Democratic Sentinel, Volume 1, Number 48, Rensselaer, Jasper County, 11 January 1878 — THE FINANCIAL CONFLICT. [ARTICLE]

THE FINANCIAL CONFLICT.

The Beauties of Contraction. [From the Cincinnati Enquirer.] With the beginning of this year the country will learn some of the effects of the Sherman policy of forced resumption, j The saddest New-Year’s day the people of the United States have known since the war was yesterday. Ia spite of the bountiful gifts of Piovidence, yesterday carried bankruptcy into more homes than any of the New-Year’s days since the war began. The divine benevolence, that has commanded plenty to spring out of the soil, has not been equal to the task of overcoming the inhumane financial legislation of the last few years. Our special dispatches yesterday announced eighty-nine failures in the city of New York in the month of December, and eleven assignments. The aggregate liabilities were $8,000,000, three times the amount of the failures of the previous month. The bitter distress of bankruptcy has multiplied three times in one city in one month. This is only a portion of the record. The Netters and the Kinneys and the Bonners are to be found, unfortunately, in every city in the land. In every comer of the country savings banks are collapsing and the hard-earned accumulations of the people of small means are melting away. The widow and the fatherless are left penniless, and the explanation given to them in place of their money is a “ depreciation of values. ” It is the John Sherman resumption policy. The statistics of failures for 1877 will be awaited with mournful interest. The number of

bankruptcies in the year determine the prosperity of the country in that year. A single failure sends agony into many hearts and homes. It means the bitterness of unavoidable shame. It is anguish for a family circle. It carries its woe and suffeiing far beyond a single family circle. Multiply the sorrow, the sense of disgrace, the humiliation, the want, that accompany one failure into 10,000, and one approximates to the year’s record of the working of the policy of forced resumption—the working* even of the threat of it. While the mercantile agencies are making up their reports to again call attention to some very eloquent facts which tell the story of the pitiless financial policy that has been pursued for more than a decade will not be out of place on this second day of the new year, one day less than a year away from that on which John Sherman says his policy can be, and ought to be and will be executed.

In 1863 the number of failures in the United States was only 485. It was the year in which the effect of having abundant machinery for the conduct of business was first felt. The various forms of United States notes, bonds, etc., that were made legal tender, or used as money, made money plenty. The amount of indebtedness involved in these failures was only $6,864,700. One city in the country last month furnished a larger amount of indebtedness iD its failures. In 1864 the number of failures in the country was but 520, an addition of only thirty-five, and the total indebtedness was only $8,579,000. This is about equal to the record of New York alone for the last thirty days. In 1865 the policy of contraction was begun, but had not begun to be felt. The failures in that fiscal year; ending June 30, were only 530, and the indebtedness involved was but $17,625,000. These were years of abundant money. The machinery for the carrying on of business was ample. They are in emphatic contrast with the years following and the years preceding. In 1862 the failures had been 1,652 and the liabilities $23,019,300. A change of financial policy in one year reduced the number and amount three-fourths. In 1861, before any of the war financial measures were Adopted, the failures were 6,993, and the indebtedness $207,210,000. We ask critical attention to these years and figures, for they show that the prosperity of the people and a sufficient currency for the conduct of that people’s business are indissolubly connected. We find that for these four years when paper money in various forms was abundant the failures were few and unimportant. There was universal prosperity. In 1865 the policy of contraction was adopted by Mr. McUulloch, and in one shape or another has been consistently and remorselessly pursued since. In one year the number of failures increased to 632, and the amount involved was trebled, reaching $47,333,000. In another year the results of the fatal policy were seen. The failures had increased to 2,386, with liabilities amounting to more than $86,000,000. Without tracing them year by year, it is sufficient to say that the dread effects of the scheme of contraction kept steady pace with that contraction. In 1870 the failures numbered 3,551. In 1873 they had grown to be 5,183, with liabilities of $228,000,000. In 1876 they were 9,092, and for the first six months of the last fiscal year they were 4,749. These are the operations of contraction. Let us await the remainder of the record.

American Gold and What It Mast Pay. [From the True Citizen.] In the late discussion, in the House of Representatives, of the bill repealing the Specie Resumption law, Hon. Wm. D. Kelley delivered a speech which we wish the people everywhere might have the opportunity of reading. We subjoin a brief extract which presents the difficulty of resumption under existing circumstances in a strong light Those unacquainted with the facts may be surprised at the mountain of debt piled up against us which may at any time send down its avalanche for our destruction. There is a grim humor in Judge Kelley’s account of the treasury gold* though the Judge, who knows well how to be humorous and is always eloquent, gives it as sober fact Speaking of the obstacles to resumption he said: “The question before the American people is not between gold and the inconvertible paper of the Government, j which by its legal-tender character is money. It is paper money and bank credits, which, in the absence of a sufficient supply of metallic money with which to convert them, will continue to be irredeemable. I have conversed confidentially with many bankers, and have not found one of ihem, when speaking thus confidentially, who did not admit that, though the treasury may resume specie payments on the Ist of * January, 1879, it cannot maintain them a week. The inadequate supply of bullion on which it may resume will, some of them have said, be exhausted on that day by the holders of certificates of deposit and banks which have sent forward large amounts of notes for redemption, and, the gold having thus been transferred to the banks, and the treasury having again suspended, the time will have arrived for a repowaL pf profits ou sales of gold by fhoee bards that suybavt

