New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1868-02-10
S7G2.Mn.ONN

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Fractional Circulation. 5lNN'NC
Interest Bearing Legal Tenders. 72@OOoO
Total ...............$ 762 100000
Now let MS look at the of the Government
and the banks which can be applied to the retirement
Of such portion Of the foregoing aggregate as expert
cnce shah hereafter show is not required on the basis
OF resumptionf
Let MS fist take the Government, as being the
largest and hy far the most important debtor and
fhe one which, in fact must shoulder the main por-
ton of the lead Of resumption.
We begin By assuming that Mr.. McCulOch must
DE allowed TO pay the interest bearing legal tenders
(s72OCOOOO either 10y money in hand or by CONVEX
sion into the permanent loan. This is what he is de-
srous of DONG and what he was doing, when Con-
gresS forbid the process During the last ten months
of 1867 he retired over S00O0OOO of these obligations
without lowering the value of coin, and without re-
ducing the bunk loans dollar thus demonstrating
Che ease with which it was done 1t is fair pre-
Bumption he can retire the balance with little diff
Guilty.
Taking for granted that the Government is not to
be run for specie its ten cent and twenty-five cent
notes and that their final redemption is 10 be a slow
process we set aside this branch of its obligations as
requiring no especial protection. What the Govern
Jent must provide for and be prepared to redeem
rs fast as presented is its S56OO00OO of gcenbacks;
and when it demonstrates to all the world ITS ability
DNN"'''N
flshed fact.
At this point It seems to become necessary to
enter upon the much mooted point of how much
circulation the business of the country requires
|n order to decide how much the Government would
4 ttIIS existing StocN Oh
RlJ6. 0O0,0 900 notes outstanding. But do not
propose to enter upon this debatable ground. We
only aim to show that whether the sum be more OF
less. the Government can maintain without diff
Guilty an impregnabe front against both the natural
and unnatural demand of trade and speculation.
OF this $,5GOt0OOO near One-third of 1t lsay $780,
CoOOO0j is held by the banks a reserve for the
redemption of their own notes. This reserve, we
may conclude, would only gradually disappear in the
event of resumption and would be long i'll declining
70 *50OOOOOO.
At least another $lOOOOOOOO, we think none can
doubt would he immoyably fixed in business chan
Dels, for a long period to come. This would reduce
The really mobile of greenbacks to $2O00O0000
more less. which if represented by available
in the Treasury TO that amount could not
fail to give the Government the control of the sua-
zion.
The Government would then be enabled to declare
Us readiness TO resume specie payments the moment
IL had funded its remaining interest bearing legal
Tenders and converted its 1905 into the permanent
loan. now so nearly accomplished
This, may easily perceive, is oimposea compare
<yely light task on the Government. 1t has only to
Increase its reserves TO $@OO.0OOOOO and fund the
manning $700C0,0O0 interest bearing legal-tenders
or this S2OOOOOCO0 it has long held in its vaults
about Sl00OOOOOO Of coin, saying nothing of its cur
Iency balance, of which we will make no occount.
This is but a trivial surely for the Government
60 raise forthis al-important object 1t shows how
near to the point Of issue from all our difficult
ties, if will but seize the advantages the situa-
tion affords. This 100000 which our circum-
x~or coff of1a
rorrect much more than we shall need-can be most
rasily obtained by establishing foreign credit to
That amount q foreign balance being just efectual
for resumption an importation Of coin, and haV
sing, besides, this great advantage over an impOrta
ton of specie. that just much of it can be used
s. wanted, and no We thus incur unneces-
sary cost, and introduce no new disturbing element
III our finances
The ability of the Government then to resume
would appear to admit Of no doubt whatever. The
precise period when it may exercise that ability de-
ponds on itself To get ready has only to fund its
9SOs and retire its interest bearing legal tenders.
This may be done in short long period, just ac-
cording to its own option. But while its regular $50
loan is worth from TO 10 per cent above par there
j. no room for questioning the fact that 1t can, at
pleasure exchange demand notes, or greenbacks.
tnto that loan, TO whatever extent it chooses and
whenever it oh ooses
Now let turn TO the banks and see what is their
power to follow the Government.
They have circulation of $500 OOO 900 in round num-
bcrs. They hold $lOOOO0OO0 active legal tender,
100000 of interest bearing legal tenders, and
100000 Of specie. Assuming they can carry $780,
10000 of circulation basis Of $i0O00000 or $780,
10000 of coin its equivalent which they did be-
fore the war, they would not find it necessary even
10 strengthen their existing TO protect their
present circulation.
But suppose Prescriptions too liberal, and that
fhe Joint paper circulation of the banks and the Gov
eminent could not be maintained, each with
cess over its reserve of $4,000 OOOas have cal
rnlated what are the resources Of each for still
further reduction The Government still has its
power of funding, which it may exercise almost al
Its pleasure. But how with the banksi Can they
hereafter strengthen themselves to the necessary
degree without such contraction Of their loans as
20 bring distress and bankruptcy to their debtorsf
Il is at this point that we come to most encourag-
ing view of the financial situation An abstract OF
Che last annual returns Of the banks January 1868
phoy, the following results Capital, $iSO,OOO.OOO