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RESUMPTION OF SPECIE PATIENT. 
 
 A SERIES OF LETTERS 
 
 TO 
 
 he 
 
 il times, 
 
 BY 
 
 KNICKERBOCKER. 
 
 SEPTEMBER-OCTOBER, 1873, 
 
 FOR SALE AT THE OFFICE OF THE NEW- YORK DAILY TIMES, AT BREN r i 'NO'S 
 
 LITERARY EMPORIUM, UNION SQUARE, AND BY THE 
 
 AMERICAN NEWS COMPANY. 
 
 , I G E 25 CEIVTS 
 
 JOHN W. AMERMAN, PRINTER, 
 No. 47 CEDAR STREET. 
 
 1873. 
 

 
 RESUMPTION OF SPECIE PAYMENT. 
 
 A SERIES OF LETTERS 
 
 TO 
 
 BY 
 
 KNICKERBOCKER. 
 
 SEPTEMBER-OCTOBER, 1873, 
 
 FOR SALE AT THE OFFICE OF THE NEW-YORK DAILY TIMES, AT BRENTANO'8 
 
 LITERARY EMPORIUM, UNION SQUARE, AND BY THE 
 
 AMERICAN NEWS COMPANY. 
 
 CE1VTS 
 
 JOHN W. AMERMAN, PRINTER, 
 
 No. 47 CEDAR STREET. 
 
 1873. 
 
NOTE. 
 
 KNICKERBOCKER, in compliance with a very general request, prints his recent 
 letters to the New-York Times in a pamphlet form. As they were in the outset 
 only intended to invite public attention, through the Press, to what seems to be a 
 simple and practical way of resumption, the constant repetition of the idea, which is 
 the base of the whole argument, was unavoidable. That idea is, that a gradual 
 resumption can be reached by withdrawing paper and substituting coin for the 
 paper withdrawn in the circulating medium, without inflation or contraction. 
 
 KNICKERBOCKER owns receipt of a large number of letters and pamphlets, 
 on the subject of American Finance, and tenders to their authors his hearty thanks. 
 He also offers his acknowledgments to the Press throughout the country for its 
 kind notice and general reprint of his Letters. 
 
TABLE OF CONTENTS. 
 
 PAGE 
 
 1. Onr Opportunity, 5 
 
 2. Our True Policy, 8 
 
 3. Our Present Need, 10 
 
 4. Substitution not Contraction, 13 
 
 5. No Further Inflation, 15 
 
 6. Gradual Resumption, 20 
 
 7. The Approach to Specie Payment, 27 
 
 8. The True Plan for Resumption, 32 
 
 0. Our Gold Resources, 38 
 
 10. What Shall We Do With It ? 43 
 
 11. Flexibility in the Currency, 48 
 
 12. Now or Never the Duty of the Government as Regards Resumption,. . 53 
 
 M207701 
 
Letter No. I. 
 OUR OPPORTUNITY. 
 
 To the Editor of the New- York Times : 
 
 THE eyes of the country are turned upon the Secretary. The 
 occasion is one of those which demand the exercise of the greatest 
 qualities of the mind firmness, courage and fertility of resource. In 
 such emergencies real power asserts itself, and history accords to the 
 successful minister the highest niche in the temple of fame. Not to 
 HAMILTON, who organized, nor to GALLATIN, whose comprehensive 
 and economic mind developed the administration of the Treasury 
 Department, nor yet to CHASE, who, in the midst of a great war, 
 successfully transformed the cumbrous and irresponsible State bank 
 system to a general banking law, with a homogeneous currency, was 
 such an opportunity afforded as now offers itself to the Secretary of 
 the Treasury. 
 
 Though a debtor nation^ in that our national and corporate obli- 
 gations are largely held by other nations, while, on the other hand, 
 we hold few, if any, foreign securities, we are a creditor trade. The 
 turn of exchanges is in our favor, and must remain so for a consider- 
 able period. The crops of both England and France are notoriously 
 deficient, while those of the United States are unusually large. A 
 heavy demand will soon set in from Europe for American bread- 
 stuffs, and gold must inevitably flow to this country in payment. 
 Indeed, the stream has already commenced. Last week a million 
 of dollars was received, and to-day's advices report the shipment of 
 another million to New- York and half a million to Canada. The 
 Bank of England sounds the alarm-bell in a first raise of the rate of 
 interest a warning to the mercantile community of Great Britain 
 to take in sail and prepare for heavy weather. 
 
 On the other hand, it is certain that no advance in rate can pre- 
 vent the shipment of coin in considerable sum to this side. It cannot 
 be doubted that during the last ten days the outstanding orders for 
 purchase of foreign goods for American account have been largely 
 
 2 
 
6 
 
 curtailed, (fifty per cent, is a low estimate,) while no new orders are 
 likely to be given in the present condition of affairs. 
 
 Very little demand for foreign exchange need be looked for from, 
 or on account of, our importers. How, then, can the exports of 
 grain be paid for by foreign nations, unless by coin or a return of 
 American securities ? But experience has shown that our Govern- 
 ment securities are just about the last things which the British 
 people, or European nations generally, care to part with. The wise 
 policy of the Government in reducing the extent of the debt has 
 secured a firm holding of it. As for rail-road securities, the tone of 
 the American market is not favorable to that style of remittance 
 just now. It seems inevitable, then, that a more considerable flow 
 of gold than has ever before taken place has already commenced 
 toward this country. The balance of trade is in our favor, and will 
 so remain if the Secretary of the Treasury be equal to the occasion. 
 
 In the light of recent experience it may safely be affirmed that 
 the country has " grown up," as the favorite phrase is, to the present 
 volume of the circulating medium, say seven hundred millions dol- 
 lars greenbacks and national currency. In 1860 the circulating 
 medium was estimated to amount to four hundred and fifty millions, 
 of which two hundred millions were in bank notes and two hundred 
 and fifty millions in gold and silver. In 1860, with gold at par, the 
 sum of national transactions demanded a circulation of four hundred 
 and fifty millions of dollars. In 1873 it demands seven hundred 
 millions, at least it so appears. When the precise measure of the 
 national transactions is reached, and the balance of trade being in 
 our favor there is no export demand for specie, gold should be at 
 par. 
 
 What is the price of gold to-day ? Had .the Secretary not with- 
 drawn from market the amount advertised for sale, this question 
 could have "been yesterday answered. Who can answer it to-day ? 
 Is it 112, the price nominally fixed by the Gold Board for settle- 
 ment ? This is to assume that in the terrible revulsion of last week, 
 when all other values have been affected except Government 
 values, sustained by their conversion into currency gold has neither 
 increased nor diminished in value ; that its purchasing power is 
 neither greater nor less than it was ten days since. This is simply 
 absurd. Is it worth more or less ? Evidently less, since London 
 exchange is offering freely, without many takers, at 104 per cent. ; 
 a nominal premium of 4 per cent., in reality at 4 per cent, discount, 
 the par of exchange being 108 per cent. This would indicate that 
 gold to-day is worth 4 per cent, less than its nominal price, i. e., 108 
 
per cent. If we judge it by currency, which yesterday sold at 3 
 per cent, premium, then 109 per cent, would appear as its present 
 value. If we judge it by the decline in all other values, it seems 
 more probable that it is worth little, if any thing, above par. 
 We entertain little doubt that if even a moderate sum, say 
 85,000,000, were added to the gold now on the market, its price 
 would rapidly fall, until those persons who now hoard currency at 
 a premium would exchange their hoard for gold ; in other words, 
 until there should be an equalization between gold and greenbacks. 
 This is practical resumption, and every dollar of gold in the 
 country would flow into circulation so soon as this par were reached, 
 while the flow from abroad would weekly add to the amount thus 
 restored to general use. Currency could then be gradually retired, 
 and gold would flow in to fill its place. So long as the exchanges 
 remain favorable, nothing will be necessary to restore specie pay- 
 ment beyond this gradual withdrawal of currency and inflow of 
 gold. The Secretary could, moreover, by direct purchase of gold in 
 foreign markets, contribute in times of necessity to the maintenance 
 of the par of greenbacks. 
 
 Let the Secretary continue the sales of gold ; let him put upon 
 the market some part of the large sum now held and ascertain its 
 value. A few millions would decide this point beyond a question. 
 If it be not materially above par, as we believe, the step to practical 
 resumption is a slight and easy one. Then out of the "nettle 
 danger we would pluck the flower safety," and the country would 
 find its profit even in the very depth of this calamity. On the 
 other hand, if this occasion be neglected, all thought of resumption 
 of specie payment may as well be abandoned for the next decade at 
 least. 
 
 If the policy of the Treasury Department be not shaped toward 
 resumption when the exchanges are in our favor and coin flowing 
 in upon us, we may as well abandon all hope of specie payment in 
 our generation. 
 
 I am, sir, yours truly, 
 
 KNICKERBOCKER. 
 September 27, 1873. 
 
Letter No. II. 
 OUR TRUE POLICY. 
 
 AT every turn the question is now heard, " Are we about to re- 
 sume specie payment ?" The public conscience seems to have at 
 last accepted the idea of resumption as a sensible idea as a prac- 
 tical idea as no longer theoretical and impracticable. What is 
 practical resumption ? The equalization of currency and coin in 
 other words, gold at par. It lies in the power of the Secretary to 
 hasten or retard this equalization. The public mind is set against 
 any undue interference on the part of the Secretary in the financial 
 affairs of the country. It holds it to be a dangerous thing to 
 habituate the banking and mercantile classes to such interference. 
 But there are many ways of interference. Negative action is at 
 times as effective as positive action. Of this there was a plain 
 instance during the past week. The sale of gold advertised by the 
 Secretary was countermanded. This was accepted at once by the 
 gold speculators as an announcement that the current policy of the 
 Government was now changed, and that it would no longer put 
 upon the market its surplus reserve. Rumors were spread of the 
 weakness of the Treasury. Hence the flurry which carried up the 
 nominal price of gold to 11 5|, from which it again receded to 112. 
 We say nominal price, because it is well known that there is not 
 enough cash gold on the market to afford room for any considerable 
 transactions i. e. 9 sale and delivery and thus to make a real price. 
 The whole movement was a domestic transaction among the gold 
 brokers themselves, in which the outside public had little or no 
 interest. 
 
 We ask again, what is the true value of gold ? and we repeat in 
 the words of Saturday, that it can only be ascertained practically 
 by the sale of say five millions. As there is no demand for export, 
 and the advices from Great Britain are of continued and increasing 
 shipments, it is absolutely impossible that there should be any de- 
 mand for speculative purposes. Who is to buy gold with hope of 
 profit in the face of large importations ? What hinders the Secre- 
 tary from continuing his sales ? It cannot be said that he fears to 
 deplete the Treasury. A fall in gold would increase rather than 
 
9 
 
 diminish his store, by just so much as such fall would tempt the 
 importer to withdraw his bonded stock from warehouse, and pay his 
 duties into the Treasury. It cannot be that it is because he fears 
 to withdraw currency from the street, because a simultaneous pur- 
 chase of bonds would immediately restore that currency. What 
 would be the effect of the sale of five millions of gold ? We again 
 repeat that gold would fall at once to its real value. So soon as it 
 reached 104 or 103, the price at which currency sold last week, it 
 would be taken by the savings banks for permanent holding, and 
 by the large number of persons who now hoard currency. By ex- 
 actly the amount of these purchases, currency would be set free to 
 perform its usual offices, to the great relief of the whole community. 
 The gold would not pass into the hands of speculators, for they have 
 no money wherewith to purchase it, even if so inclined, and credit 
 is not money in this time of shrinkage. On the contrary, the gold 
 thus released from the Treasury would pass into the hands of the 
 banking institutions of the country, and there await the near day 
 of resumption. A fall in gold would then be inaugurated, and in 
 a very short time par would probably be reached. When there is 
 more gold offering than there is demand for, as a commodity, it 
 will fall to par, and being useless otherwise,, there being neither 
 profit nor hope of profit in keeping it, it will float in the currency. 
 Then the hour will have arrived for the Secretary to take in his 
 greenbacks, while gold, freed from its confinement, will flow in to 
 fill the vacuum thus created. A firm policy on the part of the Gov- 
 ernment, checking expansion and holding the banks firmly to their 
 engagements, will enable the Secretary, in a period of time, which 
 cannot be measured, and which should not be unduly hastened, to 
 retire the whole of the greenback issue. The circulating medium 
 of the country would then consist of $350,000,000 of coin and of the 
 national bank currency, about the amount the transactions of the 
 country are generally supposed to require, with prices at gold 
 values that is, with gold at par. 
 
 Can there be a more favorable moment for the inauguration of a 
 new policy ? The exchanges are in our favor. The gold and silver 
 product of the country will remain with us, and our great crops can 
 only be taken by direct shipment of coin from abroad. The coun- 
 try should resolutely set its face against any new expansion. Let 
 us reconcile ourselves to the present reduction in values where not 
 unnaturally low, and with moderate importation and universal 
 economy strengthen our financial position. All this seems to be in 
 the power of the Secretary. Is it not worth the effort ? With a 
 
10 
 
 firm hand at the helm we may pass the dangerous breakers and 
 reach the safe and open sea. Is not this our true policy ? 
 
 KNICKERBOCKER. 
 NEW- YORK, September 30, 1873. 
 
 Letter No. III. 
 OUR PRESENT NEED. 
 
 No one, however interested in stock values, or in industrial or 
 mercantile enterprises, will deny that the present need of the coun- 
 try at large is the movement of the crops from the interior to the 
 sea-board, and their prompt shipment to the ready market which 
 awaits them on the other side of the Atlantic. Though all crops 
 will somewhat suffer from delay, we refer for the moment only to 
 those to which delay may not only be injurious but ruinous. The 
 cotton crop may wait its time, although it may be more profitable to 
 the country that it should go rapidly forward. To it the question 
 of early or late movement is after all only one of comparative profit. 
 The grain and produce crops are not in the same situation. To 
 these, every day's delay is fraught with incalculable danger. The 
 present stoppage occurs at the very critical moment. Cotton may 
 leave the Southern ports or our own at any period ; there is no 
 danger of ice-bound fleets upon the Atlantic, but the time for the 
 inland transport of our Western product to the sea-board markets 
 is necessarily limited. In these latitudes there is only one period 
 for such transport, and that a short one, between the harvesting of 
 the crops and the general closing of the canals. 
 
 Were we to-day, at the beginning of September, instead of the 
 first days of October, we might wait in patience for a general return 
 of confidence and the gradual release of currency to play its usual 
 part in this most important portion of our foreign trade. There is 
 an axiom current still among our older and conservative merchants, 
 " that the true time to sell is when there is a wish to buy." And it 
 is true of nations as of individuals. We have a great grain crop. 
 The European nations allow that they are sadly in want of a large 
 part of what we have to sell. How shall we give them that which 
 they are so ready to take ! 
 
 The recent stringency in money we use the word deliberately, 
 because currency is now our only money since by our necessities, 
 
11 
 
 springing from the abnormal state of affairs into which war led us, 
 gold is only as yet a standard of value the recent stringency in 
 money has already arrested the ordinary exchanges of produce for 
 currency, which always take place at this season. To-day foreign 
 exchange is quoted as "higher;" this means, that the produce 
 already forwarded and ready for shipment has found shipment, and 
 that the bills of exchange drawn against it have found buyers but 
 to how limited an extent ! The extent is easily measured. The 
 foreign bankers, relieved from the immediate pressure by just so 
 much as their discounts of paper for their own or foreign account 
 have been taken by the banks or note brokers acting for their own 
 or friends' account have been able to use such relief in fresh pur- 
 chases. The purchase of bankers' exchange by importers is not 
 worth the naming. The importers, resting on their banks for their 
 discounts, have surely not been permitted to use such discounts for 
 much, if any thing, more than the payment of their obligations to 
 such banks or the withdrawal of the engagements of their creditors 
 endorsed by them. 
 
