The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1874-02-01
The Muddled and UnsOlved Currency
Problem.


gress with regard to the currency or national
finances. This, however is only temporary
lull Next week, and long after, we fear,
there will be a continued and not very profit
able debate, as well as any number of incon-
gruous propositions The truth is, our national
Legislators are beyond their depth on these
questions. In the numerous schemes for reg
ulating the currency there is professedly, with
most Of the authors, an idea of bringing about
specie payments. True, they differ greatly as
to the means. And there are some 80 welded
to paper currency that they see only disaster
in any other Taking the ground that specie
basis is observation-disclosures that would give
steady, fixed value to everything and conform
to the solid currency and standard of value
among great commercial natons-the ques-
ton to decide is how and when we are to
reach specie payments.
Nearly all who urge resumption argue that
the only obstacle in the way is the legal
tender currency, and that the first and neces-
sary step is to remove this impedinent Very
strong epithets are used against the legal
tenders. They are said to be broken promises
to pay, pretence for money, and demoralizing
changes are rung continually on the word
''irredeemable. That is the monstrous
spectre that frightens resumptionists. Every
effort, consequently, is made to have these
notes redeemed as the sine qua non of resump-
ton. Well. we will 60 as far as anybody to
bring about specie payments, and admit even
that the increased burden of eighteen or
twenty millions year to pay interest on the
funded greenbacks might well be borne for
the sake of having gold currency. And to
reach that end there is not, perhaps, any
better plan than to fund the four hundred
millions of legal tenders in gold bonds having
a long time to run. A four per cent fifty
years bond would readily be taken, no doubt,
by trust companies, other institutions and in
dividuals that are more for permanent or long
time securities than for the difference of one
or two per cent interest. To avoid disturb
ance in the money market, to business and of
values, the process of funding might be made
gradual.
The proposition in Mr.. Maynards bill to
redeem the legal tenders at the rate of two
millions month in two-year gold notes,
not bearing interest, is not so good 1t would
be a slow operation, thking twenty-five years
to redeem the four hundred millions. Still
the effect would be probably to bring the
greenbacks to par with gold long before all
would be redeemed-that is, if the gold notes
issued should be taken up by the government
This will depend, of course, upon the specie
resources of the Treasury. The funding plan
would not be subject to such a contingency,
would not prove as heavy burden upon the
people and would leave q portion of the debt
to be paid by future generation and when
the country would be better able to pay.
But we must keep in mind that the object
is to reach specie payments. Now, it is
evident the country will not bear any diminu-
ton of the circulating medium at least, it
could not be reduced much without disastrous
consequences. That experiment was tried
and had to be abandoned. Indeed, the dispo-
sition OF Congress is rather to increase, in
some form or other, the circulation Admit
ting, however, that there will be no initiation,
and that the volume of currency will remain
much as it is, what is to take
the place of the.greenbacks when withdrawn?
The national bank currency, evidently. This
is what is meant by free banking. Mr.. May
nards muddled and ambiguous bill squints
at that, though it is far from being explicit
We are to have, then, a circulation of national
bank notes to the amount of six or seven hun
dred millions, and probably more. Well,
what provision is likely to be made, or can be
made, to compel these banks to redeem their
notes in specie? There is the rub. 1t is use
less to talk of specie payments unless they
be compelled to redeem their notes in gold
We have national bank Congress-that u.s.
many of the members are interested in these
institutions, and the greater part are in favor
of extending their privileges. The profits on
circulating notes amount in this country to
six per cent per annum, less the specie or
money held as reserve in the vaults of banks.
At present the bonds deposited to secure circu-
lation draw interest, and thus the produc-
tive capital of the banks is almost
doubled by the generosity of the gov
eminent All legislation is in favor
of the national banks Even the Bank of
England, which has ever been of great service
to the British government, and which does
great deal of the Exchequer and Treasury
business, pays for its circulation in excess of
the gold held in it's vaults. Why should our
banks have all the profits Of national circu-
lation? What do they give in return? OF
what service are they to the government? In
order to reach and maintain specie payments
it is not alone necessary for government to
redeem the legal tenders, but the banks must
be forced to redeem their notes in gold. Then,
to bear their share in the support of govern
ment and to make some compensation for the
great privileges they enjoy, these institutions
ought to pay portion of the profits, at least,
on their circulation which may not be repre-
scented by gold held in their vaults. There
should be no Legislation that does not secure