Ottumwa weekly courier. (Ottumwa, Wapello County, Iowa) 1872-1899, 1876-08-09

specie payments by all the banks OnA
heir notes. The official statementtc
made on the 18th of May, shows theal
of bank notes was $500, 600, IA
900, less $20OO0,O00 held by them-b
selves. Against these $3.50, OO0, 600 oftl
notes the banks held Sal GOO, OOOil
notes, or a little more !,
than fifty 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 three hundred |
and sixty million dollars, available |
and current in all foreign money |
markets. In resnming, banks even If
it were possible for all their notes to |
be presented for payment, would
have five hundred million dollars Of |
specie funds to pay two hundred and
eighty millions of notes without con.
tracing their loans to their customers,
or calling on any private debtor for
payment. Suspended banks UNDER
taking to resume have usually been
obliged to collect from needy Dor.
rowers tie means to redeem excessive
issues and to provide reserves. A 4
vague idea of distress is therefore
often associated with the process lOf
resumption, but the conditions which
caused distress in these former in.
stances do not now exist. The Cow
eminent has only to make apOd Its
own promises, and the banks DIN take
care of themselves without disturbing
anybody. The Government isl there
fore the sole delinquent.
In my annual message to thd New
York Legislature of January 81 1876.
a suggestion was made that tho Fed
eral Government is bound to redeem
every portion of its issues which the
public do not wish to use. Having Sssu-
med to monopolize the supply ofeur-
rency, and enacted exclusions against
everybody else, it is bound to furnish
all the wants of business requke.
The system should passively allow tAei
volume of circulating credits to ebbl
and flow according to ever changing
wants of business. 1t should initiate
as closely as possible the natural laws
of trade which it has superseded By
artificial contrivances and in SINH
lar discussion in my message of Jan
4, 1876, it was said that resumptioi
should be affected by such measured
as would keep the aggregate amount
of currency self adjusting during al
process without creating at any timS
an artificial scarcity and without exi
citing public imagination with alarm
which impair confidence, contract the
whole machinery of credit and dis1
turb the natural operations of busi1
ness.
The amount of legal tenders QUIT
standing is less than 1870, zoo, 900, bel
sides 49,, 100000 of fractional currenI
Icy. How shall the government mako
these notes at all times as good al
specie? 1t has to provide i'm reference
to the mass which would be kept in
use by the wants Of business central
reservoir of coin adequate to the adj
ljustment of the international balance
and as guaranty against the tran
sient drains artificially created by
jpanic 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
inconsiderable portions of legal tend
ers 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 available
for objects of this reserve, to gradual
ly strengthen and enlarge that lie.
serve, and to provide for such other
exceptional demand for coin as may
arise, does not seem to me q work OF
difficulty. If wisely planned and
discretely pursued, it ought not to
cost any sacrifice TO the business Of
, the country. 1t should tend. on thu
; contrary, to the revival of hope anG
confidence. The coin in the treasury
on the Both of June, including what i,
held against coin certificates, amount
ed to nearly $74,OOO,OOO. The curren
amount OF precious metals which has
flowed out of our country for clever
years, since July l, 1865, to June 30
1876, averaging nearly $76,OOO,OOO {
year, was 1882, OOO, 600 in the whole
period, of which $6l7, GOO, 600 were the
product of our own mines. To amass
the requisite quantity by interceptine
from the current flowing out Of tht
country, and by acquiring from thu
stocks which exist abroad, withou
disturbing the equilibrium of foreign
money markets, is result to be east
ly worked out by practical knowledge
and judgment. With respect to what
ever surplus of legal-tenders the
wants of business may fail to keep in
use, and which, in order to save in
terest, will be returned for redemp'
ton, they can either be paid or they
can be funded. Whether they con.
tinue as currency or be absorbed in
the vast mass of securities held as in.
vestments is merely question of the
rate of interest they draw. Even il
they were to remain in their present
form, and the government were to
agree to pay on them rate of inter.
est making them desirable as an in.
vestment, they would cease to circu.
late, and take their place with the
government, state, municipal and
other corporate and private bonds, Of
which thousands Of millions exist
among us. In the perfect ease with
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 clearly ascer.
tanned surplus, that is the withdrawal
of any which are not a permanent
excess beyond the wants of business
even more mischievous would be any
measure which affects the public i'm.
agination with fear of an apprehend.
ed scarcity. In community where
credit is SO much used to fiuctuation
Of values and vicissitudes, in business
are largely caused by temporary be.
liefs of men even before those beliefs
can conform to ascertained reali-
ties the amount Unnecessary currency
at a given time cannot be determined
arbitrarily and should not be assumed
on conjecture. That amount is SUBJ
ject to both permanent and temporary
changes. An enlargement of it, which
seemed to be durable, happened al
the beginning of the civil war, by q
substitute use of currency in place oil
individual credits. 1t varies with
certain states of business. 1t fuctuatei
with considerable regularity at diff.
ferent seasons Of the year. In the
autumn, for instance, when buyers OF
grain and other agricultural products
begin their operations, they usually
! hSSu w pVAiOW capital VI ClICuluCluS5
credits by which to make their pur-
clases, 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 or more per cent. of
the whole volume, and If a surplus
beyond what is required for ordinary
use does not happen to have been on
hand at the money centers, scarcity
ensues, and also stringency in the
loan market. 1t was in reference to
such experiences that in the discussion
public economies, official retren CHI
ments and wise finance are the means
which the st. Louis convention die.
tates as the provision for resources
and redemptions. The best resour.
ces is reduction of the expenses OF
the government below its income, for
that imposes no new charge on the
people. If, however, the improvi.
dence and waste which have conduct.