 Beyond this point there has been and there is no present relief to 
 the dead-lock in exchange. Precisely as gold is held above its 
 value, because there is no cash gold in the market, and no buyers at 
 its present unreasonable price, so produce bills have advanced, be- 
 cause those on the market have been already absorbed by the funds 
 which the foreign bankers, no longer timid as to the immediate fu- 
 ture, have been willing to unlock from their strong boxes. But it 
 may be safely said, that all the foreign bankers combined have not 
 to-day the power to move one fortnight's, if even one week's, re- 
 ceipts of our crops. The business of a foreign exchange banker is 
 not to use his own funds in the purchase of bills for remittance 
 abroad and return in gold, but for the purchase of just so many 
 bills as he may find sale for. He is the agent in the transaction, 
 not the principal. He can only be the principal to the extent of 
 his own available funds. Beyond this he may look for receipts of 
 coin sent from abroad for investment here in bills at a low price 
 against bills of lading. But this demands time. Have we the time 
 to spare ? Can the country safely wait for this " barter trade ?" 
 Will any ordinary release of currency provide the relief necessary 
 in time, or before the closing of the canals ? It is not necessary to 
 touch upon the power of the rail-roads ; we need every avenue for 
 a cheap movement. The present stringency will make it costly 
 enough in any event. 
 
 The Produce Exchange saw the difficulty early and appealed to 
 
12 
 
 the Secretary of the Treasury. In 1857 they appealed to the banks 
 of New- York, who were then the masters of the currency under the 
 State laws. The banks associated themselves and appointed an 
 Exchange Committee, which went into the open market and bought 
 the low bills, to a small extent, it is true, because our importers 
 were largely debtors abroad, and the instant the foreign bankers 
 saw that the banks were ready to purchase, they entered the market 
 themselves. This, it is to be remembered, was after the banks sus- 
 pended, when the whole community sanctioned that suspension, and 
 when gold was at a slight premium. 
 
 To-day the banks are not in a similar situation. They are under 
 positive engagements as national banks to the Government, and 
 gold is far above par, nominally at least. The banks must put 
 their own houses in order. Therefore, to the Secretary of the 
 Treasury the Produce Exchange of New- York applies for aid, and 
 the interior Produce Exchanges suspend all transactions until they 
 receive that currency, to obtain which they are straining every 
 nerve and drawing out every Eastern balance. 
 
 The Secretary replies that he would not if he could enter into any 
 rivalry with the. foreign bankers. Why need he enter into any 
 rivalry ? Let him make an arrangement by Syndicate, if desirable, 
 with BROWN BROTHERS & Co., DUNCAN, SHERMAN & Co., JOHN 
 MUNROE & Co., DREXEL, MORGAN & Co., the WARDS, who are 
 still the time-honored agents of the BARINGS, for the import of 
 $20,000,000 to $25,000,000 of coin, and provide such currency as they 
 may need here for immediate use in purchase of produce bills, or by 
 other modes as they may elect to bring on the Western produce. 
 The 844,000,000 reserve, which the President seems willing to use in 
 imperative need, could not be better applied for the general interest. 
 If the Secretary have not the authority, let him summon the Finance 
 Committees of the Senate and House to endorse his request to the 
 Executive to order such action, under their engagement to bring in 
 a bill of indemnity at the next session of Congress. Such practice 
 is usual in governments in times of national disaster. We will not 
 refer here to the effect such action as this would have upon the 
 restoration of specie payment. The Secretary need not hug his 
 gold-bags and hesitate as to what premium his reserves of coin may 
 be worth. The country will forgive him all the difference his hoard 
 is worth above currency if by his action gold reaches par, and the 
 American Eagle once more have its place not only in the American 
 heart, but the American pocket. 
 
 KNICKERBOCKER. 
 NEW- YORK, October 2, 1873. 
 
13 
 
 Letter No. IV. 
 SUBSTITUTION NOT CONTRACTION. 
 
 IT is clear that, for the present at least, there is no excess of cir- 
 culating medium we may as well say of currency, because the cir- 
 culating medium is now composed wholly of currency, in nearly 
 equal proportions of greenbacks and national bank notes the cir- 
 culating medium, the measure by which all values are graded, con- 
 sisting at the moment of seven hundred millions of notes. That 
 there is a scarcity of currency to carry on the transactions of the 
 country at this day, leads to the natural and not unfair inference, 
 that the business of the country has "fgrown up " to the present 
 amount of circulating medium. 
 
 As we have before stated, the business of the country was car- 
 ried on in 1860 by a circulating medium of four hundred and 
 fifty millions of dollars, of which two hundred millions, by official 
 statement, were in State bank notes, and two hundred and fifty 
 millions, by the estimate of those best fitted to judge, in coin, 
 With this amount of circulating medium prices were at gold values 
 and gold itself at par. When there is no demand for gold, except 
 as a commodity that is, when there is no demand for it as money 
 to pay the indebtedness of this country to foreign countries it 
 must take the fate of all other commodities, and rise or fall as the 
 circulating medium of the country is extended or diminished. 
 
 The experience of all nations has shown that just so far as the 
 circulating medium is expanded prices rise, and so far as it is con- 
 tracted prices fall. There can be no better illustration than that of 
 the thermometer. The degrees are measured from freezing point to 
 that where water boils, according to the length of the instrument. 
 So with the circulating medium ; double its extent and the prices 
 measured by it double. Reduce it one-half and the prices measured 
 by it fall one-half. 
 
 That we have not too large a circulating medium is clearly shown 
 by the fact that there is now a scarcity of it. General prices are 
 now reduced to gold prices, and, as this stringency becomes felt in 
 every branch of trade, retail as well as wholesale, prices will not 
 range above those that would range were we at specie payments. 
 
 The only value about which we are ignorant to-day is the value 
 
14 
 
 of gold. Had the Secretary of the Treasury continued his sales in- 
 stead of arresting them, we should have been in no uncertainty on 
 this subject to-day. Under the idea that this officer had become 
 alarmed about the strength of the Treasury an odd idea enough 
 when the cable announced large shipments of coin to this side from 
 Europe the gold brokers, whose business would be utterly de- 
 stroyed were gold to-day at par, made desperate efforts to raise the 
 price of gold. This spasmodic effort soon ran out its strength, and 
 gold, which advanced from 112 to 115f, has again fallen to 110. 
 We again repeat that we do not believe that five millions of gold 
 could to-day be put upon the market without its price falling to 
 par. With foreign exchanges in our favor, a great crop going for- 
 ward, and large amounts of coin already on the way to this 
 country, there is little temptation to the speculator to risk his 
 money in the purchase of gold at any point above par. 
 
 We assert that gold is not worth more than par a statement the 
 truth of which can only be established by the renewal of sales by 
 the Secretary, the only holder of gold to whom a fall is not an in- 
 jury. The great public advantage which will accrue from the de- 
 cline of gold to par is so infinitely greater than the loss which may 
 accrue to the Treasury from the loss of the premium upon the stock 
 now held by it, that it seems almost an offence to the good sense of 
 the Secretary to suppose such a consideration to exist in his mind. 
 If gold be not worth more than par, then resumption may be made 
 without contraction ; that is, without a contraction of the circulating 
 medium. Practical resumption means substitution, not contraction 
 the substitution of coinTor paper in our circulating medium. How 
 is this to be effected ? In the first place evidently only by the 
 withdrawal of currency and the creation of a vacuum in the circu- 
 lating medium, now wholly currency, into which gold, floating at 
 par, will flow and be absorbed. By just so much as currency is 
 diminished and gold fills its place will the circulating medium be 
 strengthened. So long as gold remains at par this process may con- 
 tinue. The Secretary can retire his greenbacks and gold will take 
 their place. This is the immediate need, and our present object is 
 to show that it can be reached without contraction. The experiment 
 is worth making. Let the Secretary put out his gold ;tnd ascertain 
 its value. That value will show the measure of our inflation, if such 
 there be. If it be not above par, as seems probable, it will be evi- 
 dent to the merest tyro in finance that the country has grown up to 
 its present circulating medium, and that the substitution of coin for 
 currency is now possible. When sufficient currency has been taken 
 
15 
 
 out of and an equal amount of gold has entered into the circulating 
 medium, legal resumption will follow as a matter of course, and all 
 this without any disturbance of values or further shrinkage. So 
 long as money is at seven per cent, in the financial centres, the 
 Secretary can continue this process. With an easy money market 
 nothing is more easy than such substitution of gold for greenbacks. 
 So long as the exchanges remain favorable it can be rapidly effected. 
 When money becomes dearer the process must be arrested. He 
 must avoid the dangerous rock on which Mr. Secretary McCuLLOCH 
 wrecked his stiff bark. No business community will endure con- 
 traction when money is dear. But we hold that now contraction 
 is not necessary. Substitution is not contraction. The measure of 
 value is neither lengthened nor shortened. It is only strengthened. 
 
 Why should such an opportunity be neglected ? Is not the ex- 
 periment worth making when the possible advantages are con- 
 sidered ? The renewal of the sales of gold by the Secretary is the 
 first imperative step. By continuing the hoard of his Customs re- 
 ceipts he stands in the way of resumption. He is to-day the only 
 block in the road to specie resumption. By his negative action in 
 his arrest of sales of the surplus coin of the Treasury he is assuming a 
 grave responsibility. Does he not see that his inaction gives time 
 and occasion for a renewal of that speculative power which has 
 already brought us into such serious difficulty. Let him so act that 
 the coin now on its way from Europe will find its place in the vaults 
 of our savings banks and the pockets of the people. Let us once 
 more become familiar with the time-honored emblem of our national 
 power. He may be sure that the American people will pardon him 
 many shortcomings if he restore the national coin to general use. 
 Until Congress meet, the Secretary holds this great power the 
 sustaining of the present unnatural value of gold or its restoration 
 to the currency. Can he hesitate ? 
 
 KNICKERBOCKER. 
 
 NEW-YORK, October 4, 1873. 
 
 Letter No. Y. 
 NO FURTHER INFLATION. 
 
 THE crisis is passed the panic has run its course ; confidence is 
 returning. There will be, doubtless, a great deal of individual suf- 
 fering, a long train of minor disasters. It is impossible that it 
 
16 
 
 should be otherwise. Such is the unavoidable result of financial 
 spasms. There will still be large and long-continued liquidations. 
 Many needed and worthy enterprises must be for a period sus- 
 pended, and new projects must be adjourned for a more favorable 
 season. But the great and necessary business of the country is 
 gradually renewing its former current. The prudent still husband 
 their resources, and move with caution. Others, more venturesome, 
 only wait the returning breeze to spread full sail once more. 
 
 Severe as the lesson has been to all sudden as the awakening 
 from a blind trust in the perpetual postponement of the day of 
 settlement under the much-vaunted merits of paper-money it is a 
 question whether even yet that warning has aroused the public 
 mind to a true sense of the danger, or brought fairly home to the 
 national conscience the changeless, incontrovertible truth, that so 
 long as we make one of the family of commercial nations, we must 
 use that money which is the common money of the world, or find 
 no relief from the common fund of that money in the time of need. 
 
 Had our circulating medium been of this character, or approached 
 to this standard that is to say, did it now consist of equal parts of 
 coin and paper the contraction caused by the recent sudden lapse 
 of confidence, the withdrawal of currency and impaired power to 
 perform its usual functions of that which remained, would have 
 inevitably and immediately attracted an addition to its store of 
 coin from foreign nations. This not being possible, the business of 
 the country was compelled to contract itself to the amount of cur- 
 rency still left free. There was no hope of aid from foreign 
 sources. The only money with which foreign nations could have 
 aided us in our need, gold and silver, are no longer money 
 with us they would only have served as an additional sum of 
 commodities to be dealt in, bought and sold with the very currency 
 which proved insufficient for already existing transactions, or rather 
 such part of it as a timorous public still left free for such purposes. 
 
 In a similar situation of affairs in England or France, such strin- 
 gencies are treated in a simple way. The price of money is raised. 
 The raising of the bank rate of discount is equivalent to a rise in 
 such price. Gold and silver, like all other commodities, seek the 
 market where they are most wanted and find most profitable em- 
 ployment. From every quarter the current of money sets in to the 
 point where it may be used to best advantage, and business trans- 
 actions contracting, the equilibrium is soon restored. The true 
 amount of circulating medium as a measure of transactions is 
 again reached, and trade resumes its movement under correct and 
 
17 
 
 normal conditions. Confidence cheapens money, and the floating 
 capital which has corrected the false relations of values awaits 
 another favorable investment. This natural movement can only 
 take place in countries where the circulating medium is strong, 
 because largely consisting of gold and silver, and where trans- 
 actions in money are left free and unfettered by restrictive laws, 
 like those of Usury, which, to our cost, still retain their place on 
 our statute-book. The Bank of England makes money dear by 
 raising its rate of discount, or rather raises its rate of dis- 
 count as money becomes or threatens to become scarce. Our 
 unfortunate banks can only make money dear by denying it; while, 
 on the other hand, so soon as they take this course, their customers 
 withhold from them their usual deposits, because they can use their 
 money more profitably in the open market, the Usury laws as 
 between man and man being little more than a dead letter. 
 
 The entire inadequateness of a circulating medium consisting 
 solely of paper, has been absolutely demonstrated in the recent 
 crisis. To what extent prices would have fallen, and what further 
 terrible calamity would have been endured, but for the happy chance 
 that there was a moderate sum of currency at the disposal of the 
 Treasury at the critical moment, need not now be inquired. He 
 who has fallen half way down a precipice takes more thought as to 
 how he may again reach the surface than of the extent of the deeper 
 depth below. 
 
 Yet, strange as it may seem, there is at this very moment a plot 
 forming to press upon Congress at its next session the issue of one 
 hundred millions more of greenbacks, under the plea that we can- 
 not carry on the business of the country with the present sum of 
 seven hundred millions. There is no secrecy about this scheme ; it 
 is talked of in more than one influential quarter. What is equally 
 serious the press, which of late has been almost unanimous in its 
 urgent demand for measures toward resumption, has fallen under 
 the spell, and no more is heard about specie resumption. 
 
 Are men crazy that they propose such schemes ? More inflation ! 
 Another hundred millions of irredeemable money ! Where is this 
 to end ? When this hundred millions is fairly afloat, what then ? 
 Why then another and another, until our worthless currency will 
 have about as much purchasing power as the old French assignat, 
 or the promises of the darkest hour of our revolutionary struggle. 
 For several years, indeed ever since the power of contraction was 
 taken away from the Secretary, the country has been lured on by 
 the delusive promise that when we had " grown up" to the present 
 
18 
 
 circulating medium, specie payment would be resumed ; and now 
 that the country has grown up to the present circulating medium, 
 it is to be deprived of the reward of its patient sacrifice, and is told 
 by these patent currency doctors that it must "grow up" to a me- 
 dium one hundred millions greater than that now existing. When 
 are we to stop " growing up ?" 
 
 I greatly mistake the temper of our people if they will for a mo- 
 ment sanction such a breach of faith as this. There are signs on 
 every side that they are awakening to a thorough understanding of 
 this question. They begin to see that national expansion brings in 
 its train individual expansion ; that a diluted currency brings wa- 
 tered stocks. Already, in this State, one of the great political par- 
 ties has put forward, as the very corner-stone of its platform, the 
 imperative need of a return to specie payment. 
 
