American citizen. [volume] (Butler, Butler County, Pa.) 1863-1872, 1867-11-27
Mr.. Pendleton's Financial Vagary

the NatiOuAi Deot th hAteSu Joais. IL
is as follows: .tIst ..rt
"Three hundred and thirty eight millions
of these bonds are, by the report Of the
Secretary of the Treasury, deposited to-day
as security in the vaults of the Treasury.
Three hundred millions of bank paper is is
sued on the faith Of these bond. Now,
gentlemen, maintain that this circulation
ought to be called in that these bonds
ought to be redeemed with legal tenders,
which will take the place Of that bank cir
cuation.
What would be the effect of this 7 The
seventeen hundred millions of interest-bear~
ing bonds would be reduced to flurteen mil
lions and twenty millions of dollars would
be saved to the Government from the inter-
est which is paid to the bankers for the
bonds which they have deposited.
New, then, suppose you take these TWEEN,
ty millions of interest which is saved, and
add it to the forty eight millions of dollars
which these gentlemen say they can pay
from the current revenue, and you have six
ty>eight millions of dollars, year by year,
and if you convert that sum into green
backs, at l40, you have hundred millions
of dollars year, and if this is appropriated
as a sinking fund, you eau pay off the whole
debt in less than fifteen years, without ad>
ding one dollar TO your taxation, or one
dollar to JonI circulating medium.
Bear in mind that am arguing propo-
sition that these bonds can be paid in green
backs without initiating the currency
The only portion of this plan which is
Mr.. Pendleton's is that relating to the
twenty millions OF dollars which he thinks
can be saved by abolishing the National
Banking system, and making the Treas
ury Department issue all the currency
now issued by the National Banks. This
would convert the Treasury Department
at Washington into United States Bank,
without other capital than the general re-
sources of the country, but commissioned
to furnish the country with all its paper
money Now, we maintain that there are
practical reasons, growing out Of the ma,
ture of Banking and paper money sys>
TEN, why the Treasury Department can
not thus supply the currency of the couu-
try. The ordinary mode in which pa>
per currency is kept afoat is that the
notes aud drafts arising in course of trade
snd business, and having from thirty
days to four months TO run, are received
by the banks, aud held till they mature,
the banks giving IN exchange therefor
their own notes, payable on demand, and
the latter pass into circulation as curren-
cy. Apart from this system of dit count.
ing private paper, currency cannot be
kept in circulation. This business the
Treasury Department could not transact,
either directly or indirectly. The at
tempt to do so through the old United
States Bank broke down the party that
committed the error. Banking, though
necessary to our public and business life.
must be kept distinct from the Treasury
Department aud all Government infuen.
ces. Let US suppose Mr.. Pendleton's
plan carried out-the present National
Banks recall their currency. and sell the
bonds now deposited with the Govern
ment for about s3OOOOO, 900 in green.
backs This transaction has swept the
National Banks out of existence. There
IL the same amount of currency held by
the people, but there are no banks, no
places of redemption, no agencies for
keeping it in circulation, no security has
been given for it by any body, and nobody
knows how much of it there is in circus
lation except at hcarsay. The profit on
circulation, which is the only considera>
tion which can induce bank to give its
circulating notes, payable on demand, in
exchange for notes Of private parties, at
four months, is gone, and hence the
banking business is stopped. All this
would involve an immediate depreciation
in the value of the greenbacks them
selves. Either the Government must en-
ploy the banks as agents to resume their
discounting, using its greenbacks instead
of their own notes, or else the system Of
State banks must be revived. Assuming
that the revival of the State banks is not
what Mr.. Pendletoa is driving at, we are
brought to the question, On what terms
would the banks resume dscounting and
circulate greenbacks instead of their own
notes
1t is essential to the safety of the
banks that the discounting shall be done
at the risk Of the banker. This cannot
be, ualess the banker is responsible for
the redemption of the notes. 1t is es-
sential to the safety of the banker that
when he gives demand notes for notes
payable at future time, he shall have
the full interest on the currency This
he cannot .fo if the Government charges
him anything for the use of the curren-
cy. 1t is essential to the safety of the
community that if the banker furnishes
the currency at his own risk, and has the
interest on it while it ID outstanding, he
shall give security fos its redemption
and no security could be so good as that
OF Government: bonds. Thus, unless We
reestablish State banks, which nobody
desires, or abolish banking altogether,
which is impossible, or convert the Uni.
ted States Treausury into a gigantic
Bank of Issue and Of Discount, with
agencies in every city, like the Bank of
England, which We don't like, the very
necessities Incident to the maintenance
OF paper currency drive us right back
to the three fundamental features of the
National Banking system, viz: that the
currency shall be furnished without in
serest BY the Government that it shall
be issued at the risk of the banker, and
than IL ehalI h. secursd he Governmant