a false pretence.  What percentage of a sufficient circulating medium could be redeemed in specie ?  The country wants, and the people are fast coming to the idea of a currency based directly on the credit of the Government, convertible into government bonds bearing a low rate of interest.  I agree with you that it has always been rash for this country to allow specie to be the basis of our currency, and that now, when our currency has stood more firmly than ever, subjected to almost the greatest supposable strain for a dozen years (based on the credit of the government), to return to a system which has so often subjected us to ruinous monetary disturbances, would indeed be 'insanity.'  What stronger proof than the frequent recurrence of such disturbances do men want, that a money system on a so-called specie basis is, in Cicero's words in reference to another matter, 'non modo improbus, sed etiam fatuus,' ---not only not what it ought to be, but also silly."

The Second Class embraces the advocates of extension of the present National Bank system, called by the seductive title of Free Banking [including Mr. Buckingham].  This would enable the holders of our present bonds to combine the same to a stipulated amount and form banks, which, in addition to the present enormous revenue of 6, or 5, or 4 per cent. gold premium on same and exemption from taxation, now pays them three times what ordinary production does, would enable them to borrow currency of the Government at one per cent. interest (called tax), and by the assured monopoly and limitation of circulation, obtain what interest they might demand of the people.  The old --old story-- to make the rich man richer, and the poor poorer.

The Third Classification consists of the advocates [old Whigs who used to be religious supporters of the Bank of the United States] of what may be termed, The American Monetary System, which bases the money of the nation upon its wealth, and regulates its volume by the requirements of its production and commerce.

Its advocates claim that---

1st.  When our currency in 1866 was equal in volume to that of other civilized nations, we entirely surpassed them in national and individual prosperity. (See page 15)

2nd.  When we reduced the volume of that currency, we in the same ratio disabled our industries, and brought ruin upon our commercial classes. (See page 14.)

3rd.  That beneficent as was that currency, its lack of elasticity was a bar to its most perfect usefulness. (See pages 5 and 8.)

4th.  "That in the interchangeability (at the option of the holder) of National Paper Money with Government Bonds bearing a fixed rate of interest, there is a subtle principle that will regulate the movements of Finance and Commerce as accurately as the motion of the steam-engine is regulated by its 'Governor.' "

I have endeavored to illustrate the workings of this in the following pages.

It is claimed that this system would correct entirely the vice of inelasticity referred to, gradually merging our bonds, bearing high gold interest, into currency, with no interest, or into other bonds, bearing lower interest in currency, held by our own citizens in lieu of foreigners, as at present, payable in currency on demand, and giving volume, as required, to effect our exchanges.

But to wait for this would be too slow, and consequently too expensive a process, as the enforced stagnation of our industries is costing millions of dollars per day ---more than the cost on both sides, of our late war.

Three supplementary modes to eliminate that currency are suggested, to wit:

1st.  Government to pay all its expenses (last year they were $290,000,000), in the new currency, as defined above.

2nd.  In accordance with President Grant's recommendation (also a cherished plan of Gen. Washington), open a new water route from the Ohio to the James river, defraying the cost with the new currency, and

3rd Acting upon the precedent of utilizing our navy in peace, established by loading the frigate Macedonian, and the store ship Jamestown, with food to relieve the Irish famine, take the guns from our men-of-war, and load those vessels with our products, bought with the new currency, at every shipping port of the country, sell these cargoes in Europe, and invest the proceeds there in our own outstanding bonds.

Remembering, that every dollar of that currency, though held by a citizen, is as much a certificate of indebtedness of the nation, but bearing no interest, as the larger bonds, bearing ruinous rates, and payable in gold, largely held by foreigners, it will be seen, that while our productive interests will be stimulated to life and health, as they were before the murderous assault upon them, the nation at large will be immensely the gainer by the economy of interest.

The productive capacity of the nation, with anything like a fair chance, is indicated by the census at $7,000,000,000 per year, or in round numbers $20,000,000 per day.  The loss by the present enforced stagnation, is variously estimated at from one-fourth to one-half that sum.  Take the smaller figure, one-quarter, and we find that we are paying $5,000,000 per day, for the luxury of our present idleness, bankruptcy and starvation;  equal, as above stated, to the cost of the late war on both sides at the time of its greatest intensity.

At great cost we convulsed all civilization for years, to obtain an indemnity from England of $15,000,000, and glorified our government for the achievement, while the same government was wickedly exhausting the nation to the same extent every three days.

In conclusion, I quote from Jonathan Duncan's work, entitled "Bank Charters," which is very suggestive:

"Daniel De Lisle Brock, Governor of Guernsey, was waited upon by a deputation of the principal townsmen of St. Peter's, who requested his countenance and assistance towards the erection of a covered market, much wanted in that town.  The Governor readily consented, and asked in what way he could assist them most effectually.  He was told that the principal difficulty was to raise the required funds.  The Governor replied that if that was the only difficulty he thought he could surmount it, but would ask first, if they had the requisite stores of bricks, timber, granite and flags, but, above all, had they the skilled artizans and laborers required for the building of the market.  They replied that there was no want of labor or raw material;  that their difficulty was chiefly financial.  'Oh,' said the Governor, 'if that is all you want, I will, as Governor, sign, stamp, declare legal tender, and issue five thousand one pound market notes.  With these pay for material and wages.  Go to work and build your market.'  The market was commenced.  The first effects were to animate trade by the additional circulation for payment for slates, bricks, etc., and to increase the customs of the shops by the expenditures of the workmen employed on the market.  In process of time the market was finished, stall rents became due and were paid in these notes.  When the notes all came in, the Governor collected them, and, at the head of a procession, with some little form and ceremony, he proceeded to the town cross and publicly burnt them by way of cancelment."
---[this was not really a quote, but a paraphrase]

John G. Drew.
Elizabeth, N.J., March 30, 1874.

introductory.

* * * "I only speak right on;
I tell you that which you yourselves do know;
Point to sweet Caesar's wounds, poor, poor dumb mouths,
And bid them speak for me."

The writer of the following pages was educated as a merchant in that Delphos of financial and commercial wisdom, Boston;  was nurtured in the lore of the oracles thereof;  and if a year since the idea of a currency without a gold basis had been suggested to him, he would have thought it as big a blasphemy as his Puritan ancestors would have considered the suggestion of a universe without a God.

The report of the Controller of the Currency of December, 1872, showing the strikingly meagre amount of our currency, contrasted with that of other productive and commercial nations, arrested his attention;  and as point after point of our empiricism developed themselves, he felt that the country was rapidly tending to suicide, and he knew not that one person existed sympathizing with his views.

On that point he was soon undeceived, and found that intelligences inferior to none had long preceded him;  had classified facts;  and for the first time in history a science of finance had been evolved.