 If it be true that the business of the country has grown up to 
 the present circulating medium, it is now the time to strengthen 
 that circulating medium by a large introduction of coin. As we 
 have already shown, no contraction is necessary, only a gradual 
 withdrawal by the Secretary of the greenback currency ; when gold 
 is at par it will flow into the vacuum thus created. In other words, 
 a substitution of coin for greenbacks. When the greenbacks have 
 been withdrawn, and gold has taken their place, legal resumption 
 may take place. If, then, the country prefer to replace the national 
 bank currency by greenbacks, made convertible into coin at the 
 Sub-Treasuries, the exchange may be made by a simple process. 
 The Secretary could redeem, with this convertible currency, the 
 bonds now lodged with the Treasury by the national banks, and 
 call in and cancel the bank notes. The United States would then 
 possess the best circulating medium in the world, half in Govern- 
 ment notes, equivalent to and convertible into coin, and the other 
 half in gold and silver ; while banks would be left to their legiti- 
 mate business of discount and deposit unrestricted by law. But the 
 discussion of this question is premature. The feasibility of such an 
 exchange is only mentioned, because a large part of our population 
 look with aversion upon any withdrawal of greenbacks if it is to be 
 final who prefer the Government to the bank issue, and object to 
 any plan of finance which enables one class of individuals to profit 
 by the currency which the whole people make use of. Such profits, 
 they assert, belong to the whole people. Nowhere is class legisla- 
 tion so dreaded and detested as here. 
 
 The immediate question is, have we "grown up" to the present 
 circulating medium ? If we have not, we surely want no more 
 
19 
 
 inflation until we do grow up to it. If we have, we want the first step 
 to the introduction of gold into that medium. I hold that we are 
 ready for such a step now. If there is no excess of currency and no 
 foreign demand for coin, gold should be at par, and other values at 
 gold values. If the Secretary will resume his sales of gold, this 
 point will be soon established. 
 
 No withdrawal of currency should take place until gold be at 
 par. The country is not in a situation or humor to endure any more 
 of the " heroic treatment " of Mr. Secretary McCuLLOCH. It is now 
 universally accepted that the growing-up process is to be the 
 only treatment. In pursuing his present policy, the Secretary, 
 instead of aiding in the establishment of the true value of gold, 
 stands absolutely in its way. The Canadian bankers, who are 
 understood to be the holders of the greater part of the cash gold in 
 the market, must laugh in their sleeves while the duty-paying im- 
 porter gradually relieves them of their stock at the rate of two or 
 three millions each week, and the Secretary absorbs their sales in his 
 Customs receipts, and sustains the market for our provincial friends. 
 Is this Fabian policy of the Secretary's own conception ? Who- 
 ever may be its prompters, the foreign bankers and gold speculators 
 are the only persons who find their account in the fictitious value of 
 gold. Finance is not an exact science, and no one knows precisely 
 how much cash gold there is on the market, or what price a round 
 sum, say of five millions, would command. The Secretary holds 
 the solution of this problem in his own hand. His silence can only 
 be explained on the theory of the Eastern proverb, that " silence is 
 golden." 
 
 Everything favors resumption now. Our imports from the 1st of 
 January to 1st of October, 1873, show a falling off of $27,000,000 
 from those of the same period last year ; our exports an excess during 
 the same period of over $48,000,000, an improvement in our favor, 
 in exact figures, of $75,871,472 for the first three-quarters of the 
 year 1873. Of specie, the exports have been $41,523,011, in 1873, 
 against $59,075,264 in 1872, and $69,702,111 in 1871. This ratio of 
 improvement will be daily increasing for the remaining quarter. 
 The recent crisis has arrested imports, except of coin, to a very great 
 extent, while every day's news from Great Britain and the Conti- 
 nent points to even larger takings of our breadstuffs than had been 
 supposed. The shortness of the wheat crop seems to be not only local 
 but continental. A carefully considered article in the London Satur- 
 day Review on the " Wheat Crop," estimates " that England's deficit 
 is probably 1-2,000,000, and that of France 6,000,000, or together 
 
20 
 
 18,000,000 quarters. England, the only buyer in the past year, has 
 imported from all other countries, France included, nearly 13,000,000 
 quarters of wheat. The two countries now require that quantity, 
 and fully 5,000,000 more, between them. The Question is, can 
 this quantity be obtained ? * * It is too much, however, to ex- 
 pect America to more than double her exportation of last year. It 
 is improbable, if not impossible, that she can so do. Either France 
 or England must then go short. There will be active competition 
 between the merchants of the two nations wherever wheat is to be 
 had, and the result of the competition will be, to raise prices. 
 Bread must be dear. Whoever goes short, this country (England) 
 will not starve ; but we shall have to pay a high price for our 
 loaf." 
 
 In the compensation of nature, their suffering is our prosperity. 
 The day is not distant since Great Britain profited by our calamity. 
 For a great part of their wants, England and France must pay us 
 specie. We will therefore not only retain our own large production, 
 but receive a considerable additional supply. Now is our chance. 
 If we neglect this opportunity to restore our national finances to a 
 sound specie basis, we shall incur, and as surely receive, the con- 
 tempt of mankind. We may as well return to the aboriginal cur- 
 rency at once, and establish a wampum factory at the capital. 
 Better this than continue the farce of exchanging paper promises, 
 which we have no intention of performing, now or hereafter, and 
 solemnly calling them dollars. 
 
 Let us have no more inflation. 
 
 KNICKERBOCKER. 
 
 NEW- YORK, October 6, 1873. 
 
 Letter No. VI. 
 GRADUAL RESUMPTION. 
 
 THE discussion of the question of a return to specie payment has 
 now passed from the narrow field of bank parlors and merchants' 
 counting-rooms to the broad forum of public opinion. It is no longer 
 possible to put off or stifle this discussion. It will not " down " at 
 any man's bidding. It is to the press of the country that the people 
 look for light and counsel. This is the time to settle some of the 
 main points in the argument. When the premises of any proposi- 
 
21 
 
 tion are clearly proven, and taken as proven, the conclusions which 
 derive from such premises are sure to lodge themselves in the public 
 mind. Public action soon results, for though those charged with 
 our Government may fail sometimes to lead public opinion, they 
 rarely hesitate to follow it when clearly expressed. 
 
 The questions now before the public are these : Are specie pay- 
 ments desirable ? Are specie payments now practicable ? How 
 shall the experiment be made ? 
 
 That there is an earnest desire for a return to the use of coin in 
 our currency cannot be now denied. In every quarter this feeling 
 is shown. The country has heard in the last few days the opinions 
 of the two Senators from Ohio, one on the Democratic, the other on 
 the Republican side. The argument is made to the people of Ohio 
 and the Western States. The final settlement of the question rests 
 in Western hands. They hold to-day, and will hold for a long period, 
 the balance of power on this continent. Every argument addressed 
 to them from authoritative sources must be fairly listened to, fairly 
 weighed, and fairly answered. The question must not be permitted 
 to pass wholly into the domain of political inquiry. It must not be 
 confined within party limits. Buyers and sellers trade with each 
 other without thought as to each other's political views. The coin 
 which should be the standard of value in their dealings has no party 
 color. 
 
 Mr. Senator SHERMAN, in his recent speech, made this important 
 admission : " There are some defects in our banking system. The 
 first is that a greenback, although mighty good, is not quite so good 
 as gold." And again : " We can go back to specie payments we 
 can go back until our money is equivalent to gold and silver coin, 
 and then we have the best currency in the world." While the 
 Senator proposes no plan to make the currency as " good as gold," 
 he affirms in the plainest way that " in all ages and in all countries 
 it has got to be an axiom in financial matters, that>gold alone is the 
 standard of value, and the planetary laws which govern the universe 
 are not more fixed and absolute in their sway than that law which 
 demands that every thing must be measured by the gold standard." 
 Such are the weighty, positive declarations of one of the Republican 
 leaders. On the other hand, his colleague and political antagonist, 
 the Democratic Senator from the same State, Mr. THUEMAN, while 
 declaring " that he is in favor of a specie currency, or a currency 
 convertible into specie," and expressing the " belief that the business 
 of the country can never be carried on with an irredeemable paper 
 currency," is as silent as Mr. SHERMAN as to the means by which 
 
 3 
 
22 
 
 this convertibility or equalization of values of coin and paper may 
 be established. 
 
 But here the resemblance between the views of these dis- 
 tinguished gentlemen ceases. Mr. THUEMAN goes on in the 
 strongest terms to deprecate the " immediate resumption " of specie 
 payments as dangerous in the extreme, and calculated " to have 
 a most crushing eifect upon the people of the debtor States." 
 Both of these gentlemen fairly and squarely declare their belief 
 that specie payments are desirable and needful. There is nothing 
 to controvert in the argument of either. In answer to that of Mr. 
 SHERMAN, it need only be stated that no resumption can take place 
 until the circulating medium, now wholly paper, has been very 
 greatly strengthened in some manner. He would doubtless say by 
 putting coin along side of it, while the sounder view seems to be 
 that the true manner is by partial withdrawal of currency and sub- 
 stitution of coin in its place. To that of Mr. THTJKMAN, it is only 
 necessary to reply that there is no such thing possible as the " im- 
 mediate resumption of specie payments." He must be mad indeed 
 who can for a moment imagine that the Government or the people 
 can solemnly legislate or declare that they will hereafter pay specie 
 to all who demand it, when the proportion of specie in their control 
 to the extent of the currency promises afloat is in the present ratio. 
 It is not worth while here to reply to the bold theory once put out, 
 that all that was necessary for resumption was " to resume." The 
 difficulty is to stay resumed. The financial history of nations shows 
 no record of any people that have been able to float any considerable 
 amount of currency with even an equal amount of coin to the circu- 
 lating medium. There can be no other than gradual resumption by 
 the substitution of coin for a part of the currency. As this substi- 
 tution will in no manner change the amount of circulating medium, 
 there will be no contraction, and Mr. THUBMAN'S fears as to the 
 change of relation between debtor and creditor may be dismissed 
 as idle and groundless. 
 
 The measure of values is the circulating medium of a country the 
 values so measured rise or fall, as the measure itself is enlarged or 
 lessened. Gold is only a standard as it is used as a standard. 
 Were it not for our intercourse with foreign nations we should have 
 no use for it except in the arts, and Gold Boards and Sub-Treasuries 
 would be needless. But as yet, the European and Asiatic nations 
 have not adopted the last American conception, that gold is a " relic 
 of barbarism," to be tabooed by all civilized nations, and they still 
 insist on payment in gold for the balance of account between their 
 
 ! 
 
23 
 
 sales to us and our purchases from them. Now, so long as we 
 content ourselves to receive at home among ourselves a paper cur- 
 rency in place of coin, and to pay our foreign creditors in gold and 
 silver, we may do so ; only as their money is not our money, we 
 need not expect that aid which they mutually extend to each 
 other in times of distress. We have placed ourselves out of the 
 pale of their finance. 
 
 The prices of the articles we exchange among ourselves, giving 
 and taking this paper money as the medium of transactions, will 
 rise and fall as we increase or diminish the amount of such paper 
 money ; or if we do neither, but hold the amount at a fixed limit, 
 prices will fall, as the increasing business of the country consequent 
 on its rapid development and prosperity causes an increased demand 
 for the currency itself. That is what is called the " growing up" 
 process. When the currency is not in excess, prices should not rule 
 above those which prevail when gold is at par. And here it must 
 not be lost sight of, that present gold prices are not those which 
 ruled before the war, either here or in any part of the world. Prices 
 have risen every where ; in Europe and Asia as well as in America. 
 The enormous increase in the world's store of gold since 1848 has 
 changed the financial face of the world, and caused a general ad- 
 vance in values to keep pace with the increase in the measure of 
 values. This advance has been still further stimulated by the ra- 
 pidity of modern communication, which has greatly reduced the ne- 
 cessity of any considerable movement of coin itself, and left nearly 
 the entire sum existing at the free service of commercial exchanges. 
 No such fall in prices here as many have feared need be looked for. 
 The fact of a general rise abroad will be readily acknowledged by 
 all those who have recently visited the Continent. Our fall need 
 only meet that rise. 
 
 For many years the amount of our circulating medium has been 
 in excess of the reasonable needs of the country. It is now claimed, 
 and it seems justly, that the business of the country fully demands 
 its present medium of seven hundred millions. There must, there- 
 fore, be no contraction of this medium. There must only be a sub- 
 stitution of gold for a part of that medium. This is gradual re- 
 sumption. This is the only time since the close of the war when 
 the condition of our foreign exchanges has permitted a serious 
 thought of the possibility of such a substitution. Nothing but the 
 great improvement in our situation toward foreign countries, 
 and the certainty that for a considerable period this improvement 
 
24 
 
 must continue in a largely-increasing ratio, renders such a plan prac- 
 ticable to-day. 
 
 After long suspension, in which values, no longer measured by 
 a gold standard, become irregular and unsettled, an immediate res- 
 toration of their true relations is difficult and unequal. It was a 
 saying of that wisest and most sagacious of American statesmen, 
 ALBERT GALLATIN, the financial Nestor by whose counsels the 
 country was led through the revulsion of 1837 up to specie pay- 
 ment, " that the agony of resumption is far more terrible than the 
 agony of suspension ;" that it is harder to submit to a loss which 
 may be avoided, or postponed, or perhaps shifted to another's 
 shoulders, to aid resumption, than to far greater losses to avoid, sus- 
 pension. The moral tone, once impaired, is with difficulty restored, 
 either in individuals or communities. 
 
 Fortunately, there is no need of such suffering now. The worst 
 has been rapidly passed. The contraction of values has been sharp 
 and sudden, but thorough, The deposite line of the New- York 
 >>anks alone has fallen off $51,000,000 since the 13th September, a 
 contraction of twenty-five per cent. There can be no further con- 
 traction. There will be no further general decline in values. There 
 will be surely an equalization between those which have fallen too 
 low and those which have not yet felt their share of the depres- 
 sion. It may safely be said that no values have wholly escaped. 
 What are we to reap from this sudden restoration of true values ? 
 Shall we hold steady where we are, and gradually recover our old 
 financial standing by gradual resumption, or shall we drift along 
 through another expansion and another inflation, to another panic ? 
 Can there be any hesitation ? Surely, we will choose the better 
 path that which leads to national honor and sure prosperity. The 
 long-promised day has at last dawned the day when, by ten years 
 of unexampled prosperity, the business of the country has grown 
 up to the full measure of the circulating medium. Shall we not 
 now endeavor to harmonize our system with the systems of all other 
 civilized nations to return to gold as a standard of values ? 
 
 It has been in the power of the Secretary of the Treasury at any 
 time since the beginning of the panic, since the 17th September, to 
 ascertain the value of gold to enable the country to see and to 
 know just how much difference really exists between the value of 
 our currency and of coin to fix precisely the excess of our cir- 
 culating medium. What relief it would have afforded to the country 
 to know that it was on the verge of specie payment that at last 
 there was to be a certain and definite element in our finances what 
 
25 
 
 a consolation for it in its hours of suffering ! It has not suited the 
 Secretary to adopt this course. 
 
 It has been also in the power of the Secretary to uphold the price 
 of gold, and sustain the hands of those whose business is a specula- 
 tion in its changing values. No positive interference was necessary 
 the country would not have brooked such interference. He had 
 only to withdraw the sales of gold he had advertised ; to listen 
 in silence, without demur, to the rumors of the dangers and em- 
 barrassments of the Treasury, by which the speculators bolstered 
 their speculations upon nominal transactions ; and finally, as con- 
 fidence was renewed, and importers commenced to withdraw their 
 merchandise, to absorb and hold his customs receipts, and thus help 
 to maintain the artificial price. This has been the course of the 
 Secretary. 
 
 The country cares little now for what he does. The matter has 
 passed beyond his control. He had the power to lead the move- 
 ment, to direct it in the proper path. The gold now on its way 
 here is pouring daily into the mint for coinage. Had the Secretary 
 shown any courage, the greater part of the ten millions which it is 
 announced must pass through new coinage, would go directly into 
 the hands of the people. All the gold on the way to this country 
 must find a market here. Who can hold it ? The foreign bankers 
 have not the power if they have the inclination. The acceptances 
 of the best of them, even ninety-day bills, cannot find takers at one 
 and a quarter per cent, per month sixteen per cent, per annum. 
 Their credit is undoubted, but their available means are already 
 exhausted in the purchase of produce bills. Their credit will not 
 move the produce now on the market. They must wait before they 
 can renew their purchases, until they find a demand for their bills 
 which, as yet, comes slowly from, importers, or receive coin from 
 abroad. 
 
