, 1873-10-30
MONEY AND COMMERCE.,
MONETARY,

WEDNESDAY EVENING, Oct. ~.
Financial mattora md general trade In this
city continue excessively quiet. Thoro has boon
scarcely ohango In any respect III the Inst four
or five days from tho general atagnatlon. De-
posits at tho bnnks aro, however, cropping up u
littlc, and discounts arc being extended In pro-
portion, but tho progross Is very slow, and
mouoy ie very tight. Primo commercial papor
still solls III tho open nlarct at ~ to per cent
per month, and lonnH OIL the bost collaterals
rannot bo lad outside Of banha for loBH than IL
per cont.
Now York exchange continues as scarce as
eyor, and soils between banks at Goo por 81, 900
premium. Tho scarcity Of Now York fuuda is
Till causing steady movement Of currency
from hore to New York,
8 G5-100 FER GENT poNps.
Among tho other numerous financial measures
which tho President Is reported aa saying ho will
recommend to Congress Is now tho issue Of q
now Government bond bearing 05-100 por cont
Interest, aud ezchangoable for greonbaclts nt par
1T tho pleasure Of tho holder. Aa
Far as the effect Of this on tho volume Of cur
roncy Was concerned, 1t would mako but little
difference whether thesc bonds were also re-
conycrtible into gr.cenbacks at the pleasure OF
tho holders Of Tho bonds or not. Thore can bo
no doubt that thoro would aloays ho, In ono part
of tho country or another, people who would be
glad to take G5-100 por cent interest for their
greonbaoks, and the effect would not only be to
establish a premium on groenbacks oyor Nation
al Bank notes to an oxtont that would establish
2: system Of actual rodomptiope Of Ma
tlonal Bank notes in grcenhacke. Tho
recommend free banking, aud It is quite certain
TINT somc such measure Of grasnback contrac-
tion as would DO produced by tue funding OF
greonbacks into G5-1o0 por cont bonds will bo
found necessary to accompany it to prevent In
1atlon.
WHAT IL FREE BANKING?
In recommending "frco banking" for several
yoara past, wo have moant simply the abolition
Of Natioaai Bank circulation. BECAUSE tie ' pres
q monopoly. If there is any ~ reason. a
FOR restricting tho amount 1t would also bo a
reason why thore should be no National Bank
We have received several communications
lately. some Of which VIC have printed, arguing
Tint to romovo the legal restriction from the
aggregate amount Of National Bank circulation,
and allow everybody that could raiao capital to
gtart National Banks to have circulation, would
lead to great imitation Of papor money aud
prices
lot US SEQ whother the privilege OF
ketting 90 per cent OF circulating notes on the
leposit Of Government bonds with tho Treasury
Eould offor Inducements sufficient to cause any
ycry eroot incroasa Of bank notag. 10y
Iho National Bank that takes mt cIrcn,atIon
must first purohggo United Statos bonds that nro
worth about par in gold In tue market. To pur-
BIOS. 600 in currency. Hora ia ar, fnvesfmont ~
bonn fldo capitsl to begin With. Tho hon5a cost-
ing 800, ,0OO in gold, or elOB. 600 In currenoy.
are then deposited with tho United States
Troaaury, and tho latter ieHueB circulation
of tho mar Ncy, in this transaction tha m ro]ation
of tho bank to fne Trousury is tllnt Of borrower
on collateral security. rio Treasury. in faet.
makes loan to the bank to the extent Of 90 nor
cont Of tho uar value OF tho bond. inst Az banh
would make n Ioan to a nrivate horrowar IN tho
flopopit Of Government bond, a railroad botl
a grain RECENT. or any other undoubted COL
CARDS tho possibility Of inflation from free bank
m0 il. Are thoso loans. made bv Tia Tronsnrv to
the banks. made on such oasy terms. that
The bauks can afford to 70 on borrowing indoti-
Tor this loan Of 90 per cent, md what obliga-
uonn thev aasnmos Thn oniv ;1roct ;ntaraat
mid bv the bapks for thie loan from The Trene-
nry Is tho pcr cent nor apnum tax on circn
ssG9 sots Sat r. 10y r; tss q o
Zion ara unayoidahlv inoi]ont to tl,o oTr,n;zo-
lion Of National Bank, 30 that the actual cost
por cent nor annum. II ia trua ti,ia ia
! very low rate of interest and II
there wero no other utilization m thc nart NJ tha
hnnlr fho ,rouid ,,ndo,,hfoSl., 10 ~ ~ 49, 80 - ~ ~
$500 s4a "na'a H " ~ NV tate VI
nteIest as 20 lnauce tne Danks 10 borrow ill.,
neinltelyCn other words, TO tntiate their cirou-
Lion When the banks nut out the circulatinp
notes which tloy hayo borrowed Of TIM Tsrcaaea
nry. tbey ob1juafo thomsolvea n rofioom ttnsa
4otes ~ Fat u oltnef Ieeat-tenaor notos OF the
gnlted STATES, or IN specie. INC consideration
therefore, Tor the loans by the Treasury
ut so low rnto OF Interest to the
National Banks ie, that tho latter sholl
raa,,rno annnia norma,+o ,vl,o,orou ttn = Ns' @.t
rcn1t doa;doo ~ 3o,.;,.n t,,., - A. :.
W ~ snea ot ING means OF
Ionuat ny, ~ eroenpaoRs oy iuuuing
tho inter. Ihla lB why greenback contraction
is necessary conconlitant Of free banking
The Government noed never resume itself. but
II can force tho hanks in resnmo nt INV timo
Evon a omnlI con4rontiom ~ nrannLnai-s ~ ~ 1919 '
~ s! So4'i % aos!11i - Btcehp ~ 1una-
xxnS =. u1Aol"ih Woa4o ~ any simo cnecN the
ucleaHe oI pank notes. Ii greonbackB
are made convertible into 05-l00 per
cent bonds, aud even II the latter wero
rn-convertihio into ,rrcanbncla II ,rnn1d a. nrat