Will the reader please ascribe what good he may find in the following pages to the aid received from the published works of the following named gentlemen:

Hon. George Opdyke, author of a treatise on political economy;

Hon. William Buckingham, originator of the bill quoted within;

Wallace P. Groom, Esq., editor and publisher of the New York Mercantile Journal;

Pliny Freeman, Esq., originator of the first practical non-forfeiture plan of life insurance, which has saved millions of dollars for our American widows and orphans;

John Earl Williams, Esq., President of the Metropolitan Bank, New York City;

Hon. Alexander Campbell, who was one of the first, if not the first, to elaborate these problems;

William H. Winder, Esq., whose investigations of the money history and legislation of Great Britain from that memorable Sunday morning, February 23d, 1797, when the King, in council, ordered suspension of specie payments until June, 18th, 1815, when the nation prematurely resumed.

If aught of evil appears, let it be ascribed solely to the Author.

Money---its Functions and Requirements.
Analysis of the Greenback.

The function of science is to note facts, and from them learn the principles which underlie them.

Tea-kettles had agitated their covers for ages before James Watt looked under the fact and discovered the laws, the application of which multiplied the material force of the human race indefinitely.  Apples had dropped since the days of Adam, but it was reserved for Newton to learn the cause, and therefrom deduce the law which impels and restrains planets in their spheres, and gradually drops the autumn leaf and the snow-flake to their resting-places.

If such results have accrued from noting, sizzling tea-kettles and dropping apples, deducing causes and thence arguing to further results, is it not possible, with the chronicles of the past, and the living experience of the last twelve years to deduce a Science of money ?  Let us try, beginning with the query---

What is Money ?

The Hon. George Opdyke, eminent as a banker and political economist, defines it as "an instrument of commerce designed to facilitate the exchange of all other commodities by presenting an equivalent in a portable and convenient shape."  Now, let us try to learn the requirements for its most perfect usefulness.  We find them to be---

1.  Security, that it may never fail of exchangeability for equal values.

2.  Uniformity of value in every part of our country.

The above two characteristics inhere fully with our present currency.  The following are lacking, and if they can be supplied we shall have a currency more perfect by far than any previously existing, and developing our industries and commerce in as great a ratio as steam has mechanics.  We believe these defective points can be remedied, and a system evolved, the operation of which will be in accordance with known laws ---where science will take the place of empiricism;  organization be substituted for spasmodic manipulation;  acting as automatically as the governor of a steam engine.  The qualities needed by our present currency are these:

3.  Stability, that it may not be elevated or depressed by outside influences.

4.  Elasticity, capable by its inherent power of adapting itself to any requirement. ---[but this is not a real requirement, ye just invented it, and present it as such]

5.  Cheapness, that the average cost of its use shall not exceed the average value of its service.

6.  Volume, equal to any conceivable emergency.

7.  Convertibility into such form as shall be perfectly safe, and subject to satisfactory conversion on demand. ---[right here, your lack of knowledge bubbles to the surface, you are confusing money, the unit of account, with a circulating note promising to pay that unit.]

I will now endeavor to show, in the order above quoted, some of the points where the deficiencies show themselves.

Lack of Stability and Elasticity.

The peculiarities of our climate and productive industries, especially farming, are more exacting to a given and fixed amount of currency than those of any other country.  The heat of our summer is so intense that our cereals are in danger of damage in transportation, and if they were not, our farmers are too busy in their fields to prepare and cart them;  many factories "only keep their hands along," and merchants and bankers take a holiday.

The functions of money are suspended, and it lies inactive at three per cent. per year.  September shows a change.  The farmers have "laid away" ---that is, stopped cultivating their corn--- thresh out their oats and wheat, shell last year's corn, and push them toward the seaboard, gradually hurrying more and more as the advance of the season warns them of the approaching close of navigation, which will increase their cost of transportation, while bad roads will double the labor of hauling.  Factories work into the night, and the same amount of money which caused a plethora in the summer, is found to be totally inadequate in the fall.  Rich gamblers see it, and not only make "corners" in stocks and merchandise, but also in currency;  and this is the second consecutive year our country has lost millions of dollars in credit and cash, and been on the verge of bankruptcy for want of money to move the crops.

The lack of stability and elasticity is thus shown, as the same money which was neglected at three per cent per year in July, is in September inadequate to the demand, even when from twelve to three hundred per cent. per year is offered.

Hon. George S. Boutwell, ex-Secretary of the Treasury of the United States, said in his report of December 2d, 1872:

"A degree of flexibility in the volume of currency is essential. * * * There is a necessity every autumn for moving the crops without delay from the South and West to the seaboard, that they may be in hand for export and consumption as wanted.  This work should be done, in the main, before the lakes, rivers, and canals are closed, and yet it can not be done without the use of large amounts of currency.

"In the summer months funds accumulate at the centers, but the renewal of business in August and September gives employment for large sums, and leaves little or nothing for forwarding the crops in October and November.

"Nor would this difficulty be obviated by a permanent increase or a permanent reduction of the volume of currency.  The difficulty is due to the natural order of things, and in creases with the prosperity of the country, as shown in the abundance of its harvests. * * * The problem is to find a way of increasing the currency for moving the crops and diminishing it at once when that work is done."

---[In 1864, before the trans-continental railroad and other railroads were built, these crops were moved without any difficulty;  people were out of debt, used cash-on-hand coins, and did not rely on banks and their credit..... Bankers and their mouthpieces weaved this touching tale about the lack and necessity of elasticity and shortage of credit, but never mentioned to their listeners that business used to be conducted without resorting to credit and india-rubber]

We propose to solve Mr. Boutwell's problem before we get through.

Lack of Cheapness.

The yearly average increase of our property is not far from three per cent.  An average of higher rates argues a merging of the gains of productive industry into the reservoirs of the capitalists.

No argument is required to show that if the prevailing rates for the use of money continue with us to rule from two to five times those paid by our competitors across the water in ship-building and all other productions, no system of bonuses or tariffs can long sustain us.

Lack of Volume.

When the ship-builder designs a first-class steamer, he does not calculate on the mininum of strength, buoyancy, and engine-power required for the finest summer day, but imagines every circumstance of wind, sea, and lee shore, learns the possible maximum requirements, and adds to that somewhat for mistakes and flaws.

We perceive from the shakiness of our craft, in what would ordinarily be considered smooth water, that there is something radically amiss in construction, and on examining models and working plans, and comparing with others, discover some of the defects.

For instance, Mr. Knox, Controller of the Currency, in his last report, page 8, shows the entire circulation of the nation, December, 1872, on population of 1870, per head, $20,48.  If we add 10 per cent to the population for growth in three years (which is right, as we double in thirty years), and deduct the bank reserves of October 3d, 1872, we find currency per head, $13.67.  He quotes France, same page, per head, $25.05.  He quotes the United Kingdom (England, Ireland, and Scotland) at $19.48.  If we should throw out Ireland and Scotland, which have but little money, England would stand easily at $30.

