Fremont journal. [volume] (Fremont, Sandusky County [Ohio]) 1853-1866, 1861-12-20

banks, representing only the interests Of
the stockholders, to the government, repre-
seuting the aggregate interests Of the
whole people.
BANK CURRENCY UNCONSTITUTIONAL.
1t has been well questioned by the most
eminent statesmen whether currency of
bank notes, issued by local institutions IN
der State laws, is not, in fact, prohibited
by the national constitution. Such ennis
sions certainly fall within the spirit, il not
within the letter, of the constitutional pro-
hibtion Of the emission Of bills Of credit
by the States and Of the making by them
of anything except gold and silver coin
legal tender in payment of debts.
| However this may be, IL is too clear to
be reasonably disputed that Congress, un-
der its constitutional powers to levy taxes,
to regulate commerce, and to regulate the
value of coin, possesses ample authority to
control the credit circulation which enters
SO largely into the transaction Of commerce
and affects in SO many ways the value Of
coin.
THE LARGEST CIRCULATION OF BILLS Is FROM
INsoLvENT BANKS.
; In the judgment Of the Secretary the
time has arrived when Congress should ex-
ercise this authority. The value of the ex.
istiDg bank note circulation depends on the
laws of thirty-four States and the character
of some sixteen hundred private corporations.
1t is usually furnished in greatest proper
tions by institutions of least actual capital.
, Circulation, commonly, is in the inverse
ratio of solvency. Well founded iustitu-
: tions, of large aud solid capital, have, il
: general, comparatively little circulation
:. while weak corporations almost invariably
e seek to sustain themselves by obtaining
}. from the people tho largest posi-
n bic credit in this form. Under such n
= system, or rather lack of system, great
e fluctuations, and heavy losses in discounts
. and exchanges, are inevitable; and not un-
/ frequently, through failures Of the issuing
institutions, considerable portions of the
D circulation becomes suddenly worthless in
f the hands of the people. Tho recent ex-
perience of several States in the valley of
the Mississippi painfully illustrates the jus
tice of these observations, and enforces by
the most cogent practical arguments the
duty of protecting commerce and industry
{ against the recurrence of such disorders.
THE PROPOSED PLANS TO REMEDY THE EVIL.
The Secretary thinks it possible to com.
: biue with this protection provision for cir
culation safe to the community and conve-
nient for the government.
q Two plans for effecting this object are
!. suggested. The first tcontemplates the grad,
,. ual withdrawal from circulation of the notes
# of private corporations, and for the issue, il
d their stead, of United States notes, payable
|. in coin on demand, in amounts sufficient fol
@ the useful ends of representative currency
: The second contemplates the preparation
: and delivery, to institutions and associations,
of notes prepared for circulation under ma
tional direction, and to be secured as to
prompt convertibiIity into coin by the
pledge of United States bonds and other
: needful regulations.
t The first of these plans was partially
, adopted at the last session of Congress in
the provision authorizing the Secretary 10
issue United States notes, payable in coin,
S to an amount not exceeding fifty millions Of
r dollars. That provision may be so extend
!. ed as to reach the average circulation of the
- country, while moderate tax, gradually
" augmented, on bank notes, will relieve the
- national from the competition Of local cir
= culation. 1t has been already suggested
It that the substitution of a national for
}. State currency upon this plan, would b.
!. equivalent to loan to the governmen
without interest, except on the fund to b.
kept in coin, and without expense, excep
3. the cost of preparation, issue and redempt
;. ion; while the people would gain the addi
5. tional advantage of uniform currency, anC
;. relief from considerable burden in the
% form of interest on debt. These advanta
Il ges are, doubtless, considerable; aud if q
scheme can be devised by which such cir
culation will be certainly and strictly con6n
ed to the real needsof the epeople, and KEEP
D. constantly equivalent to specie by promr
W and certain redemption in coin, it will hare
u y fail of legislative sanction. 81.
= THE INcoNvENIESoEs AND HAZARDS OF Tn
! FIRST PLAN.
|. The plan however is not without seriou
inconvenience and hazards. The tempta
+, tion, especially great in times of pressur,
and danger, TO issue notes without adequat
IL provision for redemption; the every presen
'e liability to be called on for redemption be
D. yond means, however carefully provided an,
,. managed; the hazard of panics, precipita
ting demands for coin, concentrated on
" few points and a single fund; the risk Of
OF deprecated, depreciating, and finally worth
D. less paper money; the immeasurable evil
ID of dshonored public faith and national bank
>. rubtcy; all these are possible consequence
. Of the adoption of system of goyernmen
~ circulation. 1t may be said, and perhap
Of truly, that they are less deplorable tha
le those of an irredeemable bank circulation
a Without entering into that comparison, th
- Secretary contents himself with observin
2 that in his Judgment these possible disai
ters so far outweigh the probable benefits
O. the plan that he feels himself constrained I
n forbear recommending its adoption.
ye THE SECOND PLAN CONS sIDERED ADvANT.
rs GEoUs TO ALL.
IS The second plan suggested remains for e
= animation. Its principal features are, lis
circulation Of notes bearing common il
preston and authenticated by common al
u thority; (2d) the redemption of these Hot'
I, blythe associations and institutions to whic
Of they may be delivered for issue; and (s1 th