The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1878-11-25

from she Rsport os the sseutrp rof Gurrescysl
SD Is ts0Y9FafnfenfG nFFent$s-
ThesamcRntgoi IegaI-ten der gfotes OUT
standing fs ss34g, 0fG, 900 of nation at bank
notes, s392, 900, 0e0 = King atotal OF $685.
600 900. gThat additional iegatte der notes
:ean be eenstitufi cnaily fssned is mt lense
doubtful and therefore Il Treasury notes
shall be substituted for the present nationals
bank .r1trs they canpot prot badly be: made a
legal tender In the payment OF yaii debts.
Two kinds OF Treasury notes will then be
in circulation, one OF which will be a legal
tender In payment OF oil debts, and the
other not q legal tender even between ma
tional banks, as Is now the case with national
bank notes. The full 1egal-tender notes
will be or greater value than the other
class unless both are alike redeemable IN
gold at the commercial centres. The BANKS
hold among their resources $3.50, GOO, 600 In
bills receivable, and an equally large amount
Of other assets. a large proportion OF Wnich
Is readily convertible into money. Their
deposits and bank balances amount to more
than $500, 200, 900, and the circulating notes
are promptly redeemed, with but little ex-
pense to the bolders, through the use OF
their assets, which represent their capital,
surplus. and deposits. II more notes are
issued TO the banks than are necessary Tor
the requirements OF business, they can be
easily retired. II q larger amount Is de-
sired, they can be readily obtained upon
application in the manner provided by
law. sOn the other hand, X the entire
circulation OF the country Is to De
issued by the Government, its amount
must be fixed by Congress, and can be
neither increased nor diminished except by
its action. The Treasury note represents
no business capital, and the volume Of the
currency VIII be controlled, not by the de-
mands Of business and the wants OF the
country, but by the views and action OF po-
lticai parties and of Congress- The COY
eminent, unlike the banks, does not receive
deposits nor. loan money, and it must, there
fore, provide for the redemption OF its
notes from its own resources. Ii 1t issues
a small amount OF currency, the amount OF
reserve required and the expense OF re-
demption will be small; buff it issues the
whole paper currency OF the country, 1t
must, when 1specie-payments are reached,
maintain ratio Of reserve equal TO that OF
the Bank OF England or the Bank OF France,
which Is not less in either case than one
third OF the amount OF its issues. Ii
the amount OF Government issues should
be S6G8, 100000, which is the present
volume Of the currency, a reserve OF S5223,-
100000 in coin must be kept on hand. The
interest upon this amount OF reserve, at the
lowest Government rate -four per cent?,
would be SS.920,000. The expense OF IS
suing the notes and the cost OF redemption
would also be large, and the total cost to
the Government, including the hazards at
tending the issue OF such large amount OF
money, would not probably be less than
S10,000,OO0 annually. This amount is nearly
equal to the net annual interest received by
the national banks upon their bonds,
and is much greater than the profits de-
rived by them from their entire circu-
latiou.- II the amount OF the Treasury
notes should be largely increased and
be subject, as it will, to additional
increase by each successive Congress the
ability OF the Government to redeem the
same will in time be questioned, and the
amount and proportion Of the reserve re-
uuircd will need 10 be increased, thus
adding materially to the expense attending
the issue. II United States Treasury notes
are substituted for the nationa-bank notes,
and specie-payinents are resumed, IL Is CYL
dent that the Government Will save but
little, il anything, by the transaction. II
not convertible, two kinds of Treasury
notes, as before stated. will then be in cir
culation. The old legal-tender note will be
Dreferred separate accounts OF each kind
OF notes will be kept, and the difference OF
exchange, which has practically disappeared
under the present system, will again appear
in every business transaction.
Nearly oil NJ tho T1nitpl States bonds
held by the national banks are, by the eX-
picit terms OF the acts under which they
were issued, payable, both principal and
interest, in coin. These coin bearing bonds
viii bear high premium in the market in
comparison with the new issues OF inCOn-
yertible Treasury notes. Only three years
ago, in 1875, the 5 and per cent. bonds OF
the United States were at premium OF
from Is to 20 per cent. in Treasury notes,
which were full legal tender, and which
were limited In the amount OF issue. The
issue OF the new Treasury notes in place OF
national-bank notes will therefore be at
tended with an advance in premium upon
the bonds of the Government held by the
banks. in amount not less than from $780,
OO0. 900 to S6O,000,000, and probably OK
ceeding that sum; and il the bonds held
bv the banks are purchased with the pro-
posed new issue of Treasury notes, this loss
of premium must at the outset be borne by
the Government.
It is believed by the Controller that this
proposed substitution is impracticable, and
that the repeal Of the national bank act will
result not in an additional issue OF Treasury
notes, but in the restoration Of State systems
similar to those which were previously in
operation. Secretary Chase, in his report
for 1861, said that the establishment Of the
natlonal-bank system would "avoid the
evils Of a great and sudden change in the
currency by offering inducements to solvent
existing institutions to withdraw the circu-
lation issued under State authority and SUBJ
stitutc that provided by the authority OF the
Union and that "tbrough the voluntary
action OF the existing institutions, ordered
by wise legislation, the great transition
from currency heterogeneous, unequal,
ard unsafe, to one uniform, equal, and safe,
may be speedily and almost imperceptiby
accomplished" The national bank act be-
came law on February u, 1863, but the
inducements offered by the Secretary were
not sufficient to bring about, to any great
extent, the conversion of existing State
into national associations. Subsequently,
on March 3, 1865, an act was passed which
provided "that every national banking as
ISOLATION, State bank, or State banking as
ISOLATION, shall pay tax Of ten per centum
on the amount OF notes Of any State bank
l~y