The Eaton Democrat. (Eaton, Ohio) 1875-1903, 1876-08-10

united in the one destiny of a common self
government. II this duty shall be assigned
to me, should not fail to exercise all the
powers, with which the laws and Constitu-
tion of our country clothe its chief magis-
trate, to protect all its citizens, whatever
their former condition, in every political
and personal right.
Reform is necessary" declares the st.
Louis Convention, sto establish a sound
currency, restore the public credit, and
maintain the National honor" and it goes
on to demand a judicious system of prepara-
tion by public economies, by official re-
trenchments, and by wise finance, which
shall enable the Nation soon to assure the
whole world of its perfect ability and its
perfect readiness to meet any of its prom.
ises at the call of its creditors entitled to
payment. The object demanded by the Con-
vention is resumption of specie payments
of the legal-tender notes of the United
States. That would not only restore the
public credit and maintain the National
honor, ,butit would establish sound currency
for the people. The methods by which this
object is to be pursued, and the means by
whichiti is to be attained, are disclosed by
what the Convention demanded for the fu-
ture, and by what it denounced in the past.
The resumption of specie payments by the
Government of the United States on its
legal-tender notes, would establish specie
payments by all the banks on all their notes.
The official statement made on the 18th of
May shows that the amount of bank notes
was 100000, 900. less $20,000,000 held by
themselves; against the $3.50, ,000, 600 Of notes
the banks held $141, ,0000 legal-tender
notes, or little more than so per cent. of
their amount, but they also held on deposit
in the Federal Treasury as security for these
notes, bonds of the United States worth
in gold about $360,000,000, available and
current in all foreign money markets.
In resumiDg, the banks, even if it
be presented for payment, would
have five hundred millions of specie funds
to pay two hundred and eighty millions of
notes, without contracting their loans to
their customers or calling on any private
debtor for payment. Suspended banks, un-
dertaking to resume, have usually been
Obliged to collect from needy borrowers the
means to redeem their excessive issues and
to provide reserves. A vague idea of dis
tress is, therefore, often associated with the
process of resumption, but the conditions
which caused distress in those former in
stances do not now exist. The government
has only to make good its own promises,
and the banks can take care of themselves
without distressing anybody. The govern
ment is, therefore, the sole delinquent. The
amount of legal tender notes of the United
States, now outstanding, is less than $780,
00O, 900, besides $S4, 4,000, 900 of fractional
currency. How shall the government make
these notes at all times, as good as 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
adequate to the adjustment of the temporary
fluctuations of international balances and as
a guaratee against transient drains, arti-
fcially created by panic or by speculation.
1t has also to provide for the payment in
coin of such fractional currency as may be
presented for redemption, and such incon-
siderable portions of legal tenders as
individuals may, from time to time,
desire to convert for special use, or in order
to lay by in coin their little stores of money.
To make the coin now in the Treasury avail
able for the objects of this reserve, and to
gradually strengthen and enlarge the reserve,
and to provide for such other exceptional
demands for coin as may. arise, does not
seem to me work of difficulty. If wisely
-rlas-rd and discreetly pursued, it ought not
to cost any sacrifice TO the business of tnv
country. It should tend, on the contrary,
to a revival of hope and confidence. The coin
in the Treasury on the 30th of June, includ
ing what is held against coin certificates
Amounted to nearly $74, 100000. The eur
rent of precious metals which has flowed oul
of our country for the eleven years from
July /, 1866, to June 80, 1876, averaging
nearly SIC, ,000, 900 year, was $685., ,0O0, 600 in
the whole period, of which $6l7 ,000, 600 was
the product Of our own mines. To amass
L - hr-a ffpn
from the current flowing out of the country,
and by acquiring from the stocks which
exist abroad, without disturbing the equilib-
rum of the foreign money markets, is a re-
suit 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 re
turned for redemption, they can either be
paid or they can be funded. Whether they
continue as currency, or be absorbed into Q
vast mass of securities held as invest
ments, is merely question of the rate ei
interest they draw. Even if they were tc
remain in their present form, and the Gov
ernment were to agree to pay on them a rate
of interest, making them desirable as IN
vestments, they would cease to circulate anC
take their place with Government, State
municipal and other corporate and private
bonds, of which thousands of millions exis
among us. In the perfect ease with which
they can be changed from currency into in
yestments lies the only danger to be guardet
against in the adoption of general measures
intended to remove clearly ascertainet
surplus, that is the withdrawal of any whiel
are not permanent excess beyond the want
of business. Even more mischievious woult
be any measure which affects the publi
Imagination with the fear of an apprehendet
scarcity. In q community where credit i
SO much used, the fluctuations of values an,
\ the vicissitudes in business are largel
caused by the temporary beliefs OF men
even before those beliefs can conform t
ascertained realities.
The amount of necessary currency at
given time can not be determined arbitrarily
and should not be consumed on conjecture
That amount is subject to both permanen
and temporary changes. An enlargement Q
| it, which seemed to be durable, happened q
the beginning of the civil war, by sui
stituted use of currency in the place OF il
diyidual credits. 1t varies with certain state
of business, it fluctuates with considerabl
regularity at different seasons of the yeal
In the autumn, for instance, when buyers Q
grain and other agricultural products begi
their operations, they usually need to boz
row capital, or circulating credits, by whic
to make their purchases, and want thes
funds in currency, capable of being dii
tributed in small sums among numerou
sellers. The additional need of currency {
such times, is five or more per cent. of To
whole volume, and if a surplus beyond whs
is required for ordinary use does not happe
to have been on hand at money centers,
scarcity of currency ensues, and also stril
| gency in the loan market.
1t was in reference to such experienc,
that in discussion of this subject in m
annual message to the New York Legislatul
of January 5, 1875, the suggestion was mac
that the Federal Government is bound to r
deem every portion of its issues whie
the public does not wish to use, an
having assumed to monopolize that supp
of currency, and enacted exclusions again
everybody else, it is bound to furnish 8
which the wants of business may requir
The system should passiyely allow the vC
ume OF circulating credits to ebb and flo
according to the ever changing wants
, business. 1t should initiate, ss closely
possible, the natural laws of trade, whit
it has superseded by artificial contriyanct
And in similar discussion in my messa
of January 4, 1876, it was said that resum
, ton should be effected by such measures
would keep the aggregate amount of CT
rency selfadjHstiDg, during all procei
without creating at any time
, artificial scarcity; without exciting t