The Democratic press. [volume] (Ravenna, O. [Ohio]) 1868-1901, 1877-07-05
Forced R esumption and Increased 1nteres

John Sherman is doing a lively bu-
siness, aud q disastrous one for the
country, as we think it will prove. in
selling bonds for gold and cancelling
the greenbacks received as the pro-
ceeds OF such sales. He is thus in
creasing the interest bearing bordcd
Indebtedness of the country, and de-
creasing the nOn-interest bearing debt.
This is in the interest of the bondhold-
ers, of course. But scheme has late
ly been developed in Wall Street,
which shows something of a conspira-
cy between the Eastern bankers and
the Secretary of the Treasury, to pro-
mote q forced resumption of specie
payments, by still further curtailing
the greenbacks in circulation, and do
ing it too by palpable violation of
the spirit of the resumption act of
1879. which Sherman pretends to fol-
low in his cast iron forcing methods
The plan is about as follows: The
National Banks engaged in the con-
spiracy-thOse of New York, Boston,
Philadelphia and other eastern money
centres-are to apply to the Treasury
for certain amounts of additional bank
note circulation, of course depOsiting
bonds, which draw interest for them
in theTreasurv as well as in their bank
vaults. Upon the circulation being
obtained, it is to be locked up from
use, SO AS not to contribute to ease in
the money market. Upon the isst I.
ance of this bank circulation, the Seca
retsry, pursuant to section third of the
Resumption Act, will retire and can
eel an amount of legal tenders equal
to 80 per cent. of the new bank notes
issued, thereby effecting contraction
Of legal tenders to that extent. In Or
der to provide the legal tenders to be
thus cancelled,itis further understood,
the Secretary will ell,under the auth
orization claimed by the Resumption
act, an equivalent amount of bonds fer
gold, subsequently selling the latter
for greenbBcks. Some operations have
already been undertaken in pursuance
of this conspiracy, and an unusually
large retirement of legsl tenders in
May ana June will be the result. The
Philadelphia Ledger, very cautious
and well-informed journal in its treat
ment of financial matters, says of the
Shylock- conspiracy:
To what extent it is proposed to
carry this process remains to be seen.
1t does not, however. require any very
extensive cooperation OF banks to ef-
tect in this way an important degree
of contraction. Each bank engaged
in the scheme can, by returning imme-
diately for retirement the notes it has
thus received, repeat the operation
about twice a month, SO that bank
taking out say 100000 of circulation
can compel contraction of legal tend
ers to the extent of SSOO,OOO within
each month.
The plan is as ingenious as it is
startling, and will make great stir in
this city, within the next few days, 1t
IS born ofthe necessities Of schat bank
ers consider Geggariy rate Of inter-
est.
The potent factors in inducing the
conspiracy are palpable. The banks
want higher rate of interest, which
they secure by decreasing the circula-
ton of the greenbacks, giving them a
monopoly of the currency supply.
Sherman becomes party to the
scheme, and it could not succeed with
out his cooperation, in order to ad-
vance his pet hobby of forcing resump-
ton by retiring greenbacks. The
Chicago Tribune i'll its money article
speaking Of the practical working OF
the plan, says:
The operation has only to be re-
peated a certain number of times to
cause the retirement of the $6O, 600. .OOC
outstanding above the 100000, ,0OC
down to which the Secretary of the
Treasury is allowed by law to reduce
the legal tender currency. One bank
using half million of bonds can per-
form the operation twice in a month,
thereby pu utting out of existence $500,
COO in greenbacks in thirty days, and
banks cooperating with five and a.
half millions could compel the reduc.
ton of SGO,0OO,OC0 in seyen months.
The Government could do nothing,
because the law is such that if the
banks take the initiative, the Treasury
Department must move in accordance
with their demands for the issue OF
new notes or the retirement of notes
already issued. Among other benefits
the banks expect to obtain is, the re-
duction OF their surplus means and
the consequent strengthening of the
loan market"
Here we have it again. Increased
rates of interest of course follow 'ihe
strengthening Of the loan market.
Generally increased rates of interest
have followed revival in business.
by a process as natural as cause and
e4fe ct, but the parties to this financial
plot are conspiring for an increased
rate with business down to zero, all
enterprises languishing, labor idle,and
capital unemployed tine very condi-
tons sure to make capitalists timid
and money cheap on impossible se-
curities.
Sherman's policy of a forced con-
traction has already alarmed the
country +; but when the people realize
that he is in a plot with the Wall
street sharks, to advance the rate of
interest by creating an artificial scare
ity of currency, the Secretary of the
BondhOlders will be apt to hear lively
thunder all around the sky. The sue
cess of the scheme involves a violation
of the spirit of the resumption law it
is an act of bad faith with the people !;
and it will eflectually block any hope
of a revival of the business interests of
the country.-[Pittsburgh Post.