The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1867-11-22

Lhat they must Ds presented at certain places
to be exchanged for greenbaeks before given
time on pain of depreciation, !. e., of partial
forfeiture; or, third, by declaring. the bank
notes legal-tender, relieving the banks of all
responsibility for their redemption, and leaving
them in circulation as so many Government
notes.
The plan first named could not be carried
out, because the banks have no control over
their circulation. Their notes are held by the
people, who would not go to the trouble of
returning them to the banks to be turned into
greenbacks on simple request to do so. The
banks would not pay premium on their own
notes, as an indueement for their return. nor
could Government force them to pay such pre-
MUM. But even supposing that published
request from the banks would bring back to
them every dollar of their circulating notes
the result would be universal bankruptcy for
1t would signify the sudden withdrawal from
the business of the country of three hundred
millions of currency. If the monthly retire
ment of four millions now causes stringeney
and dull times, what would a contraction to
the extent of half the volume of our currency
not cause
Plan number two, for effeoting the substitu-
tion of greenbacks for bank notes, would sue
oeed little better. The Government could in
duoe the holders of national bank notes. scat
tered as they are among thirty million people,
to send them for exchange to Washington or
New York only by threatening their partial
forfeiture in case of refusal or failure SO to
send them. But the Government is already
pledged to the redemption OF the bank notes
at par, and a threat of partial or total for
feiture would be threat of partial or total re-
pudiation of an honest debt-nothing more
nor less. The Government has no more right.
nor power, to repudiate national bank note
than it has to repudiate one of its Five-twenty
bonds. A threat to forfeit or repudiate ma
tional bank notes which were not returned to
Government Office for exchange by given
time, would be blow at all credit, and would
depreciate every Government bond, green
back, and national bank note to an extent
little thought of by the wise theorists who
treat this matter with such ready iippancy.
Hence, if this substitution were to be made
at all, and Government wished to make it
without shutting its own honor and bringing
loss to the people, the proper and only way
would be to adopt the third plan suggested
above, viz; declare all national bank notes in
circulation to be a legal:tender, and relieve
the banks from all obligations to redeem them
i'm word, transmute the national bank notes
into greenbacks by act of Congress, and then
| let the actual exchange take place in the
natural course of business-the depository
banks being authorized to retire national bank
! currency as fast as it came into their hands,
substituting newly-printed greenbaoks, fur
nished for the purpose by the Treasury De-
! partment
So far as the simple exchange of national
bank notes for greenbaoks is concerned, the
| plan we have sketched above would accom-
| plish it without any serious jar to business
and credit but this is the smallest part of the
| process whereby the Substitutionists propose
! to save eighteen millions of annual interest.
| The change in the character OF the currency
would not of itself save the Government any
interest. The $340 900 of bonds now
| L
| secure their circulation would still remain the
property Of the banks, while the latter would
| owe the Government $780, 000, 900 for redeem
| ing their circulating notes. How is the Gov
! ernment to get possession of those pledged
| bonds so as to cancel them and thus save the
much-talked-o of annual interest Here comes
] the rub, and here the plan of substitution
| would utterly break down, OF It would accom-
pish its end at the cost OF universal bank
| ruptcy and stagnation. The Government
could not force the banks to sell their de-
posted bonds, but it could force them to
pay their indebtedness of $500, 0,000, 900 to
the national treasury. in order to do this
the banks would probably be obliged to dispose
of their bonds; but where would they sell
| themG In the open market, OF course, where
| they would get the highest price. 1t is sug-
| gested that the Government could offer to buy
| the deposited bonds. OF this the New York
| Nation. itself hostile to the banks, says:--"f
| the Government declares its willingness to buy
| the bonds of the banks at the market price,
who is to fix that price, and white market
price is to be taken-that of the day when the
law is passed, or that Of the day when the
bank surrenders its currency, or that Of any
other day And if the Government buys
these bonds at market price, paying the
heavy premium on them (what injustice to
other bondholders y, why should the
| bonds of the banks alone be redeemed Or if
| the banks are compelled or allowed to sell
| their bonds in the open market, what dis
astrous fluctuations would result from the
sudden or even gradual sale of such an i'm
mense additional amount of securities what
loss would result to the banks and to at thou
sand other innocent holders % But there is
a still graver objection to this proposition,
which the nation has overlooked. A majority
of those who urge the substitution of green
backs for national bank notes, also hold that
the Government bonds are payable in GREEN
bAcksS hence the Substitutionists themselves
would never permit the Government to estab-
lish fatal precedent by paying the banks
more than par for their deposited bonds.
That would be surrender of the whole ques-
tion.
The banks being thus forced to sen their
S34O, ,OOO, COO of bonds in the open market,
they must first get temporary possession of
the bonds. To do this, they must gather
up and present at the Treasury S3O0OOO,000
in currency, as the Treasury would not per-
NIT the deposited bonds to 50 out OF It's pos
session until the debt which they seonFed was
paid. How would the banks get this amount
of currency They would certainly do It by
calling in all their loans, and ceasing to dis
Il IA. n.