Democratic Sentinel, Volume 2, Number 26, Rensselaer, Jasper County, 9 August 1878 — CURRENCY CONTRACTION. [ARTICLE]

CURRENCY CONTRACTION.

Tlie present general prostration of business and depreciation of values of labor and all kinds of property were mainly caused by reducing the volume of our circulating medium available as an attribute of exchange over $1,000,000,000 from 1865 to 1873. We did not so seriously feel its effects while the fact was not generally known. It was not felt by the great mass of the people while confidence existed among business men and their credit was goed at the banks, as individual checks and bank drafts supplied the deficiency. Then bankers were happy, and their profits on real capital invested were 25 to 50 per cent, per anputn, with prominent officials drawing good fat salaries. There has been no time within the past twenty years, or in the commercial history of out' country, when labor was more remunerative or property and merchandise were more readily and generally sold for cash, or when all classes of people were more able and willing to pay their taxes, duties, imposts and excises, except cupid capitalists and railroad wreckers, than during the jears of 1865-6-7. Then Congress liad provided for the “general welfare of the people ” by providing an ample circulating medium of exchange of S4O to SSO per capita, although of but partial monetary power. But to gratify the cupidity of the money power, over $1,000,000,000 of that indispensable element of the pc .pie’s prosperity was transformed into untaxed bonds, and a bankers’syndicate was foimed to transport them to a foreign land, not only depriving thepeople’siudustnesof the essential means fur developing our mechanical ana agricultural resources and properly providing for the home consumption of our homo productions, cultivating our waste lands, increasing our revenues and the facilities of education, promoting the cultivation of art and science and all essential elements of civilization, the adornment of homes, providing parks for healthful recreation, public balls for lectures and amusements and churches for devotion ; but it has also sapped the vitality of those previously developed, by the payment of commissions, usurious discounts and interest on those bonds and current Da'ioDal, State and municipal expenditures. The practical experience of the past ten years has demonstrated that it is not the price of gold, but the volume of money available for use, that gives prosperity to our people ar d value to property, and the millions of unpaid taxes in all parts of our country, tin collectable because the people are unable to pay them, demonstrate that, with the present volume of money in circulation, taxation to pay interest on untaxed bonds and national, State and muDi'ipal expenditures, inevitably results in confisca'ion of all home comforts and maDy homes of the great mass of the people, especially laboring people, invjlids, widows and orphans. With the business of the country paralyzed, confidence destroyed a multitude'of laborers out of employment, the bills of bankers—oven gold and silver -—are worth no more than so many cords of granite, hoarded in bank vaults and sub-treas-uries, for the promotion and support of the people’s industries. In 1873, by the payment of interest on deposits from corresponding interior banks, a few New York banks (controlled by Wall street gold gamblers and railroad robbers) were enabled to concentrate and corner most of the then existing money, and crush the Northern Pacific railroad enterprise of Jay Cooke & Co., because it promised competition with that corporate monopoly, the Central Pacific (built with untaxed bonds, plundered from the people), producing thereby a panic which demonstrated the insufficient volume of money available for circulation —compelling our banks to suspend granting their usual discounts and the payment of the people’s money deposited. with them, and destroying confidence amoDg business men, while, for want of a proper volume of money as a medium of exchange, all kinds of industrial productions, labor and property depredated in salable value, until millions of laboring people were deprived of remunerative employment, and insolvency and bankruptcy became the inevitable fate of all active business men outside of administrative, revenue and expenditure rings. I find in the Inter-Ocean of Julv 16 the following statistics, compiled from official sources and a volume called “ Gold and Debt,” showing the amount of our circulation per capita, and its contraction, from 1865 to 1877: Amount per Year. Currency. Population. capita. 1865 $1,661,232,373 34,819,681 $47.42 1866 1,803,702,725 &5,537.148 50 76 1887 1 330,414,677 36,269,602 36.68 1868 817,199,773 37,016,949 22.08 1869 750,025,983 87,779,800 19.86 1870 740,039,179 38,658,371 19.19 1871 734,244,774 39,750,073 18.47 1872 7£6 349,912 40,978,607 17.97 1873 738 291,749 42,245,110 17.48 1874 779,031,589 43,660,756 17.89 1875 778 176,250 41,896,705 17.33 1876 735,358,832 46,284,344 15.89 1877 696,441,391 47,714,829 14.60 The following stati tiC3 compiled by W. F Kimball, of New Haven, Ct„ showing the price of gold, flour and beef from 1860 to 1874: Xear. Gold. Flour. Reef. 1860 SI.OO $5.25 $10.75 1861 1.00 5.50 9.00 1862 1.00 @1.37 5.47 12.00 1863 J. 37 @1.7254 5.87 12.50 1864 1.72 @2 85)4 6.30 13.25 1865 1.46# 9.72 20.50 1866 1.4 1 7.60 19 00 1867 1.37 9.42 13.50 1868 1.36 8.70 15.00 1869 1.24 5.70 14 00 1870 1.10 4.92 14.00 1871 1.18 5.50 12.50 1872 1 11 6.00 10.00 1873 1.12 5.95 11.00 1874 1.13 5.95 10.37 which demonstrate that the value of gold as money has not been governed by the volume of currency, and that it is not the price of gold that governs the value of products or confidence among business men or the stability of tfieir commercial relations. I notice in the Railway Aae a computation taken from the Financial Chronicle two years ago (high authority): A STATEMENT OF DEFAULTING RAILROADS. Number Am'unl of Roads. of. Bonds. Defaults before 1873 37 $134,684,600 Defaults in 1873 before Sept. 30 (the panic) 35 91,740,500 Defaults In 1873 after Sept. 30... 25 152,233,250 Defaults in 1874 71 265.066.701 Defaults in 1875 25 1 40,488,214 Defaults in 1876 8 29,803,000 Total 201 $814,316,265 Total bonded railroad debt in United States 42,175,000,000 Per cent, of defaulted bonds to total.. 30.7 Total bonds—stock and debt of railroads In United States, about 4,775,000,000 Total bonds—stock and debt of defaulting railroads, estimated 1,800,000,000 Per cent, of investment in defaulting roads to total investment........... 38.7 In a later summary for 1876-7 I find for the entire year 1876: No. of Roads. Mileage. Capital Rep. Sold under foreclosure.. 30 3,816 $217,748,000 Receivers appointed and

