The weekly herald. [volume] (Cleveland, Tenn.) 1876-1888, 1877-12-06

Sls0oo0a0 az par, In coin, Of four per cent. bonds.
or Is COO 600 for each OF the months OF August, sep
TENDER, Ocfuber. November aud December. OF the
coin thus received 100000 have been sold for the
redemption Of United States DOtes. aud the residue
Is 10 the Treasury. The surplus revenue has also'
under the same authority, been applied 70 the re-
demptiOn OF the residue OF United states notee.
not redeemed by the sale Of coin o. above stated,
aud the balance is held IN tho Treasury in prep
These operations, aided greatly, no doubt, by
the favorable condition OF our foreign commerce,
have advanced the market value OF United states
notes 10 s1x per cent, or within nearly 20 per
cent. OF coin. They have also oonclusively demon
strated the praoticabIllty Of restoring United
States notes 10 par, In coin, by the time liked by
law. and that without disturbing either domestic
or foreign trade or commerce. Every etep mas
been accompanied with growing business. win
the advance OF public credit, and the steady up
probation OF United States notes. The export OF
bullion has been arrested, ana our domestic sup
ply has accumulated 10 the Treasury. The e1-
p%ortatiOn OF other domestic products has been
largely increased, with great advantage 10 all In
dustries. The course adopted under the Resumption
Act. as herein set forth, W pursued, VIII probably
be followed with like favorable results. and q sur
fcient fund for the maintenance OF resumption Will
doubtless accumulate IN The Treasury at or before
the date fixed by law. The provision for Tree
banking has aided tins process by allaying inag
mary fears that would otherwise have been
aroused by the withdrawal OF United States notcs.
The Secretary can not too strongly urge tue htm
maintenance OF a policy that will make good the
promise contained in the United States notes when
issued-a promise repeated in the Oct "to
strengthen the public credit" approved March ls.
1863, and made definite and effective by lie Re
sumption Act
promise, though justified by the necessity which
led 10 their issue. should be made good as soon rs
practicable. The public credit Is injured by fall
ure TO redeem them. Every holder who was
compelled by law 10 receive them has boen
deprived Of a part OF bis just due. Now, when
our National resources are ample, when the pro
cess OF appreciation is almost complete. when the
wisdom Of the existing law has been demonstrate
ed. II is the dictate OF good policy and good faith
TO continue this process OF preparation, so that AZ
or before the time fixed by law every United
States'note will have equal purchasing power with
com. To reverse this policy IN the face OF assured
success will greatly impair the public credit, ar
rest the process Of reducing the interest on the
public debt, and canse anew the financial distress
our country has recently suffered.
The ResumptionAct con temDlates the reduction
by the first day OF January. 1879, OF the amount OF
United States notes TO $500, OOO,O 900, by the %cancella-
ton of such notes 10 the extent or slightly per cent.
OF the circulation Issued to National banks.
The amount OF circulation so issued may not be
sufficient TO accomplish tho reduction contemplat-
ed; the Secretary, therefore, recommends that au-
thority be gwen to gradually fund into four per
cent. bonds all United States notes 10 excess OF
$4,000 600, the bonds TO be ISSUED at par for coil
or is market equivalent in United. States notes.
This will be In harmony with the declared object
of existing law, and will open an easy way by
which the people may invest their savings IN o
notes to the maximum Of 100000 may be ao.
complished II Congress Will authorize the coinage
OF the silver dollar, to be exchanged for United
States notes on the demand Of the holder. such
notes to be retired and cancelled.
Existing laws do not clearly define whether
United States notes, when redeemed after Jan.
uary /, 1879, may be reissued. The first
section OF the resumption act plainly pro-
vides for the permanent substitution OF silver
coin for the whole amount OF fractional currency
outstanding. Section 8 plainly provides for the
permanent reduction OF United States notes 10 an
amount not exceeding $500, 100000. No distinct leg
islative declaration is made III the resum ption act
that notes redeemed after that limit Is reached
shall not be reissued; but Section 1879 OF the Re
yised Statutes of the United States provides that
when any United States notes are returned TO the
Treasury they may be %reissued, from time 10 time,
as the exigencies OF the public interest may re-
qulre."
The Secretary is OF the opinion that, under this
section, notes, when redeemed after the 1st Of
January, 1879, If the amount outstanding is not in
excess OF $500. 100000, may he reissued as the ext
Rencies OF the public service may require. note
redeemed with coin is In the Treas.
as II received for taxes, or as q bank
note when redeemed by the corporation Issuing 1t.