 It is greatly to be regretted that some means were not devised 
 by the Secretary to import gold through a syndicate of bankers, 
 and to place an immediate and large sum twenty to twenty-five 
 millions of currency in their hands for use in the purchase of pro- 
 duce bills. The relief to the West would have been instant, and 
 the general effect salutary. We could then have marketed a 
 great part of the crops before frost, or at least brought it to tide- 
 water. Already there are signs of an early Winter. Snow fell in 
 Pennsylvania yesterday. 
 
 The coin must come, and gold will fall to par in spite of the Sec- 
 retary. His brief authority will be powerless to sustain the price 
 
26 
 
 against arrivals for a market, and none will feel tempted to buy 
 gold against such importations as are now promised. The Secre- 
 tary has been measured in the balance and found wanting. Never 
 in the history of our country has so great an occasion been so hope- 
 lessly neglected. Whatever other fame the Secretary may achieve, 
 that of a finance minister has passed from him forever. 
 
 When gold falls to par, arid there is no longer profit or hope of 
 profit in holding it, it will pass from hand to hand as of old. But 
 this is not resumption, nor yet a single step toward it. It can only 
 be held in the currency by the provision of a place for its use. 
 This can only come from legislation. The appeal will be taken 
 from the Secretary to Congress. When this important session is 
 opened, there will be found two distinct propositions awaiting its 
 approval, and the country marshaled behind the one or the other in 
 columns in which political opinions will have no place. From the 
 one will rise the cry for more inflation, more greenbacks ; from the 
 other a stern demand for a gradual approach to coin. There 
 need be no doubt of the people's position. Every man who lives by 
 his daily labor the bone and sinew of the country, the American 
 artisan, the Irish laborer, the German agriculturist has an imme- 
 diate daily interest in a return of specie payment ; only let it be 
 made clear to them that there is to be immediate resumption, no 
 contraction and suffering, but only a gradual and careful substitu- 
 tion of coin for paper, continued when gold is at par and money is 
 plenty, arrested when either gold advances or money becomes dear, 
 and there can be no division of opinion. 
 
 It is now of the greatest importance to fully put before the people 
 the entire feasibility of this plan of gradual resumption, and to de- 
 stroy the popular impression that gold prices mean ruin. It is a sad 
 thing, indeed, that the very word " specie-payment " has been so 
 used before the people that it has become as much a terror as the 
 red flag to France a terrible banner to be waved before the eyes 
 of the people on every occasion when the interests of a class are to 
 be protected or sustained at the expense of the whole. 
 
 If the inflationists are allowed to have their way they will so cor- 
 rupt the public conscience that the day may not be distant when re- 
 sumptionists will fare as badly as abolitionists, in a time not yet be- 
 yond our memory ; and one who expresses a doubt about the 
 miraculous virtues of paper money be chased about the streets as 
 those other sufferers, who dared to doubt the divine origin of the in- 
 stitution of human slavery. Dii avertite omen ! 
 
 KNICKERBOCKER. 
 
 NEW-YORK, October 8, 1873. 
 
27 
 
 Letter No. VII. 
 THE APPROACH TO SPECIE PAYMENT. 
 
 FROM the close of its war it has been the policy of the Govern- 
 ment, under the Republican administration, to restore specie pay- 
 ment to the country. 
 
 Now that this policy is on the verge of success, it is not un- 
 profitable to look over the extent of the ground already traveled, 
 and to note with what steady and firm courage it has been pursued, 
 so the country may better measure the distance yet to be gone over, 
 and nerve itself for the last and crowning effort. 
 
 Mr. Secretary McCuLLOce, in his able and lucid report of 1867, 
 states the public debt of the United States to have reached its 
 highest point on the 31st August, 1865, when it stood at 
 $2,757,689,571 43. The October statement of Mr. Secretary RICH- 
 AKDSOX states the total indebtedness, on the 31st September, 1873, as 
 at $2,138,793,898 17. In both statements the cash in the Treasury 
 is deducted. A total reduction in eight years of $618,895,673 26. 
 The history of the finances of the world shows no record of any 
 such remarkable feat as this. Alone it stands, and will stand 
 to the honor of the able men who have conducted the national 
 finances, and an imperishable proof of the boundless resources of 
 the country itself and the inflexible courage of our people. 
 
 It is upon these resources and this courage that the hope of a 
 finish of the labor in an early return to specie payment is now 
 founded. 
 
 A short analysis will show of what the debt consisted at the time 
 of its greatest extent, and to what it is now reduced. 
 
 On the 31st of August, 1865, there were of 
 
 Funded and matured debt, $1,111,071,211 89 
 
 Seven-thirty notes, 830,000,000 00 
 
 Temporary loans, certificates of indebtedness, &c., 443,220,103 16 
 
 United States greenbacks and fractional currency, 459,505,311 51 
 
 $2,843,796,626 56 
 Less cash in Treasury, minus unpaid requisitions, 86,107,055 13 
 
 Total debt United States, $2,757,689,571 43 
 
28 
 On the 31st September, 1873, there were of 
 
 Funded debt, interest in coin, $1,723,567,500 00 
 
 Funded debt, in lawful money, 14,000,000 00 
 
 Matured debt, 15,756,130 26 
 
 Certificates of indebtedness,. 678,000 00 
 
 Certificates of deposits 11,250,000 00 
 
 Greenbacks and fractional currency, 402,309,134 03 
 
 Unpaid interest, 32,083,523 46 
 
 $2,199,644,287 75 
 Less cash in Treasury, 60,850,389 58 
 
 Total debt United States, $2,138,793,898 17 
 
 The first measure of Mr. Secretary McCuLLOCH, on taking charge 
 of the Department, was to get rid of the floating debt, which, in its 
 various forms, clogged the wheels of the Treasury, by paying off 
 what was possible and funding the balance. His next, to fund the 
 general debt as far as practicable. For this great measure of con- 
 verting the $800,000,000 of seven-thirty obligations into gold bonds 
 he has been as widely blamed on the one hand as he has been 
 praised on the other. " But for this step," a recent critic has re- 
 marked of him, " he might have been called a great finance minis- 
 ter." But this very measure is the great measure of his career. 
 By it he brought American credit up to its present high standard 
 in the money markets of the world. Seeing from the first that 
 sooner or later the finances of the United States must be put upon 
 the same level as those of other nations, and aware of the difficulties 
 in the way of a return to specie payment, he resolved to place the 
 bonds of the Government at once upon that basis. No greater 
 proof of the wisdom of his policy need be asked, than the favored 
 and firm hold that these obligations now have among foreign na- 
 tions a hold they could not have maintained on a currency basis. 
 Satisfied as the European holder might be as to the ultimate value 
 of his investment, he looked naturally to a specific coin interest. 
 This the conversion from the currency obligation to a gold bond 
 provided. 
 
 The next step of the Secretary was a resolute effort to contract 
 the currency, and bring it back as far as possible to its normal 
 state ; in other words, to reduce the circulating medium to the 
 sum absolutely necessary for the transaction of the business of the 
 country. 
 
 By reference to the report of August 31, 1865, it will be found 
 that the circulating medium then consisted of 
 
29 
 
 United States notes, greenbacks and fractional currency, $459,505/311 51 
 
 National Bank notes and State Bank issues, as by Comptroller's 
 report, October 1, 1865, 250,189,478 00 
 
 Total, $709,694,789 51 
 
 To this amount must be added the sum of five per cent, legal 
 tender notes, and of certificates of indebtedness, &c., shown as above 
 to amount to $443,220,103 16, in all a sum of $1,152,914,892 67. 
 This, then, was the circulating medium of the country at the time 
 of its greatest expansion ; by it all prices were measured. 
 
 After the taking in of the various kinds of certificates, all which 
 served the purpose of currency in one form or another, Mr. McCuL- 
 LOCH begun to take in the greenbacks themselves, and continued 
 until in December, 1867, Congress formally stopped any further con- 
 traction. From the 1st of August to the 15th November, 1867, the 
 time of his greatest contraction of greenbacks, the complaints of the 
 Western country were unceasing against the policy of the Secre- 
 tary, and, indeed, if there be a fault to be found with his direction 
 of the finances, it is in that he clung so inflexibly to a fixed and 
 unyielding policy. He insisted upon contraction without regard to 
 the demands of the trade of the country or the position of the money 
 market. From his experience future Secretaries may take note, that 
 while no complaints are likely to arise against contraction when 
 money is cheap, no country which, by the representative system, 
 holds the power in its own hands, and can confine the action of its 
 finance ministers within the limits of its will, is likely to consent to 
 a contraction of its currency when money is dear. 
 
 The Treasury statement of July, 1868, shows to what extent the 
 circulating medium had been then contracted. It then consisted of 
 
 United States notes, greenbacks and fractional currency, $388,768,674 75 
 
 National bank notes outstanding 1st November, 18G7, 299,103,996 00 
 
 Total, $687,872,670 75 
 
 To which we add the sum of temporary loan certificates and other 
 notes serving the purposes of currency, amounting to $ ( ,)2,6S7,442 64, 
 and the sum of the circulating medium will be found to have then 
 reached $780,560,113 39, and shows a contraction by the Secretary 
 of 8372,354,779 28 in its total amount. This was pointed out during 
 the debates of the Board of Trade Convention which met at Boston 
 in the spring of 1868. An article in the Atlantic Monthly, for May 
 of this year, renews the same argument. 
 
 This was the first approach to specie payment. The country at 
 
30 
 
 large had felt the pressure of the screw, but had not been able to 
 discern precisely from what quarter the pinch came, the contraction 
 being partly those outside forms of Treasury obligations, which, 
 though not currency in the strict acceptation of the word, were 
 still used as such in the larger transactions of trade and financial 
 exchange. When, in a time of general pressure, the currency itself 
 became the subject of the pruning knife, the country not only felt 
 the knife, but saw how it was handled, and refused to submit longer 
 to the " heroic treatment." Up to this period, July, 1868, it will 
 be seen that the debt itself, that is, the funded debt, though mate- 
 rially re-arranged, had been slightly increased. In July, 1865, the 
 sum of the indebtedness not used as currency was $1,931,071,211 89, 
 of which $830,000,000 were 7-30 Treasury notes. In 1868, July, 
 the same class of debt reached $2,154,864,847 28, of which 
 $177,000,000 and some fractions of 7-30 Treasury notes, an increase 
 of $200,000,000. During all this period the entire indebtedness of 
 the Treasury had fallen from $2,757,689,571 43 to $2,636,320,964 67, 
 a decrease of $121,368,606 76. 
 
 Checked in his efforts to approach further to specie payment by 
 direct contraction, the country having distinctly shown its deter- 
 mination to " grow up " to the existing circulation without further 
 change, Mr. McCuLLocn set himself to work to reduce the debt 
 itself. The statement of July, 1869, made shortly after he left office, 
 returned the amount as then outstanding at $2,489,002,480 58, a total 
 reduction since the inauguration of his policy of $294,423,398 63. 
 The country will some day recognise the full measure of the ser- 
 vices that this brave Secretary rendered in the beginning of such a 
 wise policy. 
 
 The administration of Gen. GRANT under Mr. BOUTWELL followed 
 the policy of its predecessors, leaving the currency untouched and 
 continuing the approach to specie payment by the collateral road 
 of a reduction of Government indebtedness. On the 1st of July, 
 1873, there had been a still further reduction of indebtedness of 
 $339,038,607. 
 
 Mr. Secretary RICHARDSON has continued faithfully and bravely 
 in the same direction. His reduction since July alone reaches the 
 sum of $11,169,975; the total reduction since 1865 reaching the 
 sum of $618,895,673 26, and leaving the debt within the easily- 
 managed figure of a little over two thousand millions. This has 
 been the second approach to specie payment. 
 
 The country is now ready for the third great series of steps 
 toward resumption. If we have now " grown up " to the sum of our 
 
31 
 
 circulating medium, now is the time to prepare to introduce some 
 solid strength into that medium. When gold and currency float at 
 par together and money is abundant, a gradual withdrawal of cur- 
 rency will not be felt since gold will fill its place. Values will re- 
 main unchanged and resumption will gradually become possible. 
 When gold has fairly taken its place in sufficient amount to warrant 
 the experiment, there may be legal resumption, and the people may 
 then decide which of the two currencies they prefer greenbacks or 
 national bank notes. The exchange of greenbacks for the national 
 bank currency will be easy. The Treasury will only have to re- 
 deem the bonds on which the bank issues are based, paying for 
 them with a convertible greenback currency, which would thus be- 
 come the only paper money in circulation, and by the same process 
 extinguish $350,000,000 of the United States debt a desirable 
 financial operation in itself. 
 
 Are we ready for this last step the third approach to specie pay- 
 ment It seems that we are not far from it. Our exports are 
 enormous ; our imports are light, and promise to be small for some 
 time. The credit of importers will not allow of other result they 
 perforce must contract their business. Gold is falling, and would 
 long ago have touched par, or a point near it, but for the mistaken 
 policy of the Secretary. The October statement shows that while 
 his gold balance fell from $87,000,000, as it stood Sept. 1st, to 
 $80,000,000, as on the 1st of October, the portion of the coin be- 
 longing to the Treasury increased from $42,000,000 to $46,000,000, 
 and that while the coin certificates were called for to the extent of 
 $10,000,000, the real gold strength of the Treasury increased 
 $4,000,000 about the amount of his customs receipts. 
 
 Before the meeting of Congress gold will probably be floating at 
 par. The Treasury can only absorb a moderate amount the bal- 
 ance must take its chance of the market. It cannot escape us, 
 unless we again inflate the currency. The Secretary may yet find 
 no better use for his coin than to redeem the amount taken from 
 the famous reserve. He cannot use it to a better purpose. 
 
 It will be for Congress to make such legislation as wilt then 
 authorize the Secretary to withdraw his greenbacks so fast as coin 
 is at hand to replace them,* and thus take the final step in the 
 approach to specie payment. 
 
 There can be no doubt that the Republican Administration, which 
 has so steadily held this object in view, will not now fail either in 
 the wisdom or the courage to complete its work. 
 
 KNICKEKBOCKEB. 
 NEW-YOKK, October 10, 1873. 
 
32 
 
 Letter No. VIII. 
 THE TRUE PLAN FOR RESUMPTION. 
 
 THE temper of the Press which, if not always ready to lead, is 
 sure to follow the drift of public opinion, shows clearly that the 
 question of specie payment has lodged itself in the mind of the 
 people. There is a wide-spread belief in the present practicability 
 of specie payment, and symptoms of an anxious longing for this 
 most desirable result, accompanied, it is not to be denied, with 
 many a sign of dread of the suffering it may entail. There is an 
 instinctive fear that specie payment means decline in values, loss of 
 property, falling perhaps where least looked for ; witli all this a 
 growing determination to face the danger, to grapple with it, and 
 overcome it. 
 
 Specie payment will be the one measure of the coming session. 
 It is already announced that President GRANT will make this sub- 
 ject a part of his Message to Congress, and recommend some prac- 
 tical measure for its consideration. The question is not, then, of 
 the merits of specie payment, but of the plan by which it may be 
 carried into effect. 
 
 Several plans of resumption have been brought forward. 
 
 The first plan, that to which all nations have hitherto had resort 
 in similar stress, was that originally proposed by Mr. Secretary 
 McCcxLocH in his report of 30th November, 1867. He stated that 
 he would not fix the exact time of resumption, yet that under 
 favorable circumstances " it should not be delayed beyond the 1st 
 January, or, at the furthest, the 1st July, 1869." To this end as a 
 chief measure he proposed to Congress " the funding or payment of 
 the balance of interest-bearing notes and a continued contraction of 
 the paper currency" But while Congress listened with willing ear 
 to his wise scheme of taking up the interest-bearing notes, they 
 absolutely denied his urgent request to continue his contraction 
 policy, and passed' a law to suspend the further reduction of the 
 currency. It was resolved upon to wait until the progress and 
 prosperity of the country had expanded its business to the measure 
 of its currency until it had " grown up " to it. 
 
