Raftsman's journal. [volume] (Clearfield, Pa.) 1854-1948, 1869-02-10
SPEECH OF HON. G. W. sooFIELD.

| Siauuai iCsuiuptiou VI specie payments Was
recommitted to the committee on Banking
and Currency, Mr. Schofield said:
MIR. Speaker, what shall we have for
money in this country | do not mean Just
now while we are In pinch, but in the tu-
ture when we become masters Of the tinan-
clal situation. Shall 1t be exclusively metal
! lie L suppose not. There was at one time
a few advocates of hard money in che coun-
try, but know OF none now. If not metal
lie 1t must be paper. Then what kind of pa
per? Shall We revive State banking? l hope
not Its complexity, paDlcs, failures, frauds,
| and counferfeIts condemn it, and the Con-
| stitutlon, properly construed, torbids it. We
are lett, then, to a choice between United
States notes, something like our greenbacks,
and bank notes something like our national
currency. Before We choose between them
each system should be amended, or consid-
cred as amended, so as to be what we want
| to be IN case OF Its exclusive adoption.
| FIRST Banking should be free TO all. Each
bank should undertake TO redeem It's notes
| IN coin upon demand. and give security for
the undertaking. This would probably be
a sufficient limitation as TO the amount OF
| currency.
.Second A plan should be contrived by
/ which the Government would save as much
the notes were issued by the Treasury, in
stead of the banks. 1t is said that this is
the case now. Perhaps it is ; but itshould
! be in the form Of reduced interest upon the
| bonds instead of taxes, SO that we can all
| see exactly what Is saved. Otherwise wants
/ Of trade may be overlooked In the straits OF
! the Treasury, With these, and perhaps
! other notifications Of the national banking
! system, let US see which of the two kinds OF
| paper is most desirable. The Treasury
| could have no choice, because the Govern
men; would save or make as much on the
one kind of paper as the other. The bill
! holder could have no choice, because his Sc
curiry in each case would be exactly the
same, except that in the one case the re-
| spousibiLty Of the corporation would be
added to that of the Government-an addi-
| ton, perhaps, too trihing for consideration.
| Which, then, is best for trade Trade needs
stability in prices. To make prices stable
the amount of currency and the amount of
trade should always bear the same relation
| to each other. If the amount of trade varies
| during the year, or from year to year, the
amount of currency should vary also. Other
wise prices would 90 up and down from mere
excess or lack of currency. This want Of
trade has never been perfectly met by any
system. 1t probably never will be. But
the currency furnished by free banking
system will supply it more nearly than any
other. 1t is capable Of expanding as trade
expands and contracting as trade contracts.
Not SO with Treasury currency; that must ex
pand and contract as laws areimade or repeal
ed by Congress Congress cannot always guess
what trade wants, nor be willing to respond 10
those wants if it could. The necessities OF
the Treasury, the preparation for an eiec-
ton, or change of the administration would
generally dictate the increase or decrease of
currency. Legislation thus controlled by
political reasons must necessarily be arbitrary
and unreasonable No business man Wouldfee
safe while Congress was In session. A line
or two of law might wipe out half his secur
tiles or double his liabilities. Free banking,
on the other hand, is self-regulating, or
rather it is regulated by the demands of
business. Its notes will be plenty when trade
is brisk and scarce when trade is dull, and
and thus prices viii be kept stable.
1t has been supposed that this fexibility
could be impaired to the Treasury currency
by allowing the notes to be converted into
bonds and the bonds into notes at the pleas
ure of the holder The effect of this scheme
would be very different, [ apprehend, from
its purpose. The notes and bonds, being
convertible into each other, would always be
Of exactly the same value. Except in the
convenience of handling one would be as
good medium of exchange as the other.
The result would be that nearly all the
notes would be converted into bonds
for the sake of the interest, and the bonds
used in all large transactions In place of the
notes Substantially, the bonds would all
become Currency 1t would make a great
initiation of currency, and the Government
would be paying interest on nearly the whole
of it.
The gentleman from Massachusetts, Mr.
BUTLER has given us the details of plan
based upon this principle. 1t provides that
the holder Of any portion OF the bonds bear
ing SIX per cent. interest IN coin may ex
change the same for currency at the rate OF
ninety per cent OF its par value, and while
the bonds are so deposited and exchanged
receive yearly interest thereon at the rate Of
two and thirty-fiv hundreths per cent. A
man having 81 600 could purchase with it
bond of the same amount, and at once de-
posit it and get back 5000 OF his money. lie |
would thus be out of pocket 500, but he |
would annually draw from the Treasury as
interest on his bond at the rate of two and |
thirty-hye hundreths per cent S23 so.
The gentleman says there are 81, 7500 000,- |
600 of these convertible bonds. This large |
interest would cause them all TO be convert
ed, and we would thus have 81, ,575, ZOO, 900 |
of currency beside the $3.50, ,O0O,0OO which |
the gentlemen proposes to issue in advance
in the place of the greenbacks. If the whole
81, $50, 900, 600 were deposited, and ninety
per cent of their par value returned in cur
rency, the bond holders would be out of
pocket STE, 200, 600, and would receive from
the Government as interest S4l, ,l25, 600.
The interest upon their money actually in
vested would be twenty three and fifty hun
dreths per cent. The bondholder would
make a good deal of money by the opera
ton, and the Government would save some
but the country would lie afflicted
with 81 ,925, ,000 900 of irredeemable paper.
II you thus make it an object TO convert the
bonds all will be converted, and we will have
4 destructive flood of paper. If holding the
bonds pays best the notes will be converted
md the bonds used as currency. The intia-
ion will be nearly as disastrous as in the
,ther case, while the Government must
larry HEAVIER load of interest than ever be-
ore.
To avoid this objection it has been pro
posed to make only limited amount OF bonds
md notes convertible. Within this limit
he effect would be the same, with this ad-
litional disadvantage all who desired to
,educe the amount of currency, either for
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