Democratic Sentinel, Volume 1, Number 35, Rensselaer, Jasper County, 12 October 1877 — MISCELLANEOUS GLEANINGS. [ARTICLE]

MISCELLANEOUS GLEANINGS.

Trouble with Mexico is brewing, and grave apprehensions are felt at Washington that it will not be tong delayed. > Some days ago Lieut. Bullis, with two companies, crossed the Rio Grande from Fort Clark in pursuit or a band of Mexican cattle-thieves. A dispatch of the 2d inst. announces that Col. Shafter had also crossed the river “ with 600 men and two Gatling guns to extricate Lieut. Bullis from his position.” News received from the Sitting Bull commisthe report that Joseph is endeavoring to reach Canadian territory by the shortest route, and as soon as possible. Advices frdm Fort Clark announce the return ! of Shafter and, Bulbs’ commands from the Mexican side «f the Hto Grande. The expedition was unsuccessful, owing to the fact that the Indians had been warned of Bullis’ pursuit and escaped. Twelve horses and two mules which had been stolen from the American side of the river were recaptured. A small body of Mexican cavalry kept upon their trail and in Bight of the command during their march from San Diego river to the Rio Gmnde, but made no offensive demonstration. The National Congress of the Protestant Episcopal church is in session in Boston. The telegraph announces the death, at Newark, N. J., of Archbishop Bayley, of the Catholic diocese of Baltimore. Gov. Hampton, of South Carolina, has made a requisition upon Chief Justice Cartter, of the Supreme Court of the District of Columbia, for United States Senator Patterson. The contest for the base-ball championship of the United States has resulted in favor of the Boston club, which won thirty-one games and tost seventeen. The Louisville club occupies second position, with twenty-eight gntnnn won and twenty tost; the Brooklyn cfab third position, with twenty-four games won and twenty-four tost; the St Louis fourth, with nineteen won and twenty-nine lost; while the Chicago club, which easily won the champion pennant last year, brings up the rear with eighteen games won and thirty lost. He— “How serenely beautiful is the sky to-night. Heaven’s lamps are all alight. And the milky way—’’ She— Bure enough! the way the milk has heen gour for the last week is too bad.” ThOubject is immediately changed,

The Reasons of Its Great Success. Lessons for the United States Drawn from the Recent Experience of Europe. Tariffs, Banking, Cnrrency, and Ball* ion—A Letter from Judge Kelley. To the Editor of the Philadelphia Times : In grateful compliance with your request I avail myself of the earliest leisure to reply more precisely than I could without reference to official papers to your questions as to the causes of the wonderful power of France as shown in her payment, in anticipation of the time named by her conqueror, of the enormous inflicted upon her, and the maintenance of the industries of the people during the war and the succeeding interval, which has been one of such terrible financial depression to Germany, the recipient of the fine, and to Great Britain and tbe United States. Any discussion of French finance would be delusive which did not keep steadily in view the fact tot under all changes of dynasty and forms of government since the days of Colbert the labor of France has been protected by the most elaborate and ingenious tariff and system of prohibitions ever devised, and that, until the making of the first commercial treaty with England in 1860, the importation of immense numbers of articles of foreign manufacture was prohibited, and that many of the prohibitions which were until then applicable to all nations still exist in her general tariff, which regulates importations from non-treaty nations. Thus the importation of ’American cutlery is prohibited by the law of December, 1796, which has not been disturbed during the long interim ; and, while’our raw cotton is admitted free as material for manufacture, our cotton yarns and fabrics are excluded by a prohibition established in 1809. Another primary fact iu this connection must also be remembered—the patronage of art by the French Government The diffusion of a love of art and the knowledge of its laws among the producing classes secures a market for French fabrics and wares when the home and foreign markets of other nations are shrinking, as those of Germany, England and the United States now are, and have been for the last three years. While these suffering nations offer substantial commodities—heavy cottons, weighty woolen goods, etc. —France commands markets for her lighter commodities by the genius, taste and skill with which a smaller amount of material is wrought into equal superficial quantities, and so embellished as to commend them to the admiration of the world. This blending of art with utility not only secures-France universal markets, but enables her to sell imponderable things, such as genius, taste, art and skill, which may be carried to the most distant commercial countries without such freight charges as burden the heavier goods produced elsewhere. Thus much as an essential preliminary. THE BASIS OF FBENCH FINANCE. The distinguishing characteristic of to financial policy of the French Government is found in the fact that it assumes the duty of preventing alternate periods of inflation and that” to" or other exigency has caused au issue of irredeemable paper, it has invested such issue with the character of legal tender—made it available for all purposes to which money could bo applied in France, whether the transactions were between citizens or between citizens and the Government or vice versa, and has taken meamirento|preveiit the withdrawal of the paper until a continuous balance of trad chad brought into to country metallic monev enough to supply the channels temporarily filled by the paper money with which the exigenoy had been met. Colbert taught the French people and Napoleon emphasized the lessons of Colbert, that it is labor that supports government and society, and that to arrest the employment of productive industry is to impoverish the public treasury aiid produce discontent and possible disorder among the people. And I hesitate uqt to say that had this lesson been borne in mipd by our Government—had our paper money been, as the House of Representatives when providing for the issue of the greenback insisted that it should be, received by the Government in payment of all dues, and had there been no attempt to retire any part of the paper which had been invested with the character of legal tender until a metallic substitute had been purchased by the export of our surplus commodities, we shoiila never have been without the free use of gold and silver at a rate of premium no greater than that which has prevailed in France, where it never exceeded 2% per cent., and that but for a brief period, and that the question of the resumption of specie payments would have been one of as little consequence to the American people as it now is to the French people who use gold, silver, and irredeemable bank notes interchangeably. Indeed, it is a fact that, while the Government will « not permit the bank to close the operation by which its notes were made legal tender, the bank will npt, without a compensatory premium, receive any considerable amount of gold or silver in exchange for its notes, because it holds an excess of bullion, and there is a tax of $1.50 on SI,OOO of its circulation. We pay our banks 4, notes which to Government furnishes them. France, even in to greatest of her exigencies, maintains her power over the money of the country by demanding a slight tax upon circulation whenever she authorizes the bank to issue notes irredeemable, as our national-bank notes are, and pays the bank but 1 .per cent, on the amount of such notes loaned it when first issued.

