The Elk County advocate. [volume] (Ridgway, Pa.) 1868-1883, 1869-02-05
RIDGWAY ELK CO. PA, FRIDAY, FEB 5. 1862

may be overlooked in the straits of the Treas
ury. with these, and perhaps other modii-
cations 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 Government would save
or make as much on the one kind of paper
as the othe-. The bill-holder could have no
choice, because his security in each case
would be exactly the same, except that in
the one case the responsibility of the corpor-
alton would be added to that of the Govern-
mcnt--an addition, 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 tie year, or
from year to year the amount of currency
should vary also. Otherwise prices would
go up and down from mere excess or lack of
currency. This want Of trade has never
been perfectly met by ally system. 1t prob
ably never will be. But the currency fur
nished by a free banking system will supply it
more nearly than any other. 1t is capable
of expanding as trade expands and contract
! ing as trade contracts. Not so with the
| Treasury currency; that must expand and
contract as laws are made or repealed by
! Congress. Congress cannot always guess
what trade wants. nor be willing to respond
to those wants if it could. The necessities
OF the Treasury, the preparation for an cleo
ton, or change of the administration
would generally dictate the increase or de-
crease of currency. Legislation thus con-
troiled by political reasons must necessarily
be arbitrary and unreasonable. No busiaess
man would feel safe while Congress was in
session A line or two of law might wipe
ont half his securities or double his liabili-
ties. Free banking, on the other hand, is
seif-rpguating, 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 thus prices will be kept
stable.
1t has been supposed that this fcxiblity
could 6c impaired TO the Treasury currency
BY allowing the notes to be converted into
bonds and bonds into notes at the pleasure
Of the holder. The effect Of this scheme
would be very different, l 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 lie converted into bonds for the sake
Of interest, and the bonds used in all large
transactions in place of the notes. Suhstan-
TALLY, the bonds would all become currency.
1t would make a great initiation of currency,
and the Government would be paying inter
est Oh nearly the whole of it,
The gentleman from Massachusetts, (Mr.
Butler) has given us the details of plan
iessed upon this principle. It provides that
ba hpl pFo n
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 exchanged receive
yearly interest thereon at the rate of two
and thiIty-fve hundredths per cent. A man
having 1000 could purchase with it bond
of the same amount, and at once deposit it
and get back 5000 Of his money. He would
thus be out Of pocket 500, but lie would
annually draw from the Treasury as interest
on his bond, at the rate of two and thirty
five hundredths per cent. $23 so
The gentleman says there are 81, 750, O00,-
600 these convertible bonds This
large interest would cause them all to be
converted, and we would thus have Sl,575,-
600, OOO Of currency besides the $3.50, ,000,-
600 which the gentleman proposes to issue
in advance in the place of the greenbacks. -
IL the whole 81, 100 coo, 600 were deposited
and ninety per cent of their par value re-
turned in currency, the bondholders would
be out of pocket $l7j, 0O0, 900, and would
received fiom the Government as interest
S4l, l25, coo. The interest upon their money
actually invested would he twenty-three and
fifty hundredths per cent. The bondholder
would make a good deal of money by the
operation, and the Government would save
some interest, but the country would be af-
tlicted with 81, 925, 000 600 of irredeemabIe
paper. If you thus make it an object to
convert the bonds, all will be converted,
and we will have destructive flood of pa
per. If holding the bonds pays best, the
notes will be converted and the bonds used
as currency The initiation will be nearly as
disasterous as in the other case, while the
Government must carry q heavier load of in-
terest than ever before.
To avoid this objection it has been pro.
posed to make only limited amount of
bonds and notes convertible. Within this
limit the effect would be the same, with this
additional disadvantage; all who desire to
reduce the amount Of currency, either for
speculation or to approximate specie pay
ments, would convert the notes aud hold the
bonds. They could afford to do this, be-
cause they would receive fair interest upon
the money, while'they were at the same time
securing what they would consider a more
Important eud, to wit. a contraction of cur
rency and fall of prices.
When, then, we shall settle down to a
specie paying paper currency, am inclined
TO give the preference to a system of
national banking free to all, and paying into
the Treasury as much money as the Govern
ment could save 10y issuing its own notes.
No other system could make the biIi-holder
more secure, earn more for the Treasury, nor
so we'll supply the wants of trade
This system cannot be adopted until after
we resume specie payments; and this leads
me to inquire how and when resumption SHALL
begin. To answer the question | will ask