Contemporary Literature [pp. 362-378]

1876.] CONTEMPORARY LITERATURE. 377
water in cities, if such an objections were admitted to be valid. Besides, the
ereditor class, including the widows and orphans, the aged and infirm have
already suffered their losses in the inroads which the legal tender act made
upon the pittance accumulated for their support.
But we take occasion here to say, that even Prof. Price and other advocates
of resumption, seem to us to over-rate the amount of contracti~n which must
precede specie payments, when they say that the excess of present currency
is measured by the premium on gold, and that it must, therefore, 1?e contracted in this ratio. We doubt it. We think the gold premium represents,
in part, the discount on our currency, arising from the uncertainty as to its
redemption, or time of redemption. We believe that, without any contraction, were it fully and universally believed that our paper dollar would be
equal to gold as early as the year 1879, the gold premium would at once be~in to go down.
Hon. E. G. Spaulding, of Buffalo, N. Y., Chairman of the Sub-Committee of Congress which framed and urged the adoption of the legal-tender
act, in which originated our present inconvertible currency, has published
a very useful volume, entitled Financial History of the War. It is replete
with valuable infon~ation for all who may have any responsibility for the
future legislation of Congress on the currency. He vindicates, as we think,
unanswerably, the necessity of the legal-tender act when it was passed.
And, in our judgment, he shows no less conclusively, that the financial necessity out of which the legal-tender act arose, and the difficulties to which it
led, were greatly aggravated by one great blunder of the financial secretary
which preceded it, and another which followed it. The first of these was the
act of Mr. Cbase, in insisting that the great $i 50,000,000 loan, made by the
banks of tho country to the government after the Bull Run disaster, should
be drawn from them in coin, in conformity to old sub-treasury traditions,
instead of taking it in the usual fi~rm of bills, drafts, and notes, and such
small portions of coin as might prove necessary, according to tbe customs of
all nations, in which credit forms a large part of the machinery of business.
The effect of this was needlessly to break not only the banks, but the national
treasury itsdf, which could not, in the nature of things, be stronger than the
sources of its supplies. This made the legal-tender act a necessity. But fby
~his the war could have been prosecuted much longer, perhaps to the end,
upon the simple treasury notes of the government, made fundable into its
gold loans, without this legal tender element.
The next blunder was near the close of the war, depriving these legal-ten
ders of the fundable quality, which was originally given them, and certified
upon the back of each. Had this been continued, even at a reduced rate of
interest, as good faith required, the whole currency question would have
taken care of itself. The necessary contraction would have gone on spontaneously, and they would long since have reached the coin standard. A similar
act now making them convertible into a four, or four and a half per cent.
stock, gold bond of long standing, and free of taxation, if only gradual in its
operation, would soon solve the whole question of return to a coin standard,
by making it a reality.