 It is worth while now only to mark at what stage of his contrac- 
 tion policy Mr. Secretary McCuLLOCH thought that specie payment 
 
33 
 
 might be resumed, and thereby to estimate how much paper cur- 
 rency he judged could be safely floated. He had previously stated 
 in his December report, 1865, that it would not be necessary to 
 retire more than one, or at most two hundred millions of United 
 States notes before the desired result would be obtained. The 
 amount of paper circulation, he stated in the same report to be, on 
 Oct. 31, 1865 : 
 
 United States notes and fractional currency, $454,218,038 20 
 
 Notes of national banks, 185,000,000 00 
 
 State bank notes outstanding, 65,000,000 00 
 
 Total, $704,218,038 20 
 
 In other words, Mr. McCuLLOCH was then of opinion that the par 
 of coin could be maintained with a paper circulation of $500,000,000. 
 In November, 1867, when he expressed the opinion that resump- 
 tion could take place at the furthest the 1st July, 1869, the currency 
 stood, by his statement, at 
 
 United States notes and fractional currency, $387,871,477 39 
 
 National bank notes, 299,103,91)6 00 
 
 Total, $686,975,473 39 
 
 But a condition of resumption in his policy was a still further 
 contraction of the paper issues. He could scarcely expect Congress 
 to permit him to contract faster than he had already contracted. 
 The country was already wincing under the severity of the process. 
 From the 30th November, 1867, to the 1st July, 1869, the date he 
 fixed for possible resumption, a period of nineteen months, he could 
 not have hoped to contract at a greater rate than four millions per 
 month ; a full sum of seventy-six millions. The sum of paper money 
 would then be that last stated, less seventy-six millions ; in other 
 words, say six hundred million dollars. It will be seen that the 
 Secretary made an allowance for the growth of the country from 
 1865 to 1869, and its consequent need of an increased circulating 
 medium, by the advance in the sum of paper currency which he 
 estimated that the country could float at a par of coin by one hun- 
 dred millions that is, from five to six hundred millions. 
 
 If this view be correct, and a similar advance of 100 millions for 
 the four years from 1869 to 1873, (his estimate was of an advance 
 of 100 millions for the four years from 1865 to 1869,) be now 
 allowed as not unreasonable, then we have the sum of 700 millions 
 
34 
 
 as the precise measure of the amount of paper currency which, in 
 his view, can now be floated on a par with coin at least, if present 
 inferences may be drawn from his past opinions. The precise 
 measure of our present currency may as well be stated : 
 
 United States greenbacks and fractional currency, Oct. 1, 1873, . $402,309,134 03 
 National bank notes, Feb. 28, 1873, 336,292,459 00 
 
 Total, $738,601,593 03 
 
 From what may be gathered from the reports of Mr. McCuLLOce, 
 his plan of a return to specie payment was contraction to a cer- 
 tain point, which has been stated, and then resumption by the 
 Treasury on the basis of a gold reserve in its vaults. The national 
 banks would have followed perforce, or, falling under the ban of the 
 law, have been wound up and passed out of existence. 
 
 The plan o/Mr. GREELEY for immediate resumption was based on 
 the same theory of Treasury resumption. In his financial address 
 at Louisville, September 22, 1872, during the political canvass 
 which preceded the last election, he said : " My opinion was, years 
 ago, and I have seen no reason to change it, that when we had one 
 hundred and twenty-five millions of money in the Treasury, mainly 
 gold, and when we had a revenue exceeding the necessary outlays 
 of the Treasury by more than one hundred millions per annum, we 
 were then in a condition to resume specie payments ; that if the 
 Government had chosen to say ' we will resume, we will take our 
 greenbacks and will receive them as gold,' there would have been 
 no difficulty in making that resumption. Under that state of affairs 
 I have seen the Bank of England resume." Mr. GREELEY not only 
 omitted to state that the Government had come into solemn engage- 
 ment with every taker of its bonds to collect its customs in coin for 
 the secure payment of their interest, and that a breach of faith, 
 even in a partial abandonment of this pledge, would seriously 
 injure the national credit, but he further forgot that when the Bank 
 of England resumed, it was to make good in coin a currency of 
 21 million pounds sterling 100 millions of dollars the amount 
 of its paper currency, outstanding at the day of its greatest ex- 
 pansion, and not 400 millions, as our Treasury would have been 
 forced to do, and this, too, in a country where gold is always 
 abundant and which is in close proximity to the great gold money 
 markets of the world Paris, Amsterdam, Frankfort and Vienna 
 while, on the other hand, coin has for years been gradually 
 driven out of the United States, and the viciousness of our system 
 has placed us out of the reach of foreign aid and sympathy. 
 
35 
 
 The third plan is that of Mr. Senator SHERMAN, who introduced 
 into the Senate, on the llth July, 1868, a bill for the funding of the 
 national debt and for the conversion of the notes of the United States. 
 This provided for conversion at the will of any holder of United 
 States notes, (greenbacks,) to the amount of $1,000, or any multiple of 
 $1,000, into bonds for an equal amount, and that any holder of the 
 bonds might demand payment of the same by the Treasury, unless 
 the amount of notes outstanding shall be equal to 400 millions 
 such process to cease after the resumption of specie payments by 
 the United States. To this was added a section giving legality to 
 contracts made specifically in coin. The advantages of this plan 
 were more apparent than real, and they grew smaller, as, by the 
 gradual reduction of the funded debt, it passed into firmer and 
 more secure holding. The holders of the debt during the recent 
 crisis were not, to any great extent, willing to convert their bonds 
 into currency when they had the opportunity, by the sale of bonds 
 to the Secretary. The demand for such conversion came chiefly 
 from the savings banks, who, having immediate engagements to 
 fulfill, the possible extent of which they could not measure, made 
 such conversion, but locked up the currency. It afforded little 
 relief to the general community. 
 
 It must be also observed that the limit, 400 millions, set up as 
 the barrier, which should not be passed, in such conversion of bonds 
 into currency, is not far distant. Mr. SHERMAN will no doubt also 
 now allow that the country has grown up to the amount of cur- 
 rency, 700 millions, which he considered to be thirty-five per cent, 
 in excess of our needs in 1869. This ingenious plan of converti- 
 bility back and forth of bonds into currency and currency into 
 bonds for the purpose of furnishing flexibility to the currency, is the 
 corner-stone of the free-banking law project. 
 
 In January, 1869, Mr. SHERMAN put forward a further plan. 
 
 He then proposed, in addition to the legalization of gold contracts 
 and the extension of this system to the national banks, a grant to 
 the banks of the authority to issue gold notes equal to sixty-five 
 per cent, of the value of United States bonds deposited. He ex- 
 pressed the idea that "many of the banks, especially in commercial 
 cities, would gladly avail themselves of such a provision to with- 
 draw their circulation and substitute gold notes, convertible on 
 demand into coin." He sums up his argument by saying : " If we 
 are sincere in wishing specie payments, we must not only multiply 
 the demands for coin ; we must encourage contracts, issue 
 coin notes both by the United States and by the banks, and thus, 
 
36 
 
 without contraction, dispense with the use of the inferior and 
 depreciated currency." 
 
 This is a plan of gradual substitution of gold certificates of large 
 and small denominations, (the large by the Treasury, the small by 
 the banks, it may be supposed,) for existing greenbacks and national 
 bank notes. 
 
 These plans are based upon entirely different theories ; that of 
 Mr. McCuLLOCH, for resumption by the Treasury under certain con- 
 ditions, and that of immediate resumption by Mr. GREELEY, 
 assume that the ratio of reserve to issue that is, of coin in the 
 Treasury to greenbacks in circulation is the true measure of safety ; 
 but on a closer view it seems that it is only a secondary measure. 
 The true principle for the maintenance of an equality between coin 
 and currency is to be found in the correct ratio of coin in the 
 country to the circulating medium of the country in other words, 
 in the specie strength of the general circulation. The one may 
 provide a proper basis for a resumption by the Treasury alone, 
 though it is not probable it could be maintained, even with a 
 much larger sum than the Treasury has ever yet held ; the other 
 establishes the ground for a general resumption. 
 
 The objection to these plans is, that by locking up coin in the 
 Treasury they keep up the price of gold. If, on the contrary, the 
 gold be let loose and added to the present circulating medium, with- 
 out other action, that of itself will produce an inflation under which 
 prices will again rise, the medium be again contracted through 
 some sudden want of confidence, and gold again disappear. Never 
 were truer words uttered than those of Mr. McCuLLocn, when he 
 said : " It is a well-established fact that the demand for money in- 
 creases (by reason of the advance of prices) with the supply, and 
 that this demand is not unfrequently most pressing when the 
 volume of currency is the largest and inflation lias reached the cul- 
 minating point." This applies to all purely paper and to all mixed 
 currencies. 
 
 The plan of Mr. SHERMAN recognised the truth, that there must 
 be substitution and not contraction, and he proposed, by what seems 
 a most cumbrous plan, the gradual passage of the banks and Trea- 
 sury into a new system. The great objections to it are that, during 
 the long process, it would add to our existing currencies still another 
 measure of values, and the certainty that no such round-about ways 
 are now necessary if we are at specie point. 
 
 If gold is worth more than par, there is no possibility of resump- 
 tion. When it reaches the par of greenbacks it will float in the 
 
.37 
 
 currency, and by so much as it floats supply the demand for money 
 and diminish the premium on greenbacks. 
 
 The true plan for resumption is this : The taking in of the green- 
 backs as gold flows into circulation, substituting coin for paper 
 without contraction or change of values, arresting the process when 
 money rises above seven per cent., resuming it as it becomes cheap, 
 and thus gradually absorbing gold into our circulating medium. 
 When we hold the same amount of coin in proportion to our paper 
 currency that France or Great Britain always hold in proportion to 
 their paper currencies, we may not only declare but maintain a 
 legal resumption. Until then, in spite of all plans, the experience 
 of nations tells us that this result cannot be reached. No nation 
 has yet floated any large amount of paper and kept it on a par 
 with gold, with even an equal amount of coin in its circulating me- 
 dium. 
 
 In the plan proposed, the gradual substitution of coin for cur- 
 rency in our circulating medium, there need be no forced change 
 of values. The country will itself resume and take and use the 
 gold as it appears. It is only needful to guard against the in- 
 flation which even the entry of gold into that medium when it 
 floats at par will cause, by an order of Congress requiring the 
 Secretary of the Treasury to withdraw currency as coin appears. 
 
 That gold will be at par before the meeting of Congress there 
 is little doubt. Indeed, it cannot be otherwise. The time for 
 the withdrawal of the fractional currency has already arrived. 
 Large sums of silver are already refused in exchange for green- 
 backs in this city. 
 
 If Gen. GRANT makes up his mind to recommend to Congress 
 " to fight it out on this line " the line of gradual resumption 
 there is ground for a reasonable hope that specie payment may 
 be fully restored in his term of office. 
 
 He will not surely allow his practical mind to be swayed from 
 its purpose by the loud cries of the inflationists. The traders 
 who move the crops may cry for more currency; the farmers 
 who make the crops, whose crops are moved, demand more value 
 in the currency. The manufacturer may cry for expansion ; the 
 artisan, the workman, demand a better measure of value. The 
 cry for inflation may be the cry of all those who live by the 
 labor of others ; the cry for specie is the cry of the people. 
 They are weary of unsettled prices, and know full well, that 
 often as the load of decline may be shifted, it is upon their 
 shoulders that it must fall at last. 
 
 4 
 
If the President holds firmly to this purpose, and the return to 
 specie payment be the result of the financial policy of his ad- 
 ministration, he will earn and receive the blessing of a grateful 
 people, and add a leaf to the chaplet of his fame which will not 
 pale even beside those which tell of the greatest victories of his 
 triumphal career. 
 
 KNICKERBOCKER. 
 
 NEW-YORK, October 14, 1873. 
 
 Letter No. IX. 
 OUR GOLD RESOURCES. 
 
 THE fall in gold and the probability that the market must still 
 further decline, under the large shipments which have but begun 
 from England to this country, warrant the belief that par will be 
 reached before Congress meets in its ordinary course. For the first 
 time since the disappearance of the precious metals in 1861 it seems 
 possible to begin to restore coin to its proper place in the circulating 
 medium of the country. 
 
 The circulating medium does not now seem to be excessive. We 
 have only to keep it at its present amount, allow values gradually to 
 settle themselves to its measure and take steps to improve the medium 
 itself. To improve the medium it is not necessary either to lessen 
 or to add to it. It must neither be contracted nor expanded. It 
 must be held firmly at the present point, and a gradual substitution 
 of coin for currency be made. As fast as gold appears in circula- 
 tion at par, a permanent place must be made for it in the circulating 
 medium by a retirement of an equal amount of paper. The gauge 
 of this transfer will be the price of money ; when it rises above 
 seven per cent, in the financial centres the process must be stopped ; 
 when it falls below this amount it may be always safely resumed 
 without any change in values. 
 
 The chief element in this process of substitution of coin is the sum 
 of specie now here, or which may be hoped for in the course of the 
 coming year. It is, indeed, a strange anomaly that this country ? 
 the new Eldorado of the world, the great producer of the metals 
 which the universal experience of mankind has chosen as the stand- 
 ard of value, should be the only country where these metals are dis- 
 regarded and cried down as " relics of barbarism unworthy of our 
 age." Yet so long as we make a part of the financial world, we 
 
39 
 
 must, in some form, accommodate ourselves to the standard of value 
 in general use. 
 
 The Treasury Department reported the total amount of gold and 
 silver of domestic production, deposited at the United States Mint 
 and branches, for coinage, from the beginning of the Government 
 to June 30, 1872: 
 
 Gold, $836,205,463 50 
 
 Silver, 23,065,499 24 
 
 Total, $859,270,962 74 
 
 Under ordinary circumstances the mode by which to arrive at an 
 approximate idea of the amount of this product now remaining in 
 the country, would be to deduct from it the total amount reported 
 by the Treasury as exported up to same period. The remainder 
 would stand for the sum of gold now in the country. This process 
 would entirely disregard, on the one hand, the large amounts of 
 coin taken out of the country by private individuals, travelers, &c., 
 of which no exact account can be had ; but, on the other hand, it 
 would also disregard the equally large amount, though in smaller 
 sums, brought into the country by immigrants. A still much larger 
 amount should also be allowed in such estimate for that withdrawn 
 from circulation and used in plate and in the general arts. 
 
 The general estimate of the amount of coin in circulation in 1860 
 was that of $250,000,000. 
 
 The Treasury Department reported the coinage of the mint to the 
 
 30th June : 
 
 Gold. Silver. Total. 
 
 1861, $80,708,400 64 $2,883,706 94 $83,592,107 58 
 
 1862, 61,676,57655 3,231,08151 .... 64,907,65806 
 
 1863, 22,645,729 90 .... 1,564,297 22 .... 24,210,027 12 
 
 1864, 23,982,748 31 .... 850,086 99 .... 24,832,835 30 
 
 1865, 30,685,699 95 950,218 69 31,635,918 64 
 
 Total, $219,699,155 35 .... $9,479,391 35 .... $229,178,546 70 
 
 On the other hand, the Treasury Department reported the amount 
 of exports and imports of gold and silver to 30th June : 
 
 Export*. Importt. 
 
