The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1876-08-12

contracting their loans to their customers, o
calling on any private debtor for payment
Suspended banks undertaking TO resume hay,
usually been obliged to collect from need
borrowers the means to redeem excessive is
sues and to provide reserves. A vague idei
OF distress is, therefore, often associated viii
the process of resumption. But the condi
tons which caused distress in those forme
instances do not now exist. The Govern
ment has only to make good its own promises
and the banks can take care Of themselves
without distressing anybody. The Govern
menl is, therefore, the sole delinquent.
LEGAL.TRsDER RESUMPTION.
The amount Of lega.tender notes of th,
United States now outstanding is less thar
$40, ,O00, 900, besides S8i ,000, 600 offraetiona
currency. How shall the Government make
these notes ut all times as good as specie
1t has to provide, in reference to the mas
which would be kept in use by the wants OF
business, central reservoir of coin, adequate
to the adjustment Of the temporary Auctua.
tions Of international balances, and as guar
antee against transient drains artifcially
created by panic or by speculation. It ha,
also to provide for the payment Of coin oi
such fractional currency US may be presented
for redemption, and such inconsiderable por.
tions Of the legal tenders as individuals may,
from time to time, desire to convert for spec.
ial use, or in order to lay by in coin their
little stores Of money.
RESUMPTION NOT DIFFICULT.
To make the coin in the Treasury available
for the 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 q
work of difficulty. If wisely planned and
discreetly pursued, it ought not TO cost any
sacrifice to the business Of the country. II
should tend, on the contrary, TO revival of
hope and confidence. The coin in the treas.
ury on the 30th Of June, including what is
held against coin certificates, amounted to
nearly S74,000,000. The current of precious
metals which has flowed out of our country
for the eleven years from July /, 1865, TO
June 80, 1876, averaging nearly SIC, 900, 900
year, was 1882, 900, 900 in the whole period,
Of which S6l7, 200, 900 was the product of our
own mines. Toamass the requisite quantity, by
intercepting from the current flowing out Of
the country, and by acquiring from the stocks
which exist abroad without disturbing the
equilibrium of foreign money markets, is a
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 to keep
in use, and which, in order to save interest,
will be returned for redemption, they can
either be paid or they can be funded. Wheth.
er they continue us currency, or be absorbed
into the vast mass of securities held as invest.
ments, is merely q question Of the rate Of
interest they draw. Even if they were to re.
main in their present form, and the Govern
ment were to agree TO pay on them rate of
interest, making them desirable as invest
ments, they would cease TO circulate and take
their place with Government, State, munich
pal, and other corporate and private bonds,
OF which thousands 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 intended to
remove q clearly ascertained surplus, that is,
the withdrawal of any which are not perma.
nent excess beyond the wants Of business
Even more mischievous would be any meas
ure which affects the public imagination with
the fear of an apprehended scarcity. In q
community where credit is so much used,
fluctuations Of values and vicissitudes in bus.
iness are largely caused by the temporary be.
liets of men even before those beliefs can
conform to ascertained realities.
THE WANTS OF TRADE.
The amount of the necessary currency, at
given time, cannot be determined arbitrarily
and should not be assumed on conjecture.
The amount is subject to both permanent and
temporary changes. An enlargement of it,
which seemed to be durable, happened at the
beginning of the civil war by substituted
use OF currency in place of individual credits.
1t varies with certain states Of business. II
fluctuates, with considerable regularity, at
different seasons Of theyear. In the Autumn,
for instance, when buyers Of grain and other
agricultural products begin their operations,
they usually need to borrow capital or circu.
lating credits by which to make their pur.
chases, and want these funds in currency ca.
pable 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 sur
plus beyond what is required for ordinary use
does not happen to have been on hand at the |
money centres, scarcity Of currency ensues |
and also stringency in the loan market.
II was in reference to such experiences |
that, in discussion Of this subject, in my |
annual message to the New YORK Legislature |
of January 8, 1875, the suggestion was made |
that
The Federal Government is bound to re.
deem every portion Of its issues which the |
public do not wish to use. Having assumed |
to monopolize the supply Of currency and |
enacted exclusions against everybody else, it |
is bound to furnish all which the wants of |
business require. The system should |
passively allow the volume Of circulating |
credits to ebb and flow, according to the ever.
changing wants Of business. 1t should imi.
tate, as closely as possible, the natural laws
of trade, which it has superseded by artificial
And in similar discussion in my message
Of January 4, 1875, il was said that resump.
ton should be effected ''by such measures as
would keep the aggregate amount of the cur
rency selfadjusting during all the process
without creating, at any time, an artificial
scarcity, and without exciting the public i'm.
ngination with alarms which impair conf.
ienee, contract the whole large machinery of
credit, and disturb the natural operations Of
business
THE ROAD TO RESUMPTION.
Public economies, official retrenchments,
and wise finance" are the means which the
St. Louis Convention indicates as provision
Tor reserves and redemptions. The best re.
source is reduction OF the expenses of the
Government below its income, for that impo.
'es no new charge on the people. II, how.
ever, the improvidence and waste which have
conducted us to period of failing revenues
oblge us to supplement the results Of econo-
mics ana retrenchments by some resort to
oans, we should not hesitate. The Govern
nent ought not TO speculate on its own dis.
honor, in order to save interest on its broken
promises, which it still compels private deal.
FRS to accept at a fictitious par. The highest
national honor is not only right, but would
prove profitable. OF the public debt, $685..
700, 900 bear interest at 6 per cent in gold,
md 100000 at 8 per cent in gold The
.verage interest is 5.5S per cent
A financial policy which should secure the
highest credit wisely ayailed of, ought grad
lally to obtain a reduction of one per cent in
he interest on most Of the loans. A saving
If one per cent on the average would be sl7,.
100, 900 a year ingold. That saving regularly
invested at four and a half per cent would, IN
ess than SS years, extinguish the principal.
The whole $l,700,000,000 of funded debt
night be paid by this saving alone, without
,ost to the people.
The proper time for resumption is the time
shen wise preparations shall have ripened
nto a perfect ability to accomplish the object
With certainty and ease that will INSPIRE
confidence, and encourage the rey;vine NJ