, 1872-12-23
THE CURRENCY QUESTION.


THE CURRENCY QUESTION.
The proposition to authorize the Issue OF
1egal-tender notes to any amount that may De
called for in exchange for Government bonds,
which bonds in turn may be exchanged for
greenbacka, deducting the interest in the mean-
time, is not open to the objections that apply to
q general expansion of the currency. Its adop-
tion would test the much-disputed question
whether the present volume OF currency is or Ii
not equal to the wants Of the country. That
question can never be determined to the satis-
faction of the public until the opportunity is
afforded to the community Of having more cur
rency if they want it and can pay for it. If the
present issue be enough to meet tho necessl-
ties Of commerce, no more will DO
called for; If more is needed, then, upon the
surrender OF outstanding bonds, the Treasury
will Issue in exchange therefor corresponding
amount of currency. When the currency be-
comes too abundant, it will be retired for the
bonds. The present stringency in the money
market is caused, We think, by dearth Of loan
Au16 CdpILA4 lLuat " LILO 5lA pA00 4AoAoe@1 ~~
labor), rather than by 8 lack Of currency with
which the products OF labor are exchanged; but
such is not the common belief Anybody who
has Government bonds can get money for them
nov, taking the risk Of rise in the price before
he wants them back again. It is believed by
those who favor the proposed measure, that this
risk Of rise in price prevents the holders OF
bonds from selling them, and investing their
money temporarily in commercial loans, which
afford double the rate of interest that the bonds
draw.
Bonds issued in exchange for currency would
be something after the kind of securities known
| in England as e1chequer bills. When the Gov
| ernment needs money temporarily, over and
| above its revenue, it Issues e1choquer bills to
| the Bank Of England. These bills pass from
| hand to hand as money, arc Issued for suma
ranging from s5 to ESQ, bear interest at the rate
Of ~ to ~ pence per day On each s1oo, or from
| az to SIX per cent per annu1n. The amount OF
| these outstanding sometimes exceeds 0,00o,-
600. They are redeemable on demand, Al
persons having money unemployed
seek these exchequer bills, which, being
convertible into money on demand, are q most
| convenient form Of investment. The greenback
proposition goes beyond this. 1t authorizes the
| Government, upon the surrender Of any bonds
to issue greenbacks in lieu Of them these green
backs bear no interest, and consequently the
person receiving them loses the interest on hit
bonds, OF, rather, pays TINT much interest fol
the use of the currency. On the othel
hand, it offers to any person having cur
rency IN interest-bearing bond in e1
change therefor. How much interest
| these bonds should bear is m after considers
ton. It should probably be in the neighborhoo'
of Der cent. Whatever interest they bear vii
be the measure OF the interest paid for the us
OF the currency, upon the highest security, an'
it is not likely that there will be any imitation
upon those terms, or any demand for currenc
beyond the actual wants OF trade, 30 long as
involves q loss of per cent gold interest,"
The Government now has outstanding $500,
000, 900 of overdue paper. 1t is irredeemable
and bears no interest. The Government shou1
either redeem it, offer it's creditors the oppo7
tunity to put it into an interest-bearln
shape, Under this system, there need be n
lint to the amount Of greonbacks that may b
issued; if the country wants thousand mil
} ions of currency on those terms, Al
, will surrender interest-bear7ng bonds
| exchange for it, the country ougf
| to have the opportunity. II, however,
the public do not want $500, 100000, they oust
> tohave the privilege Of surrendering 80 much {
it as they do not need, and receiving IN interes
bearing bond worth par in gold.
| The immediate effect of establishing this col
yertibility of currency and bonds will be to Civ
I the currency the same value as the bonds. IT
i | per cent bonds are now worth 90 cents on Il
. dollar, Will this measure reduce their ra1u
!, and to what extent? The making Of the greer
8 backs convertible at the pleasure Of the bold
i into bonds will certainly have the general effe
: Of impairlng the credit Of the Government, b
8 cause it will bo the fulhlaent, in part, of i
@ promise to redeem it's demand notes. Hence
q is not probable that the existing bonds won
8 decline in value By the adoption OF the propos
q measure. They ought rather to advance.
q THE GENEVA AWARD,
r The disposition Of the award made by t.
y Geneva Tribunal promises to bring up as ma
J. knotty questions as did the original arbitrati
itself. There will not only be long diecussi