 1861, $29,791,080 .... $46,339,611 
 
 1862, 36,886,956 .... 16,415,052 
 
 1863, 64,156,611 .... 9,584,105 
 
 1864, 105,244,350 .... 13,115,612 
 
 1865, 67,643,226 .... 9,810,072 
 
 Total, $303,722,223 .... $95,264,452 
 
40 
 
 Showing an excess of exports over imports of $208,460,771 from 
 1860 to 1865. If we then take the estimated amount of coin in the 
 country, 
 
 In 1860, say $250,000,000 
 
 Add coinage from 1860 to 1865, 229,178,546 
 
 Total, $479,178,546 
 
 And deduct the excess of exports, 208,460,771 
 
 There remains as amount of coin in 1865, $270,717,775 
 
 Under ordinary conditions this would be a fair statement of the 
 then existing amount of specie in the country. Unfortunately for 
 any thing like even comparative nearness of estimate, there enters 
 into it the disturbing element of war. How is it possible to esti- 
 mate the amounts of coin which were hoarded in the South during 
 the war? How much coin found its way to the South and passed 
 out of the country through its ports and overland by Mexico ? 
 
 Still, as the subject is examined, the conviction inevitably results 
 that the amount of coin in private hands in the country is greatly 
 under estimated. 
 
 Those who refuse to accept the deductions from positive premises, 
 must show the falseness of the premises before they attack the con- 
 clusion which depends on them. 
 
 Resuming then the foregoing calculation, the sum of $270,000,000 
 is the starting point for the sum of specie in the country 30th of 
 June, 1865. 
 
 We will now resume the Treasury tables since that date. 
 
 The coinage of the Mint waa as follows : 
 
 Gold. Silver. Total. 
 
 1866, $37,429,430 46 . . $1,596,646 58 . . $39,026,077 04 
 
 1867, 39,838,878 82 . . 1,562,694 18 . . 41,401,573 00 
 
 1868, 24,141,235 06 . . 1,592,986 48 . . 25,734,221 54 
 
 1869, 32,027,966 03 . . 1,574,937 17 . . 33,602,903 20 
 
 1870, 30,103,364 75 . . 2,670,054 16 . . 32,773,418 91 
 
 1871, 34,403,564 42 . . 5,500,085 38 . . 39,903,649 80 
 
 1872, 36,193,18773 .. 13,421,77937 .. 49,614,96710 
 
 Total, $234,137,627 27 . . $27,919,183 32 . . $262,056,810 5& 
 
 
 
 The amount of exports and imports of gold and silver for the 
 same period was : 
 
41 
 
 Exports. Imports. 
 
 1866, $86,044,071 .... $10,700,092 
 
 1867, 60,868,372 .... 22,070,475 
 
 1868, 93,784,102 14,188,368 
 
 1869, 57,138,380 19,807,876 
 
 1870, 58,155,666 .... 26,419,179 
 
 1871, 98,441,988 21,270,024 
 
 1872, 79,877,534 13,743,689 
 
 Total, $534,310,113 .... $128,199,703 
 
 Showing an excess of exports over imports of $406,110,410. 
 If we then take the estimated amount of coin in the country : 
 
 In 1865, say $270,000,000 
 
 Add coinage, 1865 to 1872, 262,056,810 
 
 Total, $532,056,810 
 
 And deduct the excess of exports, 1865 to 1872, 406,110,410 
 
 There remains an amount of coin in 1872, $125,946,400 
 
 Now, on the 30th June, 1872, the Treasury and banks held a sum 
 exceeding one hundred millions. A careful review of this subject 
 leads inevitably to the conclusion, that sufficient account has never 
 been taken in this country of the sums of coin in private hoard. 
 
 In the preceding no consideration has been given to the sums 
 of bullion which, passing through private assay, are not included 
 in the tables of the Treasury Department. 
 
 What are the present coin resources independent of this apparent 
 large private hoard, which, being a sum uncertain, indefinite, and 
 not to be proven, must be left out of the calculation ? 
 
 The report of the Treasury for the 1st October, 1873, stated the 
 amount of coin in the Treasury at $80,246,757 54. The national 
 banks held, at the last September showing, $18,844,600, of which, 
 perhaps, (not represented by the Treasury in its gold certificates,) 
 say $10,000,000. There is estimated to be in outside holding, say 
 $40,000,000; total sum, say $130,000,000. There is on the way 
 from Europe, or lately arrived, $10,000,000 ; allowing for further 
 receipts from Europe of $10,000,000, we have in all a grand total of 
 coin of $150,000,000, upon which it is safe to calculate before the 
 1st January, 1873. 
 
 Is this not a safe basis upon which to commence the substitution 
 of coin for greenbacks ? 
 
 For a legal resumption by the Treasury before that period, or at 
 that period, certainly not ; but with the certainty that we shall have 
 
42 
 
 this amount of coin, there seems to be no reason why a substitution 
 of coin for greenbacks in the circulating medium may not be under- 
 taken so soon as gold falls to par. 
 
 For the year 1874 we may safely rely on some addition to our 
 coin from Europe, surely enough with our own productions to make 
 up the sum of $50,000,000 more. Why may we not take a large 
 part of this sum also into our circulating medium ? 
 
 What need be feared ? It is shown that in the years from 1866 
 to 1872 the Mint has received and coined two hundred and sixty 
 millions of dollars ; that in that same period we have been able to 
 export four hundred millions of the precious metals. What need 
 be feared ? 
 
 So long as we were running on upon inflated values, to which no 
 check had been given by an arrest of confidence in an exorbitant 
 system of credit, based on a paper system, there was no chance of 
 any plans of even gradual resumption by a substitution of coin for 
 paper. But now that it has been found that there is a day of judg- 
 ment and settlement for transactions in paper as well as for trans- 
 actions in gold, it cannot be denied that if it be now possible to 
 return to a gold basis the trial is worth making. 
 
 In the foregoing statements, based upon the latest figures of the 
 Treasury Department, the history of this last year's transactions 
 has been disregarded. It has already been shown that our ship- 
 ments of coin have largely fallen off to an extent since the 1st 
 January up to the 1st October, 1873, as against those of 1872, of 
 $17,000,000, and against 1873 of $28,000,000. Our imports had 
 diminished in the same period $27,000,000. No one who has 
 watched the movement of trade during the present month has 
 failed to notice the enormous increase in our exports. They are 
 already at this date $53,000,000 in excess of those of 1872, for same 
 period. It is too early to take note of the decrease in imports. 
 The effect of the panic had hardly been felt at the date of the last 
 official statement ; but it is not unsafe to say that fully one-half of 
 the orders for imports of foreign goods have to-day been canceled. 
 The importer would be wild indeed who, in the face of our recent 
 stringency in money, shrinkage in prices, and uncertainty as to the 
 future of the market here, would leave orders outstanding that 
 could be canceled. While unfortunately, therefore, there still exists 
 great difficulty in the movement of produce, and our crops may yet 
 wait before reaching the hungry markets which await them, it is 
 nevertheless sure that every bushel of wheat on which Europe de- 
 pends for subsistence, and every bale of cotton which is necessary 
 
43 
 
 to enable her working men to earn the means of subsistence, will 
 sooner or later be taken from us and paid for in coin. Only let us 
 wisely seize the opportune moment to deny ourselves that which 
 we may very well do without for a time at least, and while sending 
 to Europe that which she must have for life's sake, restore that pre- 
 ponderance which the food-producing nations can always maintain 
 over the food-purchasing nations in the trade of the world. 
 
 Only to this end let us no longer delude ourselves with the idea 
 that paper is money, or exchangeable otherwise than as the repre- 
 sentative of value. That representative of value, like all others, 
 must be measured by the inevitable standard of value, so long as 
 we find it necessary or profitable to trade with foreign nations. 
 
 It cannot be believed, that when our people look upon the vast 
 resources of this country, its enormous product of the precious met- 
 als, that it will consent to part with them with such indifference. 
 How strange the spectacle, that the country can witness an export 
 of fifty or sixty millions a year of gold and silver with indiffer- 
 ence, and yet hail with such joy as it has shown the return of ten 
 millions. The measure of our prodigality is full. Let us now take 
 pride in showing the world that a country, which in eight years 
 has redeemed six hundred millions of its national debt, while ex- 
 porting four hundred millions of coin, can now, without other effort 
 than its own powers of production and economy, and by a simple and 
 natural process, return to specie payment, and enter once more into 
 the great family of financial nations. 
 
 Then we may indeed feel that we were not wrong in the judg- 
 ment so often set forth during the great rebellion, that the supreme 
 effort to maintain the unity of the country was not only in our 
 physical power, but wholly within our money resources. 
 
 KNICKERBOCKER. 
 
 NEW- YORK, October 17, 1873. 
 
 Letter No. X. 
 WHAT SHALL WE DO WITH IT? 
 
 SPECIE in coin and bullion is rapidly flowing in upon us, and 
 there is no reason to believe that this natural course will be stopped 
 for a long period. We may look for many millions more before 
 there be even a lull in the movement. England has not yet bought 
 
44 
 
 any considerable part of the grain and cotton which are absolutely 
 needful to her, and so long as she continues her purchases she must 
 pay us in hard cash. So great is the want, and so large the compe- 
 tition for its supply, that even the steamers are called upon to the 
 utmost of their freight capacity. Those of the English, French and 
 German lines went out on Saturday heavily laden, and those for the 
 present week have full cargoes engaged. The small demand for 
 bills adds value to every moment that can be saved in getting the 
 coin returns for this export. 
 
 The Bank of England has raised its rate of interest to seven per 
 cent., but that is no proof of any unwillingness on her part to send 
 coin to the United States, but only of her intention to keep up her 
 own strength under the withdrawal of coin for shipment. The 
 raising of the rate of interest serves the double purpose of check- 
 ing trade and of attracting money to the bank vaults. Just so 
 soon as the transfer of money from the other financial centres of 
 Europe Paris, Frankfort, Vienna, Amsterdam becomes profita- 
 ble, coin will flow from them to England, to take advantage of the 
 advanced premium. 
 
 Were this not the case, the elasticity of the circulating medium 
 of England itself would be fully equal to the strain upon it. It 
 would be strange, indeed, if this wealthy nation, which has taken 
 the greater part of the large sums of specie shipped by us during 
 past years, cannot now spare us even a small per centage of that sum 
 without general distress. 
 
 The returns of the Treasury Department published Saturday last, 
 give the net amount of specie exported during the fiscal year end- 
 ing June 30, 1873, as $63,127,637; bringing up the net outgo of 
 specie since the close of the war, i. e., from July, 1866, to July, 
 1873, to $469,238,047. 
 
 So far from the Bank of England looking with regret upon the 
 return of specie to this country, there is every reason to believe that 
 the directors of this institution would be the first to hail with joy 
 the resumption of specie payment by the United States. Much in- 
 terested as the foreign bankers and gold brokers may be in the fluc- 
 tuation of values which give them such chances of rapid and large 
 profits, the great banks themselves know well that their true inter- 
 est is in steady markets and even money rates. 
 
 Surely it cannot be for their interest that the United States should 
 remain shut out from the family of specie-paying nations one day 
 longer than can be avoided. 
 
 The Saturday Review^ in its number of October 4, clearly hints 
 
45 
 
 at this feeling in saying : " The causes of the money difficulties are 
 clearly understood in England, and it will be a matter for regret if 
 the Government of the United States has resorted to any empirical 
 attempt to relieve the pressure. But for the existence of an in- 
 convertible paper currency, the arrival of gold from Europe would 
 probably soon have enabled the banks to meet their liabilities." 
 
 The view taken by one of your neighbors of Printing-House 
 Square in saying that the shipment of a few more millions of gold 
 from England to the United States is " certain to be disastrous to 
 both countries," is not a correct view, and the result will so prove. 
 
 There is little doubt that but for the unwise and persistent policy 
 of the Treasury Department in upholding the gold market, specie 
 would be now floating in the country on a par with 'greenbacks, and 
 the much-talked of " redeemability and convertibility" be to-day a 
 practical fact. 
 
 A simple comparison of the Treasury balances, at the beginning 
 and at the close of the money panic, will show how far the policy 
 of stopping sales and hoarding receipts has been carried. The 
 Treasurer reported : 
 
 20th September, 
 
 Coin in 
 Treasury. 
 
 $83623,595 
 
 OuManding 
 Certificates. 
 
 $36,194,700 
 
 Belonging 
 to United States. 
 
 $47,428,895 
 
 11th October, 
 
 82099582 
 
 31,213,400 
 
 50,886,182 
 
 
 
 
 
 Decrease, $1,524,013 $4,981,300 
 
 Increase $3,457,287 
 
 Showing that while holders of certificates withdrew coin to the 
 amount of five millions, the Treasury increased the amount at its 
 own disposal by the sum of three and a half millions in the same 
 period. 
 
 From these figures it may be seen how much the policy of the 
 Secretary has contributed to hold up the price of gold. No one 
 with any knowledge of the gold market, or who has watched its 
 course, believes that there was any such amount as five millions on 
 the market until the arrivals from Europe. Yet, under the stop- 
 page of the sales of the Treasury and a determined effort on the 
 part of the gold brokers to force up the price, it rose from 112 to 
 115, to fall as rapidly to 108. The course is now downward, in 
 spite of slight fluctuations depending on the bankers' movement 
 from day to day. Meanwhile large amounts must soon come on 
 the market ; the assay office and mints are turning out the sums 
 left with them for stamp and coinage ; there are at least ten mil- 
 lions more afloat on the way from Europe, and new shipments 
 
46 
 
 are daily announced. To add to this the Treasury itself must put 
 out $13,500,000 on the 1st November in payment of interest, and 
 some of the States pay out considerable sums, estimated in all 
 to amount to $2,000,000. Here is a sum of thirty to thirty-five mil- 
 lions which will be afloat on the 1st of next month, not fifteen days 
 distant. 
 
 Nor is this the end of the movement. There is much talk about 
 the terrible effect abroad of our taking back a few crumbs of that 
 rich store which we have been sending to Europe of late years, and 
 threats of a return of Government bonds to turn the trade balance ; 
 but as the threats do not come from those who hold Government 
 bonds, they may be disregarded. There is no greater error than to 
 treat the money capitalists of Europe as a unit, either in interest or 
 in action. Just as with us there was small desire to sell Govern- 
 ment securities during the panic, just so in Europe the holders of 
 our bonds are, in the general, those who have no interest in 
 ordinary trade. The bonds were bought and are held for invest- 
 ment. The rise and fall in price does not affect the holder so long 
 as he be sure of his interest, and this he will not fail to be if we do 
 not tamper with the Government credit, by breaking faith as to the 
 collection of even a part of the Customs in other than coin. 
 
 The recent slight rise here in the price of gold of the early days 
 of last week, was based on an idle rumor that one of the large foreign 
 houses had sold one million of Government bonds. The truth was 
 only half stated. The million of bonds were sold here, but the for- 
 eign branch of the house repurchased the same day abroad, and the 
 bankers here were in funds to take a million of dollars of produce 
 bills at the low rates then ruling. 
 
 There need be no fear of any return of Government securities 
 from Europe, that is certain. The holders of rail-road securities are 
 of a different order ; but there is little to tempt any sale of this class 
 of securities in the present depressed state of the market. 
 
 There is, then, no doubt but that the sum of specie coming to us 
 is very large. What shall we do with it f It is clear enough what 
 the people intend to do with it ; they intend to resume, and to pay 
 it out just so far as it will go. 
 
 It only remains for Congress to provide for it a permanent 
 resting-place in the circulating medium, and it will remain with us, 
 If, on the contrary, currency is not withdrawn as gold appears, the 
 gold itself, added to that circulating medium, will cause another in- 
 flation, expand bank discounts, provoke importation, turn the 
 
47 
 
 balance of trade against us, and again drive out coin from, the 
 country. 
 
 When will our financiers see the truth which France has always 
 recognised, that the true flexibility of a circulating medium should 
 be in coin and not in paper ; that it is a profound error to meet 
 financial disaster with paper plasters ; that when general distrust is 
 produced by over-trading there is no way to avoid liquidation, and 
 that it is more just and fair that the suffering and loss which is 
 caused by that liquidation should fall by contraction on the 
 shoulders of those to which it belongs, than by expansion be shifted 
 to other and innocent shoulders ? 
 
