New-York tribune., 1873-01-15
INCREASING THE CURRENCY
THE FORTY-FOUR MILLION RESERVE.
REPORT OF THE SENATE FINANCE COMMITTEE
THEREON - THE LATE INITIATION CON
DEMyED-AN EXHAUSTIVE REVIEW.

| GENERAL PRESS DlSPATLHl
| WASHINGTON, Jan. 14.-The Committee on
Finance In obedience to resolution OF the Senate OF
the 9Th instant directing them to inquire whether the
Secretary OF the Treasury had power under the existing
laws United States notes in lieu Of the s0Oc0O
OF noesretired and cancelled under the act OF April H.
1906, report that construction OF the act OF Apri 2
1885, rendered the examination OF the seVeTa
acts authorizing legal tender notes. The power OF tho
Secretary the Treasury to issue the notes described
In the resolution IL exists, must have been conferred
by these acts The authority OF Congress to authorize
their issue has been disputed, but may now be con-
sidered settled by all Departments Of the Government
1t was exercised by Congress only under the most press
ing necessity incident 10 the power to borrow
money to coin money TO declare and maintain war, and
to provide for the national defense and gen.
! eral welfare. 1t was first asserted and ex-
| ercised by Congress Feb. 25, 1862, when 10
coin the public credit INTO money seemed the only ex-
peden left to maintain the authority OF the Govern
ment during pressing war This authority was again
exercised July H. 1862 and March 1862 These several
acts declared the United States notes to be lawful money
and legal tender in payment OF all debts public and
private within the United States. except for duties on
imports and interest the public debt and were re-
CURED issued only required by the eXgeney OF
the public service, for the payment OK the army ana
navy and other creditors OF the Government. Tue
amount OF each issue was carefully limited The aggre-
gate not exceed siOOoOOO and In fact never ex
ceeded The power thus exercised felt to
be dangerous one, liable to abuse and was carefully
limited and guarded, though the war continued two
years and after the passage OF the act OF March
| 1863 and immense sums were borrowed upon various
forms Of security. The limit OF United States notes was
not enlarged.
After further argument, the Committee cay that the
act OF April 2 1906 referred to in the resolution OF the
Senate was passed in approval OF and in accordance
with the avowed policy of M McCulloch the Secretary
OF the Treasury TO retire all sh0rt-time liabilities by
funding them into bonds, and to reduce the volume OF
United States notes. that those remaining outstand-
ing should be, from their scarcity at par with gold.
The only limitation MADE to the power OF contraction
was by the following proviso:
Pror That Of un states notes no, more than : & NAV nay
be re;i and cancelled within tx % SoSa m from tas % Pa,ae 0 @ '
1t is clear that this act authorized the payment can
collation., and destruction of all obligations issued under
any of Congress whether sbearng interest or not,
and the issue IN lieu thereof Of any description OF bonds
authorized by the act OF March 8, 1865.
The issue Of bonds necessarily involved the destruction
and cancellation for all time OF the obligations received
in exchange the bonds for the act declares that 1t
should not be construed TO authorize Increase of the
public debt To hold that any Of the obligations, whether
bearing interest not received By the United States In
exchange bonds could he ressued again. Is utterly
inconsistent with the primary object OF the act the
funding the debt and with the provision that the debt
should not be increased by the exchange But for the
provision limiting the cancellation OF United States notes,
all OF them might have Cancelled when received in
exchange bonds. To construe the act as permitting
the reissue OF United States notes Cancelled undert
would allow the Secretary to increase the debt In direct
violation Of the act. To evade the act he would only
have to receive the notes payment Of bond issued,
and then cancel the and issue others in their place
In this way both notes bonds would be outstanding
The plain OF this act reduce and contract
( the currency
To render this more iapparent the Committee refer TO
what preceded the passage OF the act OF April H. 1866
and then say if the power had been CO.
existing with that Of retiring II is evident that the act
of February T. 1865 unnecessary for the evil to be
arrested by that act could well have been arrested by
the reissue OF the notes. That act passed when IL was
alleged contraction too rapid and not passed to re-
leve the strngency by authorizing reissue; but on
the contrary only suspended the power exercised after
the passage Of the of 1906 From the review Of the
several acts relating United States notes, the Com
mttee conclude that the intent and legal effect Of these
acts when fairly construed 10 reduce the maximum
Of legaktender notes TO sj600OO No one appears TO
have asserted the Secretary had power TO increase that
sum. The care with which a maximum was always pre-
scrbed indicates the intention OF Congress to preserve
one The only contingency for an excess was to tempo
| rary meet n temporary loan, and by the act Of
| April 1896, the temporary loan was funded.
IL said that since passage OF the act Of Feb 1865
large sums United States notes have been held by the
Treasury Department surplus fund, IN excess OF
in circulation for the purpose OF meeting any
sudden demand upon the Treasury. This was necessa
rily So as large quantities came In daily for redemp-
ton muated, defaced or endangered by successful
counterfeiting but no issue in excess OF Sj6O was
made except in two instances In one OF these SOOOO
was issued after the Chicago fire. TO replace that amount
burned and destroyed IN the office OF the depository at
Chicago during the fire. This scarcely an exception,
for the new notes issued only In advance OF the
formal proof and allowance for the destroyed nofes bu
not I'm advance OF the certainty OF their destruction.
The other case stated by the Secretary OF the Treas
ury in his letter of Dec 49, 1872 namely that the amount
OF United States notes in circulation was increased In
October last upon the order OF Assistant secretary
Richardson then Acting Secretary In the absence OF
the Secretary In the sum OF about so'OOoOOO
over the amount outstanding when the act Of Feb. g.
1863 became law The object Of the issue was the re-
lief of the business OF the country then suffering from
the large demand for currency employed IN removing
the crops from the South and West The CONDITION OF
affairs then existing the country seemed to the secre
tary as he says, to have warranted the Issue upon
grounds OF public policy. The Committee say that no
sooner was this power claimed than was at once con-
tested IL scarcely possible that If such power ex
listed II would not have exercised before In times OF
greater strngency. IL may be an argument Wny some
power ought be granted to issue united states nUae
TO an emergency and IL is Dased hot 50 ucn upon
which control the action Of Legislative and not Exec,
tive authorities The Committee they were referred
10 two decisions OF the Supreme Court as sustaining
the power OF the Secretary OF the Treasury 1 70 issue @
United States notes in excess OF S316VoO,OOo put
a CAREFUL examination OF these cases shows that
they have no bearing the question bafore the Co
mitfee The circumstances under which THIS Issue OF
5000 600 was made were such as would clearly nave
Justified It's exercise Il, as was honestly ana conn,
dentv claimed by the officer who made the issue ne had
the legal authority to make it. 1t was his plain duty to
exercise every power he possessed 70 project ne puo
moasiy Of the opinion that the Assistant Secretary acted
ACCORDING to what conceived to DE his legal power
and' nnhIic duty: but believing that under the law he
could notes IN excess @ on oi
In Conclusion the Committee say: power over the
currency 40 wdereachng the power 10 issue stOOO