The interior journal. [volume] (Stanford, Ky.) 1872-1881, 1876-08-11

100000 held by themselves. Against the
$3.50, 100000 legal-tender notes, or a little
more than 30 per cent of their amount, but
they also held on deposit in the Federal
treasury as a security for these notes the
bonds Of the United States worth In gold
about $500 OO0, 600, available and current
In all the foreign money markets. In
resuming, the banks, even lit were possible
for all their notes 10 be presented for pay
ment, would have $jO0OOOOOO Of specie
funds TO pay $3.50, ,OO0, 900 Of notes, without
contracting their loans TO their customers OF
calling on any private debtor for payment
Suspended banks undertaking to resume
have usually been Obliged TO collect from
needy borrowers the means 10 redeem ex-
cessiye issues and to provide reserves. A
vague idea Of distress Is therefore often
associated with the process OF resumption.
But the conditions which could distress in
those former instances do not now exist.
The Government has only TO make good its
own promises and the banks eau take care
of themselves without distressing anybody.
The Government is, therefore, the sole de-
linquent. The amount of legal-tendet notes
Of the United States now outstanding Is less
than three hundred and seventy millions Of
dollars, besides thir,y.four millions of dol
lars Of fractional currency. How shall the
Government make these notes at all times,
In reference 10 the mass which would be
kept In use by the wants Of business, n cen.
trail reservoir Of coin adequate to the adjust
ment OF temporary fluctuations of interna-
tionai balances, and ~ q guarantee against
transient drains aIti6oially created by panic
or by speculation. Il also has TO provide
for the payment in coin of such fractional
curren.s as may be presented for redemp-
ton, and such inconsiderable portion Of the
legal-tenders as individuals may from time
TO time desire 10 convert for special use, or
In order to lay by in coin their little store
Of money. To make the coin now in the
tr,asury available for the objects Of this
reserve, 10 gradually strengthen and enlarge
that re erve, and to provide for such other
exceptional demands for coin NJ may arise,
does not seem 10 me q work OF difficulty. IL
wisely planned and discreetly pursued, Il
ought not TO cost any sacrifice TO the busi-
ne-s of the country. II should tend on the
contrary to a revival Of hope and conf
dence. The coin in the treasury on the
30th Of June, including what is held against
the coin certificates, amounted to nearly
seventy -four millions Of dollars. The cur
rent of precious metals which has flowed
out Of our country for the eleven years
from July I, 1865, to June 30, 1875, aver
aging nearly $40, 900, 900 a wear, was SS32,-
100000 in the whole period, Of which
S6l7 100000 were the product Of our own
mines. To amass the requisite quantity by
interceptins from the current flowing out
Of the country, and by acquiring from the
stocks which exist abroad, without disturb
ing the equilibrium Of the foreign money
market, is a result TO be easily worked out
BY practical knowledge and judgment.
With respect 10 whatever surplus Of LEGAL
tenders the wants of business NAV fail 10
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. Whenever they continue as cur
rency, or be absorbed into the vast mass Of
securities held as investments is merely
question Of the rate Of interest they draw.
Even IL they were to remain in their pres
ent form, and the Government were TO agree
10 pay on them a rate OF interest making
them desirable as investments, they would
cease 10 circulate and take their place with
the Government, State, municipal and other
corporate 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
sdoption Of general measures intended To
remove n clearly ascertained surplus, that
is, the Withdrawal Of any which are not
permanent excess beyond the wants of bust
ness. Even more mischievous would be
any measure which affects the public I'M
agination with the fear OF an apprehended
srarcifv In n community wherp credit i
so much used, fluctuations OF values and
vieissitudes in business are largely caused
by the temporary beliefs OF men, even before
itieS.
The amount Of Necessary currency at a
given time ian not be determined Arbitrarily,
and should not be assumed on conjecture.
That amount is subjected TO both permanent
and temporary changes. An enlargement
of il. which seemed 10 be desirable, happen
ed al the beginning OF the civil war by a
substituted use Of currency in place of indi-
vidual credits. Itvaries with certain states
Of business. Ii huctuates with considerable
regularity at different seasons Of the year
In autumn, for instance, when buyers Of
grain ard other agricultural products begin
their operations, they usually used TO bOr-
TOW UT NItulF WIN
which TO make their purchases, and want
these funds in currency capable Of being
distributed in small sums among numerous
sellers. The additional need o. currency at
such times is or more per cent. Of the
whole volume; aud il surplus beyond
what il required for ordinary use does not
happen TO have been ON hand at money
centers, a scarcity Of currency ensues, and
also stringency in the loan market. 1t
was in reference to such experiences that,
in a discussion Of this subject in my annual
message TO the New York Legislature, OF
January 3, 1875, the suggestion was made
that tlisS01nderal Government il bound to
redeem evOlt portion Of its issues which
the public does not wish to use. Having
assumed to monopoliEe the supply Of cur
rency, and enacted exclusions against every
body else, il Is bound to furnish all which
the wants Of business require. The system
should passiyely allow the volume OF circu-
lating credits 10 ebb and flow according
| a. ~ $50. ohanaiuc, x,ants of hr.;na.s II