As England is an old and finished country, and we are just building ours, as a nation we should have at least double her quota, or 30×2=$60.  Again, as individuals requiring comforts for ourselves, and education for our children, that should again be doubled.  This, mind you, is the maximum ---analogous to the outside estimate of the ship-builder for strength, buoyancy, and steam-power, to meet cyclones, ice-fields, and lee shores.  One-eighth the amount would more than suffice us for January, February, June, and July, in ordinary years, gradually working up to one-quarter or one-half the amount in September, October, November, and December, leaving the balance for extraordinary emergencies.

Lack of Redeemability.

Practically, this lack has been more ideal than actual, as the greenbacks are legal tender, and all have been eager redeemers with all their personal and pecuniary resources;  and from the moment of the demonetization of gold, and their taking its place as part of our currency, and the basis of the remainder, they have been fully as redeemable as gold ever was.  But we propose to give them in the currency of the future a power which gold never had:  the option of the holder to exchange the same at par for United States interest-bearing bonds ---for working of which see next chapter.

And now let us leave the unpleasant task of criticising the deficiencies of our greenback currency --- that efficient friend, which came to our rescue when all else seemed to have deserted us, and saved the Republic for us and for humanity.  Let us learn how we can strengthen and assist it on its great mission, and send it on its way untrammeled by the weakness, the burdens, and the blunders of the past, reinvigorated, conquering and to conquer, until all the rough places shall be made smooth, and the wilderness blossom like the rose.

The Currency of the Future.

Our Currency --- what it is and what it should be.
stability.

We have, as a people, demonstrated the possibility of a "church without a bishop, and a state without a king."  We have also created a currency without a specie basis, and for eleven most trying years it has proved the best the world has ever seen.

Specie, panic-struck, hid or ran away the first year of the war.  The greenback bridged the chasm, and when, on return of peace, every body anticipated a recurrence of the almost universal ruin which followed our other great wars, we moved on, to the astonishment of the world, "prospering and to prosper."

It was a remarkable fact that while, at the close of the war, we moved on with steady steps, England and France reeled like drunken men.

The reason was the healthfulness of our currency, the strength of our money system;  healthy because detached from that most feverish of all money elements, specie;  strong, because based on the wealth of the nation --- its goodness could not be doubted.  But in all this "we builded better than we knew."

When Mr. Chase, repulsed by the bullionists, issued his first $20,000,000 greenbacks, he apologized for so doing, putting in the plea of necessity;  and from that time to this the history of our currency has been a series of temporary expedients, compulsory in inception, empyric and spasmodic in execution.

The child was born amid the sneers and curses of our enemies, and cold shoulders of our friends.  If, with such a birth and nursing, it has in its youth been an angel of such goodness and strength, what may we not expect of its manhood, if cultured with better surroundings ?

In our last we demonstrated that the elements yet required to perfect our currency were stability, elasticity, cheapness, volume, and convertibility, indicating the diagnosis of the disease, and now we propose to discuss the mode of cure.

The contemporary of Luther learning religion only in an unknown tongue ---the Galileans taught only from the venerated Rabbis at the synagogues, or from the sanctimonious Pharisee at the street corners, had no more reason for surprise--- the one by sermons in his own vernacular, the other by the eloquent teachings of the trees and flowers --- than our readers have at the very simple prescription for all these ailments.

Let Congress pass a very simple, and, therefore, easily-understood law, providing for the issue of treasury notes (greenbacks) as legal tender for all purposes whatever, to the extent which the requirements of the country indicate, and make such legal tender reconvertible, at the option of the holders, into Treasury bonds bearing a rate of interest not much in excess of the average annual national increase of property ---say 3.65 per cent. per year.

This involves very little, if any, increase of the public debt, whether as represented in currency or bonds, as the old bonds would be retired about as fast as the new ones would be issued, and a reservoir would thus be formed into which any surplus currency which might be afloat in a time of business inertia would gravitate as surely as the freshet seeks the ocean, and when the season of commercial activity again approaches, as certainly as the surplus waters of the spring-time are returned from the ocean by automatic action to vitalize vegetation, so would the life-current of the nation's money respond to the demand, again to retire to its resting-place when its work should be accomplished.

One of our ablest political economists (Wallace P. Groom) remarks:

"In the interchangeability (at the option of the holder) of national paper money with Government bonds bearing a fixed rate of interest, there is a subtile principle that will regulate the movements of finance and commerce as accurately as the motion of the steam-engine is regulated by its governor.  Such paper money tokens would be much nearer perfect measures of value than gold and silver ever have been or ever can be."

The volume of our currency would thus regulate itself and become elastic and redeemable.  The constantly increasing burdens of the people in paying rates of interest disproportioned to production would exist no longer, and the Government would realize a large economy, as when the currency was out it would on that pay no interest, and when returned for redemption into 3.65 bonds, the rate in currency would be much less than it now is in gold.

The nearest approach we have recently made toward legislation on this matter is as follows:

On the 7th day of January, 1873, the Hon. William Alfred Buckingham (1804-1875, Ex-Governor of Connecticut, now U.S. Senator from that State) introduced a bill in the U.S. Senate, extracts from which we give below, which was read twice and ordered to be printed.  It was called up three days after, and referred to the Committee on Finance, which, by its chairman, Mr. Sherman, reported it back on the 16th with an amendment, striking out all after the enacting clause, and inserting matter of an entirely opposite and mischievous character.  If my memory serves me correctly, it was then "laid on the table."

Perhaps it was necessary that the evidence of our spring's and autumn's history should accrue to give further emphasis to the words of eloquence, experience, and wisdom, with which the distinguished author supported his bill.  We quote below such portion of the bill and remarks as are pertinent to our present subject matter (the parenthesis and italics are ours):

Sec. 4.  That it shall be the duty of the Secretary of the Treasury to issue bonds, as herein described, of denominations not less than one hundred dollars, and legal-tender notes in denominations not less than five dollars,

Sec. 3.  That United States legal-tender notes, in sums of one thousand dollars and its multiple, shall, on demand by the holder thereof, be redeemed by the Treasurer of the United States, either with coin or with United States bonds, the principal of which shall be payable on demand in legal tender notes, and the interest on which shall be payable semi-annually, in coin, at the rate of three and sixty-five one hundredths per centum per annum, at the option of the Treasurer; and the principal of any United States bonds bearing interest payable in coin shall, on demand by the holder thereof, be paid by the Treasurer of the United States in legal-tender notes, and the interest in coin.  All bonds issued under the provisions of this act shall be free from State and municipal taxation.

We quote extracts from the remarks on the bill by Mr. Buckingham.