happened to present their demands in time. What the effect of a new suspension by the Government would be on the price of gold none can predict, as no one is able to predict the duration of the suspension. Upon what demands do we propose to resume gold payments ? Over $300,000,000 of greenbacks; over $300,000,000 of bank notes. I have here (to continue the list) Mr. S. Dana Hortons’ work on silver and gold, in which I find some things from which to dissent and much to commend; but the facts embodied in which have been most carefully compiled. It gives on page 44 the debt statement for September, 1876, when the national debt was $2 203,902,646. The nominal amount of outstanding State securities is given at about $543,000,000, of railroad and canal bonds about $2,170,000,000. “Gentlemen may say ‘Why, ’the passing of this act does not mature those obligations ?’ No, gentlemen, it does not; and I do not pretend to assume that the conversion of all or even of a considerable percentage of them will be sought; but when yon remember that all those securities are marketable in our market, it matures all of them that may be held by foreigners who can send them home, have them sold, and draw for the proceeds in gold. It puts our Government in the attitude of holding itself up as the reservoir of gold from which all its creditors and those of our people (and they are to be found in every civilized nation) may draw for gold when they need or desire it. The act does make payable in gold the deposits in our national. State, private and savings banks, which amount to thousands ot millions. It puts upon the gold-pay-ing basis all book-accounts, promissory notes, and mortgage and judgment debts. It piles up such an amount of debt as no nation has ever undertaken to pay in money based on a single metal. And with what do yon propose to pay it V Gold, I know. What gold have you V Why five resolutions, ingeniously contrived to extort information, brought us the fact that in July of the long session of the last Congress the treasury bad of real gold at its absolute disposal $13,000,000; for in the amount of gold named by the treasury in monthly debt statements we have bonds retired, but which have not been canceled; we have coupons paid but which have not gone into account of coupons. The major part of the gold reported as in the treasury is paper gold, against which parties have claims, or paper which the Government has paid and not yet found time to carry into account and cancel. ”

In Wbat Are Bond* Payable? [From the Chicago Tribune.] The Sherman letter to A. Mann, Jr., of Brooklyn, printed a few dayß ago, is creating a profound sensation among the goldites. The Secretary has hastened to write an explanation that doesn’t explain. We place the two documents side by side for easy comparison:

In favor of paying the bonds in greenbacks. United States Senate Chamber, Washington March 20, 1868. —Dear Sir : I was so glad to receive your letter. My personal Interests are the same as yours, but, like you, I do not Intend to be influenced by tbem. My construction of the law is the result of careful examination, and T feel quite sure an impartial court would confirm it if the case should be tried before a court. I send you ray views as fully stated in a speech. Your idea that we propose to repudiate er violate a promise when we offer to redeem the “principal” in legal tenders is erroneous. I think the bondholder violates lii« promise when he refuses to take the same kind of money he paid for the bonds. It the case is to be tested by law I am right; if it’s to be tested by Jay Cooke’s advertisements I am wrong. 1 hate repudiation or anything like it, but we ought not io be deterred from what is right for fear of undeserved epithets. If, under the law as it stands, the holders of 5-20 s can only be paid m gold, the bondholder can demand only the kind of money he paid; then he is a repudiator and extortioner to demand money more valuable than he gave. Truly yours, John Sherman.

Lame attempt to explain it away. ! New York, Dec. 28, 1877.— T0 the. Editor of t the Daily Bulletin’— Dear ■ Sir: The letter referred - to wae written by me in ■ 1868, and hag been print- ■ ed a thousand times, and • explained as often in de- , bate and elsewhere. The • queßtion raised by it was • settled by tho act of March, 18(19, partly ■ framed by me, and go as i to cover the point raised ■in the letter. I insisted ' that the first duty of the i Government wag to resume payment of United States notes in coin before raising any question with tho bondholder ; but that, if the matter was to be decided purely upon the face of the law, the argument was altogether in favor of paying certain classes of bonds in Umi ted States note*, but the ' Government ought not to avail itself of this privilege while it dishonored its own notes and refused to pay them in coin. Very resp ctfully,

JOHN SHERMAN.

This explanation may satisfy Mr. Sherman, but it will nobody else. Tlio ‘ ‘ certain class of bonds” was the whole 5-20 issue, embracing the bulk of the bonded indebtedness. They were all made payable in “lawful money,” meaning greenbacks.

The Carrying-Power of the Glaciers. In North America, and especially throughout the Northern States, the bowlders are numerous, often of great size, and indicating transits of many miles. Over the Eastern, Middle and Northwestern States, bowlders, that have emigrated from distant points to the northward, occur in such abundance that they may almost anywhere be found if the inquirer will only examine the country he passes over. Upon Mount Katahdin, in the Moosehead region of Maine, stones can be seen, lying over 4,000 feet above the sea, fosiliferous. in their nature and coming from northern sites; while toward Mount Desert masses, some forty to silty feet in height, are sprinkled everywhere, and, as in the case of the Dedham granite distributed to the south, invariably show northern origin. •In Berkshire county, Mass., these traveled rocks lie in long alignments, passing over the Lenox hills, and extending in generally southeasterly direction for fifteen or twenty miles, and have been filched from the Canaan and Richmond hills across the line in New York, being of chloritic slate, with angular specimens of limestone intermixed. Some granites from Vermont, on the west of the Green mountains, have been lifted over these barriers and transferred to the southern margins of Massachusetts; while in Vermont a bowlder weighing over 3,400 tons, and known as the Green Mountain Giant, has been drifted from the Green mountains easterly across the valley of the Deerfield river, and planted 500 feet above that stream. In Michigan, near the Menomonee river, a field upon th northern slope of a mountain is densely covered with bowlders, so that a mile can be traverse l without once touching the ground. Again, huge nuggets of copper, tom from the immense deposits of native copper at Keweenaw point, Portage lake, and the Ontonagon district, on the southeastern shore of Lake Superior are found widely disseminated to the south of these localities in Michigan, Wisconsin, Ohio and Minnesota, a few of which have weighed 300, 800 and one 3,000 pounds. —From “ The Ice Age" in Popular (Science Monthly for January,