, 1870-06-21
THE GARFIELD CURRENCY BILL.

AA~%Na ~ AuG4A 6lE-AA3 lGuEEp1ANlE III Lit
greenbacks es long as any remained, and in
gold when the greenbacks were retired; and
by making National Banking on this
basis free to all who should choose to com,
ply with its safeguards. Such course has
the manifold merits, first Of removing IN
inTidious and unpopular monopoly from the
business of banking; secondly, Of retiring
speedily the overdue and protested promises
Of the government, whose very existence
five years after the war has ended is q
stain upon the national honor +;
thirdly of effscting this withdrawal
Of the greenbacks without contracting the
total volume Of the currency; .toursAEy,
of promoting return to specie payments,
by diminishing the quantity and enhancing
the value of the legal tender notes until
they shouid he brought to par with gold,
which Is resumption =; filthy, of promot-
ing sound currency by substituting
promises whose redeemability st par
in gold Is secured by pledge Of
public stocks, in the place Of gov
eminent notes whose value varies with
every vibration in ths government credit :;
siTM1y, of promoting flexible currency,
by substituting one whose volume VIII be
increased and diminished by the loans of
the banks according to the wants of busi~
ness, for one that can neither be increased
nor diminished, and whose inaexibility
puts millions into the pockets of spcc-
ulators annually.
The New York Times and Eeening Post,
IN discussing Mr. Garheld's Currency bill,
recently passed by the House, seem to as
sune that there is no difference in the
effect, between an issue Of bank notes and
one of greenbacks, SO far ns coucerns their
tendency to depreciation, and to delay
resumption. This is a manifest and fatal
error Each bank note rests for its credit
On an independent basis of its own, the
solvency and strength Of the bank, and a
pledge Of pnhlic stocks. This double
security is ample to secure its redemption
in gold, If Ehe law required it to be redeem.
ed in gold. The Legal Tender Law by max
ing the bank note redeemable in the green.
back, holds down the value Of the note to
that OF the greenback. The greenback,
however, rests On no. independents basis oi
its owl for its credit; its redeem.
ability is not secured. BY
pledge Of public stock, OF by anything
else; on the contrary, it is itself public
stock, as well as medium Of exchange,
and, as a public stock, it Huctuates in value
with the whole s., 1oo, 600, 600 OF national
bonds. So long, therefore, as Il govern
ment promise is the thing in which our
bank note currency is redeemable, SO long
must the whole currency Of the country
and all values and contracts advance and
| decline with every little flaw of the wind
that affects the selling price Of our bonds.
All this is an unhealthy and Monstrous
anonnnly: The way to get nd Of il is to
retire that form OF the currency which is
government debt, and is affected in value
by 50 many causes of huctaation, and sub
stitute currency whose redemption and
convertibility depends on no such contin-
gency.
The Evening Post and New York 7imss,
in failing to recognize the difference be-
tween greenback and bank note circula-
ton, overlook the very essence of the
whole matter. For, while any considezn-
b1e addition to the volume of an unsecured
and MTe<1eemable currency would depte-
eiate its value, no increase Of the volume
of redeemable currency could possibly
depreciate its value.
The Garfield bill, so far Is it goes, works
q substitution of bank notes for greenbacks
Il authorizes sn issue of $95, 900, 900 Of
additional bank notes to the unsupplied
States and Territories, and compels the re-
tire1nent Of the S4J, 000, 600 of outstanding
3 per cent certificates nov held by the
banks as reserves and on Investment This
would seem, at first sight, TO leave the non
interest bearing legal tenders at their pres
ent volume of $3.50, 900. 900. but it does
not By two distinct routes the New York
Bulletin and the Etening Post both arrive
at the conclusion that the issue Of So5, 900, :
900 of banL notes would lock up about S40,-
000, 600 Of the greenbscks now outstanding
as reserves. The Post shows that the banks
issuing the sos, ,O00, 900 of new notes would,
if their deposits stood in the same ratio to
their circulation as existing banks, have
S24O, 600, coo Of deposits, and that, on this
volume of circulation and deposits, the
necessary reserves would be abont $40, ,000,-
GOO. The Bulletin makes nearly the same
estimate, and computes the necessary legal
tender reserve of the now banks at
S41, 50O, 900, which, added to the $45, ,0o0,-
600 Of greenbacks Withdrawn, to replace
that amount of per cent certificates taken
frr,r, 41,a 1nrf-y +harpea1voo roaloS a fatal
contraction of &s6, 500. 900, against an e1-
pansion of sos, ,o00, 900, or net expansion
of only S6,5o0, 600. The Eeening Post
makes out heavy case Of expansion, partly
by forgetting that the withdrawal Of the
S45, 900, 600 of per cents from the banks
would require to be replaced by greenbacks
to an equal amount, and partly by count
ing the deposits, which would accrue to the
new banks, as an expansion of the cur
rency. But, though deposits have the
function of currency in some respects, it is
fanciful to count an actual expansion OF
only $500, GOO Of notes, as an expansion
Of $500, ,o00, 600, because Of the alleged de-
posts it will give rise to. Whatever be the
actual increase in the note currency, it Will
not be likely to cause:a increase of de-
posits by more than twice or thrice that
sum- But, wLile the volume Of bank note
currency would be increased by the bill
from $500, 600, coo to 1896, 00O, 600, the
volume Of the greenback currency would
be reduced from Sa56, 5000 to
$eG9, ,5o0, 900. Heretofore there has
been $3.50 of greenbacks for every
So Of bank notes seeking redemption
in them, an arrangement which precluaes
the greenbacl being more rare than the
note, and. hence, is fatal to redemption.
Under this bill there would be only about
$3.50 available for every 81 of notes seeking
redemption. This viii set the demand for
redemption in motion, by making the green-
back rarer than the note. The Evening
Post thinks that this change would weaken
the banks by narrowing the currency in
which they redeem! The strength of the
banks does not depend on the rottenness Of
the medium in which they redeem
On tie whole, therefore, rs compromise
measure, not all we could wish, but far
better than nothing, we feel assured that
the effect of Garield's bill would be favora-
able, and would lead to free banking on q
specie basis, at the hands of the next Con
g1ess. We trust the Senate will pass it.
The passage of the sHigh Court Of
Justice BILL" by the House OF Lords OF
Great Britain, which was so quietly IN
nounced yesterday, ia IN event which may
not be supposed to particularly interest the