"The industrial interests of the country require and demand a currency elastic, secure, and convertible into that which is of more value than the currency itself.  A circulating medium that shall combine these three qualities would stimulate our energies, increase our commerce, and facilitate exchanges both foreign and domestic.  It would also mitigate, if it did not wholly prevent, the pecuniary distress felt on every "black Friday" and in all departments of business during those periods of embarrassment when relief has been sought and heretofore secured by substituting the lesser evil of suspension of specie payments.  In order to cure a disease it is important to understand its character, to know what remedies have been tried, and how far they have proved a failure or a success.  To remedy our financial evils let us first inquire as briefly as possible into measures which have heretofore been adopted, and determine the effect which they have produced.

"The United States Bank, under the authority of Congress, furnished the country with a part of the circulating medium for a limited period.  With that exception, bank notes have been issued by banks organized under State authority, but they have not maintained either one of the qualities named for any considerable length of time.

"The experience of more than three quarters of a century furnishes evidence that we have often exerted our energies until they have been nearly exhausted in order to maintain a system of specie payments which as yet has been only intermittent.  Who is so credulous as to believe that our currency will be restricted even to its present volume against the clamor for an increase every time speculators lock up money, or so long as men embarrassed by such operations can influence the Government to exercise s doubtful power for their relief ?

"The internal commerce of the nation does not absolutely require specie resumption.  That is desirable, but we can prosper without it.  In looking over the country I notice its marvelous progress, and when I see that industry has been richly rewarded, and that nearly every branch of business has been productive of profit during the past five years, I am not so ready as I have been to curtail the currency by an arbitrary statute for the sake of deceiving the people with the old idea that banks can always maintain specie payments.  They have not done it heretofore, for when the pressure came they were no more held by their obligations to redeem than was Samson held by the green withes of Delilah.  Nor am I willing to wait in a state of inactivity for business to increase until it shall make coin and paper of equal value.  I would lay aside a theory which, in times of great commercial embarrassment, has furnished no relief, and try the more excellent and practical measure of redeeming circulation in United States bonds as well as in coin.

"The bill at first will cause a demand for bonds in exchange for legal tender notes, but when the time shall come that an increase of currency will be demanded for business purposes, the tide will change, and notes will be in demand for bonds.  Bonds will be exchanged for notes, and notes for bonds.  This interchangeability, taken in connection with free banking and central redemption, makes provision for an elastic currency — a necessity longfelt but never secured.

"The business of the country is never stationary, but is always contracting or expanding.  When it contracts, bonds will be in demand;  when it expands, currency will be in demand.  Whenever it shall contract, a man may have a surplus of capital in his business for which he will seek a temporary investment.  The bill offers him United States bonds bearing interest, and gives him the privilege of taking back his capital whenever he shall require it.  The certainty of receiving it whenever demanded will make it for his interest to take and hold the bonds until his necessities for currency are greater than his necessities for interest.  On the other hand, the business of the American people will vibrate toward the other extreme.  Agricultural products must be moved, labor on unsold manufactures must be paid for, stocks of merchandise must be carried over a dull season, and cornering speculations must be prevented without depending upon adventitious aid from the Treasury Department, which, if rendered, will in the end prove to be unnatural, impolitic, and inadequate.  This will require more currency.  If the demand shall be so pressing that notes will be of more value than bonds, then men can obtain them according to their ability.

---[Neither Buckingham, nor Drew (nor Horace Greely, the whig promoter of the 3.65 concept) looks to a future when there is no government debt, no government bonds.]

"Money is the power that moves the commerce of the nation.  No Senate can determine the amount that will be required until it can determine the nature and the amount of business to be transacted.  This bill does not propose to limit either the power or the business, but to adjust the amount of the one to the necessities of the other upon automatic principles, so as to make use of all that shall be necessary, and no more.  It will act like the regulator of the throttle-valve attached to a steam-engine.  When the load which the engine is to move is heavy, the valve opens and the steam presses upon the piston with sufficient force to carry it;  when the load is lessened, the valve closes and the power is not wasted.  So, when business increases, it will open the channels through which currency will flow so long as it shall be required, and, as business contracts, it will return to the vaults of your banks.  The exchange of bonds for notes, or of notes for bonds, will cause no excitement and produce no panic or alarm, but will meet the ever-changing conditions and demands of business. * * * Bonds will, at times, be worth more than coin.  Again, this increased demand for bonds will be for the home market, and save a large annual drainage of coin, which would otherwise go to pay interest abroad.

---[Drew is counting on that his readers will not read what Buckingham said in the Senate, and he is leaving out sentences that do not suit his construction.]

"The bill, if its provisions shall be carried out, will also establish our system of banking so firmly upon national obligations as to render the payment of the principal unnecessary, and relieve the present generation of those heavy burdens of taxation which it has borne for years past.

"Mr. President, I am not an advocate for an inflated, irredeemable currency.  It would overwhelm every industrial interest, and bury them in ruin.  There should be no expansion without provision for positive redemption.  I plead for an elastic currency, and as there is no reasonable prospect of obtaining such a currency convertible into coin within the senatorial life of any number of this body, I have introduced this bill, which in my judgment contains provisions that will bring the currency nearer to a specie basis than any measures which have yet been proposed.  They are practicable measures, which, if incorporated into a public act, will increase the value of national securities, reduce the rate of interest thereon, and give us an elastic currency redeemable in that which will approximate the value of coin more closely and maintain that value more uniformly than any other securities.  Try them.  They will produce no disturbance and cause no alarm in financial and business circles, but their influence will be as imperceptible and yet as real as the morning light which ushers in the perfect day."

Let us see how this law would practically work in supplying the deficiencies of our present (greenback) currency, considering them in the order quoted above.

Stability would be insured, as our currency, for the first time in our history, being entirely under our own control, and based solely on our own property and production, would be free from the "entangling alliances" of the past, which have hitherto, in matters of finance and commerce, bound us as firmly to the dictation of Europe as if the Declaration of Independence had never been proclaimed.  This is, what it is intended to be, a startling statement, and if it is enough so to shy our leaders away from the deep ruts of the past, we shall be pleased.

Let us see if it is substantiated by proofs:

"The borrower is the servant of the lender," is a very old truism.  Being a new country, with everything to construct, and too enterprising and impatient, as a people, to wait for the slow accretions of our own industries and gains in developing national and private undertakings, we have always been, are now more than ever, and for a long time must continue to be, a debtor nation.

Gold ever has been, and we see no reason why it should not continue to be, the international regulator of exchanges between nations.  While we fully concede to it this international function, we do not admit that this concession gives any claim to mix in our internal money relations.  The shore line is the division.  Our legal tenders sustain our industries and float our crops to that line;  beyond that all is international and subject to specie liquidation of balances.

Indeed, justice to our creditors, as well as ourselves, would indicate that the small amount of specie we hold in our own right should be devoted to that function.

Bullionists argue that gold is the world's currency, and, therefore, should be ours.  This argument on their side is not worth a row of pins ---as, if it proves anything, it proves that we should accept monarchy, nobility, entail, and primogeniture, and other nuisances which, at much cost of brains, blood, and money, we have happily shaken off.

