Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1873-12-03

the neCeSsarleS VI as COulptrSu Will tiS
currency. Every one holding it has been
anxious to dispose of it on any terms. Now
we witness the reverse. Holders of currency
hoard it as they did gold in former expert
ences of a like nature. 1t is patent to the
most casual observer that much more curren-
cy or money, is required to transact Inc ie-
gitimate trade of the country during me
fall and winter months, when tue
vast crops are being removed than during the
balance of the year. With our present sys-
TEN the amount in the country remains Inc
same throughout the entire year, resulting 10
an accumulation of all the surplus capital OF
the country in few centres, when not EN-
ployed in the moving OF the crops tempted
there by offers of interest on call loans.
Interest being paid this surplus capital must
earn this interest paid with profit. Being
subject to "call" it cannot be loaned only in
part at best, to the merchant or manufacturer,
for fixed term. Hence no matter how much
currency there might be in the country, 1t
would be absorbed, prices keeping pace
with the volume, and panics, stringency, and
disasters would ever be recurring with the
autumn.
Elasticity in our monetary system is the OBJ
ject to be obtained first, and next 10 that as far
as possible, prevention of the use of other
peoples money, in stocks and other species Of
speculation. To prevent the latter it seems
to me that one great step would be taken by
prohibiting the national banks from paying
interest on deposits, by requiring them to
hold their reserves in their own vaults, and
by forcing them into resumption though it
would be in only legal tender notes. For
this purpose l would suggest the establish
ment OF clearing houses for your consiera-
ton. TO secure the former many plans have
been suggested, most if not all of which look
to me M re like initiation on the one hand. or
compelling the Government on the other TO
pay interest without corresponding benefits
upon the surplus funds of the country dur
ing the season when otherwise unem-
ployed. / submit for your consideration.
whether this difficulty might not be overcome
by authorizing the Secretary of the Treasury
to issue at any time to the national banks OF
issue, any amount Of their notes below affixed.
The per centage of their issue, say ~
per cent, upon the banks depositing
with the Treasurer of the United
States an amount of government bonds
equal to the amount OF notes demanded.
the banks to forfeit to the government say
per cen: of the interest accrnin9 On the bonds
so pledged during the time they remain with
the treasurer as security for the increased
circulation, the bonds SO pledged to be re-
deemable by tie banks at their pleasure,
either in the whole or in part by returning
their own bills for cancellation to an amount
equal to the face of the bonds Withdrawn. l
would further suggest for your consideration
the propriety of authorizing national banks
to diminish their standing issue at pleasure
by returning for cancellation their own bills
and Withdrawing so many United States bonds
as are pledged for the bills returned. In view
of the great actual contraction that has taken
MI in tho and the q
contraction continually going on, due 10 the
increase of population, the increase OF manu-
features and all the industries do not be-
lieve that there is too much of it now for the
dullest period of the year. Indeed, if clear
ing houses should be established, thus forcing
redemption, it is question for your considera-
ton whether banking should not be made free,
retaining all the safeguards now organized to
secure bill holders. In any modification Of the
present laws regulating National banks, as
further step towards preparing for the re-
sumption OF specie payments, invite your
attention to a consideration of the propriety
of exacting from them the retention as a part
of their reserve either the whole or part Of
the gold interest accruing upon the bonds
pledged as security for their issue. l have
not reflected enough on the bearing this
might have in producing a scarcity OF cash
with which to pay duties on imports, to give
it my positive recommendation, but yonr at
,ention is invited to the subject.
During the last four years the currency has
been contracted directly by the withdrawal of
the three per cent certificates, compound in
terest notes and 7-30 bonds outstanding on
the fourth Of March, 1869, all of which took
the place of legal tenders in the bank re-
serves to the extent of sixteen million dol
lars. During the same period there has been
much larger comparative contraction of the
currency.
The population Of the country has largely |
increased, more than twenty five thousand
miles of railroad have been built, requiring |
the active use of capital to operate them,
millions of acres of land have been opened TO |
cultivation, requiring capital to move the |
products, manufactures have multiplied be- |
yond all precedent in the same period of |
time, requiring capital weekly for the pay
ment Of wages and for the purchase of mate |
RIAL and probably the largest of all compare
tive contraction arises from the organizing Of
free labor In the South. Now every laborer
there receives his wages, and for want of
savings banks the greater part of such wages
is carried in the pocket or boarded until re-
quired for use.
These suggestions are thrown out for your |
consideration without any recommendation
tudt they Email ue duUpseu ilteTdily, DGt Hoplng
that the best method may be arrived at to Sc |
cure such an elasticity of the currency as will |
keep employed all the industries Of the coun-
try and prevent such an imitation will put
off indefinitely the resumption Of specie pay
meHts, an object so devoutIy to be wished tor
by all, and by none more earnestly than the
class of people most directly interested, those
who earn their bread by the sweat of their
brow. The decision of Congress on this sub.
ject will have the hearty support of the exec
utiye.
SHIPBUILDISC.
In previous messages | have called atten-
ton to the decline in American ship build
ing and recommended such legislation as
would secure to us our proportion of the car.
rying trade. Stimulated by high rates and an
abundance Of freight, the progress for the last
year in shpbuilding has been very satsfac-
tory.
There has been an increase of about three
per cent in the amount transported in Ameri
can vessels over the amount OF last year. With
the reduced cost of material which has taken
place, it may reasonably be hoped that this
progress will be maintained ard even in
creased. However, as we pay about eighty
million dollars per annum to foreign vessels
for the transportation Of our surplus products
TO a market, thus increasing the balance of
frata st II m this "a xnbiant 10