, 1876-02-28

GOVERNMENT RESUMPTION.
II the EdHorof rA& CAtea 70 Tribune:
s1oux Cirr, H., Feb A.-Your article in Tnr
TRIBUNE Of tho 79d entitled Democratic Caucus 1n1
Finance" aays: "1t can 10 demonstrated that pretty
nearly The entire amount Of outstanding Government
currency will to presented within year from dste Of
resu,nptonl Il tie ousaidcH Government currency"
understand to praetlcay Include tho Total paper cir
cnlauou Of Tho country. for ths demand for redemp
on OF National Dtuk notes will be equa II not graat
er, than grconhacts. Secretary Bnrsrow'a report Of
October 1914 Aays there Ut that dAt1 only $it6-
OK, QUO Of coin in the country. Admitting thers II
t2oo 900 900. aud every dollar avaiahls. how
redeem taoe, on paper with $2o0 0,ooo ouo roin
When We takea practte sensible look 1t the atsr.-
politics and politicians aade,-s ,spocio resumption
either possible desirable in tho present condition Of
cur cugrcncy7 MERCHANT.
II tho lcgal-sender notes werc out of tue
way, and tho banks held two hundred
millions Of coin in nthoir vaults, under liberal
law thoy could issue and protect,ali tho cur
rcncy the country would need. The great
difference between Government notes aud
those Of tho banks is this: When bunk
rcdocms its notes with coin, it Immediately
pays thcm out again in loans to It's Gus
tomors, in discounting bills, in purchasing
exchange. or in buying gold; md much of
the coin it pays out III redemption Of ito
notes returns to its vaults in tho slnpe of
deposits, and, If not enough comes back in
this way, tho bank gets ali 1t needs By Of
fering small premium for 1t. When ono
bauk has moro coin than it wants, it
sells tho surplus to othor banks. Tho
foreign specie and bullion brought into tho
country by cmigrants and traders Is sold 10
| tho banks; the gold mines soil thoir dust,
nuggets, bars, aud coins to tho banks and
/ everybody who has my spnro coin either de-
posits with or sells it to the banks. Hence,
| il tho National Banks paid out $25o, 900 600
Of gold in year, they would also take in an
| equal or greater amount. Like tho crcula-
tion Of blood through the heart, it would
apu into, out, md bnck again continually.
Such Is the experience Of banks in oil Bpocio-
paying countries.
But with the Government and ita legal-
tender notes, tho case is wholly different. It
receives its notes for taxes md pays thom ont
for exponscH. But il it undertakes to tedoem
them In coin, it cannot got tho coin except by
first selling bonds for gold, and when it re-
deems the notes it cannot pay thotn out again
except by buying bonds with them, because
ordinary revenues from taxes meet its run
ming expenses. II 1t paid out thoae redeemed
notes to defrny expenses, the national debt
wonld increase to tho extent Of such ISSUE
of notes. 10 keep the grecnbacks In cirou-
lation after the Treasury opened its doors for
redemption, it would bo necessary first to
have yast pile Of coin On hand to create pub
lie confidence In its ability to redeom, and
thereby prevent q rush md sudden depletion.
In the next place, it would bo absolutely in
dispensable to confer on tho Secretary Of tho
Treasury the authority to sell bonds for
gold at the best price he could obtain With
out fixing any limit; and in order to got his
redeemed notes again into circulation he
must havo the right to buy bonds with them
| at any premium the market would demand.
Unless those two extraordinary pow
ora were conferred on the secro-
tary, ho could not possibly maintaln
specie payments and keep his groonbackB iu
circulation.
As wo have shown in previous articles,
tho minimum Of demand for coin in
this country for year would DO s960, 900, 900,
aud il tho Government notes could not bo
kept in circulation by purchasing bonds
Herewith, the contraction in single ycar
would sweep two-thirls Of them out OF cir
culation. None Of the bills before Congress
providing for specie payments, including tho
Resumption act Of Jan. H., 1876, contem-
plate the reisaus Of the logal.tenders, bocause
1t Is seen 10 bo too difficult and hazardous to
attompt 1t.
Whenever tho Government IL ready to re-
deem ita notes, the Banking law must be 80
modified as to make It to the interest Of tho
banking capital to furnish tho country with q
gold-noto circulation. Undor tho present
ilIiberal restrictions the banks would not u1l.
dertalte 1t, and the vacuum caused by tic
withdrawal Of the greonbaoks would not bo
aliod by any papor currency.