New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-02-28
FREE BANKING FIFTH A BASIS or BONDS.

modify and warp his financial judgments, which,
however, still immature He needs two OF three
lessons week for about quarters tuition on the
trying points. il after such instruction he
influenced in his mental operations, might trust
his determinations. But the difficulty is that the
same influences that make him wrong now would
keep him 70. We therefore have to dismiss him as
beyond the reach of cure. man who will mingle
his politics with his finance has claim to respect
as a statesman. 1t is only left to- expose his fall
lacies.
In replying to Mr.. Schurz on Tuesday, he argued
that il was necessary to have increase of the ar
fetal supply of paper money in order to make money
plenty; and then, in answer to Mr. Schurz's obJec-
ton that such imitation wOnd lead to speculation
and panic he made a retort that cut the throat OF
his first position from car to He declared, what
was quite true that money becomes as abundant
and supcrabundant' under the system OF specie
payments as under an exclusively paper system; and
that speculation and panic were as apt to occur
under one system as the other
Now if money becomes as abundant and super
abundant" on specie basis any other why incur
the manifest and acknowledged evils of the increase
Of our irredeemable circulationf If scarcity and
abundance do not depend on the volume afloat. but
really do depend on the presence of capital, which
is the fact what is gained by additional artificial
issue Of paper money!
Mr.. Morton stultifes himself at the first step. And
the advantage Of exposing him is that, unlike many
Of the naters he can be made to see and appreciate
bis own blunders. Now we do not ridlcule Mr..
Morton for his position. It not his fault IL be-
longs to his view of the subject. Artificial imitation
of the circulating medium remedy for scarcity OF
money! or the revival of trade is fallacy all
through Fresh issues of rredeemabie paper, arti-
icially introduced, are only process OF watering
! A. a. aaranty in fOlt
for the issue dminishes the purchasing power of the
existing stock just in proportion to the amount
of the addition to it, Mr.. Morton knows the truth
of tins proposition We infer that he knows it by his
| argument that o superabundance" Of money is az
likely to occur under the specie system as under
paper system. He has got thus far in his financial
| studies Now if the argument presented by MI
Morton himself be true MS it unquestlonably u.s.
what apology can he make to men of financial
intelligence for advocating fresh issue Of lrredeem-
| able paper money Plainly, he can make Just one
and no more This is, that he constrained by his
! politics Now considerations ard motives OF that
| kind are certain to lead to disaster and ruin, to
| whatever country IS ruled by men who, like
| Gov Morton, yield TO them. If the existing
| volume Of circulating medium is inadequate to
the needs Of the country and this point we have
nothing to say, let it no increased in the natural
way Erect q standard Of value for all our paper
money issues such five per cent gold bond OF the
United States. for example, and exact redemption
on call therein. Then throw away the monopoly
features of the existing banking system, and permit
| its indefinite extension. Here you would have at
once redemption aud initiation, each measured not
by the arbitrary and ignorant dictation of Con-
gressmen but precisely much of each as the bust
| ness wants of the country require. Gov Morton is
sharp enough to see that such system would afford
| even him cover Unless he is very much frightened
he must acknowledge that if he yielded support to
this PLAN it is a safe hedge, even for an infatonis
| One other point. The argument of The TRIBUNE
against free banking that we have tried it, and that
it failed disastrously 10 1851 is in my view total
mistake. The essence and saving grace Of the free
! banking system is that tho circulating notes shall
issue primarily from the Government to the banks,
and be secured by State or Government bonds to the
| full amount Of the issue, Ia the same way
! as the bank notes are secured under the
| present National bank system. Now. prior TO
| 1881 the circulation was composed Of the notes
| of banks chartered by State authority. The power
of issue of these banks was practically unlimited,
aud there security for the redemption of the
bank-bil except such tho banks chose TO keep.
| The banks discounted extrayagantly, and issued
their notes extravagantly and when the panic befe
| they all came to grief, and the bi-holders and
depostors in innumerabe cases bereft Of their
money. Ii was free banking" with a vengeance,
| but no such free banking as understand by
| the term or a, grew out Of the old system and
which had such remarkable success in NewYork for
many years, outgrowng the old system and sup
| planting it so far as that State was concerned.
What is now known free banking" originated in
New-York, and was the model Of the present
National system. and is the one and the only one
now advocated by those who propose this method
as the true way of increasing and at the same time
giving the much-needed elasticity to the currency
There can be no possible objection, from even the
most conservative point of view, to the indefinite
extension of existing banking system, on its
present basis, provided there is established, as q
condition precedent, system of redemption for the
greenbacks and the bank notes alike, III q security
which bears positive and measurably unchange-
able value in our own market, and in those Of the
rest Of tho commercial world This security we
have in gold paying five per cents. Ii Is the re-
doemability feature, however, upon which the
system hinges. We must have some standard of
value quite different from the naked greenback for
an open banking system. In the first place, basis
il required which, like con shall be practically
limited. We do not want a lampered system. And
in the next ought not, in deceDcy, to continue
the irredeemabiliiy Of the greenback day longer
IL We say we cannot redeem il In coin at present
VIC can in any case say 1t shall command Govern
ment note, payable at some liked period, and bear
ing reasonable rate of interest
With this point established. we see no reason for
not taking the next step of free banking Danger
GUS initiation is impossible, when, for every note cir
cuatng as money, the holder can exact payment in
five per cent gold bond of the Treasury; the pres
entatiOn 90 be made, of course in adequate sums
The palpable and pressing danger OF immediate
feature suggested, which IL the keystone of the
system will be omitted in any banking plan pro- |
posed in the interests OF miation but 1t should be
insisted upon, if it becomes necessary, even TO the
extent Of persistent, obstructive legislation, till the
point Is yielded But, this being accomplished, 1t
wonld only be becoming in the conservative inter
aataf IN na banking.