Great Britain and the United States adopt another and opposite financial policy. They restrict the volume of legal-tender money to the narrowest possible limits available as a basis for bank circulation and compel the enterprising and producing classes to pay tribute to capitalists, foreign or native, for credit upon /o <gwd«ct -France through banks at Such rates of discount as mav prevail. s g fj - THE GERMAN SYSTEM. Germany, prior to the war, was as free from commercial and financial crises as France had er flnanc i»l system was kindred to that °f France. Her circulation consisted of money which was silver and of bank paper. The great volume of paper met with in circulation was notes of small denominations, many of them for less than $1 American money. But after the war she discarded both silver and small bank notes and ordained a gold currency, established the Imperial Bank and prohibited the issue of any bank notes for less than the equivalent of A’s or $25, and the mere attempt, ineffectual as yet, to carry out this scheme, has reduced both Government and people to a condition contrasting painfully with that which they exhibited for years before this mad expenment was undertaken. I now proceed to exhibit some of the facts from which these conclusions have been deduced. After tiie French Revolution of 1848, on the night of the 15th of March, the republic, bv decree, made the notes of the Bank to France a legal tender, limiting the increase of $350,000,000 and reducing the denomination of the notes to 10G francs, or S2O. One of the great difficulties mentioned ih the official report of the transaction and, its effects was to print these 100-franc notefl fast enough for the public consumption, though in ten days the ™?™LA 88Ued “ U^ 8 form liad reached 80,000,000 francs; and, m a very able article in toe London Timos on the 16th of February, and one that would inevitably lead to the destruction of the\ commerce and industries of .Trance, saia: “ M. D’Argout resolved to make every effort to keep alive> what may be termed the circulation of the life-blood of the comipunitv Monev was to be found to meet not only the demands on the bank, but the necessities, both public and W ® v ®fy rank to society, it was essential to enable the manufacturers to work, lest their workmen, driven to desperation,’ should fling themselves among the most violent enemies of public order. It was essential to provide money for the food for Paris, for the pay of the troops, and f°r the daily support

