The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-03-28
neutrality-suspicious..

We are asked what the banks are going
to do for legal tender notes TO redeem their
bills, II bond redemption system should
draw heavily on their reserves of green
backs. We do not think there is any dan
ger Of its doing this The banks would BIO
constrained TO keep up their supply, and
any fresh demand on their part would only
operate 10 improve the quality of the
greenbacks and advance their value. This
Is the primary object of providing for
slow bond redemption. Little by little the
greenbacks would appreciate in the mar
ket, and thus our whole paper circula-
ton would gradually improve. And If
the time came that the banks saw
the necessity of reinforcing their reserves
OF greenbacks with other cash securities.
Of equal value, they would Of course do 1t.
II the greenback got too scarce TO serve
the purpose of full basis for their entire
issues, they would merely have TO supply
this something else. 1t would not have to
be coin at first. because coin would CON-
tinue for good while TO bear premium.
That new reserve would be in the form of
cash balances on either or both sides OF the
Atlantic. 1t would come about in the easy
and natural way Of q moderate reduction
OF their own circulation in the ordinary
| progress of events or in the sale of por
| ton of their dead weight, now lying In
| the shape of Government bonds ut Wash
| ington, held to secure their circulation
| THIS lightweight reserve Is far more
than ample to supply any deficiency in
| their stock of greenbacks, and Is entirely
available for this purpose, whenever 1t is
| wanted, without any disturbance of the
money market. Some of the more con-
sentative banks are already acting on this
| line and preparing for resumption at short
notice. They are merely anticipating the
action and course which all the banks
would have to follow in case bond re-
demption were put in operation, which
should sensibly diminish the existing sup
ply OF greenbacks or render 1t necessary
for the banks to enlarge their reserves.
II is plain, therefore. that II Is upon the
banks that would chiefly devolve the
duty Of preparing for resumption in case
of our looking and acting earnestly in that
direction. We also SEQ, what is very inn
| portaut, that their means are ample TO
make this preparation without diminish
| ing their discounts, and thus distressing
their customers. They have in the Treas
ury an immense deposit Of Government
bonds TO call upon, which at an instant's
notice will bring the money TO redeem
their circulation. This vast supply, reach
ing an aggregate OF some four hundred
millions, is now pure dead weight. 1t is u
most fortunate circumstance and peculiar
| ity OF our banking system that such "A re-
serve is in existence. Under the old sys-
TEN, this immense advantage did not
exist; and II we still had that system,
the way to resumption would now
be clogged and hindered by the we'll
founded objection that resumption could
only be reached by an immense reduction
of private Indebtedness, and increased
mercantile distress. But in our present
circumstances we are totally free from this
| depressing consideration. To accomplish
resumption, even at short notice, II would
only be necessary for the banks to dispose
OF portion of their dead weight. But
our plan is TO do nothing OF short notice.
1t is TO proceed carefully aud slowly, and
no faster than tho circumstances of the
country will permit without undue strain
upon Its resources. The way is as plain as
u turnpike, and If tho politicians were not
so utterly absorbed in President making,
and other personal and private schemes
we should have hopes that Congress might
be induced to walk In 1t.
1t Is painful, and 1t II humiliating, that
! the vast material Interests Of this great