The Portland daily press., 1868-11-23

How to prevent Undue Expansions and
Contractions Of the Currency.
The answer to this question that came from
Washington Immediately after the great Wall
street panic was this: adopt Mr.. Lynch's "au--
tomatic self adjusting scheme"-issue bonds
at low rate OF interest, payable on demand
in greenbaeks. The facility with which the
bonds and the currency are exchangeable will
give us an amount of currency approximsting
very nearly to the actual business wants OF
the country at any given time. The wisdom
of the plan seemed suddenly to strike the
whole country as it had previously struck sew
eral eminent financiers who plagiarized 1t and
incorporated il into their own incongruous
schemes after it had been introduced as an in
dependent measure by Mr.. Lynch.
But just now there comes doubtful ruInor
from Washington to the effect that Seo-
retary McCulloch does not approve 'le mea-
sure, not believing that it VIII nave 'ne ehecs
TO prevent controctons and expansions of the
currency Recent events nave not done much
| TO exalt Mr.. McCuIloch's views in the minds
of the peope But his position gives weight
| ,o any views he may express Oh financial
topics and it is certainly worth while to re-
print extracts from Mr.. Lynch's speech of last
March, showing how his measure will have
tendency to effect the desired object. As it
is one of the purposes of the. bill to DESTROY
the dangerously large discretionary power
now vested by law in the Secretary of the
Treasury it is not perhaps very surprising that
it should not strike that official favorably.
We quote from Mr.. Lynch's speech:
The bill "to prevent undue expansion and
contraction of the currency" provides for reg
ulating the volume of the currency by the on
Grafton of the laws OF trade and the business
wants of the country rather than by arbitrary
enactments or the exercise of discretionary
power by the Secretary OF the Treasury. and
also provides means for the investment of
capital temporarily dle-liberating it when
the needs OF business demand, thus making
the Government greenback security as flexible
and adaptable to the business wants of the
country as that Of the national banks.
This bill provides for the issue of coupon
bonds to the amount of $500, ,000, 900, of denOm-
nations of 500 and the multiple of $10O, pay
able on demand at the Treasury of the United
States, with the interest quarter yearly at the
| rate of four per cent. in lawful money. 1t also
provides that these bonds shall be issued to
any person applying for them at the Treasury
of the United States upon paying for the same
thereon in United States notes; and that the
holder of the bonds may re-exchange them at
his option, receiving for them the par value
and accrued interest to the amOnnt of any
overdue and unpaid coupon. These bonds
have no connection with those representing
the funded debt. They are all of one class,
and all convertible at the will OF the holder
| There can be no confusion as to the amount
| out. There must always be just the amount
of bonds to supply the demand, and Just
| OraaOb3ckS nnOuUh in the Trna acurv tn
all the bonds which can be presented. There
| is no casting of interest on incoming bonds as
the. overdue and unpaid coupon, added to
| their price, will just repre- sent the amount
| due. All accrued interest on a bond present
| ed for redemption, less than a full coupon,
| would be so much gain for the Government
| and would help to pay the expense of making
| the conversion. To great extent, probably
the bonds would come n only on quarter days.
| Only on issuing would it be necessary to com
pute interest. .....-
The substantial features of this bill have
been adopted in several bills which have been
introduced during the present session. They
| have been incorporated into the funding bill
| recently reported to the Senate by the Finance
| Committee, (section five and also by the gem
| tleman from Massachusetts Mr.. Butlerl into
| his financial scheme" and by him very hap.
| PLY christened the automatic, self adiusting
system of finance" r. ..igo. .7. =
| This bill having received such distinguished
Endorsement here, and having been approved
| BY the leading journals of the country, L CON
| hdently expect to See it enacted into law dur
ing the present session: and, believing it has
not been improved by the alterations to which
| it has been subjected, 1 trust it may be passed
| substantially as introduced. ll-sr. +
| The Senate bill, to which have alluded,
| provides for the consolidation of the whole ma
tional debt into one description of bonds, reg
istered or coupon, and then by section five,
which contains the principal feature of this
bill, allows such bonds TO be converted and re-
converted to the amount of $500, 100000 There
are several objections to this section of the
Senate blll First, as is SO clearly set forth in
the report OF the Finance Committee accom-
panying the bill, the currency should be kept
as distinct as possible from the funded debt
Second, there is no necessity for having these
| convertible bonds bear the same rate of inter-
est as the bonds which represent the funded
oeDt. Ihlrd, the bonds representing the fund
| ed debt must be paid, principal and interest,
| in coin, portion of them must be registered,
| and provision made for changing from coupon
to registered under certain circumstances
Inc interest is made payable semi-annually,
which would involve great labor and ineon-
venience in making the transfer, and also la
Dor and delay in casting the interest, day by
day, as the bond may be presented Fourth,
tnere would be no gain in interest to the Gov
ernmcnt to pay for the transfer and retransfer
OF the bonds. Fifth, the amount of bonds out
6eing about twenty five hundred million dol
lars, and only $400,000,O00 convertible and re.
convertible, no one would have any assurance
that his bonds could be exchanged, as the limit
OF $4OO 100000 might be reached just wher the
holder of the bond might want to convert in
to money. The bonds, being exempt from all
taxation, would be purchased at the Treasury
just before local assessments of taxes were
made, kept long enough to get the advantage
OF the exemption, and then reoonverted into
money.
The gentleman from Massachusetts has, in
adopting the principles of the bill, only amend
ed it so far as to provide for the issue of an
additional $3O0O00,O00 legal-tender notes. The
proposition involved in this amendment is
simply to issue an additional $500 900
greenbacks without any provisions for, and
apparently without any intention Of, redeem
ing them in specie. To this L am opposed
We should first reach specie payments and
then supply the country with Just SO much
currency as can be maintained on specie ba-
| sis and no more -t ---TI7. - -.