The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1876-08-12

and by wise finance, which shall enable the
nation soon to assure the whole world OF It's
perfect ability and its perfect readiness &c
meet any of its promises at the call OF The
creditor entitled TO payment. The object de
manded By the convention is resumption 81
specie payment on legal.tender notes of the
United States That would not only restore
the public credit and maintain the nationa
honor, but it would establish a sound curren
cy for the people The methods by which
/ this object Is to be pursued and the means by
winch it is to be attained are disclosed b,
what the convention demanded for the future
and by what 1t denounced In the past Re
Sumption of specie payments by the govern
ment of the United States on its legal-tendeI
notes would establish specie payments by all
the banks on all their notes. The official
statement made on the 10Th Of May shows
that the amount of bank notes was 100000
900, less $20,000000 held by themselves
Against these $2s0,0U0,010 of notes the banks
held Sal 100000 of legal.tender notes, or a
little more than 80 per cent. of their amount
But they also held on deposit in the Federal
Treasury, as security for these notes, bonds OF
the United States worth in gold about $780,.
100000, available and current IN all the for.
eign money markets. In resuming, the banks
even if it were possible for all their notes TO
100000 of specie funds to pay $3.50 900, 900 OF
notes, without contracting their loans to their
customers or calling on any private debtor
for payment. Suspended banks undertaking
to resume have usually been obliged to col
lect from needy borrowers the means to re-
deem excessive issues and to provide reserves.
A vague idea OF distress Is, therefore, often
associated with the process of resumption,
but the conditions which caused distress in
these former instances do not now exist. The
government has only to make good lis own
promises, and the banks can take care of
themselves without distressing anybody The
government Is, therefore, the sole delinquent.
The amount of legal-tender notes of the Uni
ted States now outstanding is less than $780,
OOO,O 900, besides 1874 100000 Of fractional cur
rency. How shall the government make
these notes at all times as good as specie? IL
has to provide, in reference TO the mass which
would be kept in use by the wants of business,
a central reservoir OF coin adequate TO the
adjustment of temporary fluctuations of the
international balance, and as guarantee
against transient drains artiticially created by
panic or by speculation. 1t has also TO pro.
vide for the payment in coin of such traction
al currency as may be presented for redemp.
ton and such nconsiderablc portions of legal
tenders as individuals may from time TO time
desire to convert Tor special use or IN order
to lay by in coin. To make the coin now in
the Treasury available for objects of this
reserve, to gradually strengthen and enlarge
that reserve, and TO provide for such other
exceptional demands for coin as may arise
does not seem to me u work OF difficulty. If
wisely planned and discretly pursued it,
ought not to cost any sacrifice to The business
of the country 1t should tend, on the con
trary, to IL revival of hope and confidence.
The coin in the Treasury on the goth of June,
including what is held against coin cerifi.
Gates, amounted to nearly seveny-iour mil
lions. The current OF precious metals which
has flowed out Of our country for eleven
years from July l, 1865, 10 June 80, 1876,
averaging nearly S1G,000,000 year, was
SS32 100000, in the whole period Of which
SGl7 100000 were the product Of our own
mines. TO amass the requisite quantity by
ntcrceptlng from the current Coating out Of
the country and by acquiring from the stocks
when exist abroad without disturbing the
equilibrium of foreign money markets is
result to be easily worked out by practical
knowledge and judgment With respect to
whatever surplus of legal.tenders the wants
of business may fail 10 keep in use, and
which, in order to save interest. will be re.
turned for redemption, they can either DO
paid or they can be funded. Whether they
continue as currency or be absorbed into the
vast mass of securities held as investments is
merely the question of rate of interest they
draw, even il they were TO remain in their
present form; and if the government were to
agree to pay on them ratio of interest, max
ing them desirable as investment, they would
cease TO circulate, and take their place with
the government, state, municipal, and other
nt.h p, g tnl,
ands of millions exist among US.
IN THE PERFECT EASE WITH wHICE THEY
CAN BE CHANGED
from currency into investments lies the only
danger TO be guarded against in the adoption
of general measures intended TO remove Il
clearly ascertained surplus; that is, the with
drawal of any which are not a permanent
excess beyond the wants OF business. Even
more mischievous would be any measure
which affects public Imagination with fear of
an apprehended scarcity in a community
where credit is SO much used. Fluctuations of
values and vlcissitudes in business are largely
caused by temporary beliefs of men, even
before these beliefs can conform To ascertain
ed realities. The amount of necessary cur
rcncy at given time cannot be determined
arbitrarily, and should not be assumed on
conjecture That amount is subject to both
permanent and temporary changes. An en-
largement of 1t which seemed 10 be durable
happened at the beginning of the civil war
by substituted use of currency in pace of
individual credits. 1t varies with certain
states of business. II iluctuates with consid-
cradle regularity at different seasons of the
year. In the autumn, for instance, when
buyers of grain and other agricultural pro
ducts begin their operations they usually
need to borrow capital or circulating credits
by which TO make their purchases, and want
these funds in currency capable of beng dis
tributed in small sums among numerous
sellers. The additional need of currency at
such times is ) or more per cent. of the whole
volume, and if surplus beyond what is re
quired for ordinary use does not happen to
have been on hand at the money centers
scarcity of currency ensues and also strin-
gency in the loan market. 1t was in refer.
ence 10 such experiences that in the discus.
sion of this subject in my annual message TO
the New York Legislature of Jan. 5, 1919,
the suggestion was made that the Federal
government Is bound TO redeem every portion