Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1861-12-03

whole field OF circulation with . pupct oealils
no interest. 10 the extent that this can DC
done, the government may borrow money
without interest, and often a very large amoun'
NAV be put in circulation at a value wn'c'
will bear 6 certain fixed relation to that OF spe
Gle. It may he made equal to specie, dollal
for dollar, or it may bear some other relation,
AZ, for instance, that of 95.hundred'ns
", Provided it constantly bears a liked re!stlor
n snecie or what would be still better, the dc
msnd fnr currepcy-exchanges in a country
i romains q fair medium for the settlement Of
h.lancps and the payment Of debts. If such
~ .dvent,pe is TO be derived from = credit
currency, then it is plain that It should belong
70 the government. To the oxten; 20 which ii
thus becomes the instrument OF Borrowing
without Interest by the government, tho whole
community is benefited. If the currency is
"a be founded on credit, then it il better 10!
the community that il should rest on govern,
mcnt credit, as it is the best if properly guard
ed and regulated. 1t is in the performance O
this last conditiur: tina. the difficulties of tn
schone consist. But still there a.e e!nsrgen
cies when the advantages Of such 4 plan VII
compensate for the inevitable FISK Of the en-
t~crprise. There is a further rcs0urce. too, II
the way Of precautioD, which consists IN adopt
ing proper regulations to diminish the risk as
far rs possible. The first point 10 be attained
is to make this credit money bear a fixed rels
ton to the value Of specie, or still oette", tf
the currency demand for exchanges; and th's
il to be done without the use Of specie, be-
cause DER isolation d~eprives US Of q sufficient
supply Of the precious metals for that end
If YOUR purpose is to make your paper dollar
constantly worth 95 cents, then YOU should
offer to convert it, at The pleasure Of the hold
er, into a government stock bearing such a rate
of interest as will make it worth, in open mar
! ket. 50 per cent. 1t Is plain, with this condi-
| ton, that your Treasury note Gun sever bs
worth less than IS certs in specie, AMI il this
/ relation be constant, then the Treasury hote
becomes and remains y fair medium Of e1
! change. To 90 this the government must IN
spire the community With & just confidence in
it's ability and disposition 20 pay the intcreE;
puactua!iy. But the rate Of interest varies q
little from year to year the rate originally
axed nav become relatively so high 2s to
make the stock worth more than par. The
holders Of notes then would fund them 90
cause money was cheap and market intereH!
low, and this process wculd go On until money
became scarccr aud more valuable and the MIR
8et interest Elghcr.
But SUPPOSE, on the other hand, the iiy:d
rate Of inlcrcss should become relatively lover
than tho market rate; then the demand for
money would increase, and that for sock
would diminish; ard IN such Casts the ho!Ge:n
Of stock thus f!rdcd ought 10 n9 allowed 10 re-.
convert il into Treasury note: Of money, which,
oahg 10 the high market rate, would be ioaned
until tho last became lower. In other words.
| when money VAS plentiful End interest low, so
as TO tempt TO over trading, this system woa'd
corrcc: that tendency by holding out induce.
inents to cnn"crt O portion :ntO Go"erpmen-
stocks, which would again elevate the market
rate CT interest II, on the other hand, the
market rate OF Interest was relatively nigh,
! owing to the scarcity Of money, this system
would induce the holder Of this stocG 20 cnT.-
vert it into money, to be loaned at a higher
rate Of interest to the community. We thus
avoid the creates. dangers which spring :roin
e paper mraey, founded Hnm!raiiy upan ID;
| conveftlbiiitT INTO speci", cut really upon tHt.
| credit Que TO bank management and RESPONSE
bili,r. In this Inst case, when, owing 10 Is
turn in tho. foreign exchanges. the "a,"e q!
money becomes greater and the rate o! ir''+Test
| high. the banks. instead Of De;ng able 10 sup.
| DIV more money, coo;rsct their issues 10 in.
crease their ability &c pay specie. Bat "hcn
| ~lnts:ust Is low, owing 20 a plentiful supply ii
none, and tlers is X specie demand, tne
! temptation becomes j: resil;lo.s IL increase their
! profits b. increasing ,hzi- issues and lending
more money; which, oi :inrsn, leads 70 nnd2n
! expansion ai.d subsequently to 40 explosion CT
the whole credit system IS The country. I'm
der the FIRST plan tine currency expands wren
the demand icT money becomes greater, and
contracts vhrn it becomes less. urdcr the
last, the currency contracts when tie demand
for it increases. and exra1d6 when that De.
msnd diminishes. Ia this scheme it is essen
| tial that tine government should keep up the
value Of the stock into which notes have Escn
funded by Y prompt payment "i interest, aud
| it would be proper TO make that RAJ: OF inter,
| est such ss would k-ep The stock at specie
/ usr. The government ongEt, therefore,, 10
! have the privilcesc f rcaeeming the notes, drl.
lar for d3llsr, in spccl1, ~ iiG own pieadnrc,
! unless the holder will take . stock with 4 less
rate Gf interest,", 70 &c h1sd in reference 70 tha
par value. Ii tho value CT The stock into
which these notes nre convertible, Should rise
De. muIentl and iEtrinsica!!y above specie par,
| then ell tic notes would be funded. This,
however, would be prevented il the GoeerG
lnCnl IJult liio IlUtSS al rFSNIS, Nv S.iS o''-N'
would take q stock bearing a less rate OF l;:.tr-
est. IF the stock should remain. rerEu.
nently below hut nearly at specie par,
and the Treasury notes should oc issued
in such Dumhsrs as fall below that value,
they would be funded until the equilibrium
; was restored. Such & currency would perform
| its proper function if it were 50 managed that
| the stock absorbed in i: when it WAS deprccia.
| ting, ard increased is quality by reconvr!sion
into notes when tie existing supply was too
srnat. for tho demand. To reach this result
tie stock shuaid ba kept It specie par. and
the uotes should 10 issued III a limited guam
t;ty. Whenever onc-hria nf the amount au.
thorized should be funded, then NO more ought
to be issued hui lhe quantity MIS-. be in
crenscd il a demand exist for such increase By
tie recnnvcrSion Of the stock into notes. Our
present law allows 800, 000, 600 OF Treasury
notes and twenty millions Of currency stock
that is TO sey, OF stock recoverable into notes.
Perhaps tie holders might be alloTed 10 fund
The whole sum without much risk. None
can tell beforehand how m1n7 notes cen be
issued without depreciation /; out for the pre-
sent, the amount ought not TO DC Increased
until it is clearly ascertained tha; none can he
emitted without such 8 consequence. The
present rate VI interest upon the currency
stock is probably too nigh. would change it
hereafter 70 4 si1 PER cent stock, the interest
to be punc:ualIy paid in sp-eIs. Treasury
notes might then b: issnad IS long ss .hcT gere
equal in value to t;!is stock. p~rn@:Gei it Should
be found that this Stock wa raa::" NJ specir
par in tho marker. if It SCR: n-"v:,lTY e
raise more money. then | would Tescr. to loans
at = higher rore Of Interest. Say seven or eight
per cent, and to luars whose interest waS
payable in these notes but the interest oa
tho currency stock in:o which the notes
we're convertible, shouiG be paid in nothing
but specie. On The ether hand, public 1ues
should &c payable in nothing bit siccle
o! these Treasury notes, 80 as to siye
these notcs tie advantage of the who'll
government demand. TIA like rule were adept.