The daily Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1841-1845, 1842-02-24
SENATE COMMITTEE REPORT.
MONDAY, FEBRuARy 81, 1912.
[coNcLuDED.]

- ~ tha ,apss;hiIitv of hazard to the commu-
ny and none TO the Government except IN Tue Keep
ing of the public money. This IS risk when must
ALWAYS be incurred ON the part OF the Government
II i nsenarable from any system which be pro-
posed or adopted If il be supposed, as II has been
by MANY that the public money would besaer IN a
Bank of the United States, or under the State bank
deposte system, the committee have already shown
that both those modes Of keeping it are utterly out OF
the question. They, therefore, adopt, at the princ-
pal agencies, the only one left namely, the custody
of individuals appointed for the express purpose by
the Government with ample sureties 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 1t
would furnish a uniform currency; and they nave no
doubt that the specie notes which would De pui III
circulation by it, would in amount exceed the circu-
laton of the late Bank of the United States Inc
average circulation of that institution during the eA
istence Of its charter was about $40 O0OoOO ana lis
average amount of specie on hand short OF Sb,ooO,-
COO In some years its specie equaled 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. IL can
not be doubted then, that the circulation OF the tx
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 Ex-
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 ruinous rates OF exchange
between remote sections of the country result, es-
sentially 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 reason 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 bill drawn at New Orleans on
New York would command premium equal 10
freight, insurance, interest, and other necessary
charges for renting specie. But whilst the paper
circulation of New York, by reason of its converts
by, 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 circumstances
with a bill drawn in New York on New Orleans
No regular business, without great sacrifice can 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 sell and collect exchange. The commit
have heretofore adverted to this; and this hole
subject have consulted some OF the abest most prac
teal, and experienced men; and their wn views are
fully confirmed by the information derived from such
high sources. They cannot IN any way SO well illus
traie this brarch OF IT. and its beneficial effects on the
sound local banks, together with other advantages
by briefly nlbodylng the following views which have
thus been communicated 10 them.
A bill drawn by one agency on another, in any re-
mote part OF the United States, will be as good spe
Gle within The commercial sphere OF the emporium
where the agency located at which payment is TO be
any holder within that sphere and at rate
proportioned to his distance from its commercial
centre. II, for instance, merchant in Cincinnati
wishes to remit money to manu- acturer in Connt
tcuti bill drawn by the agency in Cincinnati, where
the deposlte is made, me agency in New \ ork
would be worth a half per cent, more than specie to
the payee. l
Exchanges through The agencies will meet all the
exigences OF the markets 1t not uutrequentIy hap
pens that New Orleans is indebted TO OHIO, for agli-
cultural products; Ohio to New York, for manuiac
tused goods, domestic or importei and New Yoik to
New Orleans, for cotton. Every weinlormed ner-
chant In those several sections will be advised of the
state of the markets A New Orleans merchant
wishes to remit to Ohio; lie deposites his specie in
the agency at New Orleans, and gets the Office
to accept his own bill of exchange for 600 payable
the order of his Ohio correspondent and transmits
it accordingly, This Sill be above par in the OHIO
market, because II Is 90 remittance for New York
where bills on New Orleans command premium
Il is bought by an hio merchant, who RENTS it to New
\ ork IN payment for goods and from New York it
is sent TO New Orleans, to pay tor cotton. Upon It's
arrival it Is presented 10 the agency where 1t W
cepted and the specie Is ready for It's re emp ion
he holder, however, no Wiling to be hardened with
the SPECIE will generally prefer the specic-noes of the
agency. linus this 3 900 IN specie, after paying
small premium at the agency, will have paid more
TIL It's amount in two. Remote markets, sent sale
and convenient currency of I'll 900 into the channels
of commerce, and is still at rest sustaining this amount
of circulation.
The use of bills ofexchange will not be superseded
by the specie notes Of the Exchequer. The former
have always been preferred, and were extensively
used under the two 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 bee appreciated here and
in Europe is, that bills of exchange more safe
than bank notes, they offer no temptation TO rob
berry or embczzIement; and several may be sent
of tue tenor and date by different conveyances,
lin which case no loss will be sustained # any one
arrives in saely) the risk may easily be reduced al
most utter lmpossbillty. The perfect character
of these bills of exchange, from then undoubed credit,
will generally give them preference over others
They will be protested for want OF funds, at
any Office where they are payable No embarrms-
ment result from the necessity Of transmitting
specie from office TO Office. The occasions very
r. re (and il this system were in operation would be
s. ii 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 Ii deposite were made in
New York to meet draft the office in New Or
leans this latter office would prefer the New York
pa per to com, IN the common state OF exchanges
When the system has been time in operation,
specie will have found its proper places OF repose, and
movements of it would seldom be required. Should
an apprehension be entertained that the retirement
of specie into the agencies would embarass the banks
it will be disspated by little reflection upon the ope
ratons already described. Those officers bound
to deliver at the time OF depositc, amount in paper
equal to the amount received in specie. That paper
will AXE the place of the specie which represents
and the same portion of it will be deposited by
chants and others who keep their accounts in banking
institutions of the specie for which it is substitute
As il will be light and convenient circulation, it
will mnge more with the paper of banks Of sound
credit in common commercial operations, and conse-
quenty be frequently used in making payments