Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1873-12-05

the events of the session just commenced.
We were told when the rebellion began
that we never could conquer the South.
and II we could that they never would
take seats in Congress again, but Mr..
Stephens has found his way back to his old
place to confound his northern peace
friends. We hope Mr.. Stephens may be
as useful as he is able in Congress.
THE PANIC AND FINANCE-INFLA-
TION AND SPECIE.
The Secretary of the Treasury dwells al
some length in his report on the panic and
the action Of the government in relation to
it. He says:
The prevailing practice, not only OF Ma
tional banks but Of State banks and private
bankers, of paying interest on deposits at
tracts currency from all parts of the country
to the large cities, and especially to New
York, the great financial center. At seasons
of the year when there is comparatively little
use for currency elsewhere, immense balances
accumulate in New York, where, not being
required by the demands of legitimate and
ordinary business, they are loaned on call at
higher rate Of interest than that paid to
depositors and are used in speculation. Every
wear, At the season when the demand sets in
from the West and South for currency to be
used in payment for and transportation of
their agricultural products. there occurs a
stfingency 10 the money market arising from
the calling in of such loans to meet this de-
mand. Until this year, though annually
creating some embarrassment. this demand
has been met without serious difficulty.
During the past Summer, anticipating the
usual Autumn stringency, the Treasury De-
partment sold gold while the market price
was high, currency abundant, and bonds for
sale in the market were scarce, and while
there was surplus of gold in the Treasury,
and thereby accumulated about $l4 900. 900
Of currency with the view Of using the same
or such part thereof as might be necessary in
the purchase of bonds for the sinking fund at
times during the Autumn and Winter when
they could be bought at price not above par
in gold, or in meeting demands upon the
Treasury, as circumstances should require.
This year there was a great demand for
currency to pay for the heavy crops Of a
bountiful harvest, for which the European
countries offered ready market. The s1s-
pension Of certain large banking houses, the
first of which occurred on the 18th day Of
September, alarmed the people as to the
safety OF banks and banking institutions in
general. Suddenly there began rapid call
ing in Of demand loans and very general
run on the banks for the withdrawal Of de-
posts. Entire confidence was manifested in
United States notes and even in National
bank notes, and they we're drawn wherever
they could be obtained and were largely
boarded with as much avidty as coin was
ever boarded in times of financial distress
when that was the circulating medium of the
country. The banks found themselves un-
able to meet the demands upon them, cur
rency in circulation became exceedingly
scarce, and the business of the country be-
came greatly embarrassed. In this condition
of things, great pressure was brought to bear
upon the Treasury Department to afford re.
lief by the issue Of United States notes. The
first application came from a number of
gentlemen in New York, suggesting that no
measure Of relief would be adequate that did
not place at the service of the banks of that
city 420, 900, 900 in United States notes, and
asking that the Assistant Treasurer at New
York should be authorized to issue to those
banks that amount of notes as a loan upon a
pledge of Clearing house certificates secured
by ample collaterals, and for which certif-
Gates all the banks were to be jointly and
severally responsible. This proposition was
declined, it being clearly not within the duty
or the authority of the Treasury Department,
under any provisions of law, thus TO employ
the public money. Exchange on Europe
having fallen to unusually low rates, and in
deed having become almost unstable in the
market, to the embarrassment of our foreign
and domestic trade, applications were made
to the Secretary of the Treasury TO use the
money in the Treasury in purchase of en-
change. The Treasury Department having
no occasion to do this for its own use, and no
necessity for transferring funds to Europe,
was compelled to decline this proposition;
which, il accepted, would have put the De.
partinent in the position of becoming dealer
in exchange, 4 position clearly inconsistent
with its duties.
The correspondence with the Produce Ex-
change of New York and the Chamber Of
Commerce of Charleston is embodied in the
report, the government refusing to accede to
their demands for help. What the govern
Inent did do is stated, viz the purchase of
bonds to the amount of thirteen million dol
lars, but without using any part of the forty
four million reserve.
The Secretary makes decided opposition 10
the payment of interest on deposits, charac-
terizing 1t as = pernieious practice fraught
with danger to borrower and lender. He asks
legislation to prevent or restrict it. Imitation
Of the currency, regulation Of the amount of
currency 10 circulation and resumption Of
specie payments are treated at some length
and in q conservative manner. While depre-
eating imitation he says:
should it be deemed necessary or expedent
to temporarily enlarge the paper money cir.
culstion in cases Of great emergency provis.
ion may be made to permit the National banks,
under circumstances and to limited extent,
TO increase their note circulation by a pledge
Of United States bonds, bearing no interest
while ~ pledged, or subjecting the banks to
special taxation upon the circulating notes OBJ
tanned thereon, or upon such other terms that
il would be for their interest to recall the