We freely accept, as above indicated, gold as an international regulator, but claim a distinctive currency for our domestic use, as fully and freely as we claim our other domestic institutions.

When, by reason of war, financial disturbance, or any one of a dozen causes, Europe, our creditor, wants what we owe her, and calls for it in gold, if our currency is based thereon, the foundation is withdrawn and the superstructure tumbles, as it has always tumbled heretofore, burying in its debris the savings and hopes of half a generation.

"He doth destroy mine house
Who doth destroy the prop which holds mine house."

With gold demonetized, this is just our position.  Our citizens owe balances to their European creditors, variously estimated at from five hundred million to one thousand million dollars, payable on call.  These balances will remain undisturbed just so long as our average rate of interest is very much higher than can be obtained in Europe (now from two to three times their rate), and no longer.

Should the rate with them (implying an increased demand for money) rise to our level, or should our rate (implying a more ample supply) fall to theirs, those balances would be called for;  in either case with precisely the same results --to wit: an advance in the price of gold.  What of it ?

Before the small amount --small, contrasted with our liabilities-- we hold could be drained, the augmented premium would have caused all kinds of exportable products and manufactures to be sought for, and bought at prices augmented nearly to the advance in gold --- much to the benefit of the nation.  Who is hurt ?

Another beneficial result would appear.  In exactly the same ratio as the gold premium acted as a bounty to our producers, it would act as a protective, or prohibitory tariff, on imports.  Again, who is hurt ?

I am not sure but it would result in annihilating free-traders and tariff-men as such, gratifying the former by closing the custom-houses and discharging the officials, and responding to the latter by an equivalent to a tariff, on a sliding scale, worked without cost, and also responding to all national requirements;  thus not only developing all our industries to a hitherto unthought-of activity and extent, giving our commerce the area of the planet for a market, but purifying our political atmosphere from the tendency to corruption engendered by political patronage, which presses on all its surface and permeates every pore.

Our system designs no fraud on our foreign creditors, who are entitled to their dues when they want them ---in fact, it facilitates their realization.

We hold our gold (like all other merchandise and products) subject to the demands of our creditors, and, holding the same by so precarious a tenure, has it not always been rash to allow it to be the basis of our money, and especially so now, when our currency has stood more firmly than ever, subjected to almost the greatest supposable strain for a dozen years, based on the property and production of the nation ?  Would it not now be insanity again to tangle all our material interests in what Washington called an "entangling foreign alliance" with Europe ?

Every banker knows the feverishness with which, in the former reign of King Bullion, European events were watched.  If money was plenty on Threadneedle Street ---Bank of England rates three per cent. per year, street rates one-half per cent. less--- foreign creditors ordered their funds invested here;  money plenty, discounts free, and "every thing lovely."

Then comes a European commotion.  Germany or somebody else wants money.  Gold goes out of the Bank of England.  Interest advances there.  Our foreign correspondents draw or order remittance;  specie is shipped;  discounts are shut off;  loans on storage certificates and other collaterals are called in;  merchandise sacrificed at half the cost of production;  the year's savings of the merchant are gone in an hour.

This is but a flurry, which occurs twenty times where a panic does once.  The flurry is distressful ---the panic is horrible.  Grand old firms, with assets twenty times enough to meet their liabilities, are upset, smashing smaller fry as they tumble.  Honorable merchants, who to pay the pound of flesh do not wait for Portia's ruling, but pay it, if all their heart's blood follow, so that their honor is saved.  Daily and hourly destruction of life by the intensest torture.  Wealth destroyed more rapidly than in war.  Banks sympathizing, but do no more, for at that crisis to afford relief would be their own legal destruction.  Cities telegraphing, watching, listening to cities, hoping, trusting, praying that their neighbors would be the first to sunder the chain which is strangling the nation;  and when the word flashes from Albany that our metropolitan banks may clear their necks from the murderous halter and suspend, in an instant, simultaneously, New York and Boston ---with a heartfelt Thank God!--- breathe.

But at what a cost the accumulation of a decade gone in an hour ---and, with many, the last productive decade on earth, and, oh, their widows and orphans !

Did such disastrous results, worse than sinking a navy, occur on any coast, millions, if necessary, would be expended for beacons to warn the sailors.  Did they result from physical malaria, not a Grand Jury in Christendom but would indict the cause as a nuisance.  But we, with an infatuation more criminal than that of the worshipers of Juggernaut, consider these things as inevitable decrees of nature.

And, in a sense, so they are, as was the plague of London, and more recent visitation of the cholera, decrees of nature until the causes were removed, when the disease disappeared with it.

Men and brethren! why will you not apply the same tests of analysis and synthesis to the nation's life-blood which you do to a hen cholera or a potato rot ?

We have above more facts to form a science on than Newton's apple or Watt's tea-kettle afforded.  The cause of the disastrous panics which have before the war so often prostrated our country, are directly traced to specie affiliation;  this is proved by the removal of the cause, which has always been followed by disappearance of the symptoms.

This inference is further sustained by the fact that since our currency has been partially sundered from this feverish element, such deplorable phenomena have disappeared, and we have found our circulation healthy in just the same ratio as we have refrained from that disturbing cause.

From the above we may deduce this axiom:  As long as America bases her currency wholly or in part upon specie, Americans live financially on European sufferance.

In this connection we quote Mr. Charles Sears, one of our best political economists:

"Independently of circumstances and on its merits, the 'Specie Basis' hypothesis is the most disorganizing element that ever obtained place in society, and its ghostly presentments ought to be laid without benefit of clergy whenever they show in daylight.

"On this hypothesis our monetary, industrial, and commercial system constitute a huge pyramid or cone standing upon its apex.  Forty billions of property resting upon six billions of current production, which rests for its value upon say seven hundred millions of currency, which in turn for its value rests upon two hundred and fifty millions of specie, which, so far as our possession of it is concerned, depends upon the interest and the good-will of our rivals in industry and haters of our political system.

"The precious metals, being limited in quantity, are insufficient to meet the demand for money to effect exchanges, and the quantity is supplemented by the fiction of paper money payable three or four dollars for one in coin.  Here is an artificial limit to production and exchange.  Coin being limited, bank notes on the specie basis must necessarily be so, even if the legitimate demand for money in production and exchange be, as it usually is, three or four times greater than the sum of coin and bank notes.  At this point a system of extended credits intervenes, and private obligations supplement the bank notes;  so that, upon the day of liquidation, the balances would amount to ten, twenty, or fifty times the amount of coin.