proceedings commence J 46 7,576 588,0.0,006 And in 1877: No. of Roads. Hi eat) re. Copit il Rep. Sold under foreclosure.. 54 3,879 $198,984,400 Proceedings commenced. 44 5,409 320,681,930 Sales ordered 16 2,238 255,755,800 Total 114 11,522 $775,421,630 These figures show that this destructive process is going on with increased velocity—as the fatal day of resumption approaches—which has brought and must bring fearful results, unless prompt measures are taken to stay the currents rushing on to the inevitable maelstrom. The same authority estimates the losses to the present time on railroad property alone at 50 per cent, of the capital represented—which amounts to $2,387,500,000—and this great loss falls almost wholly upon our own people, mostly by persons of limited means who hold the stock, while alien bondholders, and a few Wall st reet stock gamblers, who hold most of the first mortgage bonds, are rapidly acquiring tho title in fee by foreclosure (or gobbling the stock at an infinitesimal price) to nearly all tho main arteries of circulation of our internal commerce (our railroads) that they may slake their thirst for greed on tire blood of the industries of our people—by monopolizing and pooling exorbitant charges, and taking all net receipts hereafter. The same ratio of depreciation uxtends to all other classes of stocks, such as insurance, bank, mining and manufacturing, and, in fact, to all corporate investments, as well as real estate and personal properly of every kind or nature on land, lake or sea, to an amount almost beyond the power of figures to represent, producing financial disaster, the result of McCulloch's and Sherman’s clients’ financial policy. They have, until recently, taught that silver and gold were the true standard of all value, by reason and virtue of their indestructibility and universal use ; but recently, when it better suited their crafty acquisitiveness they suddenly found that it required a third, and more potent element, viz., legislative enactment, to give those commodities a standard value, subservient to their interests ; by legislative enactment they procured the demonetization of silver in Germany and in this country, thus demonstrating the axiom that the third is, was, and ever has been the most potent element in fixing and maintaining a definite monetary value to any substance or commodity. Our people are learning the importance and influence of those two words. Our corporate bodies have for some sixty years, to consummate their schemes for pluuder, relied upon what is commonly kuown as the Dartmouth-College decision—of our highest judicial power—which embodied the Blaelcstonian proposition, that whatever Parliament doeth, no power on earth can undo. But all honor to the granger, 8. M. Smith, of Kewanee, who in his school days had read the story of that honorablo poor of Blackstone, Lord Chief Justico Halo, who once laid aside his ermine and put on a dusty robe and represented an honest miller, to purge the court and jury of tho influence of tho ancestral lineage of this same money power, which is now the direst scourge of our land. That sage jurist rose higher than Blackstone and drew inspiration from the power that created Parliament, and so spread the transparent rays of unalloyed justice on the tablets of common law that the storms of two centuries have failed to tarnish them. Like' diamonds of pure water, they sparkle and glow to light the pathway of our highest jurists, whose recent decisions confirm the right of the people through their representatives to so "modify chartered privileges that they shall not grow into unendurable extortionists, wielded by unscrupulous officials who care not for the equities of tho people, or capitalists who intrust them with their funds. We find busmesß prostrated throughout the land. The great mass of the people have struggled with the tide of contraction, compelled to economize, and to mortgage their homes, to pay their taxes and provide the necessaries of life, and have become so contracted that the tax-gatherers and mortgagees have taken most of their property and their homes. Our great factories and machine-shops are closed or running at a loss. Our stores and tenements are vacant by the thousand,and their recent prosperous occupants living on public or private charity, or traversing tho country, bearing the stigma of “ tramps,” seeking labor to procure food and raiment. This destructive system of contraction affects not alone the laborer, and mechanic, and all our great industries, but it has sapped the sacred fount of the trust funds, and savings of invalids, of widows and orphans. It has depreciated their securities on lands, tenements, stocks and life-insurance securities, and savings bank deposits, to an alarming extent. Advocates of contraction say it is caused by over-production. As production is the source of all sustenance and wealth, for the general welfare of all, where is the possibility of overproduction of useful or ornamental commodities ? Civilization unfolds new and increasing wants, which open other avenues for labor, and, as facilities increase, the cost decreases, and competition brings the price within the means of the greater number. But when the medium of exchange is, as now, inadequate to give remunerative value to labor, and its production, and the great mass of the people are unable to purchase, consumption diminishes and general stagnation of business must inevitably ensue. I know not where to find that overproduction, unless it be of idle men, with destitute families. Of else pray tell us what? From New England’s hills, our fertile plains, and Sierras’ peaks, echo makes tho sarno answer—what?