Democratic Sentinel, Volume 1, Number 32, Rensselaer, Jasper County, 21 September 1877 — SPECIE-RESUMPTION. [ARTICLE]

SPECIE-RESUMPTION.

Judge Doolittle’s Views—His Objections to tbe Present Legislation on the Subject. A reporter for the Chicago Tribune recently called upon ex-Senator Doolittle with a view to ascertain. his opinion as to the effect oif specie-re-sumption on Jan. 1, 1879—that is, in about sixteen months. In the courso of a lengthened conversation on the subject, Mr. Doolittle said : To answer your question, I must first put another question, and answer that, and that question is this : How much must the volume of paper money, including greenbacks and Treasury notes, be decreased ; and how much must tbe volume of coin now in this country be increased, in order to resume specio payments, and to maintain resumption? I retreat, to resume and to maintain resumption ; for I think all will agree that to resume for a week and then to suspend would be disastrous.

I assume as a fact beyond dispute that no nation, by any system of paper money, ever has maintained or can maintain specie payments, unless there is at least as much coin in the country as there is paper in circula tion. Ido not say it must all bo ii> the vaults of the banks or the treasury. But if not in their vaults, it must be in the hands of the people. The treasury and the banks may get on and maintain spocie payments with one-half the amount of coin in reserve ; and sometimes with one-third, when there is, at the same time, a large supply of coin in the hands of the people which, when pushed, the banks or the treasury may command. The history of our own counof England, France, Prussia, and every other country shows this. In 1861, before the civil war, when we wero in a normal financial condition—when wo had specie payments—-we had of bank paper, in I rouud numbers $200,000,000; of coin money on deposit, $100,000,000; of coin circulating among the people, according to estimates, $165,000,000. There was then about $65,000,000 more of coin than of paper to be redeemed. Even during the suspension in 1867 there was more coin in the country than there was of bank issues ; but it was in the pockets of the people and not in the vaults of the banks. . “ Bear in mind,” continued the ex- Senator,' “I do not say that specie payments can be always maintained when the stock of coin in the country is equal to the volume of paper. But, what I do say is, that specie payments cannot be maintained when the stock of coin in the country is less than the volume of paper.” In England, where specie payments are maintained, the volume of paper money does not exceed $225,000,000; the coin reserve in the Bank of England is a little over $100,000,000; the coin in circulation is estimated at $525,000,000. In Prussia, where specio payments are maintained, the paper money is about $202,000,000; the coin reserve of the bank is $154,000,000; the coin in circulation is about $500,000,000. In France, where the bank still remains in suspension, the amount of paper money is about $512,000,000, its coin reserve is about $253,000,000; the coin in circulation among the people is $500,000,000. The notes of the bank are par with coin; and yet that bank, conducted by the greatest financiers of this generation, does not resume specie payments, though its stock of coin reserve is more than one-half the amount of its notes, and there is more than $200,000,000 more of coin in the country than paper to be redeemed if demanded. To make a long story short, before we can resume specie payment, and stay resumed, wo must increase our stock of coin ; and decrease our volume of paper until the coin shall at least be equal to the paper.

The currency is to the country what the blood in circulation is to the human body. Since 1875 one-seventh part of the blood has boon drawn out, business is stagnant, men of enterprise are paralyzed ; many who will stand are weakening ; they feel themselves beginning to stagger. If drawing out one-seventh part of the blood in the system in two years has produced that result, what effect will follow if you draw out in one year more than one-third of all that is left in the system ? There is but one answer. The patient will die in the operation. Two-thirds of all the business men still standing will go to the wall. Every property under mortgage for one-half its present value will change hands. The forced and sudden change in the meaning and increase in the valno of the dollar will bring upon the country more destruction of fortunes and values than a civil war. Reporter—But how can that be, as gold and greenbacks aro now so near par? Is it not simply a question of 4 per cent ? Mr. Doolittle—l am glad you askod that question, and lam glad to answer it. Lot me assure you it is not a simple question of 4 per cent. Ten times 4 per cent, is involved in it. Facts are worth more than theories. The history of resumption in England is full of instruction upon the very question. Duiing tho wars with Napoleon and after they were over for nearly twenty years the Bank of England suspended specie payments. But in 1819, after four > ears of peace, the value of paper currency rose to be only 6 per cent, below coin. Peel and Ricardo urged upon Parliament resumption in four years. Thoy said, as some say now : We are almost at the point of resumption ; we have already discounted our sufferings. It is only a question of 3 per cent. Ricardo said, “ The whole difficulty would be in raising the value of the currency 3 per cent.”

Though wise business men protested—though the Governor and Directors of the Bank of England warned Parliament of the danger of contracting the currency, as they must be compelled to do to resume in four years—yet such was the influence of Peel and Ricardo that they carried “ Peel’s Resumption act” through the House of Commons by a unanimous vote. But one man stood out against it, and they oven persuaded him to leave tho Chamber when the vote was takeD, so that it would appear unanimous. What was the result? Sir Archibald Alison, in his history, tells the sad story; “ The effects of this extraordinary piece of legislation wero soon apparent. The industry of the nation was speedily congealed, as a flowing stream is by the severity of an Arctic winter. * * * The entire circulation of England fell from $232,545,000 in 1818, to $142,757,000 in 1821. The effects of this sudden and prodigious contraction of the currency were soon apparent; and they rendered the next three years a period of ceaseless distress and suffering in the British islands.” Tho discounts at the “Bank of England, which in 1810 had been $115,000,000, and in 1815 not less than $103,000,000, sunk in 1820 to $23,360,000, and in 1821 to $13,610,000. The effect upon prices was not less immediate and appalling.” The rate of wages fell one-half. “From the tremendous reduction in the price of land.” says Mr. Doubleday, “which now took place, the estates barely sold for as much as would pay off the mortgages, and the owners were stripped of all and made beggars.” History repeats itself. Like causes produce like effects. We are blessed this year with a bounteous harvest. There is a prospect of ft foreign demand for our surplus. And yet, if when Congress meets the policy of the Secretary of the Treasury and of the National Board of Trade at Milwaukee shall be followed, there are disasters before our country which no pen can portray. Reporter—But, Senator Doolittle, are you not in favor of a return to specie payments at some time? Mr. Doolittle—Certainly I am, but not by any such sudden and violent contraction as resumption by January, 1879, will force upon tho country. To use the strong language of Gen. Ewing, of Ohio, I would come to resumption by “ the pleasant paths of industry, economy and prosperity, and not be dragged through hell to reach it.”