, 1873-09-25
CURRENCY IN TIMES OF PANIC.


for groonbacls, and upon tho surrondor
Of tho groenbacks, reHtoro tho bonds, minua tho
interest meanwhile, has beon frequently dis
cussed In this papor, During tho temporary
atringency in tho full and oarly winter Of 1879,
wo published and commended plan Bkotcllod
by banker of this city, which had for its pur-
pose to secure elasticity OF tho currency. That
plan WAS substantially as follows: That Congress-
should provide by law that any holder OF $4,000
or multiples thoroof iu any Of tho gold
intoreBt-bcaring bonds Of tho United Statcs may
rctiro tho samo temporarily, ut any Of tho Sub
Treasurios, under such regulations as may be ea-
tablishod, aud receive in exchange an amount
| Of United Statos legal-tonder notes equal to tho
faco Of the bondR aurrondored; md that, upon
presentation Of q like amount Of such notes at
tho sub-Treaaury, to receive tho said bonds, or
thoir equivalent in kind, less the interest ac-
crucd during their retirement. That tho SecEe-
tary Of tho Treasury be required to keep rescrve
Of 5400o0000 in logal-tonder notsa, for tho pur-
pose Of temporarily retiring tho bonds such re-
sorvo not to bo used for any othor purpose, and
the whole amount Of notes issued noyor to cx-
coed 1900, 100000.
This plan is FREQ from tho objection Of increas-
ing tho public debt; 1t is FREQ also from tho OBJ
lection Of putting in circulation an amount Of
greonbacks in oxccss Of what tito business OF the
country may neod. It has in Its favor the con-
greenbackB to that of the bonds, and to TINT ex-
tont approximate to specie valuos. Whenever
the country needed an interoat-paying invest
mont Of tho highest security more than it needed
the currency, tho latter could bo retired, aud
when tho country needed tho currency, as now,
moro than it needed the bonds, tho Government
would aavo tho interest on tho amount OF tho
bondB retired during that time. Had Congress
yoar ago made this provision, not conaning tho
privilege to tho 5-20 bonds, but per-
mitting any bond Of Whatever Issue
to obe thus exchanged for groonbacks, it might
hnva arrested the progreas Of the panic; It cor
tainly would have enabled the solvent institu-
tions to protect themselves, and, by paying their
| debts, havo protected other institutions from
embarrassment
The amount Of $50 bonds held by banks in
| this country ia limited; thore are, however,
| 10-40s and tho now 5s, as we'll US tho currency
| Gs, which might have been surrendered, rs they
are hold more generally by institutions which, In
timos OF asringoncy, would gladly exchange
them for greenbacks. The plan VIC have mon-
toned suggested that the amount Of legal tom
ders in circulation, including tho roservo.
should never exceed s4o0000,0oo; but
this restriction III not essential. ANY por-
| Hon willing to tako non-intereat-b t-boaring
groenbacks in exchange for bonds ought to hayo
the privilege Of doing Goat least until specie
payments Rro resumed. The objections to an
unlimited issue of greenbaoks do not apply to
tho case where thore ia aurrouder Of bonds
| and forfeiture OF interest to an equal amount,
il the holder Of tho notoa may at any timo ro-
| turn thom and receive bonda therefor. 80 long
as tho opportunity Of funding non-iuterost-boar-
ing currency in intorest-boaring bonds IL open to
every person, thcro will be no danger Of an in
aation Of the curronoy, aud the notos must OF
necessity bo OF equal valuo with tho bond. The
Secretary Of tho Treasury has boen en-
deayoring to exchange & por cent bonds for 6
per cent?. II Congress- would authorize him
to mako the new 6s oxchangeablo at any time
at tho sub-Troasury for groenbackB, and limit
tho issue of g1eonbacks TO tho solo purpose Of
exchange for such bonda, tho new bond would
have IN additional yaluo in tho commercial
world. and tho greanback would have fixed
vatue which It caunot hayo now.
II. &,tfr
OF institutions such Us Jay Cooke and Horny
CLOVIS conducted, nor would 1t DO OF any particu-
lar value to them In an emergency. It would
tend to make tho national bonds tho security
in which the banking reaerves would be i'll
vested. It would have q tondoncy to separate
tho eonadouce operators from tho real
md substantial bankers. Tho iobbers
and spoeulators would, OF course, con-
tiuuo to doal In visionary railroad and
other fancy stocks and bonds, and would gam
bio in them az now, but, when thoy failed, they
could not create such general distrust AZ would
force tho solvent institutions Into embarrass-
monts from tho moro inability to convert their
assots into currency. With currency elevated
in value to that Of the national bonds, aud TINT
currency ayatlabe to an amount equal to tho In
voatmont In the national debt, thero can 10 no
such thing as a suspension from tho moro want Of
currency. Fa1lures eau happen then only from
want OF capital. Thoro Is no way to preyont
failures which originate from that cauHo.
It Ia, Of course, impossible to make thls sys.
tenn available for the preaont panic, which has
doubtloss already spent Its force but, with tho
expe rlence OF the past as 6 warning. aome suoh
measure might vol DO adopted before another
yoar Ia passed. In the meantime, there Ia 4
remedy, and after all tho only roA one, In tho