New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1875-06-28
4 SUGGESTION.

4 SUGGESTION
Though the United States have not now, and
never have had, large stock OF gold imme-
diately available for expectation, their relations
of commerce and credit with foreigners are
second in extent to those of no other nation
except Great Britain. In consequence OF these
extensive connections with foreign countries,
and the Quotations of various kinds to which
such relations are liable, We are frequently
called upon to export large quantities of gold
The fiscal year now drawing to a close affords
good example of such drain OF specie
and of the effects which it produces
Experience has shown that nation
like France, which is Saturated with specie"
can endure u large subtraction from lbs coin
with but little Inconvenience. England, using
less specie and far more credit than France In
her business transactions, has more difficulty
in sparing her gold, while we of the United
States, who arc amazingly tolerant OF paper
money swindles of all kinds, have even greater
difficulty than England in parting with any
unusually large quantity of coin. BY an unli-
sually large quantity we mean an amount
greater than the yearly production of our
mines, which after the home demand of jewel
erS ana altilcelS ~ suppncu ID dS iVSu"iiy
exported as the cotton crop.
In the United States the effect of large with
drawals of specie from scanty stock is now
seen in an advancing gold premium and exor-
bitant rates of interest paid by borrowers of
gold, from which arises great arrangement OF
our foreign trade and of wholesale prices gene
rally. I'm England the Bank has to sustain
the demand for gold to export, and thus
1t has happened that the great problem OF En-
glish banking, if we may judge from the
intcrmnabe discussions of the last seventy
years, has been to guard the Bank OF
England from the danger of having TO
suspend specie payments. 1t is true
that the Bank has never actually suspended
since its resumption in 1921, but in 1925 and
again in 1889 it was on the verge of suspen-
sion. The practical solution of this problem
by the British Government and the Bank has
taken the shape ~ of restricting the Bank
from increasing lis issues OF notes unless Its
specie increases at the same time by an equal
amount, and (2) of establishing practice on
the part of the Bank of advancing the rate OF
interest whenever its reserve OF coin ana
bullion is drawn upon. 1t remains to be seen
whether, under our system OF issuing notes
against "a deposit of Government bonds, with
out any great central controlling bank, we
should be able to maintain payments IN coin Ill
the face OF a drain of specie like the one we
are experiencing.
The requisites for surrounding such drain
would be a strong reserve of legal tender notes
to be held by the New-York banks and an am
ple stock of coin and bullion in the National
Treasury for the redemption of those notes, for
if we are to have specie payments under the
present system of legal tender and bank notes,
every demand on the banks from their depOs-
itors for coin to export Will be a
demand on tho Government for the
redemption of grecnbacks. Hence the
necessity of considering the Government,
in the event of resumption, rs responsible Tor
the payment i'm coin on demand OF the National
bank notes as well as The g1eenbac,s. We are,
therefore, by no means sanguine OF resump-
ton in 1879, it being necessary, in our opinion,
as a preliminary, that the Treasury should
hold sufficient gold cOin--siver has nothing to
do with the business-tO meet any foreign
drain and to be left at the end of it with gold
enough to be secure against internal panic.
The New-York banks must also he well man
aged and strong in their cash reserves, or the
danger of internal panic will be great
A sound currency does not necessarily imply
sound system of banking, but a bad cur
rency, whether issued by the Government or
by the banks or by both, always gives birth
to bad banking. The experience Of Holland
for centuries, and that of England for the last
thirty years, are conclusive that banks can ex
tend all proper facilities of credit to the bust
ness community, without issuing any other
kind of circulating notes than simple re-
cepts for specie on deposit. like the
United States gold certificates. On the other
hand the power exercised for so many years
by the banks Of this country of coming their
credit into notes leads to undue extensions of
loans and discounts, permits unbOmded spccu-
lation and terminates in periodical suspensions
of specie payments, preceded by panic and fol-
lowed by stagnation. These disasters, which
are the natural offspring of credit too freely
given, a sound currency does not, of course. pre-
vent, though il confines them within narrower
limits. But the great advantage of a currency
of gold certificates would lie that it, Issue could
be entirely separated from the business OF Dor
rowing and lending as carried on by banks,
thereby avoiding the danger of suspension Of
specie payments.
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THE RIFLE TEAMS At DOLLYMOUNT
Strange is il, but true that what are called