National Republican., 1877-12-04


United States notes or coin. Such system
will secure to Tho people safe currency OF
equal value in all parts Of the country. receiv-
able for all dues, and easily convertible into
coin. Interest eau thus be saved on so much
Of the public debt as can bo conveniently main
tained in permanent circulation. leaving to
national banks the proper business Of such
corporations, Of providing currency for the
varying changes, the ebb and flow Of trade.
Tho legal-tendcr quality given to United
States notes was intended TO maintain them in
forced circulation at time whom their depre-
citation was inevitable. When they arc re-
deemablc in coin this quality may either be
withdrawn or retained without affecting their
use as currency In ordinary times. But all ex-
perience has shown that there are periods
when, under any system Of paper money, how.
ever carefully guarded, II is impracticablc TO
maintain actual coin redemption. Usually
contracts will be based upon current paper
money, and It Is Just that, during a sudden
panic, or an unreasonable demand for coin, the
creditor should not be allowed to demand pay
mcnt In other than the currency upon which
the debt was contracted. To meet this con.
tingcncy, IL would seem to be right To main
tain the legal.tcndcr quality Of the United
States notes. IL they arc not Mt par with coin,
1t Is tho fault of the Government and not Of
the debtor, or, rather, II is the result Of un-
forcscen stringency not contemplated by the
contracting parties. -
In establishing system of paper money
designed 10 to permanent, IL must be remcm-
bered that heretofore no expedicnt has been
devised either in this or other countries that In
times of panic or adverse trade has prevented the
drain and exhaustion ofcoin reserves, however
large or carefully guarded. Every such system
must provide for q suspension of specie pay
mont. Laws may forbid or ignore such con.
tingency, but II will come, and when IL comes
1t cannot be resisted, but should be acknowl-
edged and declared to prevent unnecessary
sacrifice and ruin. In our free Government
the power to mako this declaration will not be
willingly intrusted to individuals, but should
be determined by events and conditions
known to all. II is far better TO fix the maxi.
mum Of legal tender notes at $300, ,OOO, 900, sup
ported by minimum reserve Of $l00000,0 900
Of coin, only to be used for the redemption Of
notes not to be reissucd until the reserve Is re-
stored. r.'
demand for coin to exhaust such o reserve
may not occur; but IL events force Il Its exist
ence would be known and could be declared,
and would Justify q temporary suspension OF
specfe payments. Some such expedient could
no doubt be provided by Congress for an ex.
ceptional emergency. In other times the gen.
eral cor ldence In these notes would maintain
them at par In coin, and justify their use a.
reserves Of banks and for tho redemption Of
bank-notes.
NATIONAL BANKS.
In this connection, the Secretary calls the
attention Of Congress to the report of the
Comptroller of the Currency.
The number Of national banks in existence
on the first day Of November, was 20S0. The
amount Of their circulating notes retired within
the year prior to November 1877 Is $50, ,6S1 637.
nj a.;
tional banks during the same period Is &c.
308,030. The aggregate amount of their cir
culation outstanding Is $3l6,775,111. Their
loans and discounts amount to $SS8, ,243, ,2901 n.
The general solvency of the national banks,
as now organized, and their benefit to tho peo.
pie, have been demonstrated during q period
of fourteen years. No one has lost dollar
by receiving their notes. They have been less
subject to revulsion and failure than any other
corporations or firms. Their organization un-
der general law containing every safeguard
which experience has suggested--the supervi.
sion over them by the Comptroller of the Cur
rency, the frequent and unforeseen examina-
tions to which they are subject, the sworn
statements required of them Of every detail
necessary to disclose their condition, the abso-
Lutte security of their issues-makes this sys-
TEN of banking as safe and efficient as any yet
devised,
The remaining condition to pc rfect this sys.
tenn is, that their notes should be readily con-
vertible into coin. While United States notes
were irrcdeemable and deprecated, it was not
possible that bank-notes should rise above the
par of United States notes. The true test OF
this system Of banking will come when the
United States notes are maintained at par with
coin; then the banks must redeem their note.
| in coin or United States notes equal to coin.
The ample statistics given by tho Comp
troller, and his comparison of the reserves and
condition Of the national banks with tho re-
serves and condition Of other systems of bank.
ing In specie-paying times, give assurance that
the national banks are able to redeem their cir
culating notes in coin at any date fixed upon
by the Government.
They certainly should not enjoy the fran.
chise Of circulating as money their un-inter
est-bearing notes, unless they are prepared Il
redeem them. The present system of redemp
tion Of bank-notes at tho Treasury of the Uni
ted States can be continued after United State.
notes are at par with coin Us well as now. Il
experience should show that additional re
serves are necessary they can be required
Then, as now, their notes will be amply secured
by the deposit of bonds, and confidence In thi.
security will dispel the fear of failure, which
under former systems, has been the cause o.
sudden runs or demands on banks for payment
of their notes. If tho policy of the Govern
ment should be to maintain In circulation al
phi With eoih VI buEto
| millions of United States notes. and to support
| them with q reserve of not less than one hun
dred millions In coin, these notes will be tn,
| natural reserves Of the banks, and more con
venient for that purpose than deposit of COLI
in their vaults
| Tho real danger that in former system
threatened bank was its liability for deposits
| II these were suddenly withdrawn or greatl,
diminished, the note holder was the chief suf
ferer. The first rumor Of weakness about
bank brought o demand from depositors ant
note-holders alike, but under tho national
banking system the note-holder is secure ani
Indifferent whether the bank breaks or not
and the depositor, who is voluntary credito
of the bank, is not likely to hasten its fall. ii,
is usually paid by a transfer Of Credits and II
most cases is q debtor as we'll as creditor o
the bank. Scarcely five per cent. of deposit
are paid by currency.
The capital stock Of national banks paid II
is now S479, ,467, III. and the surplus fund ant
other undivided profits is now $i66 ,34S, 100 90
The banks are exceptionally strong in thei
cash reserves Their condition is as favorabl,
to maintain redemption In coin las in United
States notes, and the Secretary concurs in th,
opinion Of the Comptroller that they ought {.
| be, can be, and will be prepared for redemp