Richmond Whig. [volume] (Richmond, Va.) 1862-1865, 1863-02-07
. norrnnrRArE FINANCES.

TO PROVIDE IOR Thk fOhlhhN~iS9S~ - 49,
suRY NOTES, AND FOR OTHER PURPOSES.
The object of the proposed measure is to enable the
Government 10 avail itself Of It's whole credit Tor the
,roo.es Of the war and In such manner as may re.
ducs the present redundant currency within reasonable
Ii,bit. In discussing the fitness oil this scheme ior
the ends designed to be effected it may be well 70 refer
10 our PAST financial history and to the system miner
to adopted BY an act passed in Montgomery, and
approved on the - day oil --, inc Seoie-
tsry of the Treasury was authorized TO issue
millions of treasury notes receivable in payment OF pub
lie dues and bearing no interest, but with provision
that the holder might fund them at his pleasure III
bond bearing per cent. interest The act also con-
tanned section allowing the holder OF the treasury
notes TO convert them into bonds bearing interest, and
rconyertabe at his pleasure into treasury notes. The
effect of this last provision TO enable the Govern
ment to obtain the use Of the floating capital which in
bank returns usually figures under the head OF deposits
These deposits attracted 10 the Treasury because
interest paid them until Withdrawn by the holder
of the cal certificate" aud because he could recon
vert that certificate into currency at his pleasure The
objects of the other funding provision in the act were
first to borrow without interest such sum as could be
kept in circulation through the demand oil the country
for currency and secondly when these notes had been
issued in Of that demand to borrow that excess
in the hands of the holders, by enabling them to con-
vert it into treasury bonds, payable at the end Of
years and bearing per cent interest per annum Had
the Government been able 10 pay the interest on the
bonds in specie and had such system OF taxation been
adopted as would have provided the means for
this, aud also for paying the expenses Of the
Government other than those made necessary
by the war il is probable that the purposes oil
his financial scheme would have been accomplished
The only dangers TO which this system exposed
we're those arising fiom the chances Of war, which
might affect the fatho the public in the ultimate SOL
yency of the Government There is little doubt but
that certain amount Of paper currency can be kept
ahoat even at a specie par by the mere demand for II
as n circulating medium. Within certain limits the
amount of that currency depends upon the portion OF
the field of circulation held in its possession. But no
man can ascertain beforehand what is the precise extent
Of that amount IL is obvious, too, that il the curren
CIV should be issued in excess of that amount depre
citation in its value must ensue, and depreciation in
PROMOTION 10 that excess To guard against any undue
depreciation arising from this cause, it was provided
that the holder might fund these notes az his pleasure
in a government bond, payable at the end Of years,
aud bearing per cent. interest. Tho value of the
note then could not fall far below the value Of this
bond If such a bond worth specie par the note
would have the same value If it were worth only 80
per cent a. compared with gold, such would be the
value Of the currency Had the interest been constant
ly paid in specie the bond probably would have been
worth nearly as much a. specie and this selEadust
balance between the note and the bond would have
made our currency a reasonable steady aud certain
standard of value Of course the steadness of value
in the bond might be disturbed either by the chances
of war or by issue Of these securities beyond the
amount of loanable capital in the country. The first
risk was inevitable, the second could be avoided by
very little prudence and foresight.
Unhappily the interest these bonds has been paid,
not IL specie but in treasury notes. and consequently
both have deprecated together not perhaps in the
same ratio but so nearly in the degree that the
one has proved to be very imperfect check upon the
excessive issue Of the other.
IT, then we can no longer fix the value of the bond
by ia relations specie the best thing to dc would
e be TO Tx, fposIbe the amount Of treasury notes
10 be issued in the shape OF currency We cannot
cerAn the precise amount OF treasury notes which could
be kent ut specie par, but probably approx
mate the amount nearly to prevent any dangerous
deDrecaton in the currency. II the issue could be thus
restricted the valve Of the bond would be increased
because the value Of tie interest received for them would
be raised. The evils too, arising from currency
duly deprecated would be avoided and before very
long the expenses Of the Government would be dmin
sbed more than One.half because prices would fall in
that ratio Ii the entire issue Of currency notes had
not exceeded $50 200, instead Of reaching the
amount of $3000O0QOO or something near it, the est
mates for next years expenditures probably would
have much exceeded those for the first six months For
the supplies necessary for the war; which constitute by
far the greater portion of these estimated expenses pro-
bably would not have cost half much they will
wien these prices are measured by the present inflated
standard OF value OF this assertion is intended
TO be confined to such articles as have preserY kc'n
slant proportion between the demand and sup The
interest received by the public creditor in that event
would be worth twice much TO him as it now is and
the public would have escaped many evils yet TO be felt
when the performance OF contracts made under these
inflated prices shall be enforced. II something is not
done TO reduce the volume OF the currency it will con.
tuue TO expand by regular progression until it becomes
utterly worthless and the public credit is destroyed
The Secretary Of the Treasury estimates that the
last day of December, 1862 there in circulation
$3.50 in treasury notes bearing no interest besides
Others bearing interest TO the amount of 100000
In addition this there must be large monthly issue
of new notes for the ensuing year the demands
for the war He estimates the issue for the first
I months of the year at more than $500 900 600 IL is
uaufes' then that unless can provide absorb
Ont for this excess OF currency beyond wants bank
ruptcv stares US in the face The first step is TO provide
some mode Of absorbing the S29OOOOO 900 of currency
notes issued in the last year To effect this object Con-
rres at It's last session. declared that the privilege Of
funding them in bonds bearing per cent interest should
cease on the 22i of April 1863 and that after that Pc
rod they should be convertible into bonds bearing only
per cent. interest To make the funding Of these
notes still more certain the Secretary of the Treasury
has recommended that shall refuse to fund them
at all after the lst july 1863. This suggestion has been
adopted in the first section of the bill which is
ported TO the Senate. But the notes issued and su
ed during the present year, will probably be somewhat in
excess Of the legitimate demand for currency by
the first Of July, and must certainly be largely
SO before the conclusion Of the year, il some for
absorbing that excess should not De PROVIDED fro0-
ably the best plan for eecng this would be to provide
for monthly issues and TO induce, force the
holders TO fund them ut fixed periods. BY such means
the volume of the currency would remain the same
during these periods If for instance required ouly
monthly issue OF Sl2,50OOO0, and the holders we're
constrained TO fund them at the end Of the year, then
in each month OF the year many would be fund
ed as would be issued during that month The effect Of
this would be that the currency would exceed
fall below $780, 100000 during succeeding years, and
we should thus borrow Sl5OOOOOOO annually through
the agency OF the Treasury notes. This, like in
visible tax collector would enter every house, and
gathering contributions from pence well from
pounds would make ta loans from all capitals whether
great or small 1t is beca the currency note is the
most convenient form of borrowing money that gov
ernments are too apt abuse its facilities until through
the imitation of prices the loans become exorbitan
as to destroy public credit.
1t not to be supposed that the Congress of the Con-