 The truth is, very little legislation is necessary. Let us have a 
 respite for the present from any new plans of finance. If Congress 
 will provide a place in the circulating medium for the coin we are 
 sure to have at the time of its session, it need go no further. This 
 place should be made in the first instance by the withdrawal of 
 greenbacks. The Secretary should be ordered to take them in as 
 fast as coin arrives to take their place, and the condition of the 
 money market permits. Gold cannot again rise above par if the 
 circulating medium be kept at its present point seven hundred 
 millions the sum now generally allowed to be not in excess of the 
 needs of the country. The dearness of money would keep it in cir- 
 culation, and the price of money be the gauge by which the Secre- 
 tary could measure the time and amount of withdrawal. 
 
 The balance of trade would not be turned against us, because the 
 banks, forced to prepare themselves for the day when the Treasury 
 itself would resume, would so stop discounts as to check imports. 
 It is a source of regret that this withdrawal of currency should 
 not be of the national bank notes ; but a moment's reflection will 
 show how cumbrous such a withdrawal would be, and how impos- 
 sible to distribute the gradual reduction equally among the banks. 
 There is no doubt that the people have lost their confidence in the 
 national bank issues and prefer the greenbacks. Yet it would be 
 unjust, after the recent suffering of the banks, to inflict on them the 
 further loss which such a measure would involve. 
 
 It will be a simple measure when a large part of the greenback 
 issue has been taken in, and the remainder made convertible into 
 coin at the Sub-Treasuries, to call in the whole bank circulation, 
 and pay off the United States bonds on which it is based by a new 
 issue of the convertible greenbacks. 
 
 It is needless here to notice the effect that such a withdrawal of 
 bonds would have upon our national credit, There would be a 
 
48 
 
 saving of fifteen to twenty millions a year in interest, and the debt 
 itself would be not much in excess of fifteen hundred millions a sum 
 which would be held beyond the contingencies of money markets, 
 and eagerly sought for permanent holding both at home and 
 abroad. Our circulating medium, consisting of seven hundred mil- 
 lions, half greenbacks and half coin, would unite the best qualities of 
 the famed systems of France and England an amount of coin, as in 
 France, as large or larger than the issue of paper an issue of paper, 
 as in England, so limited that it cannot fall below the par of coin ; 
 in addition, the American principle of a reserve in coin in the Trea- 
 sury equal to twenty or twenty-five per cent, of the greenback issue. 
 
 The product of coin in the country would yearly supply quite as 
 much additional circulating medium as the country would require, 
 and render it yearly better and stronger. We have contributed 
 since the beginning of the Government more than nine hundred mil- 
 lions of specie to the store of the world. We have drained ourselves 
 of it much further than it was safe to do. Now that, in the order 
 of nature, we have for the first time a chance to control its course, 
 let us not hesitate to grasp it. Let us henceforth keep our own 
 precious metals, at least our full share of them. Now is our hour. 
 Neglect it and to-morrow it may be too late. Can there be a doubt 
 as to what our choice will be as to the specie as to what we shall 
 do with it ? The country will soon ask that question, and its an- 
 swer will be, We shall keep it. 
 
 KNICKERBOCKER. 
 
 NEW-YORK, October 20, 1873. 
 
 Letter No, XI. 
 FLEXIBILITY IN THE CURRENCY. 
 
 IMMEDIATELY upon the opening of Congress there will be laid 
 before it several schemes of finance, each proposing to remedy 
 present distress and to provide against like disasters in the future. 
 
 Of these the best known are that of Mr. Senator SHERMAN, 
 proposed in July, 1868, and January, 1869, for the issue of con- 
 vertible notes by the United States Treasury to banks upon the 
 deposit of Government bonds, and that for a new Bank Law } 
 brought forward by Mr. FREEMAN CLARKE, late Comptroller of the 
 Currency, in January, 1872. 
 
49 
 
 The main features of each of these is to provide flexibility in the 
 currency. The need of some sort of flexibility has been clearly 
 shown in the late crisis, the circulating medium being limited by 
 law to a fixed sum. When, from distrust or other causes, this fixed 
 sum proved insufficient, there was no relief the viciousness of our 
 system of paper money being an absolute bar to any aid from other 
 nations, or to any relief from the money store of the worldother- 
 wise the gold arriving would have already provided relief. It must 
 not be supposed that the gold now flowing in upon us comes to us 
 because of the distress in our money market. It is not to us a part 
 of the floating capital of the world, seeking employment where it 
 is to be had to best advantage, but a mere commodity sent here to 
 be bartered for such other commodities, grain and cotton, as we 
 have in abundance and other nations greatly need. Had there 
 been no crisis, the flow of gold would have taken place, though, 
 perhaps, it would not have lasted so long as is now probable. 
 
 There is, it is true, a sum of forty-four millions in the Treasury of 
 the United States, the remainder of the sum by which Mr. Secretary 
 McCuLLOCH contracted the legal tender issues under the act of 
 April, 1866, and which has been again, as during the summer of 
 that memorable year 1867, the bone of financial contention. The 
 importance of the controversy, except as it regards the interpre- 
 tation of the law, has been greatly overrated. The issue of this 
 sum of forty-four millions would afford no such relief as has been 
 claimed for it. It would have been, after all, but an addition of six 
 per cent, to the circulating medium of the country, which now ex- 
 ceeds seven hundred millions. A considerable part is needed by the 
 banks to bring up their reserves to the legal point. It must not be 
 forgotten that this reserved currency is of the legal tender issue, 
 and therefore would have been taken up and hoarded in the same 
 way as the rest of that circulation has been. The withdrawal in 
 currency not being of the bank note issues, but of the greenback 
 issues, to which legislation has given exceptional value, this reserve 
 would add but little flexibility, even if issued, and when once issued 
 would never return to its original place as reserve, but be absorbed 
 in the medium which it would itself have inflated. Only a direct 
 contraction would restore it to the Government for similar use in 
 similar emergency, and we know what Congress thinks of con- 
 traction. As Mr. BOUTWELL naively remarked in his address of 
 Tuesday evening, " It is much easier for a Government to extend 
 the volume of currency than it is to reduce it." Yet to issue that 
 reserve to-day, when the market is recovering from the pressure, 
 
50 
 
 would be to inflate values and retard the near approach of specie re- 
 sumption. The theory of Mr. Secretary RICHARDSON is the true one. 
 If the forty-four millions be used at all, it must be for Government 
 purposes, and to provide for unforeseen contingencies in Govern- 
 ment finances. And this should be settled, beyond a doubt, as early 
 as possible by an order of Congress. 
 
 To return to the plan proposed by Mr. SHERMAN. In his speech 
 in the Senate, Jan. 27, 1869, he laid down as the requisites of a good 
 currency : 
 
 " 1. That it be a paper currency. 2. That it be amply secured, 
 either by the credit of a nation or by unquestioned collaterals. 
 3. That, except in extreme cases of panic, it be convertible into 
 coin. 4. That provision be made for a suspension of the right to 
 demand coin during such panics." 
 
 The objections to this plan are obvious. What is a panic? 
 When does it begin and when does it end ? If the crisis of 17th 
 to 20th September had closed on the latter day, (Saturday,) would it 
 or would it not have constituted a panic within Mr. SHERMAN'S 
 meaning ? Probably not. Yet had the relief by the issue of cur- 
 rency in purchase of bonds by the Treasury been given on Friday, 
 instead of Saturday, the stoppage of the Union Trust Company 
 would have been, perhaps, avoided, and the panic have ceased, or, 
 at least, its violence have been checked. Liquidation would, 
 however, have gone on ; when once begun, it seldom stops before it 
 is thoroughly ended. The public like, now and then, to take sound- 
 ings even in the wildest expansions, and when they begin they do 
 not stop sounding until they touch the bottom. 
 
 But the difficulty is not only to determine what a panic is, but 
 when it exists. Who is to have this enormous power conferred 
 upon him ? Surely, the Secretary of the Treasury is not to be sole 
 judge of such a grave matter, and if not lie, who then ? The banks 
 cannot be allowed a part in such judgment, for then the disease 
 might become chronic, and a state of panic become their normal 
 condition. These are fatal objections. Mr. SHERMAN'S plan of an 
 interchangeability of notes and Government bonds would not pro- 
 vide such flexibility as is desired ; he himself proposed a maximum 
 to such issue and thus put a limit to its flexibility. Desirable as 
 some features of his further plan of an issue of small gold notes 
 may have appeared in 1869, when the approach to a specie level 
 seemed so long and so beset with danger, they cannot now be so re- 
 garded, when, under judicious management and by simple process, 
 
51 
 
 general resumption may be gradually attained without their 
 adoption. 
 
 The second plan, that of Mr. FREEMAN CLARKE, for a new bank- 
 ing law, allows to any bank the issue of as much circulation as it 
 may choose to put out upon proper security ; provides for a general 
 agency where such notes shall be redeemed in legal tenders, and 
 finally requires that the Government shall hold a reserve of 100 mil- 
 lions in coin for the redemption of its own notes. 
 
 This plan has greater flexibility than that of Mr. SHERMAN, but 
 is all the more dangerous on that account. And it would be found 
 in practice that the notes would be all travelling toward the 
 agency for redemption just when they would be most wanted. 
 Such was the case in 1857, when the action of the interior banks 
 forced the suspension of the city banks after all need for such sus- 
 pension had already passed. Nor does this scheme provide for any 
 increase in the amount of coin in the country, and there is no 
 safety* in any plan which is not based on the ratio of coin in the 
 country to the amount of the circulating medium. If there be no use 
 provided for coin, it will not remain with us, but follow the same 
 course it has taken of late years. The country will be in a con- 
 tinual state of paper inflation, and at another time of distrust, the 
 issues of the banks certainly, and perhaps those of the Government, 
 will be discredited. The present system is quite as good as this ; 
 and if to-day the Treasury held one hundred millions of coin and re- 
 deemed its issues, would work quite as well at least until the 
 exchanges again turned against us, when it is certain that with the 
 limited supply of coin in use, it would find itself compelled to close 
 its doors. The Treasury of the United States has no power of 
 expansion or contraction. It cannot raise the price of money and 
 attract it to its vaults, as the Bank of England does in times of 
 pressure. Yet it would have to maintain at par an issue of 350 
 millions of dollars, (or 400 millions, if the reserve can be legally 
 used,) on a coin basis of 100 millions. The Bank of England, on the 
 24th September, before the pressure for money had begun, held 
 21,632,321 in coin and bullion to an active note circulation of 
 26,678,140, or, say, of 110 millions dollars coin to 135 millions cir- 
 culation ; and this with the great money marts of Europe at her 
 very door. Yet it is proposed that our treasury with the same re- 
 serve shall float three times the amount of paper that the Bank of 
 England keeps out when her issues are the largest. 
 
 The position of France may be referred to, but gives no ground 
 for comparison. There is only one paper circulation in France 
 
52 
 
 that of the Bank of France and since the war its notes have 
 not been convertible into coin. Yet in spite of her disasters, the 
 whole issue of notes did not exceed, on the 2d of October, 2,947,323 
 francs, equal to, say, 590 millions dollars, while it held in cash and 
 ingots the sum of 717,338,720 francs, or, say, 140 millions dollars. 
 Gold is still at a premium great enough to keep it from general cir- 
 culation, and will so continue until some withdrawal of paper issues 
 be made. Even the Bank of France, though no longer paying coin, 
 has, by raising the rate of discount, the power to sustain its posi- 
 tion and attract money to its treasury. 
 
 In these systems all inflexibility is in the coin part of the cir- 
 culating medium. The banks strengthen themselves by attracting 
 money. In the FREEMAN CLARKE bill the unfortunate Treasury 
 would be called upon, with a reserve of 100 millions of coin, to sus- 
 tain directly an issue of 350 to 400 millions of paper, and indirectly 
 of just as nfuch more as the banks would find the country willing 
 to take up. Here the flexibility is all on the wrong side. 
 
 There is still another plan proposed, that of a general free bank' 
 ing law, under which any individual may lodge bonds with the 
 Treasury, and receive currency, or return the bonds and get back 
 the currency at will. As the Government debt is gradually re- 
 duced, it would probably be found that the holders of bonds would 
 not be those who would care to make such exchanges, and the 
 scheme would practically defeat itself. This impracticability ren- 
 ders any further discussion of this scheme unnecessary. 
 
 If it were otherwise, there seems to be no reason why the Treas- 
 ury Department should be turned into such a national pawnbroker's 
 shop as this would make of it where any one who wanted to take 
 advantage of a fall in stocks could borrow money from and pledge 
 his bonds with the United States Treasury. 
 
 Experience has certainly already shown us that United States 
 bonds are the last things which are parted with in times of pressure. 
 There is then no flexibility to be looked for here. Where, then, is true 
 flexibility to be found? Only in the introduction of a large amount 
 of coin into the circulating medium, by the substitution of coin for 
 currency when gold shall be at par. This policy should be pursued 
 until the amounts of gold and paper in circulation are about equal 
 say 350 millions coin and 350 millions paper. This can be reached 
 most easily by withdrawing the greenbacks first. Later, a con- 
 vertible issue of greenbacks may purchase the bonds on which the 
 national notes are based, and replace them on their cancellation. 
 
 All restrictions on banking should be removed. The usury laws 
 
53 
 
 of the several States should be repealed by Congress. If it have 
 not the clear authority under the Constitution, it should seek it by 
 an amendment. Seven per cent, should be fixed as the legal rate 
 where no contracts are made. The banks can be then confined to 
 their legitimate business of deposit and discount, and, relieved from 
 Government interference, transact their business each in its own 
 way. The strong banks need no longer be forced to cast in their 
 lot with the weak in time of trouble, and this premium upon im- 
 prudence be set aside. This would be true free banking. 
 
 The currency will thus be independent of the banks, and no com- 
 bination of circumstances, accidental or designed, can keep it from 
 the people to whom it belongs while the product of our own soil 
 will add as much coin each year to the circulating medium as the 
 increasing business of the country rnay require. This, and the ex- 
 emption of money from the usury restriction, which is, indeed, a 
 " relic of barbarism," will give to the circulating medium the flex- 
 ibility which it needs. 
 
 KNICKERBOCKER. 
 
 NEW-YORK, October 25, 1873. 
 
 Letter No. XII. 
 NOW OR NEVER. 
 
 THE DUTY OF THE GOVEKNMENT AS KEGAKDS KESUMPTION. 
 
 As the hour approaches when, by the law of supply and demand^ 
 the premium upon gold must inevitably fall and finally wholly dis- 
 appear, the power of the country to begin a gradual resumption by 
 the absorption of specie" into the circulating medium, is the main 
 and paramount question. That gold will fall to par before the 
 meeting of Congress, hardly admits of a doubt. During the month 
 of October, the mints received for coinage the sum of ten millions of 
 dollars. There are now about ten millions more on the way from 
 Europe. The Treasury Department must pay out on the 1st Novem- 
 ber the sum of nearly fifteen millions in coin for interest, and on the 
 16th, fifteen millions for the loan of 1862 already called in ; in all, a 
 sum of fifty millions will be by the middle of next month upon the 
 market. The same causes which have drawn to this side of the 
 Atlantic the sum of twenty millions still continue, and show no 
 
 5 
 
54 
 
 sign of early stoppage. The supply, therefore, bids fair to be 
 largely increased, while, on the other hand, there is no reason to 
 look for any demand which can take up such a sum as fifty millions 
 in this space of time. The bankers have their hands full in the 
 movement of produce and cotton, and money will surely remain 
 stringent enough to check any considerable speculation in gold, if 
 such a spirit were likely under the prospect of an increasing supply. 
 
 The circulating medium does not seem excessive. All the cur- 
 rency, both of greenback and national bank issues, is fully em- 
 ployed in the crop movement. Money will be in full demand. 
 Now, then, is the moment to prepare to retire a part of the paper 
 issues, as gold appears in circulation, and to make a permanent 
 place for it in our daily uses. Not only does the present seem to be 
 the favorable moment for the beginning of this substitution, but 
 there are grave reasons to believe that if this chance be neglected 
 it may not return to us for a long period of years. 
 
