, 1873-09-28
MONEY AND COMMERCE,
MONETARY.

MONETARY.
SATURDAY EVENING, Sept. n.
As The banks and tho people progress In this
struggle to "restoro confidence" they will
eventually discover TINT thoy lavo boon ntruE-
Cling III tho dirk against difficulty thoy hnVo
misunderstood. and callcd It by q wrong na'ne.
Thoro is much talk of loBa Of confidence, anu
yet 1t Is generally claimed OH NIL sdos that tho
banks arc solvent and will bo able to ray all
their dopositors. What Ia 1t thon in which poo-
ple hayo lost confidonco7 Unquestfonab1y It is
tho avorago mercantile credt represented by
bnnk balances. Tho aepoB1sozs beneye that
tho banlss will DO abundantly ablo to
pay them OF with something 81 good as they
gavo, viz, ohockH and mercantile paper. but the
doposlsors want something bottor than thoygave,
hence tho don,and for currency.
1nstoad Of tilfB being struggle on tho pnrt Of
Tho banks to re-establish public confidence In
Themselves, they aro, without knowing It,, strug-
Cling to lift the average 1norcantile crot OF tho
country to par with Tho credit Of tho Govorn-
ment. ,~
But tho bnnle, lnboring away to overcome
Ehat they persist iu regarding 'aB only an
abnormal scarcity Of currency, have gono to
york In Now York, Boston, Cincinnati, and other
places to supply tho temporary deficiency Of cur
roncy by III issue of Cloaripg-House loan
certificates. This ,belng only another kind Of
currency, based On the average mercantile orodit
which tho bnnks aro trying to Lift to par with
tho Government credit, 1t iu not at oil surprising
That In Now York these Clearing House loan-
certificates arc already at a discount OF from to
4 per cont ~ compared with groeubacka. Tho
moro thoro is iraued Of them, tho moro they will
dopEociate, because tlloy arc good for nothing
L.. ~ rf$..
Of banks In tho Clearing House. Tho
result Of their Use will DO simply to circulate
round and round among thcso few banks until
thoy wipnow evory dollar Of greenbaoks out Of
their vaults md tho banks will DO in much
worse plight whom thoy como to the final crash
than it they Ind mover used tho oloan-oortihoates.
Tho average mercantile credit of the country
as basis Of circulating currency of my kind
would perhaps never be so good undor any cir
uumstanccs as tho credit Of tho Government.
But in the present case 1t must bn remembered
That tho mercantile credit Of tho country
at largo has been much injured by
the recent collapse in speculative schemes. II
Is, howoyor, also true that credit hos boon in.-
iurcd moro In some parts of the country than
othcrs. It lias undoubtedly been damaged mcre
in Now York thnn III Chicago and the loan-cor-
tllcates Of Chicago Clearing House Associa-
ton might not deprociato 80 much as those of
New York Association. But, after ali, the
principle upon which the certificates are issued
is wrong, and any issue Of them iA any place
can result in no permanent good.
Currency will never flow into the present
banks again except under one Of tyo conditions:
Tic average mercantile credit Of the community
must DO raised to level with Government credit
BY o liquidation Of tho present indebtedness OF
the banks to their depositors, or olse tho credit
Of tho Government must be depressed to par
with the present average mercantile credit Of the
country by tho issao Of Aood OF greonbaoks.
An unprecedented circumstance in financial al
fairs has occurred. There has been an ab-
nor,nal expulsion of the currency from
Tho banks. It has placed us In
d position wllero VIC are obliged to
elect which wo will do whether We will liquidate
aud begin On ne,o basis Of mercantile credit, Or
whether We shall domand new ora Of greon-
buck imitation.
II VIC elect to begin On q new basis Of morcan-
tile credit there is also every reason why 1t
should not alao be on specie basls OF pricos.
There IL aou lido in our affairs which, II taken
at its Aood will certainly load on to the happy
result OF plaving tho financial aifairt
OF this country on firm basis ot
specie values. There Ia now such q
food Of gold leaving Europe for the United
States that it even threatens tho suspension d
the Bank Of England. If we remove the obatrlc
tou of the Legal~Tendor act so that this gold wil
circulate as money instead Of being more com
modify as now, it will stay with US othor~iso /
will flow back to Europe again 1ues VI G-c1 u
tho foreign lomand for our breadstuffs ceaaes
and sLe rat Of foreign exchange turns againstus
The grecnbacka and National Bank notes can
not get out Of the country. dreenbacks Woni
still be legal tender for all debts contractor
prior to tho ropoa OF tho act, and also for ta1ee
They would still circulate as deprecated ou1
roncy as compared to specie. But as they ar
simply the non-nterest boaring bonds Of th
Government, and as they would, sometime, nee
esaarily DO funded into bonds bearing some rat
Of interost, there would DO no reason for m
great depreciation.
But tho grcat demand for thcm to pay of th
enormous mass of present indebtedness woul
keep them IN actiyo circulation.
At FIRST glance 1t might seem that this COZ
dition of things would make d necessity for th
Government to resume specie payments br
there is no rcasop that thla should bo the cast
II the Government should some timo fund il
grcenba CHS, that would DO all tho resumption n
Quirad.
TIRE LOCAL. SITUATION.
In applying the above remarks in regard t
tho liquidation Of tho deposits to the local stua
lion, no do not wish to DO understood ths
all tho banks should giyc legal motto
that they will so into voluntas
liquidation, aud quit tho banking huaiueas. Y
mean that thoy ehould sottle up at onco, final
and completely, with evosy deposltor who d.
mapds tue settlement Of his account. II IT,
nd In =