Essex County herald. [volume] (Guildhall, Vt.) 1873-1964, 1875-10-23
How to Resume.


mercial transactions is in gold coin, that
no paper representative can I'LL its place
unless made convertible with 1t on de-
mand, and that there can be no healthy
and stable condition in the commercial
community until specie basis is reached.
In short, let it be assumed that resump-
ton is the end to be striyen for: how
then is it to be reached? Oar irredeem-
able paper has a value approXimating |
somewhere near what it processes to |
represent, because it is legal tender for
public and private dues, except customs,
is limited in volume by law, and because
there remains large degree of conf |
dence that the Government will sooner
or later provide for its redemption. 1t
is deprecated considerably below the
par value, because the volumn is still too
large, because there is no provision for
its redemption, and because the indefinite
poStponcment of such provision end the
wild advocacy of the policy of never
making it, have somewhat weakened the
confidence in the Government.
Now what is needed to make resump-
ton comparatively easy is the removal of
the causes which keep the currency de-
preciated, and the adoption of policy
which will bring it to par with coin.
One of the most important things is the
restoration of confidence by cessation
of talk which shows disposition to
evade obligations, or by action which
will show that this talk has no influence
upon the policy of the Government but
is confined to a harmless faction. 1t
is desirable that the Appreciation of the
value OF legal tender notes should be
gradual and that resumption, when it
comes, should not produce sudden
change but form quiet transition fully
prepared for. To effect this, time in
the future must be fixed at which green
backs shall cease to be legal tender, and
the intervening period must be used in
actual preparation for the change. En-
Secretary McCulloch, in his last letter to
the New York Tribune, suggests that the
T United States notes should be mande
Immediately convertible into four or four
and a half per cent. gold bonds, with a
provision that bank notes to an amount
equal to the notes retired may be issued,
if required by tn banks, and that the U.
S. notes should cease to be legal tender
+ on the LIST of January, 1878.
Making greenbacks convertible with
interest bearing bonds, if the rate of
interest is not placed too low, would
cause them to advance in value at once.
They would be actually converted as
fast as there was any profit or advantage
in the operation, and the liberty given
: to the banks to supply their place
F would prevent any violent con-
traction. There would in fact be
contraction to the extent needed, for if
the requirements of business were not
such as to induce the banks to take as
. much more currency for circulation as
| had been withdrawn by conversion OF
, greenbackS, they would take less
amount or at first none at all perhaps
and this degree of contraction would be
; controlled, as it should be, by the de-
mands Of the business community for a
I circulating medium. The prospect that
f greenbacks would cease to be legal
tender in two years would keep the
process of conversion going on, they
would be constantly disappearing under
4 it's effect, and their place would be taken
by National Bank notes precisely to the
extent that it needed to be taken at all.
Of course another important part Of
the preparation would be the accumula.
, ton of coin by the banks for the purpose
5 of making their notes redeemable when
the legal tenders had been withdrawn
Their notes wonl1 of necessity advance
and by the time the date for resumption
. arrived they ought to be at par. Then
8 there would be no loss to the bank or
gain to the holder in their conversion
and no probability of heavy or long
= continued demand for coin The circula.
: Gion of the banks would still be secured
by a pledge of United States bonds, the
Government actully holding 500 of their
property for every 800 of their promises
that they put in circulation, so that the
Government would stand behind the
\ banks and give the people assurance that
} their promises would be kept. Under
f these circumstances there is little
probability that their notes would be
returned to them and coin demand, eX-
cept when there was surplus, and in
obedience to the salutary laws of tIarde
, which, if left to work their own results,
will always prevent redundancy by rG-
turning such suplus and taking the gold
for some more profitable use than me-
dium of exchange.
+ To effect such conversion of bank-notcs
as might be required, a reserve of coin
in every bank would be very necessary.
But there would be no occasion, as some
of the opponents of resumption profess
to believe, for an amount of coin equal
t to the volume of the currency. The
amount of reserve kept by the State
banks before the war, which did not have
the responsibility of the Government
: behind them, rarely exceeded 20 per
\ cent. Suppose the volume of our nation
B al bank currenyc, after it had been
,g-I,N -. 4 H..