The Richmond palladium. [volume] (Richmond, Ind.) 1855-1875, 1874-08-12

A panic in finance is like "a panic in
the army, is generally caused by some
sudden and unexpected event that
confuses the minds of men and de-
stroys confidence. Panics occur quiet
as frequently where the currency is
gold and silver. r.as where it is paper
convertible into coin or inconvertib!e
paper. During this panic the people
had unbounded confidence in the cur
rency and boarded it as they had gold
and silver upon former occasions, and
government securities were the only
ones upon which everybody relied:
The panic came upon Us in period
| of uneQualed prosperity, and was as
little expected as the shock of an earth
quake. 1t was produced by the fall
ure of a great banking house, having
extensive connections, which had
| rashly undertaken to build railroad
across the continent. The question
Immediately rose how the panic should
| be treated-what policy should be
| adopted to mitigate its consequences
and bring about speedy restoration
of confidence. business andprosperity.
I CURRENCY. m
The financial question was first pre-
sented to Congress at the last session
| by the President in his December
message In that message he assert
ed that the currency OF the country,
based as it was upon the credit o; the
country, was the best that has ever
been devised; that the volume Of cur
rency was not more than sufficient for
the dullest season of the year that
since 1870 there had been an actual
contraction to the amount of sixty
three millions, and that there had
been almuch larger comparative con-
traction by the growth of population,
trade and commerce, the develepe-
zation of free labor in the South. He
argued the necessity of returning to
specie payments, but declared that it
was impossible until, eur exports, ex-
elusive Of gold, paid for our imports,
interest abroad, and other specie obli-
cations. As measure of expansion
aud relief he recommended that the
Secretary of the Treasury should be
authorized to increase the issue Of the
existing national banks forty per cent.
upon their filing additional bonds to
that amount upon which new currency
should be issued dollar for dollar.
This would have authorized an expan-
sion OF s145, 100000. 49,.
Soon after the delivery of. this mes
sage the Committee on Finance in the
Senate reported a resolution of which
the following is part: That it IS the
duty OF Congress during its present
session to adopt definite measures to
redeem the pledge made in the act
approved March Is, 1869, entitled an
act toss trengthen the public credit, ;"
,, as follows:I And the United States
also solemnly pledges its faith to make
provisions at the earliest practicable
period for the redemption of the Unit
: ed States notes in coin. r
, THE VETOED BILL.
Upon this resolution the discussions
| began, and it was strongl ly argued that
. there should be an immediate return
r to specie payments, which it was ad-
/. mitted by most of the advocates, could
l be accomplished only by largely con;
0 tracing the volume of currency. With,
!, out going into a history of the discus
e sions, which lasted throughout the
/; winter months, it is sufficient to say
: that in April currency bill passed
y both houses, containing but two sec.
r tions. .1 The first declared : that the
0 maximum amount of legal tender note:
v should be $500, 900, 600, just what hac
e been claimed by Secretaries McCul
: Tough, Boutwell, and Richardson, and
by the President himself, but which
had been disputed vehemently in Con
Z. gress and out Of it. 1t simply declar
e ed the law to be what the Presiden
IL and Secretary had assumed tito be
= The word maximum means the great
: est 1t did not mean ftheE precis'
8 amount, but simply the amount be
n yond which the issue could not go
e and did not make it obligatory upoi
IS the Secretary to issue another United
e States note, and left his decretion
d ary power just what he had claimet
= it to be. - .--.s-.5--.
'e The second section provided for tn
l. issue Of sic, 600, 900 of additional BAN
r notes to be apportioned to the State
IS Of the West and South, having les
t. than their proportion of national ban
( currency, to be issued under the sam
10 conditions, limitations and security a
= those already provided by law. A
IS the law then stood the issue of thi
D amount of national bank currenc
srr would have required legal tender re
ID serves to the amount of not less te
lie millions, which would have been with
.: drawn from circulation. so that if tn
al whole additional forty-six million
80 had been aiken up and issued, the &C
a. tual expansion Of currency in circula
e. ton would not have, exceeded thirty
e. six millions. A large portion of thi
o. forty-six millions would have bee
or appropriated to Southern States ths
ne would have taken it up very slowl.
ct so that any danger to have resulte
u from sudden expansion of the cul
n rency was Of the most visionary cha
as acter. This bill was vetoed by I'll
at President. 54,st sf'5E1
nd
rs THE Bill l. THAT BECAME A LAW.
u Just before the close of the sessit
bill was passed by vote Of mo-
all than 40 thirds of each, House ar
rs, signed by the President, fixing Il
,r- amount of legal tender notes at 3
III millions for permanent circulatio
* and taking from the Secretary of Il
Mt. Treasury the power to- retire Il
he twenty-six millions of such note
is which had been issued after the cor
IRE mencement Of the panic, as part
he thtAlegal tender reserve, and which
ay was asserted by the Secretary he h;
M the power to retire and should do S
by out of the first surplus revenues.
IS. provided for taking fifty five million
he of national bank currency from Il
on Eastern States having an excess ov
n- the proportion they were entitled
1st under the law, to be distributed to Il
N States of the West and South that h,
nal less than their proportion Itfurth
es- provided tor ab0llshIng the legal te
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