"Of course on this system all people in all times have been insolvent.  Production and trade have been carried on upon sufferance.  So long as confidence continued unimpaired, the movements of property were kept up, but the exigencies of war, of local trade, of the stock and money speculators (the real money being limited in quantity invites speculation), the natural tendency of the system itself requiring periodical settlements, demonstrate the general insolvency.  Within the last fifty years payday has come quite regularly at the end of every ten years.  Something ---any one of a dozen or twenty causes, few know what--- sets gold flowing out.  Fifty millions withdrawn in a short time from their usual places of deposit is quite sufficient to make the whole volume of coin disappear from ordinary commercial circulation as completely as if it never existed.  The 'Metallic Basis' is gone, slipped out;  the pivot of the system is dislocated;  somebody wanted it and took it;  and the pyramid tumbles down, burying in its ruins three-fourths of a business generation.  The creditor class does not even now get specie payment of balances from the debtors, but such property as may be in possession, or a list of uncollectable credits.  Nor does specie enter into ordinary commercial liquidations to much extent at any time.  In the immense volume of our exchanges, specie payments do not enter to the extent of one-tenth of one per cent.;  the pretense of specie payments, therefore, is a false pretense, not innocent by any means, but a ruinous falsehood;  which, together with the limited volume of currency incident to the system and the consequent high rate of interest, is rapidly concentrating in the hands of a small class, those who control gold, who 'traffic in the revenues of Empire,' the surplus earnings of the nation.

---[You are blaming the coin at the bottom of this inverted pyramid, and not the credit pyramid built up on this coin, and you are certainly not blaming those who built up this credit pyramid and those "who traffic in the revenues.'  (paid or unpaid propagators of what the bankers want to be propagated)
The bankers want to get rid of silver and gold, they want to use bank assets as the basis of note issue and circulation.]

"For a dozen years past we have enjoyed immunity from these commercial cataclysms, although during this period we carried on a devastating war, and our activities were suddenly arrested and changed into new directions, incident to the close of the war.  Such immunity has been due to two causes:

"First, to the fact that we cast out from our monetary system the lying pretense of specie payments.

"Second, to the larger volume of currency in circulation, enabling us to make exchanges with facility, and also to make cash settlements more largely than ever before, and so eliminating one element of bankruptcy from our dealings, namely, credit.  Truth in our monetary system, and a larger volume of currency, saved us.

---[You left out the $800million a year government demand for war supplies.  U.S. notes did not produce the prosperity (for those who were not casualties of war), the government demand did.]

"The laws governing the production and exchange of property necessarily inhere in its representative, therefore the measure of monetary issue should be freely responsive to the demand for it in production and exchange.  There would be the same propriety in restricting production and exchange by law that there is in restricting by law the issue of the money required for production and exchange, provided always that money represent property, and not person or credit.  Money is the currency which floats property, by its title, from hand to hand, as water is a current to float property from place to place;  and there would be the same wisdom in restricting the supply of water in our canals to one-third or other proportions of their capacity, as there is restricting the volume of our currency to one-third or other proportion of the volume required to make exchanges.  In either case property perishes by detention in transit.

"To establish and maintain a just balance, a working equilibrium between property and money, is a financial problem which, perhaps, only the people of the United States can solve.  The opportunity has come, and the method has been indicated, namely, by a Government issue of bonds bearing a low rate of interest, which rate shall not much exceed the average annual increase of property and bond certificates;  the bonds and bond certificates to be mutually convertible, at the option of the holder.

"These bonds to replace the existing bonds as rapidly as the conversion can be made.  They would still represent the public debt, but they also represent part of the cost of our civilization;  they stand for a certain value, namely, our institutions, laws, usages;  and for the present are a suitable basis of currency issue.  They would constitute the reservoir into which any surplus currency would speedily flow whenever the volume afloat should rise above the industrial demand.  These bond certificates, together with coin certificates and coin, would provide a currency adequate to all our monetary want. * * *

"Whenever we get out of debt, and have no further occasion to issue bonds, property certificates, based on current production, may replace the certificates issued on the bonds, and the current expenses of Government be paid from interest on loans.  That is to say, the people, collectively, would loan their own money to themselves in their private capacity, and provide a currency at so low a rate of interest that our resources may be freely developed without artificial restriction, and Government be maintained without other taxation than the small interest representing part of the annual increase of property.

"Every step of change henceforth should contemplate a forward movement toward a popular monetary system, corresponding with our popular political and religious system, and not in any measure tending backward to the financial scheme of past ages, generated of and in accord with, despotic institutions and caste society, and which has been for our industries a system of organized destruction.

"Let us have a people's money, and abolish credit in exchanges."

In future numbers we shall treat on the elasticity, cheapness, volume, and convertibility of our proposed system.

The Currency of the Future.
elasticity, volume, convertibility, and cheapness.

IN the first article of this series (to which, in this connection, we refer our readers) we quoted largely from the able speech of Mr. Buckingham, in the United States Senate, January 7th, 1873, (Bill 1313) and from Mr. Boutwell's, Secretary of the Treasury, report of December, 1872, arraigning the currency for its lack of elasticity.

January 7, 1873.
Friday, January 10, 1873.
Thursday, January 16, 1873.
Mr. Buckingham asked and, by unanimous consent, obtained leave to bring in the following bill; which was read twice and ordered to be printed.  A Bill Supplementary to an act entitled "An act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," approved June third, eighteen hundred and sixty-four, and to secure an elastic currency, to appreciate national obligations, and to reach specie payments without commercial embarrassment.

The extract from Mr. Boutwell's report closed thus:  "The problem is to find a way of increasing the currency for moving the crops and diminishing it at once when that work is done."

Our response is: Let Congress pass a very simple, and, therefore, easily-understood law, providing for the issue of treasury notes (greenbacks) as legal tender for all purposes what ever, to the extent which the requirements of the country indicate, and make such legal tender reconvertible, at the option of the holders, into Treasury bonds bearing a rate of interest not much in excess of the average annual national increase of property ---say 3.65 per cent. per year.

"In the interchangeability (at the option of the holder) of national paper money with Government bonds bearing a fired rate of interest, there is a subtile principle that will regulate the movements of finance and commerce as accurately as the motion of the steam-engine is regulated by its 'governor.'  Such paper money tokens would be much nearer perfect measures of value than gold and silver ever have been or ever can be."

Our readers should impress the above firmly in their minds, as there is more financial science contained therein in its adaptability to our tres, nt national need, than in all the volumes of political economy ever before written.  Horace Greeley, in a characteristic editorial of the Tribune, Nov. 9, 1871, said:

"The benefits of this system would be these:  Our greenbacks, which are now virtual falsehoods, would be truths.  The Government would pay them on demand in bonds, as aforesaid, which is in substantial accordance with the plan on which the greenbacks were first authorized.

"Our greenbacks, no longer false, but convertible at pleasure into bonds bearing a moderate gold interest and exchangeable as aforesaid, could not fail to appreciate steadily until they nearly reached the level of gold.  Indeed, they would, unless issued too profusely, be really better than gold.  Drawing a higher rate of interest than British consols, and convertible at pleasure, as these are not, they would in time obtain currency even in the Old World.

