The renewal of the order to the Secretary of the Treasury to re - commence the contraction of the legal tender issues, which had been regularly begun and then was arrested, is the most obvious and, it would seem, the wisest course to adopt. There is no doubt that the paper issues in America are in excess; the premium which gold bears relatively to paper, or, which is the same thing, the discount and depreciation under which the paper dollars suffer, fully establish the fact. The amount of the excess can be discovered only by actual trial. When the contraction is finally decreed, and its execution commenced, the rise in the value of the paper dollar will gradually reveal that the excess has disappeared. It was so in England; and then the important and gratifying fact was disclosed that the day of resumption decreed by the law could be anticipated, and the Bank gave gold for notes long before it was compelled to do so. There is every reason to believe that the process of resumption would run the same course in America. The certainty that the notes must soon march on equal terms with gold, and the steady effects of the continuous contraction, would make men feel in all the markets before the actual day of positive fact arrived, that the paper and the metallic dollar were the same things.
Many apprehend that contraction would create a deficiency of currency to the consequent injury of trade; but this is an entire mistake. If by contraction is meant that there would be too little currency with gold and notes convertible into gold to do the work of cash payments, of carrying out that buying and selling which is effected by ready money, then such contraction would cause inconvenience; but such a state of things could not arise if notes were always to be procured from the issuers subject to the obligation of redemption in specie if demanded. This was before 1844 the state of currency in England; and assuredly no one complained in those times that currency was inconveniently scarce.
Moreover, as I have shown above, a deficiency of a particular tool of exchange is always of slight duration, and is easily remedied in many ways. Smaller cheques would spring up in abundance, banking machinery be more used, and credit, for a while, in small matters enlarged. The greatest inconvenience from such a deficiency to society would be a real scarcity of shillings and pence as occurred occasionally in England; were it to last any time, very small notes would speedily make their appearance. The United States would be protected by their small notes.
The true inconvenience resulting from contraction lies in a totally different region, and would undoubtedly be real, and must be fairly admitted. We have seen that an inconvertible paper currency leads to a rise of general prices in all markets. The notes are worth less than metallic dollars, they are depreciated; every seller in every store is obliged to demand more of them for the same goods, in order to obtain in the paper money the full value of the things he sells. Under contraction the difference between gold and paper would lessen and ultimately disappear; and along with this movement there would be another by its side in prices which would gradually become less. The effect of this process on debtors and creditors would be real. Every debtor who owed paper dollars would find, as contraction went on, that to procure these notes he must give a larger quantity of his property. He is pledged to pay so many dollars; but as the dollars grew in value, the prices of his goods would be lower, because each single dollar was worth more, and to procure the dollars necessary to discharge his debt, he cannot acquire them except at a larger cost of property given for them. Thus, as the paper dollar advances to par with gold, the debtor whose debt is of long standing necessarily loses. But equally did the creditors lose as inflation went on; they successively received dollars which bought less and less as prices advanced in the stores. This inevitable loss to debtors and creditors in turn is the curse of inconvertible currency, and for that very reason it is that steadiness of value is the first quality of a good currency. The loss which resumption will bring to some debtors is to be regretted, but it cannot in any way be pleaded as a ground for persevering in inconvertible notes and rejecting specie payments. In the first place, this loss will go on, and does go on now, incessantly, and the premium on gold varies constantly from time to time; it has varied from upwards of 133 to 10, between 1865 and 1871 - and all these movements up and down have injured debtors or creditors. This fact alone suffices to repel the objection that contraction and resumption will injure debtors. But secondly, with a period so distant as 1879, most old debts will have been cleared off, and all new ones be made more and more on the basis of a dollar of gold. The ultimate remainder of old debts, formed under a great difference between paper and gold, would be insignificant.
But even were it not so, and that a serious loss must fall on debtors, the plea that this loss ought to bar the resumption of specie payment would deserve no consideration whatever. It proves too much, and that fault in logic renders every argument worthless. It would land mankind in a practical absurdity of the highest order. To demand that bad legislation shall be persevered in because the return to good legislation would involve suffering to some, or even to all, would sentence society to moral petrifaction. Progress would be impossible, for the mode of existence of man would have been surrendered to a past generation which had made bad laws that could not be altered. Men, whether as collected in nations or as individuals; cannot do wrong without suffering, and that suffering must be endured, if the wrong is to be made to cease. It is pure irrationality, and never is or could be endured in practice, that a nation cannot put away evil because some pain must be incurred in the act. How many keepers of hotels and owners of coaches were deeply injured in England by the introduction of railways? How many in the United States by the abolition of slavery? The loss which a few debtors would suffer by resumption cannot be taken into the least account against the abolition of so bad and loss-inflicting an institution as an inconvertible paper currency. Whether that loss could be mitigated by some arrangements in the carrying out of resumption is a totally different matter, and one quite deserving of consideration; but I confess I have seen no suggestion respecting it which seems practicable, and I am not aware that any country, on its return back to metallic currency, adopted any process of this nature.