The New York herald., 1861-12-28

sustain her armies in the aggressive and ambitious
course q her policy she was compelled 70 eo,row nna
bank TO aid by an accumulation Of money the credit OF
the government.
charter extended from time TO time upon condition
that certain advances should be made to the
at ratos Of interest varying from nothing TO eight per
cent per annum until 1885, when the bank held upwards
Of nine millions pounds sterling Of tho public debt and in
1883 fourteen millions, The advancing of these large
the consideration given for the issue OF
sound currency As congSqusnce or the Insecure cha
racer Of the bills OF this bank and other smaller ones
panics among the holders Of bank bills frequently occnr
1891. In 1914, 1915 and 1916 two hun.
payment, and thus created SO general dstrus in the
paper OF these institutions that the notes Of the Bank OF
England became go much In demand In 1917 that they
rose nearly to par with specie In 1925 another panic
arose, when, within period OF six weeks, moro than
seventy banking institutions failed In 1926 the Bank OF
England established fifteen branches for tho purpose Of
supplying more substantial aud uniform currency
or late and ut the present tnc the Board OF Cover
nors Of the Bank Of England endeavor to keep about one
third OF the amount OF its liabilities in bullion and when
the stock falls below this amount the requisite quantity
10 generally supplied BY purchase In consequence OF FUR
ther advances TO government, and 70 give greater cur
rency TO the notes Of the bank Parliament passed m act
making them legal tender. The volume OF the issues Of
this bank governed by the faction OF the public
and Mr. Horsley Palmer said before committee Of
the House Of Commons "that the rule Of the bank
to allow tho public regulate the currency for itself
through the action Of the exchanges"
From this statement il s apparent that th6principlo
on which all currency should be based has never been
reached in England; and in proportion ss was known
to advance toward recede from the pledge Of govern
ment securities has the confidence Of the public boon
conferred and withdrawn. The bank held largo
amount Of tho public debt AZ an Investment, and al
though pledged to redeem the bills issued yet the
knowledge OF the fact that they the chief invest
ments Of The bank enhanced the credit Of its bills above
the issues Of all other institutions With the view of still
further sustaining this institution, Parliament violated
the great principle which they proeased to bare their
currency by declaring that the notes Of the Bank Of
ho ivadh NV nj In man
Of debts due them This clearly act Of unushabe
arbitrary power and should have been exercised only
Of this institution, which they thus compelled
thsir people to receive. The history Of English
pans demonstrates the general confidence in
secured promises And an English writer on currency
has the candr and franness to after the panic OF
1926 "that what is really wanted in this country is the
adoption OF system that will exclude the possibility OF
notes being dscredcd, by preventing all individuals
associations from issuing such have not been guaran
teed' and in memorial Of the Manchester and Liver,
first that except so far az the issue OF notes
banking is essentially private business with which the
State has right to interfere 1t is clear therefore,
that tho security TO be given by bank OF issue ought
be proportioned to its issues and not to its cspitao
There abundant evidence in this paper to show that
the omission Of the English government 10 base the
rency issues OF the banks upon security lodged with the
public authorities not from lack OF knowledge Of the
great principle but from dsnclnation TO exercise
troll tho currency for the benefit Of the people
England.
our country is and has been cursed beyond example
with Q depreciated and unsound currency.
PROPER SECURITY.
