New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-05-16
LETTERS FROM THE PEOPLE.
FREE BANKING NOT TIE WAY TO REsUMP

FREE BANKING NOT TIE WAY TO RESUMP-
TON.
. PAGE FROM ENGLISH MISUNDERSTANDING FREE
BANKING STEP ON THE ROAD TO RUIN.
TO the Editor Of The Tribune
SIR: The friends-Of FREQ Banking, believe,
have not suggested 1t as way to specie payments.
This H. indeed remarkable because the only nation that
has redeemed its Overssued paper was chaDled 10 re-
deem by the results OF FREQ banking Inc nancers OF
the day seem TO have forgotten the of
history upon which we find tho details OF England's dis
asrous passage TO hard money we heed not consider
the causes leading TO the increase OF Bank OF England
notes during years 1901 to 1870 ana he consequent
dscoun, upon them. In 1903 tho discount was ~ per
cent and in per cent the paper issues hav
ing increased from al7,OOo00O to f226l523 Country
han naner free bankng) increased in still greater pro-
norton. In 1872 tho discount was 2oa per cent, the
quantity OF papermoney becoming larger than before
while In 1sl31 the discount upon ~ reached the maxi
mum Of 25 per cent During all this time the number OF
country banks increased there were In 1897 only $780, but
-; 1914 tbere were in existence less than 600 The
whole object OF these banks seemed TO be to get their
no,es into circulation many forcing processes were
sad tn start the issues money. or course, prices
advanced TO enormous figures In 1878 Ihen the tue
turned In this year and tho following heavy harvest
and renewed communication with the continent caused
low prices and great financial revuslon In sl4l5l6,
$40 country banks stopped payment The destruction OF
their notos made room for the circulation Of the paper
Of the Bank OF England and finally resulted IN the re-
sumption Of specie payments, May L. lSz Imagine inc
snernr which the failure OF onequarter OF our banks
woud cause and only then Is it possible TO understand
the fearful price paid by England through Tree Dahkhg
for the advantages OF hard money.
Shall we learn nothing from her examplei Shall
xo start upon a road that history has marked: ITO
Ruini" 1t quite unnecessary to consider the details
of the many schemes and OF course Congt ess NAV give
ma bill for free banking under which no banks VIII DO
organized II the bill that provides Tor new banks
their issues rodeemabe in greenbacks-provdes also
for retiring the greonbacks 1t may seem Ike authorizing
a man to build upon your premises while you remove
| tho foundations. Again, those expected to organize
may apprecate the fact that the right to withdraw the
foundation is reserved by stupid Government whose
record il one OF financial bunders 1t must be recol-
lected that bonds and other securities are not money
and however the issues are secured they must III
time OF panic bring bankruptcy to their Issues unless
the legal tender is forthcoming The banking scheme
viii be urged upon the ground OF uselessness, and We
NAV consider that the bill Will be framed To induee tho
onId 6o he greatest Involvement to Offer for most men
will gladly take the opportunity to issue paper
and TINS make the interest upon IL anti presented
In fact the safeguards and the Inducements VIII vary IN
inverse rao the number OF new banks increasing WIN
issued the higher must go prices ana the more
terrific must be the inevitable maj crash Any ehectua
frre banking bill would seem TO be step on the road
thai England followed to her cost Those who would
allow to regulate itself IN the natural manuel
shoud reflect that money Is not natural money 1t
does moi flow into and Of the country according 10
natural laws as money should. Its supply Is regulated
by most ignorant body OF naucers In time OF panic.
II disappears aud natural law causes ITS Importation
While a system OF free banking. upon gold basis,
might be allowed and would have power to regulate
Itself yet this does not settle the present ques,
ton for rredeemable paper Is disease ana
free banking would, 1t seems, be merely an
aggrayaton Of it, Let us not be deceived by
fond hopes OF reaching specie payments without cost
We are bart way up Imitation Hill, and need not go
higher by the aid OF new banks, TO find lrecipce
from which fall The shock will be great enough from
ala I
start downward Let small portion OF the greenbacks
be retired at by issues OF bonds, ana thls process
continued until the value OF those remaining Is equal 10
that of gold Much Inconvenience and contraction OF
prices would accompany the process: bit am conn
dent this the best and cheapest metuou o sct
ting down again TO terra-frma. nadia
NeW-I0rk May TO- 1874