The authority to reissue IL does not depend upon
the mode in which IL IS returned to the Treasury.
But this construction is cOntroverted, and should
be settled by distinct provisions Of law. II should
not be open TO doubt or dispute. Tue decision OF
this question by Congress involves not merely the
construction of existing law, but the pubic policy
of maintaining In circulation United States notes,
either with or without the legal tender clause.
circulate readily; are OF universal credit; are q
debt Of the people without interest; are protected
by every possible safeguard against counterfeit
ing; and, when redeemablei in coin at the demand
OF the holder, form a paper currency as good as
hos yet been devised. 1t Is conceded that a GER
IN coin, be always maintained in cir.
c~ulation. Should not the benefit Of
this circulation inure to the people, rather than
TO corporations, either State or Nationali The
Government has ample facility for the collection,
custody, and care OF the coin reserves of the
country. 1t is a safer custodian OF such reserves
than o multitude OF scattered banks can be. The
authority to issue circulating notes by banks is
not given to them for their benefit, but for the
public convenience, and to enable them to meet
the ebb and flow Of currency caused by varying
crops, productions, and seasons. 1t ia %indtspcn-
eibie that O power should exist somewhere TO
issue and loan credit money at certain times, and
to redeem IL at others. This function can be per
formed better by corporations than by the Gov
eminent. The Government can not loan money,
deal in bills Of exchange, or make advances on
The Secretary ventures to express the opinion,
that the best currency for the people of the United
States would be a carefully limited amount of
United States notes, promptly r~edeemable on pre-
s~entatiOn in com and supported by ample reserves
OF coip, and supplement ted by q system Of National
banks, organized under general laws, FREQ and
open to all, with power to issue circulating notes
secured by United States bonds deposited with the
Government, and redeemable on demand in United
States notes or coin. Such IA system Will secure to
the people u safe currency Of equal value In oil
PARTS of the country, receivable for all dues, and
! easily convertible into coin. Interest can thus be
saved on so much Of the public debt as can be CON
veniently maintained in permanent circulation.
leaving to National banks tho proper business OF
such corporations, of providing currency for the
varying changes, the ebb and flow OF trade.
1.-THE legal.tender quality given to United States notes
wnS intended to maiUtain them In forced clrcuati0n, 81
a time when their depreciation was inevitable. When
they are redeemable in coin thisquality may either be
withdrawn or retained, without affecting their use as
currency in ordinary times. But all experience has
shown that there are periods when, under any system
of paper money, however carefully guarded, 1t H. I'M
| practicable TO maintain actual coin redemption. Usu
ally coutracts win be based upon current paper monoyt
and II Is Just that, during asudden panic, or IN unreAs-
enable demand for coin, the creditor should not be al
lowed TO demand payment in other than the currency
upon which the debt was contracted. To meet this
contingency 10 would seom to he right 10 MAINTAIN the
legal.tGnder quality OF the United stataj nOtos. II
they are pot at par with coin IL Is tho fault OF the Gov.
eminent aud not OF the debtor, or, rather, IL is the re-
suit OF unforeseen sLrlneenCy not contemplated ny the
contracting parties"
In establishing q system OF paper money do
signed TO be permanent, 1t must be remember9d
that heretofore no eXpedlent has been dovlseQ
either in this or other countries, that In times oil
panic or adverse trade, has prevented the drain
and exhaustion OF coin reserves. however large OF
carefully guarded. Every such system must pro
may forbid or ignore auch a contingency, but
} 10 will come; and when 1t comes II can not be re-
sisted, but should be acknowledged ana declared,
TO prevent unnecessary sacrifice and tuln. In
our free Government the power to mako this dec
%laration will not be willingly %intrusted to ind
viduals, but should be determined by evente
and conditions known to all. 1t is far better TO
FIX the maximum OF leaal.tender notes at $500, 900.
600, supported by O minimum reserve oil
S1OO, 900, 900 Of coin, only to be used for the re
dempuOn OF notes not to be reissued untl the
reserve is restored. A demand for coin TO exhaust
such q reserve may not occur, but, II events rorce
IL, Its existence would be known md cOuld he de
clarcd, and would justify q temporary sui onsiou
Of specie payments. Some such oxpedlent c0ulu
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