New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-09-16
ELASTICITY And REDEMPTION.

Two things, according to the predictions OF
its friends, were to be accomplished by the
five per cent fund for redeeming bank notes
with greenbacks. The bank notes were actu-
ally to be redeemed and rejuvenated, and the
paper money was to be made elastic. Now an
elastic currency has not been hobby with us.
We have never heard of a currency that had
this quality to any great extent. To be sure,
the currency might be stretched until it was
az thin as gold leaf, but we have never read
of any successful method of restoring cur
rency thus stretched and attenuated to its
pristine strength. The machinery of redemp-
ton, we were told, was to take the currency
from the money centers, where it would 9TH
erwise accumulate in the dull season, and
"send it back to the vaults of the banks,
"there to remain until the legitimate COM
"merce of the country again called for its
tissue" Thus we were to obtain the desired
elasticity. 1t is quite unnecessary to say that
nothing of that kind has taken place. The
state of things in the dull season of 1874 has
not been at all different from what it was in
the dull seasons of former years. The banks
and other dealers in money have had their
super6uous capital to lend as in former years,
and they wOnld have lent it as in former
years, if they could have found the spectators
to lend it to. So tar as the supply of money
is concerned the Wall Street brokers have
had nothing to complain of. Those who ex
pected redemption to withdraw the currency
out of their reach and quietly store 1t away
for use in moving the crops, have been disap-
pointed. The currency, so to speak, has not
gone home to roost The Utopians who looked
to see the currency retire safely within its
shell-head, legs, and tail-like some kinds of
turtles, have looked in vain.
The redemption and rejuvenation is pro-
crossing, but at snail-like pace. Some of
our great financial authorities in New-YOrk
and Washington were so sanguine as to pre-
dict that the outstanding aggregate of bank
notes would be contracted in Summer "by the
"amount of fifty or sixty million dollars at
"least.n The operation of the five per cent
fund was to be like "that of the great dikes
ain certain parts of Holland vi. e., some
powerful pumping was to be done. If we
suppose an average period of ten days to be
required for sending bank notes to Washing
ton for redemption and getting them back to
the issuing banks after rejuvenation, we have,
according to the results so far, an aggregate
amount of three million dollars constantly
undergoing redemption, against at least three
hundred millions of bank notes in active cir
culation, outside of those in the hands of the
banks. BY the system of exchanging notes in
use thirty years ago among the Scotch banks,
for every three millions in circulation four
millions were lying idle in the tills of the
banks. At the present rate of redemption at
Washington three years will be required to
redeem the S350,0OOOO0 of bank notes now
circulating. BY the system in use in Scotland
the whole of the bank note circulation was
redeemed once 10 eleven days. (See testi-
mony of Alexander Blair, esq, before the
Committee of the House of Commons on Banks
of Issue in 1S4l, questions 1902 and 1,S03)
We are not ut all sangaine that we shall ever
see banking conducted in this country with
the skill and success which have distinguished
the management of the Scotch banks, but we
certainly should rejoice greatly to see the
Treasurer, having been provided with twenty
FIVE per cent greenback fund, or greater yet
if necessary, redeeming the entire bank ciIcu-
lation once q fortnight. We trust that Con-
gress will see the advantages of imparting
little more briskness to the business.