Wilmington journal., 1876-08-11


But they also held on deposit in the
Federal Treasury, as security for these
notes, bonds of the United States.
worth IN gold about $50 millious.
available and current in all the foreign
money markets. In r.:suming, the
banks, even ii it were possible for ali
their notes to be presented for pay
ment, would have 500 millions OF
,pecie funds to pay $50 millions OF
notes, without contracting their loans
TO their customers, or calling on any
private debtor for payment. Suspend
ed bauks, undertaking to resume, have
usually be: obliged to collect from
needy borrowers the means to redeem
excessive lssnes and to provide re-
serves. 4 vague idea of distress is,
therefore, often associated with the
procea of resumption. Il 1t the cOndi-
tions which caused distress in those
former Instances 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. 'rbe government
j., therefore, the sole delinquent.
IFGAL-reNDER RESUMPTION.
ttC t1lttItb oi Gtlt b''N'''
Of the United States now outstanding
is less than. 370 millions of dollars,
besides 81 millions of dollars of frac-
tionnl currency. How shall the gov
arnment make these notes Mt all times
as good as specie
L. has to provide, in reference to TIA
mass which wuuid be kept in use by
tlue wants Of business, IL central reaer-
voir Cf coin, adequate to the adjust
mont of the temporary fluctuations OF
international balances. and aS giinr
anty against transient drains artificially
crrnttu by panic or by speculation.
1t has also to provide for the pay
ment in coin OF such fractional curren
cy IA may be presented for redemption,
aud such incOnsiderable portions of
the 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.
RESUMPTION NOT DIFFICULT.
To make the coin now in the treas>
ury available for the objects of this re
serve. to gradually strengthen and en-
large that reserve, and to provide for
such other exceptional demands for
coin as may arise, does not seem to
NE work of difficulty. If wisely
planned and discretly pursued, 1t
ought not to cost any sacrifice To the
business of the country. 1t should
tend, on the contrary. to revival OF
hope and confidence. The coin i'll the
treasury on the Both of June, InciudF
ing what is held against coin certfi-
Gates, amounted to nearly 81 millions.
The current of precious metals which
has flowed out of our country for the
eleven years from July l, 1865, to
June 80, 1876, averaged nearly 76 mil
lions a year, was 852 millions III the
whole period of which GIT millions
were the product of our own mines.
To amass the requisite quantity,
by interceptiDg from the current fiOw-
ing out of the country, aud by acquir-
ing fram the stocks which exist abroad
without d ,sturbing 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 cf business
lay 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. Whether
they continue as currency, or be absorb
cd into the vast mass of securities held
as investments Is merely question of
the rate of i1terest they draw. Even
if they were to remain in their present
form, and the government were to
agree to pay on them rate of interest,
making them desirable as Investments,
they would cease to circulate and take
their place with government, State, mu
nicipal, and other corporate and pri
vate bonds, of which thousands of
millions exist amongst us. In the per
feet ease with which they can be
changed from currency into invest
ments lies the only danger to be guard
ed against in the adoption of general
assembly measures intended to remove
clearly ascertained surplus; that is,
the withdrawal of any which are not a
permanent excess beyond the wants of
business. Eyen more mischievOus
would be any measure which affects
the public imagination with the fear
of an apprehended scarcity. In a
community where credit is so much
used, fluctuations Of values and vicis-
situdes in business are largely caused
by the temporary beliefs of men even
before those beliefs can conform to
ascertained realities.
AMOUNT OF NECESSARY CURRENCY.
The amount of necessary currency,
at given time, cannot be determined
arbitrarily, and should not be assumed
on conjecture That amount is sub
ject 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. It varies with
certain states of business. It fuctu-
ates. with considerable regularity, at
different seasons of the year. In the
autumn, Tor instance, when buyers of
grain and other agricultural products
begin their operations, they usually
need to borrow capital or circulating
credits by which to make their pur~
chases; and want these funds in Cur
rency capable of being distributed in
small sums among numerous sellers
The additional need of currency at
such times is five per cent. of the
whole volume, and. if a surplus be~
yond what is required for ordinary
use does not happen to have been on
hand at the money centers,
of currency ensues, and also
a stringency in the loan market.
It was in reference to such expe>
riences that, in a discussion of this
subject, in my annual message to the
New York Legislature of January 5,
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 assumed-to monopolize the
supply of currency, and enacted ex-
clusion 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 waits of business. It should
initiate, as closely as possible. the
natural laws of trade which 1t has