The national Republican., 1861-12-11
PLAN OF OBSERVATION-DISCLOSURES.

port OF the Secretary Of the Treasury which |
proposes tue substitution Of Government paper
for bank paper, IN the circulation Of the SCUM
hy: III 81 Il
The circulation of the banks Of the United
states, on the lst day of January, 1851, was
computed TO be $2O2 ,00O,767. OF this circula-
iinn $3.50, 900, 900, in round numbers, was In
States now loyal, including West Virginia, and
$50, 900, 900 in the rebeious States. The whole
| of this circulation constitutes n loan without
| interest from the people to the banks, costing
| them nothing except the expense of issue and
redemption and the interest on the specie kept
| on hand for the latter purpose; and It deserves
consideration whether sound policy does not
| require that the advantages of this loan be
| transf rred, in part at least, from the banks, |
representing only the interest Of the stockhold'
ers, to the Government, representing the aggre.
gate interests Of the whole people.
It has been well questioned by the most emf.
| nent statesmen whether q currency of bank
notes, issued by local institutions under State
Constitution. Such emissions certainly fall
within the spirit, IL not within the letter, Of the
| constitutional prohibition Of the emission Of
bills of credit by the States, and Of the making
| by them of anything except gold and silver
coin n legal tender in pay ment of debts. How.
ever this may be, II Is too clear to be reasona.
| bly, disputed that Congress, under its censtitu-
tional powers pnSs to lay taxes, to regulate CON com
possesses ample authority to control the credit
circulation which enters 10 largely into the
transa otions Of commerce and affects in 30 many
ways the value OF coin. GIL, . - 1
In the Judgment Of the Secretary, the time
| has arrived when Congress- should exercise this
authority. The value of the existing bank note
| circulation depends on the laws Of thirty -four
States, and the character of sumo sixteen hun.
dred private corporations. 1t is usually fur.
| nished In greatest proportions by institutions
of least actual capital. Circulation, commonly
IA in the inverse ratio of solvenoy. Well
have, in general, COMPARE ively little circula.
ton; while weak corporations almost inva.
riably seek to sustain themselves-by obtaining
from the people the largest possible credit in
this form. Under such system, or rather
lack of system, great fluctuations, and heavy
losses In discounts and exchanges, are inevi-
table; and not unfrequenty, through failures
of the issuing institutions, considerable por.
tons the circulation become suddenly worth
less in the hands Of the people. The recent
experience Of several States In the valley Of
the Mississippi painfully illustrates the justice
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 Secretary thinks II possible to combine
with this protection provision for circulation,
safe to the community and convenient for the
Government
GOVERNMENT NOTES FOR CIRCULATION.
= Two plans for effecting this object are sug-
gested. The first contemplates the gradual
withdrawal from circulation Of the notes of
private corporations, and for the issue, In their
stead of United States notes, payable In coin
: on demand in amounts sufficient for the useful
D onds of n representative currency. The sec nd
, cOntemplates the preparation and delivery to
institutions and associations OF notes prepared
for circulation under national direction, and to
, be secured rs to prompt convertibility into
coin by the pledge Of United States bonds, and
other needful regulations.
I'll DEMAND NOTES.
ThaA Arot pf thnan Al oil uAn tnA
at the last session of Congress, In the provision
authorizing the Secretary to issue United States
o notes, payable In coin, to an amount not ex.
oseding ffty millions Of dollars. That provision
|, may be SO extended as to reach the average
8 circulation Of the country, while a moderate
tax, gradually augmented, on bank notes, will
relieve the national from the competition of
local circulation. 1t has been already suggested
that the substitution of a national for State
currency, upon this plan, would be equivalent
to n loan to the Government without interest,
except on the fund to be keptin coin, and with
out expense, except the cost OF preparation,
issue. and redemption; while the people would
gain the additional advantage of \ uniform cur.
rency, and relief from considerable burden
in the form Of interest on debt. These advan-
, tages are, doubtless, considerable; and II a
scheme can be devised by which such y circu-
lation will be certainly and strictly confined to
, the real needs Of the people, and kept con-
stantly equivalent to specie by prompt and
q certain redemption in coin, it will hardly fail
of Oflegis'ative sanction. ....
The plan, however, IL not without serious
nconveniences and hazards. The temptation,
: especially great in times of pressure and dan.
ger, to issue notes without adequate provision
Tor redemption; the eyer.present liability to be
) called on for redemption beyond means, how.
ever carefully provided and managed; the
n hazard OF panics, precipitating demands Tor
/ coin, concentrated on few points and single
fund; the risk of deprecated, depreoiaupg,
and finally worthless paper money; the i'm
measurable evils of dishonored public faith
:. and national bankruptcy; all these are possible
, consequences of the adoption Of a system o!
|. Government circulation. 1t may be said, and
. perhaps truly, that they are less deplorable
: | than those OF AN irredeemable bank circulation
Secretary contents himself with observing
that, In his judgment, these possible disasters
!, 50 far outweigh the probable benefits Of the
=, plan that he feels himself constrained to for
bear recommending its adoption.
SUBSTITUTE PoR BANK NOTES.
The second plan suggested remains for ex
animation. It's principal features are, Qst) u
circulation of notes bearing II common impress
sion and authenticated by common authority;
(2d) the redemption of these notes by the asso
Citations and institutions to which they may be
L. delivered Tor issue; and (3d) the security o
= that redemption by the pledge OF United States
Il stocks, and An adequate provision OF specie.
,fl In this plan the people, In their ordinary bus
ness, would find the advantages of uniformity
4. 10 currency; of uniformity in security; of effeo
tual safeguard, if eflectual safeguard is possible
against depreciation; and OF protection from
y losses in discounts and exchanges; while, In
Vt the operations of the Government, the people
would find the further advantage Of u large de
mand for Government securities, of increased
facilities for obtaining the loans required by the
war, and of some aeyiaton of the burdens or
industry through dmnution In the rate of in
terest, or a participation in the profit of cirou
\. lation, without rsking the perils of II grea
= money monopoly.
A further and important advantage to the
D. people may be reasonably expected in the in
g. creased security Of the Union, sprngng from
" the common interest In its preservation, Gre
d ated by the distribution of its stocks to asso
10 Citations throughout the country as the basis o
# their circulation.
The Secretary entertains the opinion that 4
credit circulation in any form be desirable, Il
, Is most desirable In this. The notes thus issued
"a and secured would. in his judgment, form the
~ safest currency which this country has ever