of the quantity of the currency to the actual requirements of the business of the country. That cause, lack of confidence in the issuer, has not operated since the Government showed that it could maintain itself, and also demonstrated its ability to work in the direction of a redemption of its liabilities. But, sir—and I wish the Senator to mark this—that cause will commence to operate again as soon as the quantity of the currency has increased to such an extent as to render doubtful in public opinion the ability or willingness of the Government, or of the banks, ultimately to redeem their promises.
The second cause, that is to say, the relation the quantity of currency bears to the actual requirements of the business of the country, will operate as soon as the quantity of currency in circulation is in excess of the actual requirements of business, and that effect will grow more extensive as the volume of currency is increased. And here, it seems to me, it matters very little whether the inflation of the currency be that of the legal-tender notes or the national-bank notes, only with this difference, that, as I admit, an inflation of the national-bank notes will be 25 or 15 per cent., respectively, less effective, owing to the amount of greenbacks to be locked up as bank reserves; but either kind of inflation, in my opinion, will run up the general prices of commodities, of gold among others; will stimulate speculation, and speculation will have the same effect that it had before. It will draw the currency away from the channels of legitimate business and concentrate it at the great centers under its own control, thus preparing the way for new collapses and disastrous crises. These breakdowns will be the more disastrous the greater the inflation of the currency has been.
Now, sir, I do not wish to be understood as being absolutely opposed to free banking under any circumstances.
