The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1842-02-24
SENATE COMMITTEE REPORT.
MONDAY, FEBRUARY 81, 1912.
CONCLUDED.

there IS not the possibility OF haZaru 10 INC cohhu-
nity and none TO the Government except IN the Keep
ing of the public money This is risk which must
ALWAYS be incurred on the part OF the Government
Ii is nseparable from any system which can be pro-
posed or adopted. If it be supposed, il has been
BY many, that the public money would be safer in a
Bank of the United States, under the State bank
deposite system, the committee have already shown
that both those modes of keeping utterly out OF
the question They, therefore, adopt at the prlncl-
pal agencies, the only left, namely, the custody
of individuals appointed for the express purpose by
the Government, with as ample suretes and under
such penalties as the law is capable of providing
This system is designed for the collection, safe
keeping, and disbursement OF the public revenues,
and through Its operations TO furnish uniform cur
rency and to equalize exchanges. .
The committee have already shown in what way II
would furnish uniform currency and they have no
doubt that the specie notes which would be put IN
circulation by it. would in amount exceed the clrcu-
lation of the late Bank of the United States The
average circulation of that institution during the eX-
stence of its charter about SlU,UOU,UUU, and It's
average amount of specie hand short of $4,000
COO In years It's specie equalled, IN others er-
ceeded its circulation. And hut for its expansions,
commencing In 1929, and continued to the expiration
of its charter its average circulation would not have
much exceeded its average specie on hand. 1t can
not be doubted, then, that the circulation of the Elk
chequer will equal if not exceed, that of the Bank OF
the United States. And if the Bank of the United
States furnished uniform currency then the Elk
chequer will be capable of doing the same and that,
too without any risk to the community, or hazard to
the credit of the Government.
This, when accomplished, will do much towards
equaizing exchanges. The runous rates of exchange
between remote sections of the country result,
sentally, from the depreciation of the local cur
rency.
If the paper circulation of New York and New
Orleans both of the value of specie and the ba
lance of trade between the two places by Of
the interchange of commodities, were merely nomi-
nal, exchange between those distant points would be
at par But If the balance OF trade were IN favor OF
New York, then a bill drawn at New Orleans on
New York would command premium equal 10
freight, insurance, interest, and other necessary
charges Tor renting specie. But whilst the paper
circulation of New York. by reason of its converti-
bility is of the value of specie, and that of New Or
leans deprecated because of the suspension OF its
banks, bill drawn at the latter place on the former,
and paid for in deprecated paper would command
premium equal to the cost and charges OF renting
specie, added TO the amount OF the depreciation OF
the local paper below the value Of specie. The re-
verse would be the case under these crcums stances,
with bill drawn in New York on New Orleans
No regular business without great sacrifice, sus-
tain itself under such ruinous rate of exchange.
The uniform currency which will be furnished by the
operations of the Exchequer will do much towards
curing this great evil.
But there another feature in this system by which
the exchanges will be perfectly accommodated, namely
the power TO sell and collect exchange. The commit
subject, have consulted some of the ables most prac
tica and ex perenced men and their views
fully confirmed by the information derived from such
high sources. They cannot IN any way well Illus
this brarch OF IT, and Its beneficial effects the
sound local banks together with other advantages, as
by briefly mbodylng the following which have
thus been communicated TO them.
bill drawn by one agency on another, IN any re-
part of the nlted States, will be good spe-
Gle within the commercial sphere of the emporium
pbara Slncat tod IS tn he
made and may generally be negotiated above par by
any holder within that sphere and at rate IN some mea
sure proporoned to his distance from its commercial
centre. If, for instance, merchant In Cincinnati
wishes to remit money to manufacturer in Connec-
ticut bill drawn by the agency Cincinnati, where
the deposlte Is made, on the agency IN New I ork,
would be worth half per cent. more than specie to
the payee.
Exchanges through the agencies will meet all the
exgencies of the markets. 1t not unfrequently hap
pens that New Orleans is indebted to ONO, for agl-
cultural products; Ohio to New York, for manutac-
tured goods, domestic or imported and New YORK to
New Orleans for cotton. Every well-intormed mer-
chant in those several sections will be advised of the
state of the markets A New Orleans merchant
wishes to remit Ohio; he deposites his specie in
the agency at New Orleans and gets the same office
to accept his bill of exchange for ST. 900, payable
to the order of his Ohio correspondent and transmits
it accordingly. This Mill be above par in the Ohio
market because II good remittance for New York,
where bills on New Orleans command premium
1t bought by ohio merchant, who RENTS it to New
York in payment for goods and from New York it
sent to New Orleans to pay for cotton. Upon It's
arrival it is presented the agency where it
copied and the specie is ready for Its re lemp'lon.-
The holder, however, MOI willing to be buldened with
the specie will generally prefer the spece-notes OF the
agency. Thus this 81 900 In specie, after paying
small premium at the agency, will have paid more
than It's amount in two remote markets. sent safe
and convenient currency of 81 900 into the channels
of commerce. and is still at rest sustaining this amount
of circulation.
The use of bills of exchange will not be superseded
by the specie of the Exchequer The former
have always been preferred, and were extensively
used under the national banks when their paper
in sound credit had every advantage which this will
possess, of being made such substitute. This proof
from experience is conclusive. One ground of pre-
ference, which has always been appreciated here and
In Europe is, that bills of exchange more safe
than bank notes, as they ofer no temptation to rob
berry or ENLIGHTENMENT; and several may be sent
of the same tenor and date by different conveyances,
Gin whch no loss will be sustained If any one
arrives in saeiy) the risk may easily be reduced al
most to utter impossbilty. The perfect character
of these bills of exchange, from Their undoubted credit
will generally give them preference over Others
They will never be protested for want OF funds at
any office where they are payable No embarras s.
nent can result from the necessity of transmitting
specie from office office. The occasions very
rsre and if this system in operation would be
still more rare IN which specie needs to be removed
for almost every purpose good paper is Preferred
The paper of one office would generally be good
as specie in most others. If deposlte were made IN
New York to meet draft the office In New Or
leans this latter office would prefer the New ork
paper to CON- In the common state OF exchanges
When the system has been some time in operation,
specie will have found its proper places OF repose, anu
movements of it would seldom be required. Should
an apprehen sioin be entertained that the retirement
of specie the agencies would embarrass the banks
it will be dssipated by little reflection upon the ope
rations already described. Those officers are bound
to deliver the time of deposite amount in paper
equal to the amount received IN specie That paper
will lake the place of the specie which it represents,
and the same portion of it will be deposited by mer-
chants and others who keep their accounts in banking
institutions as of the specie for which ii is substitute