The national Republican., 1862-01-07
METHODS OF BORROWING.

METHODS OF BORROWING.
"A tie national Government cannot borrow
that is, by sale Of stocks, except at sacrifices
deemed on all sides to BE- i"admissibe and as
the necessity Of borrowing large sums is abso-
lutely imperative, two extraordinary methods
Of borrowing are under discussion, in aud out
Of Congress:
The first is the issue to creditors OF Treasury
scrip, Of such small demon nations as to enter
into general circulation, to be made receivable
for public dues, and to be convertible into a
funded debt at the will of the holder.
The second is to create an artificial market
for Government stocks, by making them the
basis OF banking operations.
The experiment Of banking upon public
stocks has proved an entire failure wherever
II has been tried in this country, and for the
intrinsic reason that the security Is impaired
or destroyed by the very fact Of being called
into requisition. The forciag of stocks upon
the market, TO redeem the issues predcated
upon them, so reduces the market value of the
stocks that they cease to be the security relied
upon.
What has happened in the Northwest in this
respect, Is go recent that It will be sufficient
merely to refer to IT,
The catastrophe Of the system in New Yor k
happened four years ago, and. Of course, Is
quite forgotten, as mankind never remember
anything in the historv OF paper bubbles be.
yond twelve months.
10 the New York EUening Post we find
communication from Edmund Dwight, said by
the editors to be "a gentleman who has given
the greater part of his life to the study OF
financial questions"
Mr.. Dwight says:
As all deNs are made payable in money, as
money 10 named in all contracts and is the rep.
resentative of all values nothing hat money
can satisfy the demand which arises in those
periods Of distrust when all faith in promises
ID gone. The sale of public stocks will, of
course, produce money at some rate, but. at
such times, the market ia Don gutted, and the
securities, however good, deprecate and all
as reliance. A vital fact in this question is
that the forcing OF securities upon Il panic.
stricken market aggravates the panic beyond
all other causes. The better the securities are
the more complete and universal is the de.
structiop of market values by the forced sale
and consequent depreciation of them. If you
have two hundred millions of bank note circu.
uon ecured by United States bonds, and in a
sudden panic you throw ten millions of these
upon the market, and they fall to so, all other
market values simultaneously fall in the same
proportion.
THIS occurred in 1857, when, in a sound state
OF the trade ot the country, mere panic sales
forced New York State stocks from 10 down
10 70, ard the State security system was total
ly broken down. A suspension Of specie nav.
ments promptly followed, and the deposit
pahKs ei New lork came IN the rescue of the
country banks of circulation So quickly by
taxing their notes on credit that tho fact that
the system Lad failed ard de monstrated d its own
.mperiectlnn, was hardly recognized. 1t never
lheIess was ract, AZ d a mOmentous one in its
bearing on the mode OF organizing a national
currency. For If the market could not take
enough OF New lOrk state stocks Unsurpassed
IN real vaiue) to redeem lhe hrDi,ed bank note
currency secured by them, what would be the
result when the stock security of "a national
circulation of 10000 900 should be thrown
upon the same market?
The conclusion then is, that neither bonds
ana mortgages nor state stocks, nor Govern
ment bonds, nor British Consols, nor any other
form or property, can be safely made the Sc.
curty for the bank note circulation except for
that portlon OF 1t which neither pancs nor bal
ances or trade can ever drive home for redemp.
t'"n, and which, therefore, (although nominal.
ly payable on demand } may be regarded as a
permanent loan from the people.
10 this conclusion more than century of
experiments and failure, have driven the states.
NJ u "i England and II Is now fully recognized
and embodied IN the organization of the Bank
OF England, and established by It's successful
working.
To this conclusion our own history and fail
nres impel us, and will, ill we accept it,"
Of the two things. Treasury scrip. or hank
notes predcated upon Government stocks, we
regard the ilrs, 81 ilnm easurably the safest for
the public, and as accomplishing the object of
borrowing. much the most efficiently and
economically.
by tn" use Of Treasury scrip, We can borrow
TWO hundred millions without interest, or at A
nominal rate Of interest, and q, cure 10 the Gov
ernm2nt the prtli, resulting from tbe loss and
destruction Of the scrip in circulation which ia
no small! item in the kaias OF arnisbinp m nor
money.
If we sell two hundred millions Of our
stocks TO bankers, upon tn, inducement of al
lowing them TO issue upon it circulating
paper, we must pay at least the ordinary in.
terest upon the stocks 20 sold while the profit
Of Issuing the paper circuI Iition enures wholly
10 the bankers.
GEoANs "Y THE ENEMY The Richmond Er
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