of the atelier# nafioaaux. A failure on any one point would have led to ft frisb convulsion.’ n ' ■ , _ •• ci As illustrative of the truth that it is labor and not coin that maintains society and governmental Leite another brief passage from the necessity of paying away the rejnnapt of itp, coin than it made every exertion to increase jfs metallic rest About forty millionsof silfebwere purchased abroad at a high price. Mor© than one hundred millions .were made pvpr in dollars to the Treasury and Executive Departments in Paris. In ail, taking into account the branch banks, five hundred and six millions of five-franc pieces have been thrown by the bank into tbe country since March, and currency was thus supplied to all the channels of the social system. Had the Government-refused, as cars did, to receive the notes which it had made legal tender among the people, gold and silver would have gone to such a premium that the bank, instead <A buying specie, would hay© sold it, as ~our banks did, whereby some of them were enabled to declare dividends of 100 percent.; but as paper, silver and gold were at par with each other, to bank could buy bills of exchange on foreign countries from French merchants, and thus procure the specie with which it should soon resume cash payments. But the recent experience of France, as to which you more particularly invited an expression of my views, is even more striking than the foregoing. THE WAR AND ITS RESULTS. The war between France and Germany was declared July 19, 1870, and was terminated by the treaty of May 10, 1871. In April, 1870, the circulation of the Bank of France was $288,. 750,000, and it held of specie and bullion $261,550,000. In August the Government required it to suspend specie payments, and by the same decree made its notes a legal tender. The first statement published after peace had been restored showed a circulation of $442,000,000, with $110,000,000 of specie. In consideration of the suspension of specie payments and to use of its notes as legal tender, the bank loaned the Government $306,000,000, at 1 per cent, interest, and agreed to pay the tax above referred to on its entire circulation. When, in August, 1870, the French armies had been defeated and consternation had seized upon the people of Paris, the Bank of France and the other credit institutions of that city entered into co-operation and determined as a matter absolutely necessary to the maintenance of society to advance to the people within a fortnight 180,000,000 francs, ($36,000,000). and it is a matter of history that not a single failure of moment took place in France pending the use and liquidation of these loans. If you ask to whom these immense advances were made, I answer, in the language of the late Thomas Balch, Esq., whose long residence in Paris made him familiar with the financial magnates of Europe : “To merchants, manufacturers, shopkeepers, artisans and mechanics ; to any citizens, indeed, whose books showed that their business during a sufficiently long period had been fairly prosperous, and whose industry and integrity were established, and of course much importance was attached to this latter fact. Many of the advances to artisans and mechanics were made without indorsement or collateral at all; on no other security, indeed, than a fair business and an honest name. The effects of this extraordinary operation were of commensurate, public importance. In the midst of the most frightful and accumulated military and political calamities in the gradual environment of the French capital by the German hosta the trade and labor of France were preserved and even stimulated ; and it was altogether owing to this patriotic and most sagacious audacity that, in a period of special and terrible trial, no noteworthy commercial or industrial failure occurred, and that France was afterward enabled to provide for the payment, Without serious difficulty, of an indemnity intended permanently to crush her, and which excited by worWf^' 1 ' 10 asfotaisliment of to whole The decree of legal tender (cours force) fixed the maximum of the issue of the bank at $480,000,000. It was, however, increased by the law of Dec. 29, 1871, to $560,000,000, and finally by the law of July 15, 1872, to $640,000,000. What effect had’khe issue of this vast amount of paper money on the premium on gold ? Did it, in accordance with the theory of Secretary Sherman and the British economists our freetraders and bul'ionists so delight to honor, expel the precious metals from France ? Or did it show that their wisdom is folly, and that their so-called science, -which John Stuart Mill truly said was “a science based on assumptions,” is no science at aIJ, but a mere mesh-work of human reason based on false and delusive assumptions ? Fortunately the facts of history speak on this point with no uncertain sound. In November, 1871, when a large payment on accourit of the war fine, which, as you Know, amounted, with interest and charges, to sl,100,000,090, in addition to the surrender of the magnificent provinces of Alsace and Loraine and toil’ wealthy and industrious people to Germany, was due, to premium on gold rose to its highest point, per cent., at which, to the French people, exorbitant rate it remained for but a few days, and when the irredeemable circulation had subsequently been increased from $460,000,000 to $490,000,000 the premium fell to 1 per cent., and in October, 1873, when the volume of notes had actually reached $614,000,000, the premium was merely nominal, and was only demanded on large sums. Legal tender, gold, silver anl paper money were then circulating in common and at par with each other. As I have said, the war fine amounted to $1,100,009,000. The total cost of the war to France has been officially estimated at $2,000,000,000, and the direct loss to agriculture at $800,000,000; yet the last payment on account of the war fine was made on the sth of September, 1873, or in two years and four months after the conclusion of the treaty of peace. Does history present any such striking illustration as this of the harmony of the interests of a state and its people ? Tne advance of the banks to the manufacturers in August, 1870, enabled them to maintain their industries and by paying living wages to place the whole people in a position to uot only respond to the demands of to Government for taxes, but to meet its call for two loans, one for $550,900,000 and the other for $827,000,000, the tenders in response to the latter call amounting to the fabulous sum of $8,600,000,000, or four times the amount of the national debt of the United States.

