The New York herald., 1877-08-25
Financial Policy Of Secretary shsr-

Shuckers, the friend and biographer OF the
late Chief Justice Chase, on the speech OF
Secretary Sherman at Mansfield. We regret
that this letter of Mr. Shuckers, like the
one which preceded it, is in tone OF
acerbity which adds nothing to the force OF
his statements and hardly BELTS grave
| public discussion. If Mr.. Sherman is wrong
it quite sufices to refute him, without i'm
pugning his motives or expressing contempt
of his character.
| In this letter Mr.. Shuckers is rather dis
cussing the state of the money market than
the resumption policy of the Secretary Of
the Treasury. To be sure, Mr.. Sherman. in
his Mansfield speech, expressed the opinion
that there is superabundance Of currency
and assigned reasons for this opinion in
which it is possible to pick flaws. But
whether those reasons be sound or fallacious
it is certain that money is abundant. 1t is
easy to prove it by different arguments from
those employed by Mr.. Sherman. The fact
that some sixty millions of greenbacks are
now on deposit in the Treasury may have
been misinterpreted by Mr.. Sherman as
proof that the currency is redundant with
out invalidating or impairing other argu-
ments which establish that conclusion. The
true test of the abundance of money is the
rate of interest, and it is only necessary to
observe the rates at which the banks are
Offering loans to be satisfied that the supply
of money is in excess of the demand. Nor
is this transient condition of the market
- - ,>c%o
Among many proofs we will call at
tention to one OF peculiar significance.
At the beginning Of this month the Bowery
Savings Bank, one of the most solid and
best managed institutions Of the kind, made
o voluntary abatement of the interest due
from its debtors from seven per cent to six.
Why did this prudent institution offer to
take O lower rate than the people to whom
it has loaned it's funds have stipulated to
pay? It was because, with the foresight Of
sagacious business men, they saw that for
some time to come the market rate is likely to
be less than the legal rate, and they wished
to retain their present mortgages. They
knew that their debtors could borrow money
ut lower interest and pay them up, and to
avoid this they have voluntarily thrown off
one per cent. This remarkable fact shows
that, in the opinion OF good judges, the loan
market is easy for borrowers, and is likely
to remain SO for quite period to come.
Even if the fact we're otherwise we fail to
see that that would be reason for abandon
ing the attempt to resume specie payments
at the date prescribed by law. If there is
not currency enough it is in the power of
the banks to increase their circulation
to any extent they choose. If money
terest would be high, and it would be
profitable for the banks to extend their cir
culatiop. Under the Free Banking law there
need be no solici.ude We shall have all
the currency which the banks can loan to
advantage and keep at par. and more ought
not to be desired. The fact that the banks
have been Withdrawing a portion Of their
circulation attests their opinion that money
is too abundant to find profitable employ
ment. Why, then, should Mr.. Sherman be
so severely criticised for supporting sound
opinion with feeble arguments?
But we are by no means convinced that
the argument of Mr.. Sherman is so lame as
Mr.. Shuckers considers it. The sixty
millions of greenbacks deposited in the
Treasury are, in part owned by private
individuals to whom it is mere idle money,
in part owned by banks that have other
unemployed resources in excess of the legal
reserves, and in part by banks which
.1:. of ~r
in paying their clearing house balances.
The daily clearing house balances are prob
ABLY less than n twelfth Of the amount so
deposited. But Mr.. Shuckers, by a trans
parent fallacy, argues as If the whole
of it were actively employed. There is
a similar fallacy in his reasoning about the
reserves of the country banks The official
statement Of April IA shows that besides
their regular legal reserves the country
banks had large deposits in the city banks.
Whether it is proper to reckon such deposits
as reserves is q mere question of language,
and not of substance. Equally with the re-
serves they are resources for paying deposi-
tors, and it is only necessary to class them
as reserves to justify the averment Of
Mr. Sherman, which is no juggle, but a loose
way of stating the fact that the banks have
larger provision for paying their depositors
than the law requires of them. We copy
from contemporary the following analysis
of bank reserves, made up from the bank re-
port of April IA, 1877 =
ANALYSIS OF BANK RESERVE APRIL IL, 1871
Reserve required ,o.. .oo
Reserve held
Specc ACKNOWLEDGEMENTS. T. l66. $50
LEGAL tend 81, ,94s 207
Certificates OF deposit. 1,17U,O00
Redemption fund in Treasury. 1OI54,6l6
Total cash .,.....................$ $4s. O30sl2
Deposited in city banks .......,,... 50, ,90} 422
Total reserve ... SIO3 944, ,234
Reserve required
1856 city soivo', 500
Reserve held