New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1876-08-05

it is to be attained, are disclosed by what
the convention demanded in the future,
and by what it denounced in the past.
Resumption of specie payment by the
government of the United States, on its
legal tender notes, would establish specie
payments by all the banks, on all their
| notes. Official statements, on the fifteenth
of May. show the amounts OF the bank
notes were $500, ,0C0,000, loss $50, ,0G0, 600,
held by themselves. Against these SISO,-
600, Cos OF notes, the banks had slil ,00o,0GG
OF legal tenders, or little more than fifty
per cent OF that amount; but they also had
On deposit in the Federal treasury, as
security for those notes. bonds of the
Unlted States, worth IN gold about
$3o0, 900, available aud current il
all the foreign money markets. Ic re-
sumlpg, the banks. even il IT were
possible tor all their notes to be presented
for payment, would have 500, 000G9) Of
specie funds to pay e2s0,000,00o Of nctes
without contracting their loans to taeir
customers or calling on any private debtor
for payment. Suspended banks undertak-
ing to resume have usually been obliged TO
collect from needy borrowers the means to
redeem excessive issues and provide re-
serves. A vague idea of distress has before
been often associoted with the process of
resum ptiOD; but the conditions which
not now exist. The government has only
to make good its promises, and the banks
can take care Of themselves without dis.
tressing anybody.
The government is the sole delinquent in
the legal tender resumption. The amount
of the legal tender notes Of the United
States now outstanding is less than S310,
100000, besides $3i000,0G0 of fractional
currency. How shall the government
nuE fEneo or oil Il
specie! 1t has to provide, in reference to
the mass which would be Kept in use By the
wants of business, a central reservoir Of
coin ace q uate TO the adjustment OF the
temporary fluctuations Ut international
balances, and as guarantee against
transient drains artifcislly c.e.ted by
panics or by speculation. 1t has
also to provide for the payment of such
fractional currency as may be presented
tor redemption, and such incOnsiderable
portions of the legal tenders as individuals
from time to time may desire to convert
for special use or in order to lay Oy IN coin
their little stores of money.
The coin in he treasury available for this
reserve, to gradually strengthen and en-
large that reserve, and to provide tor such
other exceptional demands for coin as may
arise, does not seem TO me to be a work of
difficulty. If wisely planned and discreetly
puIsutO, cuSut uOb W coSI ANY sdcfluct
to the business of the country 1t should
tend, on the contrary, to revival of hope
and confidence. The coin in the treasury
on the thirtieth of June, including what is
held against com certificates, amounted to
nearly g. 900 600.
The current of precious metals which has
flowed out of our country for eleven years,
from July ]. 1865. to June 80, 1876. averag-
ing nearly SO, 100000 year, was 1892 ,000,-
Al Ill. id e .,alG 80
900 were the product OF our own mines.
To amass the requisite quantities by inter
cepting from the current flowing out OF the
country, and by acquiring from the stocks
which exist abroad without disturbing the
equilibrium ct foreign money markets. Is
result to be easily marked out by prac teal
knowledge and judgment with reapect to
whatever surplus OF legal tenders the wants
of business may fail to keep in use,
and which in order to save interest
will be returned for redemption, they can
be either paid or they can be funded.
Whether they continue as currency or be
absorbed into the vast mass OF securities
held as invest ments, is merely a question Of
the rate of interest they draw. Even if
they were to remain in their present form,
and the government were to agIee TO pay
ON them a rate of interest making tiem &C.
sira BILE as investments, they would cease to
eminent, State, municipal and other cor
porete and private bonds, of which thou
sands of millions exist among us.
In the perfect ease with which they can
be changed from currency into investments
lies the only danger to be guarded against
in the adoption OF general measures to re-
move clearly ascertaned surplus-that
is. the withdrawal of any which are not
permanent excess beyond the wants of
hns
be any measure which effects the public
agination with fear of an apprehended
scarcity in the community where credit is
so much used. Fluctuations OF values and
vicissitudes in business are largely caused
by the temporary beliefs of men. even be-
fore those beliefs conform to ascer aimed
realities.
The amount of the necessary currency at
a given time can not be determined arb;
trariiy, and should not be assumed upon
conjecture. That amount Is subject to both
permanent and temporary changes. An en-
largement, which seemed to be durable,
happened at the beginning of the civil war,
by substituted use of currency in place of
individual obligations.
1t varies with certain states of business;
it huctuates with considerable regularity
at different seasons of the year. In au-
tumn, of instance, when buyers OF grain
operations, they usually need to borrow
capital or circulating credit by which to
make their purchases, and want these funds
in currency, capable of being distributed
in small SUMS among numerous sellers. The
additional need of currency at such times is
five or more per cent of the whole volume.
and if surplus beyond what is required
for ordinary use does not happen to have
been on haad at the money centres,
itu Of ND
stringency in the loan market.
1t is in referen ce to such experiences that
in discussion of this subject in my an
nual message to the New York Legislature,
OF January ), 1875, the suggestion was made
that the Federal government is bound to
redeem every portion of its issues which
the public do not wish to use. Having as
sumed to monopolize the supply of curren-
cy and erected exclusions against every
body else, it is bound to furnish all which
the wants of business require. The
system should possibly allow the
volume OF circulating credits to ebb
and flow according to the eyer-chang-
ing wants of business, should initiate
as closely as possible the natural laws of
trade, which it has superseded by artificial
contrivances. And in q similar discussion
said that resumption should be effected by
such measures as would keep the aggregate
amount of the currency selfadjusting dur
ing all the process without creating at any
time an artificial scarcity, and without ex-
citing the public imagination with alarms
which impair confidence, contract the whole
large machinery of credit and disturb the
national operations of business.
Public economies. official retrenchments
and wise finance are the means which the
st. Louis convention indicates as provision
Of reserves and redemption.
The best resource is reduction of the
pxnensea of the governmenf helOw its in