The sun., 1878-12-30
Substituting Greenbacks for National
Bank Notes Nothing to be Saved by IL.

We had occasion last week To notice the
report lately published by the Comptroller
OF the Currency. That report covers n
broad ground, and gives on the whole n
candid. judicious, and instructive view of
the fiscal situation. But there is one topic
discussed by Mr.. KNOX which calls for
special attention at this time. We refer 10
the mooted substitution of lcgal-tender
notes for the bills Of national banks,
which latter issues at present constitute
about one-half of our circulating medium.
IL has been proposed in certain quar-
ters % put forth additional legal tom
ders to the extent Of some S320,0O0OOO. the
same to be issued in payment of an equal
amount of bonds now held on deposit at the
Treasury TO secure the circulating bank
notes. I'm this way, it * claimed, the coun-
try would save all the interest accruing on
those bonds, or in round numbers some thir-
teen millions yearly. Now would the sum
economical approach this figure or would
the much smaller saving actually made be
more than Offset by loss in other directions
We do not propose TO inquire here whether,
as matter Of law, a new issue Of Treasury
notes beyond the volume now outstanding
could be made a legal tender In payment Of
all debts. II is indeed most doubtful
whether Congress Is authorized 10y the Con-
etitution 10 exercise such power in time of
peace But let us suppose the measure
sanctioned by the United States supreme
Court, and the S34G,OOO,OOO in lc2al-tcnder
notes at present circulating swollen by the
addition of some $500, 0,OOO,OOO correspond
lug 10 the value of our current bank bills.
.I,,t xx-il N CnXarpruput main
tain the confidence OF the people in its ex-
banded paper? What assurance can it give
that the volume OF currency will not he
liable To il,.icr and capricious multiplica-
ton, that it will be steadily and warily
adjusted to the requirements Of trade
Above all, what guarantees can the Treas
ury furnish for the redemption Of its notes,
thus doubled at one stroke, and subject, ap-
parently to indefinite expansion
In the existing state of things, the naeonal
bank bills represent an elastic currency, by
turns contracted or enlarged in compliance
with the shifting necessities of commerce.
Ifatany time more notes are issued 10 the
hanks than are called for by the eXigencies
uf business, they can easily be- retired. II,
IN the oJncr nanG larger amount Is Geeir-
able, they can be secured ON application
noupled with n deposit Of the security re-
guired by law. But II our whole circulating
medium is 10 be furnished by the Gov
ernment, its amount must be fixed by
Congross, and can neither be increased
nor diminished except by Legislative
action. It is further pointed out by
Mr.. KNoX that since tho Treasury
note represents no business capital, the vol
umc of the currency need not hinge in the
case supposed ON the relation Of demand
10 supply; need not be controlled by the
conditions of trade and the wants of the
country; but would, in fact, be determined
hy the views and interests of political par.
ties IN Congress. In a word the iiuctua'
tlons OF the currency, instead of exhibiting
an instructive and hcalthtul process Of sclf
adjustment, would be pregnant with the
mischicf5 Of arbitrary disturbance.
Now. what guarantee could the Treasury
offer that the greatly enlarged bulk of lcga
tenders might be converted into specie al
will The Government unlike the banks
does not receive deposits on loan money, ant
therefore it must provide for the redemption
OF its notes from its own resources. If it H.
sues, as at present only moderate an,
fixed amount Of currency. the amount OF re
serve required will be nconsidorable, Bu
should il undertake 10 put forth the who'll
circulating medum,l it must, when spcci
payments have once been resumed maintain
ratio Of reserve equal to that OF the Banl
OF England or the Bank uf Franc,
In either case this ratio does no
fall short of one-thrd OF the aggregate cur
rency ailoat. Thus, II the sun Of Govern
mcnt issues should reach S6Gs 100000 white
S, the volume needed for business purpose
to-day, n coin reserve Of s223,O0O,OO0 woul
have 90 he kept on hand Even at pc
cent the interest on these accumulation
would be Ss.92g.00O. To this would have I