The security In the ancient banks the precious
metals That is the base of currency and consequently
would appear to be the very best that could be selected
But must take into consideration that there other
objects to be secured besides safety Coin is the reality
Of the promise but bears interest," produces nothing
Is the token Of doubt Bonds and many other evidences
of debt bear an interest and convertible into at
price, in the market at nl times. But these bonds TO
be base for currency should be made by the national
Qnv nYnaft nc unAnV all
others, inasmuch as . tax laid by the government
is q prior lien upon all taxable property in the
perfect security, since these bonds given by the
highest authority, bear interest," and universally
known To keep this security good becomes necessary
for the government TO that large enough pay
tho interest its debt and the ordinary current ex
pensss Of the administration, shall be annually laid
collected This is feature In national finance which
should be avoided neglected. and in this part
cular again the recommendation Of tho Secretary em
nently wise and statesmanlike. Not only should the
government mako ample provision for interest and
rent expenses bus the Treasury should be made
subject TO demand Il cannot meet Here, TOO the Secs-
tary has displayed wisdom in refusing extend plan OF
demand notes beyond the Immediate funds in posses
sion OF the government. This system iustiabe only
Of this rebellion when the government required money
the administration into power found
the Treasury had been drained by the teachey Of pub
lie servants. The vaue OF bond Is not altogether found
in the suciency of the ultimate security upon which il
s based but much of consists in the punctuay with
which interest is paid and other engagements met Espe
cially is il with security where there is legal
power to enforce an obligation Public credit is cou-
troad by the evidence Of good faith and financial skill
dispayed by the powers who have the the
national treasury under their control In this connection
may be well to remark that the bonds Of goyernne eu
as general rule should have at least twenty years
rum but inasmuch the Of interest upop
government londs must vary according to the Of
government and the currents Of trade always wise
to embrace provision in all twenty year bonds that
they may be paid at the end Of live years that
while the public credit will not be affected by their
falling due, STILL if interest becomes lower, the
hn fact m too7
bonds and take up the old ones II the Treasury
shall continue to be managed through series Of years.
with the same knowledge and skill that control IT,
the public securities can be 30 sustained in the general
Market as to command cash at reasonable rate OF in
forest. These securities will need the usual support of
absorbent and sinking fund.- and these the Secretary
proposes TO supply This sinking fund nccd not be used
to extngusb any part Of the public debt indeed in the
financial systems Of the States Of the Old World thoy
used purchase government bonds when the market
is low, and they uniformly sold when the market
will take them at higher rate. Thus they effect two
objects the support OF the credit of government and
the other the increase Of the capital OF the sinking fund
The absorbent the Secretary proposes to create is de-
nand from the banks and banking associations for Sc
curity upon which 10 base the issues Of all banks that
shall make application at the Treasury for circulating
notes. and to encourage that demand he proposes to
make the notes Issued by NIL the banks and banking
associations existing that may hereafter that
obn these secured circulating notes, receivable pay
mont for all taxes and other public dues except duties on
imports at par In all parts OF the United States and hc
proposes also to pay them 70 all public creditors that viii
receive them. This will make uniform currency and
cessarily produce effect upon their market value Not
only will they be purchased for furnishing bank issues
and capital but they will become favorte investment
for the funds Of other institutions and because
they will possess all tho requisites Of perfect security
while their cash price the market will be equal Ger.
tain. Every bank whose credit upon these bonds
will be strengthened in public opinion others based
upon less perfect security Whom the banks shall invest
in these bonds TO the extent Of their capital and IL
will dspace other securities disturb individual
credit while the bonds used security currency will
be entirely withdrawn and locked up the Treasury
Department. that they cannot compete with bonds
offered In the market Any bank that shall invest all it's
capital in these bonds, and receive circulating notes
therefor will greatly advance tho interest Of it's share
holders and customers. The capital will be safely invest
at six per cent and it loan out all its bills TO
customers, TO keep them in circulation IL will be
making twelve per cent per annun. Thus it is very
likely that interest and patriotism induce the
Of banks to invest all their capital in these bonds and
any Of them shall do the Secretary should bo auhorz
ed TO such institutions fiscal agents without de-
manding any further security from them.
In this way the Treasury Department Of the govern.
ment may bo provided In all parts OF the Union with the
very best and most responsible fiscal agents that any
people have been provided with for the collection OF
taxes dues property and funds and dsbursng same
under the direction OF the Secretary Of the Treasury
Improperly managed, this plan of the Secretary which
has boen 80 modesy and opportunely Con-
gress and the people, will furnish for tho nation all the
credit and money that prudent administration ought TO
require TO conclude the war with honorable peace
CHARACTER CURRENCY.