 A view of the amount of gold coin outstanding in the circulating 
 mediums of Europe and America, is here of interest. 
 
 In the supplemental report on international coinage, made to the 
 Department of State on the 8th April, 1870, by Mr. SAMUEL B. 
 RUGGLES, whose authority on this and kindred subjects is beyond 
 question, the following table is given of the amounts of coin in 
 
 the currencies of Europe and America at that date : 
 
 
 
 GOLD COIN OUTSTANDING. 
 
 I. In France, Belgium, Switzerland, and Pontifical States, . , $1,250,000,000 
 
 II. In Austria, Spain, Sweden, Greece and Roumania, 200,000,000 
 
 III. In Germany, (North and South,) Netherlands, Denmark, Nor- 
 way, Portugal, Russia and Turkey, 300,000,000 
 
 IV. In the United Kingdom of Great Britain,. 450,000,000 
 
 V. In the United States of America, 200,000,000 
 
 VI. In Canada, Mexico, Central and South America, 150,000,000 
 
 Total, $2,550,000,000 
 
 There have been some notable changes in this distribution since 
 the date of this report. From one hundred to two hundred millions 
 have passed from France to Germany in payment of the tribute of 
 war, and the United States have lost at least fifty millions of the 
 amount held by it in 1870, as a reference to the tables of production 
 and export of specie will show. 
 
 In the seventeen years ending the 30th June, 1870, the United 
 States had exported over $650,000,000 of gold coin and bullion 
 
55 
 
 beyond the amount imported, and thus provided for one-quarter of 
 the vast sum of European and American coinage. 
 
 The amount of coin in circulation in the United States has been 
 variously estimated at different periods. Mr. JAMES GUTHRIE, Sec- 
 retary of the Treasury, in his report of 1854, gave the following esti- 
 mates : 
 
 1853, gold and silver,. . $204,000,000 
 
 1853, gold and silver, 236,000,000 
 
 1854, gold and silver, 241,000,000 
 
 In the year 1855 there began a great outflow, of the precious 
 metals from the United States. Silver had so risen in value from 
 the Asiatic demand, that the French Government had undertaken 
 to replace the coinage of France, which had been chiefly of sil- 
 ver, with gold. The constant and increasing supplies from Cali- 
 fornia rendered this a favorable moment, and under the process, 
 the balance of trade being against this country, a heavy exportation 
 of coin to Europe commenced, which continued without stop until 
 the Fall of 1860. 
 
 The following tables show this movement : 
 
 Exports and Imports of Gold and Silver, as by the reports of tlie Treasury Depart- 
 ment, to June 30. 
 
 Exports. Imports. 
 
 1855, $59,239,348 $3,659,813 
 
 1856, 45,745,485 .... 4,207,632 
 
 1857, 69,136,922 .... 12,461,799 
 
 1858, 52,703,147 .... 19,274,496 
 
 1859, 63,887,321 .... 7,434,789 
 
 1860, 66,546,239 8,550,135 
 
 Total, $357,258,462 .... $55,588,663 
 
 showing an excess of exports over imports of $301,669,799. 
 
 On the other hand, the amount of production is shown to have 
 been: 
 
 Statement of Gold and Silver of domestic production deposited at the Mint to 
 
 June 30. 
 Gold. Silver. Total. 
 
 1855, .... $6.3,574,032 54 .... $371,336 85 .... $63,945,369 39 
 
 1856, .... 59,608,609 50 .... 294,472 55 .... 59,903,082 05 
 
 1857,.... 23,270,03074 127,25612 .... 23,397,28686 
 
 1858, .... 40,977,168 55 .... 316,472 36 .... 41,293,640 91 
 
 1859, .... 27,213,557 15 .... 273,167 47 .... 27,486,724 62 
 
 1860, .... 18,971,041 75 .... 293,797 05 .... 19,264,838 80 
 
 Total,.. $233,614,44023 $1,676,50240 $235,290,94263 
 
56 
 
 Comparing these amounts, we then find : 
 
 Excess of exports, $301,669,799 
 
 Domestic product, 235,290,942 
 
 Loss of coin 18551860, $66,378,857 
 
 The export movement continued during the Summer of 1860, 
 until the total amount of loss nearly reached one hundred millions 
 of dollars. This heavy drain ceased in October, and soon after the 
 tide turned, and an inflow began to the United States which, with 
 the amount of domestic product, increased the amount in the 
 country by about ninety millions in the year 1860 to 1861. This 
 favorable movement in its turn ceased toward the close of the 
 year. 
 
 There were, again, many wide differences of opinion as to the 
 amount of specie held by the country in the year 1860. In his re- 
 port of 1861, Mr. JAMES POLLOCK, the Director of the Mint at 
 Philadelphia, used,, these words : " From the most reliable data 
 attainable, I estimate the amount of specie in the United States at 
 this date, October, 1861, at from 275 to 300 millions of dollars." 
 If we deduct from this amount the increase of the preceding year, 
 which he himself says " has added about ninety millions to our 
 stock of coin," we arrive at his estimate for 1860 of two hundred 
 and ten millions as the amount of specie in the country. 
 
 Mr. Secretary McCuLLOCH did not rate the amount so high in his 
 report of 1867. He said : "The actual legitimate business of the 
 country is not larger than it was in 1860, when three hundred mil- 
 lions of coin and bank notes was an ample circulating medium." 
 As the bank notes in issue that year reached the sum of two 
 hundred millions, there is room in his estimate for only one hun- 
 dred millions as the stock of specie in the country. 
 
 Senator MORTON, of Indiana, in a speech on the finances in 
 December, 1868, in the Senate, estimated the circulating medium in 
 1860 "at four hundred and fifty millions, of which the entire bank 
 circulation was two hundred and two millions; in vaults of banks, 
 eighty-eight millions of coin, and in the country, outside of banks, 
 one hundred and fifty millions." His estimate of the specie was 
 then for the year 1860, two hundred and forty millions. 
 
 Here, then, we have three estimates for this period : 1st. That of 
 Mr. Secretary McCuLLOCH, of one hundred millions ; 2d. That of 
 Mr. POLLOCK, Mint Director, of two hundred and ten millions ; 
 3d. Of Mr. Senator MORTON, of two hundred and forty millions. 
 
57 
 
 When the amounts of exports, of imports, and of production of 
 gold and silver come to be looked into, it will be found that the 
 enormous exports of specie, from 1861 to 1873, can in no other way 
 be accounted for, except by adopting a starting sum even larger 
 than the estimate of Mr. Senator MOKTON and it will be admitted 
 that two hundred and fifty millions is an inside figure. In this cal- 
 culation the mode of estimate will be that taken by Mr. POLLOCK, 
 viz. : the amount of deposits at the mint of coin and bullion of 
 domestic production, adding thereto the foreign imports and de- 
 ducting the exports. 
 
 The Treasury Department reported the amount of deposits of 
 coin and bullion at the various mints, less the re-deposits, to the 
 30th of June a in the following sums : 
 
 Gold. Silver. Total. 
 
 1861 $69,084,52374 .... $3,062,04747 .... $72,146,57121 
 
 1862, 42,945,659 23 .... 2,477,571 78 .... 45,423,231 01 
 
 1863, 22,153,24455 .... 1,548,59276 23,701,83731 
 
 1864, 23,078,922 94 .... 933,818 55 .... 24,012,741 49 
 
 1865, 26,979,793 76 .... 1,003,055 33 .... 27,982,849 09 
 
 1 866, 30,188,202 53 .... 1,723,516 71 31,911,719 24 
 
 1867, 32,968,338 20 .... 1,568,710 19 .... 34,537,048 39 
 
 1868, 23,117,766 44 .... 1,473,559 40 .... 24,591,325 84 
 
 1869, 31,178,779 34 .... 1,761,478 66 .... 32,940,258 00 
 
 1870, 27,931,390 99 .... 2,477,397 11 .... 30,408,788 10 
 
 1871, 34,339,784 23 .... 4,797,619 90 .... 39,137,404 13 
 
 1872, 37,811,623 60 8,605,830 24 46,417,453 84 
 
 Total, $401,778,029 55 $31,433,198 10 $433,211,227 65 
 
 On the other hand, the Treasury Department reported the amount 
 
 of exports and imports of gold and silver for same period to 30th 
 June : 
 
 Exports. Imports. 
 
 1861, $29,791,080 .... $46,339,611 
 
 . 1862, 36,886,956 16,415,052 
 
 1863, 64,156,611 ,... 9,584,105 
 
 1864, 105,244,350 .... 13,115,612 
 
 1865, 67,646,226 .... 9,810,072 
 
 1866, 86,044,071 .... 10,700,092 
 
 1867, 60,868,372 .... 22,070,475 
 
 1868, 93,784,102 .... 14,188,368 
 
 1869, 57,138,380 .... 19,807,876 
 
 1870, 58,155,666 .... 26,419,179 
 
 1871, 98,441,988 .... 21,270,024 
 
 1872, 79,877,534 .... 13,743,689 
 
 Total, $838,035,336 .... $223,464,155 
 
58 
 Returning now to the estimate named, of the amount of 
 
 Coin in 1860, $250,000,000 
 
 Adding deposits in mint, 1860 to 1872 433,211,227 
 
 And imports of foreign coin, 1860 to 1872, 223,464,155 
 
 Total, ; $906,675,383 
 
 And deducting exports of coin and bullion, 1860 to 1872,. . 838,035,336 
 
 There remained as coin, June 30, 1872, $68,640,046 
 
 Now, as it is known that the amount in the Treasury and "banks 
 at that date exceed one hundred millions, it is clear either that the 
 starting point of 250 millions was too low an estimate of the coin 
 in the country in 1860, or else that the amount of bullion assayed 
 by private, individuals which being taken note of by the Custom 
 House, appears in the export column, while as it did not pass 
 through the mint, it does not appear in the column of domestic pro- 
 duction was sufficient to account for this large difference. The 
 writer published a calculation in his communication of the 17th of 
 October, based upon the tables of the coinage of the country. To this 
 it has been objected that it did not make proper allowance for the 
 amount of imported specie, which, passing through the mint for 
 coinage, thus appeared twice in the estimate. Starting at the point 
 of 250 millions in 1860, the sum of 126 millions was reached as that 
 remaining in the country June 30, 1872. The results of both of 
 these calculations are below any reasonable estimate. 
 
 If we take as the probable stock June 30, 1872,. $150,000,000 
 
 Add estimate of product for 1872-73, 35,000,000 
 
 And imports to June 30, 1873,.. 21,480,937 
 
 Total, $206,480,937 
 
 And deduct exports to June 30, 1873, 84,608,574 
 
 There remained in stock June 30, 1873, $121,872,363 
 
 A sum we again find too small, for on that day the Treasury 
 held eighty-eight millions, and the banks of New- York alone, by 
 their statement of June 28, 1873, twenty-four millions, in all, a sum 
 of one hundred and twelve millions, without any account of the 
 amount on the street or in private hands or held by other banks. 
 
 Another estimate then becomes necessary. The following may 
 be safely taken as the minimum of the stock to-day : 
 
59 
 
 In Treasury, October 1, $80,246,757 
 
 In New- York banks, September 9, as by statement, 14,585,810 
 
 In outside holding, 40,000,000 
 
 Total, $134,832,567 
 
 Received in October, 10,000,000 
 
 Total, $144,832,567 
 
 This is coinage enough to begin the process of substitution with, 
 if by the fall of gold to par it be clearly shown that the circulating 
 medium is not in excess. A few weeks will settle tin's point. If 
 we are not now to make the effort, what probability is there that 
 we shall ever attempt to resume ? 
 
 A reference to the foregoing tables shows, that while from 1861 
 to 1872 the excess of exports over imports of the precious metals 
 reached the sum of $614,571,181, the production in same period only 
 amounted to 8433,211,227. So that we lost not only all of the pro- 
 duct of our mines, but $181,359,954 from our stock. If we add to 
 this the difference between excess of exports of sixty-three millions 
 for the year ending June 30, 1873, over the production of same 
 period, estimated at thirty-five millions say a ^oss of thirty mil- 
 lions the sum total of our loss is carried to the enormous figure of 
 over two hundred and ten millions. Nor need we console ourselves 
 with the thought that we could not help ourselves that the war was 
 the cause of this great loss for, on closer examination, we shall find 
 that from the 3 Oth July, 1860, to the 30th July, 1865, this loss was 
 only $15,193,541, while from 1865 to 1872 it amounted to 
 $166,166,413 ; and if our product did not last year exceed that of 
 1871-72, the loss in the single year 1872-73 will exceed that of the 
 whole war period. Can we quietly sit still and see this draining of 
 our li fe-blood at such terrible rate ? It is not possible. If we do, and 
 our production of the precious metals remain the same as at present, 
 and we continue to lose coin at the rate of the last decade, we shall 
 arrive at the centennial of our independence with the disgraceful re- 
 cord, that since we became a nation we shall have produced and coined 
 to the value of ONE THOUSAND MILLIONS DOLLARS of gold and silver, 
 while the unfortunate Secretary of the Treasury may hardly know 
 whither to turn for a sufficient sum to pay the interest on the Govern- 
 ment debt. When that day comes, the difference will be found out 
 between coin and paper, and the country will learn to its cost that no 
 law will avail to check the rate the European money holder will 
 exact for that which we now let slip from us, with a prodigality for 
 which no equal can be found in the history of the world. A genera- 
 
60 
 
 tion is rapidly coming forward that has never seen or handled the 
 national coin which we yet have been stamping with a dissolving 
 image by the hundred millions. If we hesitate now or falter, our 
 children may go to their graves as ignorant as they have been from 
 their cradle, It is indeed noio or never that this wild folly must be 
 stopped. But we will not hesitate. So soon as the people take note 
 of these stern facts, there will be a movement which will rock the 
 country like an earthquake ; an upheaval of the popular conscience 
 which will unhinge party machinery, tear asunder political ties, ancl 
 threaten the very life of the great organization which now controls 
 the destinies of the Republic. 
 
 The country looks trustfully to the President in this crisis. With 
 his strong common sense, he will sooner or later find the sure road 
 and lead the country in safety, through the perils which threaten it, 
 to the repose for which it yearns. 
 
 He has already entered on the true path in the order to withdraw 
 the fractional currency and replace it with silver. In this trial 
 measure he will find that silver will float in the currency in the 
 precise rate in which paper is withdrawn. As there is an abundance 
 of fractional currency the two cannot float together one must be 
 withdrawn in parf to make room for the other. From the result of 
 this trial the true manner of restoring gold to the currency may be 
 established. There can be no doubt as to what the result will be. 
 By substitution, only, without increasing the circulating medium, 
 can the passage from a paper to a gold basis be effected. 
 
 Let the President take the lead in this, the greatest measure of his 
 administration. Let him remember the pilgrim's parable. Toward 
 the close of Christian's progress it is related " That it was Little 
 Faith that fell into the hands of the rogue Mistrust, and lost the 
 most of his spending money, though he had a little odd money left, 
 but scarce enough to bring him to his journey's end, so that he went 
 with a hungry belly the most part of the rest of the way." It was 
 Hopeful who, taking Christian by the hand, led him through the 
 dangerous slumbers of the Enchanted Ground to the beautiful land 
 of Beulah. 
 
 So may the President, with good courage and self-reliant strength, 
 lead the country through the dangers which beset it, to boundless 
 and sure prosperity. 
 
 KNICKERBOCKER. 
 
 NEW-YORK, October 29th, 1873, 
 
Stockton, Calif. 
 
 T. M. Reg. U.S. Pat. Off. 
 
 YC 24204 
 
 ivJ207701 
 
 SIS 
 
 THE UNIVERSITY OF CALIFORNIA LIBRARY