National Republican. (Washington City (D.C.)) 1872-1888, 1874-01-19
INITIATION Is RUIN.

the Treasury in 1865 for seat in the Sen
ate Of the United States the question was
put to Mr.. T. P. Handy, an eminent banker
Of Cleveland, Ohio, who, in eli the West.
could command the confidence Of the busi-
ness men of that section for the position OF
Secretary of the treasury The query was
aropounded by newspaper man from New
York, who stated at the same time his con-
viction that the coming man should be
rom the West because Western men
lbounded in pluck, nerve, facility of re.
sources and elasticity beyond all others
hat they were famous as inanciers could
10 larger business on q smaller capital
Than any other class of men, and come sue
,essfulIy and safely out of it. Such man,
most thoroughly acquainted with the uses
and abuses, the fallacies and philosophers
Ind sophistries of paper money, so-called
g necessary to get US gradually down nom
Dur financial stills without disastrous reyul-
zion, (gold was then nearly TIVE hundrsd.)
Mr.. Handy at once replied that there was
no person that he knew of 30 well calcu-
lated in all respects for the situation a. Hugh
HcCulloch, of Indiana, then comptroller OF
the currency The skillful management OF
the State Bank of Indiana and its branches
through the crisis Of 1857 was instsnced as
the strongest evidence that Mr.. McCulloch
possessed the fullest knowledge of the prin-
:iples of paper currency, or what he termed
credit-money.
1t is well known that Mr.. McCulloch
was nominated by the President and sup
ported by the press and confirmed BY the
Senate with the greatest unanimity. His
administration of the finances was sue
eessful in the respect Of paying of the
aoating debt largely reducing the funded
aebt and the premium on gold without any
great commercial disaster.
The theory pursued was the same pre-.
:isely that man pursues in his private
Affairs. To appreciate his paper he reduces
is volume. The credit of the country was
greatly extended and ruinously low, and
It's promises were out to the extent Of two
thousand six hundred millions. oSoms Of
;hcse were payable on demand IN other
promises; while others were payable b an
uncertain way, at an uncertain time. Il
was insisted that all these matters must be
definitely fixed by Congress, and gold made
he basis for the payment Of both principal
and interest, ...,7 -.... 49,. Z,
This was the only way in which to re-
ruscitate and maintain the national credit.
This policy was opposed by many. Even
President johnson disagreed with his imam
:ial minister, and squinted strongly in the
direction of reputation. But Congress
finally became convinced that circulating
medium was necessary which would give a
Uniform value to q d.y's labor all over the
and. This could only be done BY the next
hing to gold itself Gold bearing bonds rs
! security to note holders was decided to be
he next thing. This WAS assurance to all
Government creditors that the honor Of
.yery American citizen was pledged 70 pay
1lle Indebtedness of the Government.
From the m 1ment that Congress definite
y fixed the character Of our bonds sad the
medium in which they sho1h be plid. the
redit of the nation began to appreciate and
-apidly approach that medium (sold) in
-ralue. Then, when the footing debt was
wiped out and the reduction Of the funded
lebt commenced, the appreciation WAS still
more rapid. AMI soon placed our gsla-bear-
ng bonds upon par with gold Then we
we're virtually specie-paying country in
,ne half our transactions. The customs
iuties are received in gold and the interest
IN the funded debt is paid in gold, About
,ne half of the paper circulation Of the
country is secured by gold deposits or their
convertible equivalents; the other half IS
simply Uncle SANS o US, Undesirable
except by conversion into bonds bearing a
ow rate Of interest. They represent moths
ing, they earn nothing; they are not even
"talcnts buried in q napkin. Our ffac-
:ional currency 10 redeemablc IN legilten.
iers, and our legal tenders are receivable
or all .Governm mt dnes except Customs
duties and interest on the public debt. ,TSty
:. What do we ysy Of Q merchant who issues
! lot of due bills and, then refuses to recsiye
hem except for certain class Of his lndcol.
UncSS! DU VIC yuV IyuS NM 0UWn 20 VI
doubtful soavency Ard afser Esdeemine
diem, II LIE persists n their e Issue b al
Increased quantisy does not thai asea still
further impair our.o onfdence Il rs credits
Furthermore, does not mis- cfed1s depreciase
among his ncigh6ors and customer nj Bc
:isely the same ratio that he add % ht
ssrtially redesmable promissfi In what
Ices . Government differ from an hdI
,idual in this respect. We all know. thss
he merchant Is obliged to pay mare Tor Ole
property he buys with this sost Of paper
han if he paid in ossl, And Why r Sim
ply because II is diluted. Il win not com
uand in the market suy more, nor scarcely
10 much Is he PROCESSES to redeem it for In
certain kinds Of goods or dues. ng ;s3.;iN
Again, viii the property purchased By
his paper sell in cash for the sauna price
,:lsat it cost the merchant. Certainly MOI.
Then the value at which he purchased Il Is
,niy apparent, not real Bat when he
asts up his invoices and shows his sggre-
gate assets the exhibit is good for he b
:ich in apparent property. Turning. how
sver, to his cash sales, and estimating his
sssets upon that basis, and the aggregate
Ialls short of his liabilities. He n insol.
rent Nor will an extension Of his due