The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-06-13

Fiscal Policy or the Administration.
The Treasury outlook has SO frightened
that the financial world takes note of 1t
with feeling of gratifed surprise. The
extent and rapidity of the change is best
marked by contrasting the doubling and
rather respondent tone of the last report OF
the Secretary of the Treasury with the en-
gagements entered into by the Syndicate OF
American and foreign bankers on Saturday.
In December last Secretary Morrill, was un-
able to see his way to resumption in
1879 without important new legislation
by Congress, but after an interval OF
only six months the country is apparently
on a sure road to specie payments at the
designated time, although Congress did
nothing at the late session to promote the
measure. Secretary Morrill, recommended a
law authorizing the issue Of four and a half
per cent bonds for funding surplus green
backs-a recommendation which proves that
he had no expectation at that time that the
four per cent bonds would become exchang-
able even for greenbacks, much less that
within six months the Treasury would be
able to sell them at par in gold. Secretary
Morrill's misgivings did not discredit his
financial judgment, for he had as yet been
able to sell only forty millions Of the four
and half per cents, and had two
hundred and sixty millions Of them
still on his hands. Nobody could have
anticipated SO wonderful an improvement
of the situation Us that which we now wit
ness, when two hundred millions Of the four
and half per cents have been sold, and
the Secretary of the Treasury, in the exer-
else of q discretion conferred on him by law,
has withdrawn the other one hundred mill
ions of that class of bonds because the credit
of the government has risen so high that the
four per cents can be sold ut par. This IN
expected fact puts quite a new face on the
great fiscal problems which confronted the
new administration, and relieves them of a
great part oftheir difficulty. There is no Ion
ger any reasonable ground to doubt that spe-
Gle payments can be resumed in January,
1879, without any additional legislation. The
process might be rendered somewhat more
gentle and easy, and on some points little
less circuitous by new law permitting a
direct funding of greenbacks /; but such
law is no longer necessity, and would be
only minor convenience.
The unexpected capabilities of the Re-
sumption law Of 1876 afford curious illus
tration of the lack of foresight with which
important Legislative measures are some
times planned. Neither advocates nor
opponents Of that act had any faith
in it as practical method of
resumption. It was voted for by
rag money infationists in Congress
because it seemed to them shrewd device
for postponing specie payments indefinitely
under guise of friendship for the measure.
They were satisfied that it did not permit of
any substantial contraction Of the currency,
and Senator Sherman, who drew the bill,
was SO anxious to get votes enough to pass
prejudices Of the infationists. The substi-
tuition Of silver for the fractional currency
would produce no contraction, because the
amounts were to be equal. The withdrawal
of eighty dollars of greenbacks for every
hundred dollars of new bank notes issued
was regarded by the infationists as slight
to their side, because the
average greenback reserve of the banks for
their circulation is less than
twenty per cent. The permission given to the
Secretary of the Treasury to use the surplus
revenue for accommodating stock Of gold for
redemption purposes was regarded as null
lily, because SO many taxes had been taken
off or reduced that no considerable surplus
was expected, and there would, indeed,
have been none in fact had it not been for
the large subsequent reduction of expendi-
lures by the democratic House. The
to sell the new bonds at not less
than par in coin to provide gold for re-
was thought to amount to
nothing, because it was not expected
that the bonds could be sold at
par for actual gold, although the
Treasury might be able to force an exchange
of the old six per cent for the new five per
cent bonds. The act of 1876 was accord
ingly regarded at the time of its passage,
both by hard money men and rag money
men, as q mere direction to resume ut q
prescribed date, without providing any
available means. President Grant signed
the bill on the ground that it acknowledged
an obligation to- redeem the greenbacks in
gold, but with his approval he sent in q
pointing out the necessity, and
urging the adoption, of more efficient means
to make the promised resumption effectual.
''The necessity of an increased revenue"
was what no chiefly insisted on, and
q restoration Of the duty on ten
and coffee was one of his specific
not allude at all to the permitted sale of the
new bonds at par, evidently regarding that
as no practical provision at all; but he did
scheme of his own for grad