Rensselaer Union, Volume 8, Number 40, Rensselaer, Jasper County, 22 June 1876 — Contraction of the Currency. [ARTICLE]

Contraction of the Currency.

It is a noticeable fact that, whilethe Inflationists are wildly clamoring tor more paper currency, as the sovereign panacea for all the ills of trade, there has been a voluntary retirement of currency by the spontaneous action of the banks ever since the passage of the Resumption Act of January 14th, 1875. The bank-notes outstanding at the time of the passage of this act amounted to $851,861,450. Between that date and May Ist, 1870, there were reaeemed and retired $24,803,700 of National Bank-notes, besides $4,685,877 of such notes surrendered: making an aggregate of redeemed and surrendered notes amounting to $29,489,588. Between the same dates there were issued $14,868,856 of new National Bank-notes. Thus the net decrease of such notes from Jan. 14th, 1875, to May Ist, 1870, has been $15,120,728; leaving the amount outstanding at the latter date to be $880,740,722, against $351,861,450 at the former date. In addition to this, there has, daring the same period, been a retirement of sll,472,124 of legal-tender notes under the Act of Jan. 14th, 1875, leaving the amount outstanding May Ist, 1876, at $370,527,879. The total decrease in the two currencies in a little more than fifteen months is, therefore, $28,592,852. Still further, the Treasurer of the United States, May Ist, 1876, held $28,083,291 in legal-tender notes, deposited with him to retire an equal amount of National Banknotes, and which will be paid out only as the latter notes are retired and destroyed. The result is an actual decrease of paper circulation since Jan. 14th, 1875, amounting to $54,676,143. Greenbacks and bank-notes outstanding Jan. 14th, 1875, amounted to $733,861,450; and on Ist ot May, 1876, their amount was $679,185,807—showing an actual contraction of $54,676,143 in the paper circulation of the country.

This has occurred not because the Government has forced the decrease upon the people, but as the result of purely spontaneous action. Tne Resumption act of Jan. 14,1875, repealed all restrictions upon the aggregate amount of bank currency that might be issued, and, in effect, pro* vided tor free banking. To the repeal was added the provision that the Secretary of the Treasury should redeem and retire legal-tender notes to the amount of eighty per cent, of the new hank notes that might be issued. The banks, by a previous law, were privileged to withdraw their bonds from the Government by depositing with the Secretary of the Treasury legal-tender notes equal to the amount of bank notes issued to them on these bonds; the former notes to be held for the purpose of redeeming the latter. By this process the hanks were enabled to reduce their own circulation; and, aa a matter of fact, we have, in a little more than fifteen months, made such a reduction to the amount of $29,489,583, against the new issue of $14,368,855 of bank notes, giving a net decrease of $15,120.728.

The laws of Congress simply provided for the possibility of these results. They made it possible for the banks to increase or decrease their circulation; and under the laws of trade the banks have chosen to do the latter, and are still continuing the process. We grant* that the motive by which they are governed is that of selfinterest; yet the fact conspicuously shows that they bad a larger paper circulation in the form of bank notes than they could profitably employ. And this fact means that, in their judgment, there was no active demand among the people for the whole volume of outstanding bank notes. Had such a demand existed, there would have been no reductipn of volume; and not only so, but there would have been an increase of bank notes in proportion to it. We present, then, to the inflationists the fact that under free banking there has been an increase of National Bank-notes to the amount of $14,868,855 in about fifteen months, and during the same period a decrease of bank-notes redeemed and surrendered to the amount of $29,' 489,583; showing a net decrease of $15,120,728. We present to them the farther fact that this decrease is still continuing, and that on the Ist of May, 1878, the United States Treasury held $28,083,291 in legal-tender notes deposited there by the banks to redeem and retire a like amount of their own notes. Does this look as if there was a deficiency of currency to “ meet the wants of trade” T Not at all. Such facta would not.exist in the Sresence of a deficiency. Currency uner free banking is a matter of supply and demand, and'is quite sure so to regulate itself as to make the supply equal to the demand. The simple truth is, there is more paper currency in the country than the business demand requires, and this is the economical reason which has led to the reduction of bank-notes during the last fifteen months.— N. Y. Independent.

In one of the Sulphur mines near Steamboat Springsa nujpber of Chinamen are employed. The mine is situated at >he foot of a hill, about a mile from Steamboat. Two perpendicular cuts are made into the hill, so that they converge at a given point. These are made for ventilation, and are kept open to permit the heat to escape. At the end of these cuts they have a face twenty feet high. The sulphur begins within seven feet of the top, and continues in rich layers all the way down, intermingled with sand and other formations. At this point the heat is very great. The other day, while working, one of the Chinamen struck his pick through into a fissure, when a column of blue flame shot up to the distance of thirty feet, filling the atmosphere with a villainous stench, and making it *o terribly .hot that the Mongolian, dropping his pick, rushed from tne place, followed by his frightened companions. It was some time before they could be induced to i* sumo their work. —Gold Hill (Nn.) Hoe*. What a Cincinnati editor doesn’t know about musical simile* could fie passed through the eye of a needle and never touch the steel. One of those editors, after bathing and annotating himself for the effort, satftlown and wrote of Wagner’s Centennial march that “through the crash of the fanfare runs a little delicate thread of the original theme like thevoioe of the nightingale above the roar of tiM cataract.'’— at. Louie Utpublican.