The Washington union. [volume] (City of Washington [D.C.]) 1857-1859, 1857-12-10

there 80 far a. the operations of the Treasury Department
In its disbursements concerned The government has
its money in the hands of its officers and In the only
currency known TO the constitution IL has met every
liability without embarrassment IL has resorted To no
expedent meet the claims Of its creditors, but WITH
prOmptness pays each upon presentation IL the con
between the operations of 1887 and the present time
stopped here il would be enough TO vndcae the policy OF
the independent treasury SYSTEM but 1t does not The most
remarkable feature distinguishing the two periods has ref
erence 10 the effect upon the commercial and general
business interest OF the country produced by the present
operations of the independent treasury II is the relief
which has been afforded 10 the money market by the dis
bursements in specie Of the general government In
1887 the demand Of the government for its funds with
which meets its obligations weakened the banks Grip
led their resources and added to the general panic and
pressure In 1867 the disbursements by the government
of its funds which IL kept in its vaults supplied the
banks with specie strengthened their hands and would
thus have enabled them to afford relief when II was SO
much needed il they had been in condition to do It,
Their inability unwngness To do under such favor
able circumstances only shows how much worse the EN-
would have been ii the government was now
demanding payment from them, instead of furnishing
them the means of relief.
At the time and subsequent the passage of the indie
pendent treasury act OF 1876 the greatest apprehension
was expressed and doubt felt by its opponents of the
effect OF such policy The accumulation of specie in
the vaults of the government the distress it would
con in the collection of the public dues in specie and
particularly its operations in monetary crisis
garded as certain of inevitable evil The idea
that would afford relief at such time looked upon
MS wild and visionary by its opponents and not very
dently anticipated by its friends The success of the
policy should he gratifying it unexpected to
those who resisted Its adoption with much zeal and
ability
Whilst the opponents of the system apprehended from
it the runous effects upon the banks and the
rency its friends looked confidently to its operation for
wholesome check upon excessive issues by the banks
Experience has shown that the apprehensons of the
groundes and the ancpations of the Others
well-tounded, to limited extent The increase of the
circulation of the banks at the time they used
public repositories compared with their circulation at
other periods and particularly since the adoption of the
independent treasury system affords the most atisiac-
tory evidence of the restraining influence OF the system
upon the tendency of the banks to extend their credit and
increase their issues 1t is impossible to estimate with
accuracy the extent of this influence There many
elements which enter into the financial operations of
great and extended country like ours that no man can
pretend anayze the many at work with view
of assigning to each s separate and legitimate effect
No doubts, however, that the effect of collecting
the public revenues in the notes OF the banks, and
depostng the funds when collected with them, would
be an extension of the credit of the bank, and an
addition their circulation proportioned to this in
creased demand for the of their notes. To the
extent that this stimuant to credit has been with
held to that extent certainly has the restraining in
Auence of the independent treasury upon excessive bank
issues been felt Tho collection annually of about $40
600 600 in the notes of banks and large amount at all
times remaining in their vaults as deposits would afford
facilities for extending their credit which the past his
tory Of these institutions shows they would not hesitate
to avail themselves Of If such system had prevailed
for the last years the strong probabilities that
the present crisis would have been much reached
and effect would have been disastrous, because
more extended, and with fewer sources of relief
If the beneficial effects of the independent treasury sys
TEN IN restraining the banks from extending their cred
its have not been estimated and it is confidently be-
leyed that they have not it is respectfully submitted
to public consideration whether the adoption of the
same principle the respective State governments would
not complete the work of reform and prevention
against bank suspensions happily naugurated and
successfully pactsed by the general government. The
various State governments collect annually about
$50 900, 600 This amount is collected mainly in bank
notes and when not Immediately disbursed is either
kept in the form of bank notes in the vaults OF the State
treasures or deposited directly with the banks Let the
several States collect their in specie and thence
is withdrawn from the banks stimuan to overbanking
the extent of the facilities now afforded them by this
Use Of their notes.
The remarks already made in connexon with the in
dependent treasury of the general government are here
applicable to the effect that would be produced by such
policy The collection and disbursement in specie of the
revenues of both the general and State governments not
to speak Of the various city, town. and county corpora
TONS would constitute such demand for specie at all
times as to require its retention in the country The
banks knowing that they liable to furnish THEN
holders with this specie, would regulate their
issues accordingly, and would consequently be re-
strained from excessive overssues, which render sus
pension of specie payments by them inevitable when
a crisis comes, which requires them to do what
they ought always to be ready TO dopay their debts
The apprehension thp such requirement. by the State
would operate 0ppreSsiyey upon the people
would prove unfounded ii did in the OF the
general government State taxes paid most gen
orally in bank notes. These notes profess to be the rep
resenatives of specie. If they the could
easily convert them into specie. If they not then
they ought to he received such either by the State
governments the people. The very object OF the law
is guard against the attor contingency and thus to
secure the country sound paper curcncy always
vertibe into specie.
Under the operation of independent treasury sys
te adopted by each of the States, there would be nc
difficulty in retaining in the country sufficient amount
of specie only for the purposes of the government
but also TO secure sound paper currency. AS long
however the present system lasts this result cannot
be looked for One wonld suppose that the large increase
of gold in the last few would have enabled the
banks have protected themselves against the necessity
of suspendipg specie payments Such should haze been
the case but It has not been and will not be until
policy such is here recommended is adopted, which
will compel them to keep sufficient specie in their vaults
TO meet their issues Since the discovery of gold in Cali
onia in 849 there has been coined at the minis of the
United States the of $500 900 000 and larger
amount has beon added from that to the gold
the world At that time it estimated that there
was in the United States Sl20, 900, 900 of specie
OF that amount the banks held Si3 900, 900 upon
which they issued circulation of STA Il3 AIS. Theii
deposits at that time amounted to S9l, lI8, 623.
is estimated that there is in the United States $780,
900 900 specie and of this tho banks have $50,
900 900 upon which they have issued circulation OF
S2l4,77s,S 1922, and their deposits have increased to
$3.50 352 IL will be from this statement thai
with the increased quantity of specie in the country the
banks have only increased their specie from S43 900 600
to 500 900, whilst they have increased their ocua
ton from s1l4, 743415 to s24, 7Ts,s22, No one sup