Northern tribune. [volume] (Cheboygan, Mich.) 1875-1885, 1878-10-19
ASTOCK ARGUMENT OF THE ssIR-
REDEEMABLES.n

A STOCK ARGUMENT OF THE ssIR-
REDEEMABLES.n
One of the arguments in which the
National Greenback orators seem to take
great deal of comfort, in their crusade
az inst redeemable paper money is based
upon the fact that the oil state banks
rarely or never had at any one time,
enough specie on hand to- redeem their
outstanding circulation il it had all been
presented at once. 10 this fact they
point triumphantly as an explanation of
what they call the ''failure OF state bank
ing systems;"ap while some of them
leave the matter to inference. many of
them openly declare that all the evils OF
those systems would have been avoided
II the paper, instead of being based OIL
an insufficient amount of coin, had been
based on none at all. Wild as is the fall
lacy involved i'm this argument it is seri-
ously urged wherever the fiat idea is
predominant; and as some are undouied-
ly deceived by .r, it becomes necessary to
treat it as seriously as if it really had
some foundation.
1t is true that during the existence OF
the state banks none OF those institutions
had, or pretended to have, the specie on
hand at all times, or ut any time, to ex-
change Ser their outstanding sfotes, Ii
would have been the height of folly tor
them to do so, not on their own account
alone, but on account of the business
community. The notes they issued were
issued MT merely because paper was
more convenient than coin for use i'm the
transaction of business, but because there
was not coin enough TO meet the wal Is
of the business community. There was
demand then-as there is now and il
iikly to be for many years-for a cioculs.
ting medium larg ly in excess of the
coin precurable fot that purpose; aud
the fact that there was such demand
made it abundantly safe to issue a large
amount os notes upon a small basis oil
COLI, provided, always, that there was
enough solid security in addition to the
coin, and an honest administration of the
banking business. The, absolute neces-
sity for paper in circulation was a guar
anty that, so long as confidence existed
1t would only be presented for redemp-
tion when coin was actually needed fol
specific purposes 10 which paper was moi
duplicated, or when the .amoHRt in cir.
culation exceeded the wants Of trade
But while the amount of specie held
by each state bank was thus necessarily
small when compared with its outstand.
ing circulation, it is simply absurd TO say
that the banks or the people would have
been better off il there had been DO spe-
clio Or no liability to pay it on demand
The knowledge that specie could be had
on demand. kept the notes of the several
banks of equal value i'm the market and
at par with coin, whereby the people
were benefited; and the knowledge OH
the part of the banks that any issue OF
notes In excess of the wants of trade
would he speedily returoed for redemp-
tion restrained them from excess which,.
III the Cbsence of a liability to redeem,
there would have been great danger OF
them committing.
The conclusive answer, however, to the
assertion that specie resumption was All
evil under the state banking system is
found in the fact that the system was re-
markabiy successful where specie re-
demptiOn was abundantly sure, and un-
successful only where doubts existed OH
that point. In New Nngland and New
York the national banking system. which
is certainly admirable insits protection to
the bill holder, whatever its defects in
other respects-could only be made to
supersede it by taxing the state banks
out of existence. The system was good
because it provided. with as much Ger.
tainty as human enactments could fOl
the redemption, when presented, OF every
note issued, and compelled the banker
to restrict his issues within snch limit:
rs would enable him 10 comply with the
specie paying requirement. Certain, OF
the state banks i'm the West, too, occupied
quite as high position as the Eastern
banks and commanded rs much conf.
dence, because they also redeemed al
their notes--swhen presented; and the
reason why so many Western banks failed
to command confidence and eventually
failed altogether, was because they dit
not redeem.
If there we're anything in the argu
ment which was based upon the in
suficiency of the specie in the old state
banks the same arguments could be EN-
ployed with crushing effect against th'
national banks of to day, considered a
banks of deposit. There is not one o
them that could pay its depositors if al
of thees should make demand upon tn
bank at once for the amount to thei
credit. In sworn statement, winch lie
before us, as TO the condition on Oc;Obe
] of one of the Strongest national bank
in the Nor, Invest, the amount Of indi
yidual deposits snbjtct to check is give
az little less than 81 400, 200, while til
amount of actual cash on1 hand is les
than $4,000. If all of its deposition
were to demand sthcir money! at In
same moment this bank would only hav
one dOllar in four to pay then
and, yet it is perfectly. sound. Ii
assets and resources are ample