"The trouble so inveterately borrowed by thousands with respect to 'over-issues,' 'redundant currency,' etc., would (or at least should) be hereby dispelled.  If there were at any time an excess of currency, it would tend to precipitate itself into the bonds aforesaid.  If there should ever be a scarcity of currency, bonds would be exchanged at the Treasury for greenbacks till the want was fully supplied.  Black Fridays and the locking up of greenbacks would soon be numbered with lost arts and hobgoblin terrors.

"Though the demand for these bonds might for months be moderate, their convenience and manifest utility would soon diffuse their popularity and stimulate an ever-widening demand for them.  They would be a favorite investment with guardians and trustees, who should expect to be required to pay over the funds held by them at an early day, whether fixed or uncertain.  They would say, 'Though I might invest or deposit these funds where they would command a higher interest, I choose to place them where I know they will be safe and at hand when called for.'

"Ultimately, we believe they would become so popular that hundreds of millions of them would be absorbed at or very near the par of specie, and that with the proceeds an equal amount of our outstanding sixes might be redeemed and canceled, without advertising for loans or paying bankers to shin for us throughout Europe.  The interest thus saved to our country would be an important item.

"Such are the rude outlines of a plan which we did not originate, but which we heartily indorse.  Why not give it a trial ?  We should dearly like to inform Europe that, since she seems not to want any more of our bonds at five per cent., we have concluded to take the balance ourselves at 3½.”

---[and the people of the country would have to pay perpetual interest on perpetual debt.

Some one has well remarked that the truest test of a scientific theory is in its power of prediction.  Measured by that severe criterion, the verdict must be in our favor, for, while our opponents have been entirely bewildered by the phenomena of last fall, political economists of our school predicted them, and placed the predictions on record.

An analysis of the foregoing programme shows a logical division into four parts, thus:

1st.  Issue of Treasury notes (greenbacks) to the extent which the needs of the country indicate. ---[who decides what indicates the extent of the need ?]

2d.  Such notes to be legal tenders for all purposes.

3d.  Such notes to be convertible, at the option of the holder, into Government bonds bearing a low rate of interest.

4th.  Such bonds payable, principal and interest, in said currency notes on demand.

The first three have been spasmodically accepted at different times in part;  sometimes under pressure of necessity;  sometimes from vague aspirations for response to our need ---but never in combination.

The result has been like that of a four-horse balky team --- not only not pulling together, but a part laying on the breaching, while the rest pulled on the traces.

For instance, as to first requirement of ample currency, an eminent antagonist in the columns of the N.Y. Times, over the signature of "Knickerbocker," says:

"By reference to the report (Secretary of the Treasury) of August 31, 1865, it will be found that the circulating medium consisted of United States Notes, Greenbacks, and Fractional Currency ... $459,505,311.51.  National Bank Notes and State Bank issues, (Report 1865,) by Comptroller's Report, Oct. 1, 1865. .... 250,189,478.00. Total .... $709,694,789.51.

"To this amount must be added the sum of five per cent. legal tender notes, and of certificates of indebtedness, etc., shown to have amounted to $443,220.103.16;  in all, a sum of $1,152,914,892.67.  This, then, was the circulating medium of the country at the time of its greatest expansion. * * *

"The Treasury statement of July, 1868, shows to what extent the circulating medium had been then contracted.  It then consisted of United States Notes, Greenbacks, and Fractional Currency .... $388,768,674.75.  National Bank Notes outstanding 1st November 1867 .... 299.103,996.00.  Total .... $687,872,670.75.  To which we add the sum of temporary loan certificates and other notes serving the purposes of currency, amounting to $92,687,442.64, and the sum of circulating medium will be found to have then reached $780,560,113.39, and shows a contraction by the Secretary of $372,354,779.28 in its total amount. * * *

"The country at large had felt the pressure of the screw, but had not been able to discern precisely from what quarter the pinch came, the contraction being confined to those outside forms of Treasury obligations which, though not currency in the strict acceptation of the word, were still used as such in the larger transactions of trade and financial exchange.  When, in a time of general pressure, the currency itself became the subject of the pruning knife, the country not only felt the knife, but saw how it was handled and refused to submit longer to the 'heroic treatment.'"

"Knickerbocker's" figures, quoted above, take us to July, 1868, when, as the "people felt the knife, saw how it was handled, and refused to submit longer to the heroic treatment," the contraction of the cast-iron currency was stopped, and the people allowed to "grow up to it."

Five years have passed, and as we double in population in thirty years, it follows that we are one-sixth larger in 1873 than when we groaned so awfully in 1868.  This one-sixth growth, with the same volume of currency, amounts practically to a contraction of one-sixth of the aggregate of 1868, and now we have but $13.68 currency per head (including $40,000,000 in gold quoted by the Comptroller of the Currency as "in circulation"), which is about one-half the average of France, one-third of England, and 2½ per cent. of that quoted by "Knickerbocker" as existing at the close of the war.

No wonder that our industries are paralyzed, and our crops stuck in transit for lack of currency to move them.

With the foregoing figures --taken, mind you, from the compilation of our antagonists-- before us on one hand, and Hunt's Year-Book, and other statistical authorities, on the other, let us see how this resulted.

The mercantile failures in the Northern States, from 1862 to 1870, inclusive, which we copy from Hunt's Magazine and Year-Book for 1870, were:

Year.   Failures.   Liabilities
1862 ... 1,652 ... $23,049,000
1863 ... 495 ..... 7,899,000
1864 ... 520 ..... 8,579,000
1865 ... 530 ... 17,625,000
1866 ... 632 ... 47,333,000
1867 ... 2,386 ... 86,218,000
1868 ... 2,197 ... 57,275,000
1869 ... 2,411 ... 65,246,000
1870 ... 3,160 ... 79,697,000

We supplement the foregoing table with the following (for the whole nation), of commercial failures for 1870, '71, '72, and '73.

Year.   Failures.   Liabilities. 1870 .... 3.551 .... $88,242,000
1871 .... 2,915 .... 85,252,000
1872 .... 4,069 .... 121,056,000
1873 .... 5,181 .... 228,490,000

The failures of '73 are about 25 per cent. in excess of '72;  but the aggregate is nearly double, showing that devastation is spreading among the loftier commercial and financial circles.

This computation does not include any losses not resulting in absolute failures, but it indicates beyond cavil that there were six-fold more of losses and disasters during each year of currency contraction than during each year of full currency.

It will be observed by comparison of dates of contraction with dates of failures that they kept pace in equal step.  To effect these results ---as orderly and economical as the career of a mad bull in a crockery store: the Government.

1st Retired its certificates of indebtedness by borrowing gold from Europe at a high rate of interest and giving bonds, which, with exemption from taxation, cost the people at least 10 per cent, currency interest, when the people themselves would gladly have taken currency, saving all gold premium and interest.

