The Richmond palladium. [volume] (Richmond, Ind.) 1855-1875, 1874-04-29

1t will take some time to get the
public to understand what the real
effect of the Senate finance bill would
have been. The infationists supposed
it meant imitation, and the contraction
lists agreed with them; but when its
provisions were analysed, it became
evident that the practical effect would
have been contraction. Even If the
46 millions of national bank currency
had been taken up, there would have
been contraction by reason Of "a change
in the law affecting bank reserves,
whereby banks were required to keep
a larger proportion of their reserve in
their own vaults than formerly. The
Senate bill did not affect the greenback
reserve, except to authorize measure
the legality Of which was questioned.
The Secretary of the Treasury had
paid out 26 millions of the Al millions
reserve, leaving Is millions on hand
The Senate bill fixed 400 millions as
the maximum greenback currency,
but it was not mandatory upon the
Secretary of the Treasury to use the
Is millions OF the reserve on hand, nor
did ieprohibit him from Withdrawing
the 26 millions of the reserve already
used. The Senate bill, therefore, did
nOt dhtCt tliC CiNC ali, CACtpi "
establish beyond question the legality
of the issue Under the Senate bill the
Secretary Of the Treasury would have
had all the power over the reserve
that he has without it-no more, nc
less. He can not, without n law of
Congress, contract the greenback cur
rency below $50 millions; but between
that amount and 400 millions he has
II millions to play with. This power
he would have had under the Senate
bill, and this is all the power he has
without it. 1t is not correct, there
fore, to say that the veto Of the Senate
bill authorizes contraction beyond
what was authorized without it. SO far
as the greenback currency is concerned
it stands precisely where it would
have stood if the President had sign
ed the Senate bill, except that the lat
ter settled the question of legality.
In regard to the national banks, the
Senate bill authorized an increased
issue Of 46 millions, but it made such
provisions with reference to the reserve
that would have offset that imitation,
even had the whole amount been TAX
en- up. Suppose, for example that the
banks of this city are required to hold
a reserve of two millions. They are
now permitted to keep half of that in
New York. It is there loaned out to
the extent of $750,OOO. Under the
Senate bill c2ly $500 coo coo Vi the reserve
could be kept in New York, of which
only $375,OOO could be used there.
Thus on two millions there would
have been an actual contraction of
$325, 900. In like manner the country
banks that keep their reserves in Gin
cinnati would have been required to
withdraw a large portion. Thus that
portion of the reserve which is now
kept in use would have been locked
up. This would have created an i'm
mediate disturbance, and In the end,
had the whole forty-six millions al
lowed to national banks been taken
up, the volume of available currency
would not have been increased.
the national banks should keep in
vaults twenty-five per cent. of the gold
interest received on bonds deposited
as sectrity for their circulation. Thus
six millions of gold would have been
Withdrawn annually from the market !
and locked up. This would have
strengthened the banks for ultimate
resumption, but it would have
strengthened the ring who speculate |
in gold for rise, also, because the |
operation would have made gold |
scarce, by putting it out of reach.
How the infationists could, in view |
of all the facts, have regarded the |
Senate bill, in itself. as measure of |
imitation, and Why the anti-infationists |
should have opposed it on that ground |
is puzzle. In point of fact the Sen |
ate bill in itself was a conservative |
measure rather than measure Of in |
fation; and the provision against keep |
ing one half or two thirds of the re
serve in New York was good one
Thus surplus is loaned on call to |
spectators, and when the country |
needs the money, and it is withdrawn,
the usual panic in the stock market |
occurs. These panics affect the whole |
trade of the country, more or less
The President, then, in vetoing the |
Senate bill has accomplished nothing, /
except to give notice that he will not |
approve any bill that initiates the cur
rency. This is all there is in it. The |
bill he vetoed would not have inflated |
the currency. His veto does not con- |
tract the currency. 1t leaves matters !
precisely as they were. Without con-
gressional action the currency can not |
Be contracted, except that the Seerc- |
tary of the Treasury might. if he had |
the means, withdraw and place in his |
vaults the 20 millions of the reserve |
paid out last winter to relieve the pre- |
vailing panic. This is the full extent |
of his power. 1t is more than any
man ought to have, but the Senate bill |
did not increase or diminish it.
The temper of the majority of Con- |
gress is such that there can be no con- !
traction of the currency, while. If |
there is any way of initiating without |
running against q veto. it will likely |
be done. Yesterday propositions were |
made to reduce the tax on State banks
to one per cent This wonld place
them on an equal footing with nation
al banks, and would revive to some ex-
tent the State bank system. But the
President would not sign bill to that
effect
A joint resolution, not requiring the
signature of the President, might be
passed prohibiting the Secretary of
the Treasury from Withdrawing the
twcnty-six millions of the reserve now
out, and this will likely be done; but
in the direction of imitation but little
can be done, unless the President
changes his mind, which Is not prob
able. This is the assurance the couG-
try has that We are not to have indef-
mite imitation. Upon this assurance
We shall not have wild speculation,
but . revival of business upon a