The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1865-12-06
full money, in excess of the required reserve. was

L
| sl7o, o45, sea-
| COMPULSORY REDEMPTION cy TUE CURRENCY RxoosMxSDrp
cannot De necessary TO diiate upon the inevtane
consequences which mast result from this excessive
amount Of redcemabe currency II left uncontrolled BY
the action Of In respect TO the reduction OF
its issues, and enforcing system OF redemption which
shall cura by lis operations the power and tendency to
expansion So far as bank issues concerned is be
leved that the efficient check would be found IN
its compulsory redemption in the great financial and
commercial centres OF the conntry-New York. Boston,
forced institutions established chiefly for the
advantage arising from the issue Of their promises
without the expectation OF being called upon to redeem
them, would find that they had exceeded the require
ments OF legitimate business and obtain relief In the
abatement OF their issues The circulation thus with
drawn from sections where II Is required could
dispensed To other portions of the country as vet but
partially supplied with banking institutions.
In this manner Also would remedy be furnished for
the unequal distribution which has resulted from the act
OF the Sd Of March last giving the preference to tho
version Of state banks applications for national
associations without reference to the Of currency
which by such conversion has been concentrated in To-
cates where the former institutions were the most M
merous.
CAPITAL THE ORGANIZED RANKS
The national banks already organized embodv capital
sufficient to cnte them TO receive 5000 672 992 of cir
cuatlon on the deposit OF the requisite securities gov
eminent bonds II not anticipated however that
more than three hundred millions will be called for by
banks now organized ms many OF them located in large
cities of the Northern States will not ask for the amount
OF circulation TO which their capital entities them Bonds
have been deposited to ente the banks organized
70 S244 10 OF circulation only In will the
limit OF the act be exceeded.
SOUND POLICY RsQUTRfs RETURN PAYMENT
Whatever may have been the intention of tho trainers
OF the federal constitution in respect the measure of
value TO be used in the transaction OF business during
time of peace and in the ordinary flow of events there
Is ample justification for departure from q metallic
currency and bank circulation redcemable in specie
demand in the necessities of the country as supcrin.
duccd by the unparalleled civil war through which the
nation has been called TO pass Now, however. that tho
emergency which called for this departure from first
principles has happily been surmonntcd, il would
to be the dictate Of sound policy to return speedily
the financial condition OF tho government and the bust
ness interests OF the country will allow normal
condition OF the currency that the pccuniarv relations
subsisng between ourselves and other nations may be
placed upon more harmonious basis of value.
The evils resulting from rr 'deemabe
100 well known to enumeration They should be
tolerated no longer than absolute necessity requires
Inc lundng, and the consequent retirement OF portion
OF the ina"tive circulation shown TO he held in
serve and liable he called increased
and additional enhancement Of prices demand and
the consequent reduction of the to the amount
CURED by tho actual necessities business, would
constitute of the FIRST steps towards that sound
condition Of finance under which alone permanent
prosperity can be secured. BY such only
we place the manufacturing and producing interests Of
the country in position u compete successfully with
other nations, prevent excess OF imports exports
and thus prevent drain upon our resources which
must otherwise postpone to indefinite period the
sumption of specie payments
Under the present imitation OF prices the cost Of
labor and OF all the elements entering into tho
production Of staple commodities, whether in agr
culture, mechanics or manufactures, Is such as
70 invite the direct competition OF all other
our market the best to sell in and the worst to buy in
the part OF foreigners and which, In the consequent alb
sence OF an adequate export demand must evcntuate IN
the denudng Of the precious metals and the creation
of a debt abroad that will be greater drain upon our
resources than our present national debt
THE BALANCE or TRADE AGAINST THIS COUNTRY.
