The Cecil Whig. [volume] (Elkton, Md.) 1841-current, 1862-12-13


!. conclusive against the theory of grea
ssaundancy that, on the 18th dav o.
October, when the aggregate actual
circula ion, national aud corporate, wa.
about $500, 100000, the premium on
gold was 81 whereas, on the 10Th day
of November, when the circula ION had
increased by more than millions, the
premium on gold was 20 TO 30 per cent
But if the fact of considerable redun-
dancy in circulation be conceded, it by
no means follows that it is the crcula-
ton of United Safes notes which is re-
dundant.
1t must be remembered that the law
confines national payments and receipts
to coin and notes of the United States.
Officers Of the treasury, officers of the
army and navy, all officers of all depart
ments, must observe aud enforce this
law. For all payments to be made in
behalf of the United States, in case of
inability to obtain coin, United States
notes must be issued. 1t is, indeed, the
duty of the legislature to see that the
purchasing power Of these notes is kept
as nearly as possible equal to the pur-
chasing power which gold would have
had if specie payments had been main
tanned but the issue and use of the
notes is unavoidable, and the Govern
ment can resort to borrowing only when
the issue has become sufficiently large to
warrant just expectation that loans
of the notes can be had from those who
hold or can obtain them at rates not
less advantageous than those of coir
loans before suspension. The difficulty
which the takers of the recent loan Of
Sl3,Gl3,450 found in obtaining United
Sta es notes with which to meet their
engagements to the treasury is very in.
struc i've on this head 1t points. in
deed, directly to the conclusion that
loans of Uni cd States notes, in sufici-
ent amounts to meet the disbursement
of the Government, could not now be
obtained at rates which due regard to
the Interests of the xpayers would
permit the Secretary to accept. Wha.-
ever may be said Of the aggregate circu-
lation, it cannot, then, be successfully
maintained that the circula ion of United
States notes is excessive. When ex-
tended to the limits authorized by
existing laws, it will be no larger than
the wants of the people and the Govern
mcnt imperativcly demand.
If there be considerable radunlancy
then if there be u considerable real
depreciation of the which
is by no means admiltcd-what has
caused the redundancy and he dcprccia
ton
The cause of all ,l,at exists is easily
found III the statements of the banking
corpora ions. III. circulation of corpo-
rate notes increased during the year
ending on the lst Of November, 1862.
from Sl3o, 100000 to $lG7 600, U00.-
During the same time the volume of
! deposits, which answer very many of he
purposes OF circulation, had swcllcd
I from S264 100000 to SSH 900, 000.-
The greater portion of this increase took
! place within the last seven months
The augmen'a ion Of Geposi always
accompanies increase Of circulation. -
Together ,Aey imuIatc loans, and are
in turn, stimulated by the desire of the
interest derived from loans. As might
have been anticipated, loans increased,
though not equally, with .hc circulation
and deposits. From SG07, 900, 900 On
the LIST day of November, 1861, they
had grown to SGT 100000 on the LIST
! day of November, 1862.
Here is an obvious and sufficient
explanation of whatever undue cxpan-
sion may have taken place. The Sccrc-
tary has already expressed the opinion
that the circulation is not greatly redun-
dant, and that no considerable deprccia-
tion of currency has actually occurred.
lie thinks it sufficiently proved, how
ever, that wha' ever there may be of
either is fairly attributable not to the
increase of United Staes notes, but to
the increase of bank circulation and
deposits.
1t is to be observed tina no law COM
PEELED anG no public necessity required
any enlargement of the public volume of
currency by the banks. On the con-
trary, there are, in some of the S cs,
positive enactments by which The increase
of circulation during suspension is pro-
hibited and the principle embodied in
them is so obviously just that well ma H.
aged institutions, when obliged to sus-
pend. almost invarbly, without the con-
straint of any law, reduce their circula-
tion instead of augmcnting it. In ODE
dience to this principle, reduction of
bank circulation actually took place after
the suspension in December. 1t was
only when United States notes, havin g
been made a legal tender, were diverted
from their legitimate use as currency
and made the basis of bank crcula! ion,
that the great increase of the latter
began. 1t was purely voluntary ::
prompted, doubtless, by the desire of
extending accommodations to business
as well as by the expectation of profit
No practical limit upon this increase has
as yet been proposed by the parties
| interested in it.
The Secretary has already shown that
the case was far otherwise with the cir
culation of United Sta es notes. A con-
dition had been created by the suspen-
sion which made loans of coin impossible.
Loans OF corporate no cs, Objectionable
in fhnnc u,o.o ,,,h Al