THE TRANSFER OF BULLION. But, omitting many facts that would be pregnant and instructive, I must, in view of your limitation as to space, hasten to a conclusion. The German empire entered upon wjl&t, a., fatal experiment tig receive the buUton theu _ geld by France and that Which she? might earn in the time stipulated for the payment of the fine, she detatimued to establish a gold currency, demonetize silver, and to exclude small notes from circulation. The highest estimate I have seen anywhere of the loss of the precious metals by France in the payment of the war fine is $240,000,000, but that this estimate is excessive is shown by French and other official figures. The French Government shipped SIOO,000,000 of specie and bullion directly to the German Government. Yet the tables of the two countries, and they are confirmed by the British tables of exports and imports of specie, show that France tost from her intercourse with Germany from Jan. 1, 1871, to Dec. 31, 1874, but $140,000,000 in gold and silver. This is the statement of M. Leon Say, made during the time he was Finance Minister, which he continued to be till MacMahon changed his Cabinet. Great Britain took temporarily some of the French rentes, as she has during the present depression taken our 5, 4% and 4 per cent, bonds, to be held as certificates of deposit on call. Between Jan. 1,1871, and Dec. 31, 1874, the dates just referred to, she sent $110,000,000 more of gold and silver to Germany than she drew from her. Assuming, which there is no good reason for doing, that all this went on French account, and it appears that Germany rcceivod but $250,000,000 of cash from-Frwice inpaymeiS thereof. The truth is that France being, for the reasons stated in my introductory remarks, the creditor of all commercial nations, paid Germany in bills drawn against foreign debtors by the French people, or, in other words, Germany was paid in foreign merchandise, the imports of which in excess of exports from Jan. 1,1870, to Dec. 31, 1874, having been, according to the Bavarian Vaterland, $1,132,000,000. Many of the earliest of these bills were drawn against German merchants and bankers, and served to transfer money which had been in circulation in Germany to the imperial treasury, and thus withdraw-itfrom.commercial use. Thus the industrial and financial sagacity of the French Government enabled France to revenge herself yef man y By the methods with which it settled the unconscionable war fine imposed upon her. AN INSTRUCTIVE STUDY. The legal and actual condition of the Bank of France at this time furnishes an instructive |

study for those of our statesmen who are endeavoring to bring about a resumpbon of specie payments by to contracting oar legal-tender-paper as to further reduce tne priooof wages and commodities, which are already belw hardpan, or prices which ruled in the days or 1859-60, when our bankpajjer wasjsnppesed to be convertible into epecie oltadAnaqa. The Bank at Ncagce an exeess of gold, ji?tv%TkaiT,Nt is said, she holds $100,000,000 es silver, which, like gold, Is legal tender ; yet the law wiU not permit her to resume specie payments until January 1, 1878. she now does, and has for nearly two vears, paid in gold or silver sums of 1,000 francs or Jess, and, to escape to tax on circulation, would have resumed more than a year ago had the Government consented. As this statement mar seejn incredible to those who are not familiar with the facts, it may be well to state that to latest returns of specie held, and they are but three weeks old, coming down to Aug. 30, show tot the Bank of EnglarJdfroMs $125,146,000, the Bank of Germany $133,845,000, the Bank of France Thus it appears tot, allowing $100,000,000 of the bullion in the Bank of France to consist of silver, and assuming, what is very far from the fact, that none of the bullion in the Banks of England and Germany is silver, it is shown that the Bank of France has, by the aid of irredeemable paper by which the industries of France were kept active, accumulated nearly $100,000,000 of gold more than the united stock of to banks of England and Germany. Tn view of these facts may not the stricken nle of the United States wisely order a halt e work of contraction, and, following the example of France, demand the repeal of the Resumption act, the remonotteation of silver, and the maintenance of the existing volume of our legal-tender paper money, which measures will enable them to go to work at honest wages and to earn the gold and silver with which, in due time, we can if desirable resume specie nayments ? Yours very truly, William D. Kelley.