2d.  It created and continued the existence of about $400,000,000, bonds costing 10 per cent. interest as above, to enable it to withdraw and withhold $354,000,000 currency from the people for no other purpose than to retain said bonds as security for its indorsing the paper of holders of said bonds, for which indorsement said Government gets 1 per cent, per year interest, and calls it tax, while the people would have been much better pleased to have retained their own paper and saved the bond interest.  In short, in this transaction the people, collectively, through their agents, borrow money at 10 per cent., and loan it again at 1 per cent to the bond-holders, who re-loan it to the individual people at 7 percent to 50 per cent. per year.

3d.  With plenty of bonds outstanding costing, as above, 10 per cent. interest, it called in and paid off all its 3 per cent. indebtedness.

4th.  It then attempted to absorb the remainder of the life-blood currency of the people at the rate of $4,000,000 per month, and actually progressed eleven months in the nefarious work when (to quote our antagonist again) "the people not only felt the knife, but saw how it was handled, and refused to submit longer to the heroic treatment."

Like John Le Pean, they "could eat caterpillars, but squash-bugs were a little too fat."

When Jim Fisk and other geniuses stole the Erie Railroad, the splendor of the villainy so dazzled the world that for the moment men forgot to call it stealing.

A deep conviction is fast gaining ground that, emboldened by that operation, his old fellow workers, with other conspirators on both sides of the Atlantic ---some Jews, others bad Christians--- have a deep-laid plot to so reduce the values of the nation that a ring of a thousand men can gobble them all up.

Most certainly, if such is their plan, the past action and present lethargy of our legislative and executive departments play well into their hands.

We have endeavored to show that at one time the first requirement of the currency of the future, to wit: adequacy to wants of the country existed, and during its existence we enjoyed, notwithstanding the waste and ravages of war, an unparalleled prosperity, and by the highest statistics have also shown decadence in prosperity, coextensive with reduction of the currency, until we are now in an almost entire collapse;  could show that the material loss to our country from the errors of legislation since the war has been greater than the money cost of the war, and do boldly affirm that, with the loss to our great industrial competitor of men by emigration, exhaustion of her iron and coal, our superior power of production of the great staples, iron, coal, cotton, wool, tobacco, naval stores, grain, petroleum, gold, silver, etc., and our better mechanics, if we avail ourselves of our own domestic money, under scientific regulation, at a cost not much beyond its earnings, in ten years we will have re-established our naval prestige;  become the dominant manufacturing and naval, as we are the greatest agricultural, power in the world, and instead of the planet's exchanges centering in England, they will be with us.

The second requirement is that such notes shall be legal tenders for all purposes.

The present greenback is indorsed as "legal tender for all debts except duties on imports and interest on the public debt."  Wipe out these exceptions.  The gold received for duties on imports is only required to enable the Government to pay out the same for interest.  Let it buy.  Such will be the stimulus that this domestic, natural, self-sustaining, and self-regulating currency will give to all our production, that very soon the balance of trade will be in our favor, and gold easy at par.

England, with infinitely smaller resources and larger proportionate foreign liabilities than we, not able to furnish her quota of men for her continental wars, agreed to supply the deficiency in money, and did it ---boldly meeting the question, prohibiting the payment of specie and augmenting her currency.  And such a currency like her consols (consolidated interminable annuities) utterly unredeemable, and therefore infinitely inferior to that proposed by us.  But bad as that currency was, it did the work;  her productions were stimulated;  although heavily in debt to the foreigner, the balance of trade soon became largely in her favor.  She received balances at her option in gold or her own outstanding obligations.  She wisely took the latter, and now her creditors are mostly her own citizens, all civilization her debtors, with perennial balances flowing in from all quarters.

Since writing the above our attention has been called to an admirable article by W.H. Winder in the New York Express, from which we quote freely thus.  Will the reader please remember that convertible in the extract means in gold.

In eminent illustration of the foregoing truths we may cite the case of Great Britain, a country in all of the natural elements of wealth inferior to the United States and some other countries, yet from being a heavily debtor country to the foreigner, she has become, by a wise fiscal policy, the wealthiest of countries, the creditor and the banker of the world, possessing the largest foreign trade of any country.  All countries are tributaries to this insignificant island, and made so only by her wiser fiscal policy.

Will not a similar fiscal policy to that which extricated from a large foreign debt, and has so immensely aggrandized Great Britain, with our vastly superior advantages extricate the United States from its foreign debt, and enrich her as it has enriched Great Britain by a "flourishing export trade," that sole specific for the extinction of foreign debt and accumulation of wealth ?

What was that fiscal policy which so surely and so speedily cleared Great Britain from her debt to the foreigner, restored specie payment, and rendered it eminently to her interest to invite all countries to adopt free trade and specie payment ?

The Government of Great Britain promptly adopted the only policy by which her salvation could be secured;  it prohibited the payment of specie, and made the bank notes money.  The effect of this fiscal policy was two-fold:

1st.  It secured a currency impregnable to the foreigner;  it was not in his power to contract and expand at his will the volume of currency, convulsing trade and industry at every change.  It is a fact of official record, the truth of which was verified by the Bullion Committee of Parliament, that no period of specie payment in England, of similar duration as the paper currency, was so free from perturbations as was the era of paper currency;  nor had there been a period of greater activity or equal production.

2d.  The foreign creditor had but the two modes of an alternative to get home his funds from Great Britain:  he could remit in gold or in commodities.  The policy of Great Britain sought to render gold so dear and inaccessible to the foreigner, that he would find the commodities in the market cheaper than the gold in market, so that remittance in commodities would be preferable.

The inevitable result of this policy became immediately apparent in the excess of exports, diminishing on the one hand her imports (because by this fiscal policy the currency acted favorably for domestic commodities and against foreign commodities), and augmenting her exports (the same policy in the currency), compelling the foreign creditor to find it to his interest to remit in commodities.  This demand, forced by the wise fiscal policy of Great Britain, for her commodities, gave full and profitable employment to her productive industries;  it familiarized the markets of the world with the commodities of Great Britain, and it systematized and perfected her manufactures to a degree which rendered her the equal of any, and the superior to most, countries in the production of manufactured commodities.  But in the very flow and current of the prosperity from this sagacious fiscal policy, there were then, as now, many crazy people obstreperously clamorous for "specie payment," who had scarce a glimmering of the true meaning of this term;  ignorant of the fact that the policy then denounced was in strict harmony with the principles of "specie payment," Pitt and Addington successfully combated and exposed these delusions.  They presented these truths with convincing force ---that so long as Great Britain was heavily in debt to "foreign parts," specie payment was a most transparent impossibility, a clear absurdity;  because, the moment paper was convertible, the only person who would convert it, or who had any occasion to do so, was the foreign creditor;  and as gold would be a better remittance for him at par .....