BY gold valuation or our Imports and exports the
balance that has against this country during the
four years previous 30h day OF June last nclud
Ing the interest American securities held abroad pur-
chased within thar time and also taking into due con-
sideraton the difference between the standard of
own and that OF foreign gold ninc and three per
cent?, has been 30s, 0O0, 900 of dollars
BY reason of the probable falling or In the export or
coin, and the In reased amount OF interest be paid
abroad Il estimated That the nccrnnv balance during
the present fiscal year will amount TO $500 600 000 max
ing total for ilvc years OF S42S, 600, 600
THIS BALANCE ~ TO IA PAID
Our only resource TO pay this gold balance against
has been and still is sale Of our securities abroad
The amount required, sold at average discount Of
forty per cent, will be s7l30 0O0 and the annual in
crcst at six per cent will be $40 $50 600 The discount
lar OF which will be an entire loss to the country.
The asnost exclusive use and demand for gold now is
the interest the public debt; this followed by the
sale of the surplus beyond the amount required to pay
interest which surplus again accumulaes TO go repeat
cdy through the same process II one half OF the die
rcnccs between our imports and exports were paid In
gold as they occur the prcc Of gold and foreign exchange
would have long since reached rate sufficiently high TO
have materially checked our imports and increased in
corresponding ratio exports The price Of gold Is
governed by the demand for the purposes stated,
and the foreign balances against us paid, be.
fore shown, by the sale abroad OF government and
other securities at a discount of about forty per
cent; thus instead of paying creating an add-
tiona indebtedness To the extent OF the difference be-
tween the amount received for securities and their
par yalue, every fraction Of which shall ultimately
have to pay in gold In addition 10 the interest It may
be said that exports will bc increased by the addition
Of southern productions. This will undoubtedly be SO:
but TO greater extent than imports will Increase.
Tho South will need more than all the goods her surplus
crops will purchase and IL cannot compete In the
open market with other nations relative position in
reference to imports and exports will not be improved
In view OF our position, prudential considerations
would seem TO point 10 such adjustment Of the tariff
intermediate To tho resumption Of specie payments as to
discourage inordnatc mportaons This can be done by
Increasing the OF duties lust proportion the
price of gold and foreign exchange may recede thus
keeping mp the cost OF mporations high they
are including present rate OF foreign exchsnge This
could be followed by graduated reduction Of such in
crease say ten per cent at tho expiration OF each six
months until brought down 10 the original rate Imports
would b. held back in view OF such reduction and there
would be overwhelming crash resulting from sudden
TALL of prices but business would adjust itself to the
sent and prospective condition In which II would be
placed under the legislation indicated In the mean
time, by steady reduction OF the volume Of rredeem
able currency and consequent reduction OF prices we
would be able once more TO place our and
agricultural productions footing that would enable
them to enter into successful competition with those Of
other nations In the markets OF the world.
TO TAKEN REDuc.
As the first step to be taken towards reduction OF the
government issues used rs currency SOUND policy would
indicate the conversion OF all the Interest bearing eeal
tender notes into $50 six per cent bonds II Is believed
that the slight contraction caused by such conversion
would be scarcely perccptibe, more especially at this
time II Is not probable that than five cent OF
the whole issue In active circulation. II would be
simply exchanging security held as an investment
for another.
Tho national banks alone, shown by their reports,
held tho LIST Of October last &193 6S in legal ten
der notos $c2 72 462 than the whole Of
their national bank circulation al that time they also
held In notes of other banks $l6 2 and Of thor
notes not In circulation $19 525 1872 making total
OF unemployed circulation the hands OF national banks
Of s22s 96S 75s which is several millions moro than the
entire paper circulation OF tho country tho LIST Of jan
uary 1851, or at any previous period.
An EXTENDED LIMIT THE CIRCULATION DEuRAMx
In view OF the urgent demand that will undoubtedly
be made for increase Of the national bank circulation
and gentle mode Of further reducing the volume Of
legal tender notes. s suggested that the national
rency act be amended 10 allow increase Of the
limit TO four hundred million OF dollars conditions
only that all the banks be required 10 redeem their
notes in New York, Boston or Philadelphia; and also
that issue Of six pcr cent $40 bonds be authorized
TO the amount that will require 10 tho addi
tonal circulation under the provisions Of the act which
bonds the banks when organized shall purchase each