The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1842-03-08
THE EXCHANGE FEATURE.

we are surprised 10 learn tnal some pOuti-
clans who IRE, on the whole, friendly to the Elk
chequer scheme entertain scruples with refe-
renee to the Exchange feature as being open 10
abuse, in the form Of what is sometimes called
kite flying Let US look at the subject, for a
moment, and see whether ii be in fact justly
obnoxious to the objection thus urged. Were
the purchase and sale of exchange without mi-
tation, there mightbe some danger drumming be-
yond the mark but as the legitimate wants of the
Government form boundary beyond which its
agents cannot go, it would seem to US that no
mischief can arise from an operation which to
that extent must be productive of general con-
venience. Let us see what is in fact the nature
of the transaction of which we speak. The
Government has occasion, we will say, for
hundred thousand dollars at st. Louis, Mis-
souri, at which point its receipts amount to al
most nothing, if you please. With view,
then, to procure the funds at the point where
they are wanted, the agent Of the Treasury,
having authority to draw on New York. goes
into the market and sells his drafts for any given
amount, IN specie or the paper Of specie-pay-
ing local banks, and thus possesses himself of
the means Of discharging the liabilities of the
Government. So much for the side Of the Go
vernment, but the advantage does not top here.
Institutions or individuals situated in st. Louis,
and having ample means there, are indebted at
New York and elsewhere, and wish to procure
some medium of payment, whereby the exorbi-
tant cost of transmission through private chan
nels may be avoided. AS matter of course,
the agency Of the Government would be the
point to which persons so situated would look,
and the convenience Of all parties would be sub
served by the interchange of securities, the Gov
eminent draft answering best the object of
the debtor to New York, and the cash, that Of
| the public service at ST. Louis. Now, we are
at loss to discover how such an operation as
| the above could be wrested to evil purposes,
provided it be understood that money, o, its
equivalent, shall be the only basis on which the
| agent Of the Treasury is to issue his draft
nor do we the exercise of any power that
does not come legitmately within the scope of
the authority universally conceded 10 belong TO
the Government. Should we be told that the
purchase and sale Of securities, whereby pre-
MUM discount is created, does not come
within the purview of the powers granted to
the Government, we answer that a commlssary
of subsistence buys, every day, articles for the
| public use, which are paid for in securities on
which there is discount or premium and yet
nobody ever doubted his power to do so.
| The true distinction in this case would seem
| to be, that whilst it may not be competent
| for Government, through its agents, to be-
come dealers in exchange, it is absolutely un-
| avoddble that its securities should carry with
them peculiar value, and thus Incidentally
regulate the exchange between distant points of
the country. We will suppose such case as
| the following, and then observe the necessary
consequences Of Government credit as connect
ed with exchange. A military officer on service
at the far west, finding it necessary to forlify
point, and not having sufficient force with him,
employs person who, with his neighbors,
agrees to do the work. The service being per-
formed, the officer states in writing that such is
| the case, and that the labor done is worth five
hundred dollars, requesting the proper author
tiles at Washington to pay that amount to the
party named in his order. This document be-
ing obtained by the performer of the work, he
goes to the store where he owes money to the
amount named, and the storkeeper being indebt-
ed in New York or Philadelphia is not only will
ing to take the order as so much cash, but finds
it to his advantage to allow premium for an
evidence Of debt, which to him is equivalent to
cash funds wherever he may be indebted Now
the most fastdous sticker about the powers
conceded to Government, would hardly assert
that in this there would be any undue
stretch of prerogative or invasion of State rights,
and yet it is, virtually, precisely the operation
which will arise under the exchange feature of
the Exchequer bill. In other words, the Trea-
sury agent at given distant point, wishing to
pay the debts of the Government, contacted for
work and labor done, provisions furnished, &C.,
gives draught on New York or Washington
where there are Government funds, for which, |
for convenience sake, he takes q giuen amount
Of money, instead of giving separate draughts
to the respective parties with whom the bills
have been contracted The holder Of the draught
thus purchased may or may not sell it at pre-
MUM, just as suits his own views but most
assuredly, were he to obtain never so much adj
vance, the Government would have nothing to
do with that part of the affair. In reversing
the case, it is equally simple aud plain. The
Exchequer agency in New York, having surplus
funds, is applied to by person who has specie
in that city, an equivalent to which he wishes
to place in st. Louis, where the Government
wants money 10 ply its debts; he deposits his
specie and receives certificate of deposte,
which he can easily sell in the last named city,
where there are always bona fde purchasers