The daily union. [volume] (Washington [D.C.]) 1845-1857, 1847-12-02
Treasury NOTES.-The. z.

Treasury Notes.-No. Y.
In the report which he, Secretary Of the Treasury,
made to Congress in November, 1911, Mr.. Gallan in
troduced the following observations:
"The ability and will of the United States faithfully to
perform their universally known and the
terms Of Loans VIII IN no shape wha,eve be affected BY
not only on the state of public credit and the ability
hr obss we his maT bee 0I
ney TAINTED by the public must be purchased market
year, the whole of stock in the shall ex
coed certain limits may be expected that legal interest
that The most simple and direct also the cheapest
and safest mode appears much more eligible to pay
allowing higher of interest to increase the
of stock created attempt any operation which
might niuriously affect the circulating medium OF the
country"
There is much good in these remarks. The rate
at which loans be negotiated depends not solely
the willingness and ability of government to pay, but
partly on that and partly on the varying ability of mo-
neyed men TO lend and the demand for capital for other
objects, Whatever may be the amount OF money
wanted by the public it must be purchased at market
price, 1t is in vain that governments attempt
terac this law OF nature and it wrong for them to at
tempt to counteract it. Neither individuals nor the pub
lie have any right to expect to borrow money for less
than il is worth
Governments may, however, deceive the people, and
perhaps deceive themselves, by the manner in which
they negotiate loans, and appear to be paying than
the market rate OF interest," when in reality they are
paying more
L. By borrowing from the banks, with an understand
ing that large amount is to remain deposite
touched In this way, they may pay interest on two
millions, while using but one, and appear to be paying
five cent while actually paying ten.
g. BY inducing the banks 10 increase their issues
then the price OF every thing, government has to
buy is increased in proportion The very notes lent by
the banks the of this RISE and government,
addition TO paying the banks interest those notes. has
to pay many per cent. more IN the increased cost OF
supplies.
| g. By borrowing inconvertibe paper from the banks
| d. BY issuing treasury notes bearing no interest," and
OF such small denominations as TO enter into the retail
trade Government thus appears to be paying no inter-
est what il boTows but it these notes issued in
large quantities, pays double treble the legal rate of
interest in the increased cost of what il has to buy
! s. BY issuing certificates of stock for larger amounts
than the actually borrowed Thus we, during the
of ls125, issued certificates of stock for hun
dred and twenty-five dollars for every hundred dollars
paid into the treasury, and that in bankno de-
precated many per cent below par.
by granting in various indirect ways privileges to
those who make loans to government.
| During the war of 1Sl2-'15, our government
appeared TO pay more than seuen per cent? but taking
borrowed, and the premiums it granted, it paid, in
some instances, much fifteen twenty per cent
The direct loss which government sustained in conse
was estimated, by the Committee of Ways and MANS OF
1880, at thirty four million dolars-an sum,
when is considered that the whole expenses of the war
were only about hundred millions. The indirect
losses sustained by the people amounted to many hun
dreds Of millions, and moral injury was done which
cannot be calculated in dollars and cents.
By acting similar principles-that is. by borrowing
bank notes. sometimes when they were twenty-five per
cent below par and by granting premiums on loans,the
British government has added, unnecessarily, hundreds
of millions to its funded debt In the year 1891, for
ample, it issued certificates of stocks for E22l los for
every f00 it borrowed and thus, while it appeared to
be paying but three per cent interest," was, in reality,
paying nearly seven and engaging to refund than
double the amount Of the principals besides deprying it
self Of the power of essenng the expense Of the debt
by paying off the holders, unless they chose to accept
lower rate when money became plenty.
If roubous times come on in these United States, we
hope 6 our a lea gg, thereby both congsss
has done in such timesthat s meet the difficulty bold
w. and pay openly Tor such money as may have TO Dor
get for less twill assurey have to pay more itesorts
to any such humbug schemes of fnancierng issuing
treasury notes of small denominations borrowing bank
the amount actually borrowed, or receiving in payment
of public dues bank notes issued with public stocks
security, it will add greatly to the cost Of the war; and in
fict lasting injury on the people
AS the United States government in both its treasury
notes and certificates of Stocks lays itself under oblga
ons to pay gold and silver ought to receive gold and
And here would suggest whether it would not be
well to provide for contingencies which may occur, by
taking prompt and efficient means 10 increase the reve-
nue. We should not suffer ourselves 10 be betrayed into
during the present year. The that have produced
i will no doubt; continue to operate with more or less
force, and WILL for the Average OF years TO come increase
the means OF government But experience in past
years shows that periods of excessive generally fol-
lowed Dy PERIODS OIL deHCent revenue OWING 10 causes
which we have not here room to explain, our pub
lie fucuates more than that OF any other ma
ton To sustain public credit under all contingent
cies il is desirable that the revenue of government
should in times of extreme bank contraction,
be sufficient to pay ordinary expenses and the inter-
est the public debt As bank contracions follow bank
expansions, Just certainly winter follows summer,
every American statesman should in laying his financial
plans have regard for of distress in the money
market.
New England has been laborng under the dis
as Old England-namely, plethora OF bank cred
It's and mania for making railroads. The pressure
for money which has begun there will be felt, with
more or less force, in all parts of the Union and the
ability Of individuals to lend to government be OF course
diminished.
The greater the revenue OF government, the less Will
have borrow and the less has to borrow, the
favorable, OF course, will be the terms which it will
be able to negotiate loans.
II can, out of the for the year, deray not
only ordinary, but part OF extraordinary ex-
penses, much the better The funding system has
its conpeniences; but, if the whole expense of each
year OF could be raised within that year, it would in
the end be much cheaper for the people An additional
tax of only dollar head per annum, laid at the
commencement of the war, would as we have already
shown have left at the close OF the war without any
public debt.
Independently OF this, is another consideration OF great
| moment Whenever a public debt is incurred, prompt
measures should be taken not only for the punctual pay
ment OF the interest," blu, for the redemption, at no very
| remote period, OF the principal =
In financial affairs, is always better If we err at all,
to err on the safe sde is always better, especially IN
times OF war, to have too much than to have
| 100 little. THETA
rnecipo Of Hihernian had oraoialv