Democratic Sentinel, Volume 1, Number 51, Rensselaer, Jasper County, 1 February 1878 — The Results of Contraction. [ARTICLE]

The Results of Contraction.

[From the Cincinnati Enquirer.] The business distress of the country has grown, in recent years, with the contraction of the currency. As business misfortune is itself a cause of business misfortune, the disasters in business have increased even more rapidly than the contraction of the machinery with which business is done. The contraction of the currency of a country is properly measured, not merely by indicating the volume in circulation, but by owning the volume compared with

the population for whose business it is the machinery. The volume of currency a country should have must be determined by still another circumstance—the sparseness or the compactness of the population. The aity, with its various credit devices, bills of exchange, notes, checks, drafts, clearinghouses, needs comparatively little monev per capita, while the millions of people scattered thinly over an undeveloped continent need a much larger sum per capita. In this country, after the close of the war, an element of enormous contraction was suddenly introduced in our financial system by the addition to the Union of the doilarless States that had attempted to secede. The same quantity of currency was spread over a vast territory and among millions of moneyless people where it had not been used. The annual increase of population, the currency remaining the same, is of itself an element of contraction. The results of contraction tration of all industry, the suffering that accompanies hard times. We present a statement of the amount of contraction that has actually taken place. On the 30th of June, 1864, the amount of paper-money issues outstanding, consisting of greenbacks, postal curcurrency, treasury notes, certificates of indebtedness, national-bank notes, State-bank notes, seven-thirty notes, temporary deposits for which certificates were issued, was $1,125,877,034.53. In that year there were but 520 failures in the countrv, and ihe aggregate liabilities were but $8,579,000. We give below the story of the contraction for the last thirteen years: Paper Money Years. Paper Money. Per Capita. 186551,651,282,373 $47.42 1866 1,893,702,726 50.76 1867 1,330,414,677 36.68 1868 817,199,773 22.08 1869 750,025,089 19.86 1870 740,039,179 19.19 1871 734,244,774 18.47 1872 786,349,912 17.97 1873 738,291,749 17.48 1774 779,021,587 17.89 1875 778,176,250 17.33 1876 „ 735,358,832 15.89 1877 696,443,394 14.60 What is the result of reducing the money of the country from SSO per capita to sl4, a reduction of almost three-fourths ? For the first six months of the year 1877 the number of failures in the countrv was 4,740, and the indebtedness involved was $99,606,171. The agony of bank••uptcy has been multiplied more than twentyfold. And the end, even the worst, is not yet.