The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1878-04-03

SUMPTION; second, that the nauOnal DankS
can tnrow upon the government the burden
of resumption of bank notes as
well as of United States notes;
third, that resumption requires resumption
and cancellation without power of reissue
of notes below $500, 900 600; to these answer
that believe that with such auxiliary legis-
latiOn as pending in both houses we can sell
enough 4 per cent. bonds 10 prepare for
resumption, but il l mistaken in this we
can sell either 4 - or per cent bonds, which
they admit will command gold, silver and
bank notes, to maintain resumption. Some
OF these gentlemen have proposed to me
that If sell them 4 y per cent. bonds at par,
in CON- they will guarantee enough coin
for resur, ption. and have some
better offers from other banks
and bankers so that on this point ii is only
a question of the rate of interest on bonds.
When it becomes clear that money can not
be had for per cent, it is time enough 10
pay ~ The silver bill has crippled my
power to sell 4 per cent. bonds but q wise
savings bill that will enable me to deal
= directly with the people would go far to
repair this. u pom the second point it may
as.well be understood that the national
banks can not throw upon the government
the burden of redeeming their notes. The
attempt would be suicide. They are bound
I TO redeem their notes on demand at the
/ treasury with United States notes or coin,
and 10 maintsin in their vaults
very large reserves OF United
/ States notes. Any effort OF theirs
I TO force the redemption of their reserves of
United States notes in coin would at once
cause the government to withdraw all gov
! eminent deposits from them, to present all
bank notes held or received by the govern
ment for redemption, and if need be to ex-
change United States notes for bank notes
Such struggle as these gentlemen cOntem-
+ plate would end in their lOsing their power
4 TO issue circulating notes at all Their talk
/ about forming line TO break the govern
ment is not discreet, and is dangerous.
/ am more concerned about what you will do
than about what they will do. The United
States government already holds larger
cash reserve for redemption of Its notes in
proportion to demand liabilities than any
bank represented by these gentlemen. and it
has power TO increase 1t. Our certificates of
deposit the most dangerous form of demand
liabilities, are secured, dollar for dollar, by
coin or United States notes actually on hand,
, while the banks owe over 5000 600, 600 to
I depositors the great body of which is repre-
sented by notes and bills discounted. Toe
only demand liability we owe, not covered
by actual cash on hand, is United States
notes and of these $70,000,OO0 are in our
vaults. and $4,000, 900 more the banks are
! bound to maintain in their reserve, with a
coin reserve of 500, 900 600 TO $150,0 900.
The redemption of $500, 0O0, coo United
States notes would be easy, and that
reserve could not be diminished to any con-
siderable extent by the banks or any combi.
nation OF bankers without a continuous
draft upon the banks to make it good. We
can rely upon the intelligent and self
interest OF banks TO prevent such a struggle.
Nothing would provoke it more quickly
than threats by the bank officers, and If
such a struggle comes the government, with
its reserve, with ample revenue and power to
Il -.
without fear of line of bank cashiers
anxious to break the treasury or to force
high rates OF interest on the last point. The
power to reissue is plainly given by section
1919 of the revised statutes and is not cut
off any more by notes coming into the
treasury in exchange for coin than IN the
payment OF a tax, even if the supreme court
hold them as no longer full legal tender
They are as much so as q bank note. II
choice must be made between the two, the
common interest would decide in favor Oh
the United States note. l believe they
both ought TO circulate and both be at pal
with coin, but nothing is SO. discOdrag
ing in the progress of resumption q.
for the rational banks to shrink from
their share OF the burden of resumption. Of
TO make threats, such as are stated by some
of these gentlemen and nothing is so injuri
Gus 10 the banking system or will precipitatt
ITS overthrow more certainly than popular
conviction that the banks are eDdeavariog &c
embarrass the government in maintaining
resumption.
Mr.. Chittenden defended the bankers who
participated in the New York conference
from any suggestion of holding threats
against the treasury, and he appealed to Mr.
Ewing for confirmation of that disavowal
which Mr.. Ewing promptly gave.
Secretary Sherman went on to show thai
all that the government had to dc
in hn maj Of ,@S,,, 4,
take care OF some $500. OOO OOC
legal tender notes, while the national bank.
on their side were to take care of the nation
al bank currency, and he undertook tC
demonstrate that both the government anC
banks were abundantly able to do This
Mr. Ewing pressed him closely on this pom
as to the effect of the presentation of 500,
100000 legal tender notes for resump tion, bu
the secretary took the ground that under all
, circumstances and inview of the fact that las
week the report of the New York associated
, banks showed only an amount OF some
: twelve millions of legal tenders on hand
such superstition was not to be regarded a.
possibility, particularly as the banks them
, selves had 10 retain a reserve Of legal tend
, ers IN order TO redeem their own outstand
ing notes.
, Mr.. Ea1nes suggested the question whether
the existing paper circulation was not re
stricted enough for the business of the
country, and whether there was any likeli
hood of any considerable diminution of i
by its conversion into specie.
Secretary Sherman concurred to a large
extent in this view of the case. He thought
that the paper circulation of $50, GOO, 600 wa.
not too large TO meet the demands OF the
business.
In further reply to Mr.. Ewing's question
he took the ground that il there was any
doubt about the ability of the gOvefnmen
with its present means to meet all demand.
, OF the resumption act, there would be nc
doubt whatever about. If he was authorized
either TO issue popular percent. loan or Il
sell ~ per cent. bonds TO brokers. He haC
guarantees of all the specie that could be-
required if he would sell those AZ per cent
bonds, and it should be Tecollected that the
rate of interest was lower tnan had hereto
fore been known in the history of this gov
eminent. The conference, or which the
foregoing presents the leading points, Is tC
be resumed on Thursday.
Public Debt Statement.