The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1868-03-06
DAILY PRESS. /
PORTLAND.
Friday Morning, March 6, 1868.
The Financial Situation.

~ 1-9A-1-SlAASfA n NAliONAL CURRENCY.
Instead of the clumsy indrection of fur
nishlng currency for the banks and eiyino
them gratuitously the profits of its circula-
ton, when they have not been able to begin
to perform the service of redeeming it, when
its only value is derived from the collateral
undertaking Of the government to provide
for its redemption, and its currency is Cue
alone to the fact that ii is exchanged for
tegdi tender treasury notes, let the govern
ment itself issue and redeem the currency.
The coming of money is, under the Consti-
tuition, function of the general government.
The neutrality-suspicious. ofevery country, from
lineage of Caesar to the present time, has borne
the image and superscription of the reigning
sovereign. The coin of Great Britain is
called the Kings coin. Gold has its intrinsic
value as bullion, but derives its monetary
value from the fact that it is stamped with
the enblems of national sovereignty, and its
weight and worth are authenticated by the
sovereign powerthat issues it. Whatever takes
theplaee OF coin, as the permanent substitute
and representative of it, should be issued like
it in the name OF the sovereign power, and
its issue, circulation and redemption should
be regulated solely by the national govern
ment.
After the establishment of specie payments
by the United States treasury, which is the
first and indispensable step towards any real
financial reform, let the circulating notes OF
the banks be retired, in such modes, and at
such intervals, as shall not disturb the busi-
ness Of the country, and give the banks the
option to withdraw corresponding amount
of their bonds, or receive an equivalent
amount of United States notes of denomi-
nations suitable for currency, redeemable en-
demand at the treasury in coin. After civ
ing this option to the existing banks, let as
many other banking corporations as may OBJ
tain charters from the several States, be fur
nished each with from $l00,O00 to 81, 100000
demand notes, to be used as currency upon
surrender of an equivalent amount of
United States interest bearing honds-they
paying the accrued interest, but no premium,
whatever the market rates may be- -5.sz
The money thus obtained the banks can use
under their corporate powers, in making
loans and discounting commercial paper Let
us suppose the rates of interest restricted as
now to six per cent. By reckoning interest as is
done, not upon the sum loaned but upon the
greater sun, discounted, by adding exchange,
and by the eompounding resulting from short
loans, the gross annual interest earned can
be made per cent. But the money paid
out upon discounted bill at 10 O'Clock, was
paid upon mortgage, and at IL o'clock the
mortgage brings it in as deposit, the bank
loans it again upon an endorsednote, the Gus
toner uses it in purchasing a cargo OF lum-
ber, and at II o'clock it returns to the bank
as a deposit, and before 1 o'clock it is paid
out in purchase of a. 80 days bill of exchange
in this way banks receive, as their. returns
show, interest never ON less than once and a
half, and from that to four times their capi-
tal.- Besides these sources of income, the
banks will be the financial agents of the gov
ernlnent in circulating and keeping out its
notes, in redeeming these notes in coin, and
in exchanging bonds and notes for each
other; for all which services they ought to
be paid a just commission to be fixed by law.
. 1t is believed that under such system an am
pie margin is left for safe and profitable bank
ing, and that there need not be the slightest
apprehension that the commercial communi-
ty will be deprived OF the salutary and essen
tial agency Of banking institutions i4 oni
/ If the original provision OF law allowing
the exchange of treasury notes for interest
bearing bonds, which it was piece of bad
faith and bad economy to repeal, be restored,
as is recommended by the Finance Commit
tee Of the Senate, the whole volume OF
greenbacks issued and to be issued win be at
any moment convertible into such bonds and
the bonds back again into greenbacks. But
to prevent small interest-bearing bonds of
$50 and $100 from being used as currency,
while they draw interest, such bonds should
never be converted into notes, except when
presented in sums of $1,000 and the maxi
mum Of circulating treasury notes should be,
as now, fixed tromtime to time by law. Indeed
if the existing banks should manifest dis
position to sustain the credit of the govern
ment, and cooperate with it in establishing
and maintaining a permanent paper Gun
rency redeemable in specie, The government
might make them its sole financial agents,
furnishing them its bonds at par and fur
nishirg circulating notes only upon their
requisition, under such security and such su-
pervision, as the assuming of such trusts
would make necessary. IL a,..t
The people under such monetary system
will not only be relieved from the interest o
so much of the national debt as is embraced
in the circulating notes, but they will have 8
currency, which the whole nation is pledged
to pay, currency contracting aud expanding
according to the demands Of trade. When
business is active the interest-bearing deb
passes largely into demand notes, money be
comes abundant, and the government gets re
lieved from interest; when business is dul
surplus demand notes are invested in bonds
and the government pays interest to relieve
the people.
OF course the banks will not pay so large
dividends, nor accumulate surplus profits SC
rapidly as they have the last four years. MOI
should they, for the heavy interest earned by
banking capital has aggravated the market
rates of interest, and diverted capital from in
dustrial enterprises. Some of the country
banks, not having the advantage of large
deposits may choose to wind up their affairs
Ifso there will be an opportunity to establish
banks in sections of the country where they
are needed, without enlarging dangerously
the aggregate bank capital The business o
loaning money and dscounting paper, which
individuals have done with profit, corpora
tions whose credit is strengthened by associa-
ton, can do with still greater profit. There
need be no apprehensions that banking
which has become one of the commercial in
stitutions of civilized men, will come to an
end or that the government will be compelled
to leave its proper functions, and to under
take the business of loaning money to needy
merchants and of discounting bills of ex-
change. 7l+ 1880 FI4' .A'e' ...--.
If less profitable under such system, bank
ing will become more safe No longer liable
to redeem their notes in coin, they need not
keep large reserves of coin, and SO long as
they loan on reliable paper, they may still
further than under The present system utilize
their deposits. When specie enters again in
to circulation, it will naturally flow to the
banks and whenever the banks redeem treas
ury notes with specie, not kept on deposit