Western Reserve chronicle. [volume] (Warren, Ohio) 1855-1921, 1867-12-25


providing means for their circulation.
Conservative legislation is now indis-
pensible. The public mind is too SEN
sitve, business is too unsteady and the
political future too uncertain to war
rant any financial experiments. For
tunately none are required. The ma
tional banking system has furnished a
circulation, deprecated it is true, like |
United States circulatory notes, but /
solvent beyond question, and current /
throughout the Union. 1t has aided |
in regulating domestic exchanges, and |
furnished government with valuable |
financial agents. Had it not been /
ladopteG the State banks would have /
continued as long as they were tolers- |
ted to furnish the country With bank
notes. In most of the States banks
were not required to deposit stocks for
security of their notes, and in those
States where security was required
there was no limit to the amount of
bonds that might be deposited and
consequently no limit 10 the amount Of
notes that might be put in circulation
In other States there was no security
beyond the capital OF banks and fre-
auently the unreal and partial liability
of stockholders. Generally deceptive,
who can estimate the extent of injury
which the people and government
would have sustained If State instltu-
tions, without any other restrictions
than were enforced by state laws, had
been permitted to occupy the field
Ali having suspended specie pay
ments, and thereby been relieved from
the necessity of furnishing evidence of
solvency, banks unwisely or dishonest
ly managed would have stood on lev
el with those who were managed wise
ly or honestly, while the latter would
have found it difficult 70 keep their is
sues within reasonable limits, stimuls-
ted, as they would have been, to issue
freely, by the necessities of the govern
ment and the increasing demand for
money, which is always the result of an
increased supply. The former would
have poured out the irredeemable
promises, until distrust created panic
and panlc disaster. The national sys-
tenn. with its limited and secured cir
culation, and its restricted provisions,
, by suspending the State systems, has
prevented financial crisis, there can
be but little doubt. For this it is enti-
tied to credit, and for this and for 9TH
er reasons suggested, it should be sus-
tanned until a better. shall be devised
> or the country is in condition to dis
pense with bank issues altogether.
The arguments in favor of compel
ling banks toretire their notes and yield
the field to the notes of the Govern
ment, are based on the supposition that
9 if three hundred millions of United
4 States notes were substituted for three
hundred millions of national now IN
"a circulation the government would save
some eighteen millions dollars In In
terest which is now a. gratuity to the
banks. There would be no such saving,
nor any saving, By the proposed substi
tuition, as is clearly shown by the
Comptroller of the Currency IN his &C
companying report, to which the at
8 tention of Congress is especially asked
If an account were opened with the
: banks, and they were charged with in,
: terest on three hundred millions o.
i dollars, and the losses sustained, inter
est on the United States notes held BY
them as permanent reserve, with the
+ the taxes paid by them to the govern
ment and States, and with q commis
sion covering only what has been saved
in transferring and disbursing the pub
g lie money, It would be ascertained
f that the banks were not debtors to the
d United States
: 1t is not necessary, however, for the
y Secretary to dwell on this point, rs his
: objection to the substitution would
b not be removed if saving Of interest
= would be effected by it. Regarding
, as he does, the issue Of the United
+ States notes in the first instance, sE
q having been o misfortune, and theil
s continuance as g circulating medium
= unless til volume shall be steadily re
It duced, as fraught with mischief, the
s Secretary can conceive no circumstan
VI ces that would justify further issue
l. These deprecated, but legal tendel
e notes, Notwithstanding the reduction
/ that has taken place, stand in the way
{ of a return to specie payments. A sub
s stitution of them for bank notes
g would be regarded by him and by the
5 country as a declaration that resump'
s ton has been indefinitely postponed
+ If those outstanding shall be retired al
y the rate of only four millions per
q month, the amount in actual circula
! tion will soon be reduced 80 that they
9 may not seriously retsrd the restors
e ton at the true measure of value. L
L on the contrary, under any pretenee
C or for any purpose whatever, their val
y ne should be increased, especially i
It they should be made the sole papel
y circulation of the country, false
n measure Of value will be continued
, speculation will be stimulated, industry
o viii decline, and great risks incurred
e that financial health will be obtained
/ by a revulsion, the effect of which upon
], the material interests and credit of the
e country no one can estimate. Such {
!, revulsion the Secretary is most anxiou
II to prevent, and he, therefore, can no
: approve of the proposition for substi
II tuting notes of the United States To-
r those of national banks, but recon-
l. mends that the policy of contraction
e be continued.
CONTRACTION.
.e The apprehensions that this policy
s will embarrass healthy trade Is in his
e Judgment, unfounded. Legitimate
Dn L