The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1878-04-05


ceedingly annoyed about the publication, be-
cause It would seem like violating that under
standing which we had when the co lference
was held, but the paper was surreptitiously or
tanned, and the committee does not fee. at
fault about il.
Mr.. Chittenden- pains we're taken at
New York to exclude newspaper reporters.
Secretary Sherman-It IL pretty hard TO ex-
clude newspaper reporters, but / think ii was
night enough to have that conference published.
IL presents the opinions of very intelligent gen.
tlemen, whose businessi it IL to be familiar with
the subject, and their opinions are entitled TO
weight. l can only give you my general reply
to them.
MIR. Ewing-I supposed that these gentlemen
were coming here.
The Chairman-We expected TO get them
here at some time, and hence in some manner
we understood the conference was rather u
matter of confidence between the sub-commit-
tee and these gentlemen. or course We OK
pected TO get those facts out through them in
different form, but this conference was a
sort Of confidential communication on their
part.
Secretary Sherman-My reply would be about
this: These gentlemen assume three PROPOSE
tons:
/. We cannot sell enough 4-per-cent. bonds
to prepare for resumption.
2. That the national banks can throw upon
the Government the burden Of resumption Of
bank notes well as United States notes.
B. That resumption requires resumption and
cane citation without the power Of reissue Of
| United States notes below $500 000, 900.
To Il ese / answer Il a. believe with sucb
aux iary legislation Is pending III bah
houses, we can sell enough per cents. to pre-
pare for assumptions but, if am mistaken in
| this we can sell either Az 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
| II sell them Az per cents. at par in coin they
| will guarantee enough coin for resumption,
and have some better offers from other banks
and bankers, 80 that on this point it is only
question Of the rate Of interest on the bonds.
When it becomes clear that money can not be
had for per cent. 1t is time enough to pay Az.
The Silver bill has crippled my POWER to sell &
percent. bonds, but wise savings ILL that
will enable me to deal directly with the people
would 60 far to repair this.
Upon the second point. it may as well be IN
derstood that national banks cannot throw upon
the Government the burden Of redeeming their
notes. The attempt would be suicide. They
are bound to redeem their notes on demand
at the treasury with United States notes or
coin, and to maintain in their vaults very large
reserves of United States notes. Any effort
of theirs to force redemption of their re-
serves OF United States notes in coin would
at once cause the Government to withdraw all
Government deposits from them, to pre-
sent all bank notes held or received by the
| Government for redemption, and, if need be,
TO exchange United States notes for bank
notes. Such a struggle AZ these gentlemen
contemplate would end in their losing their
| power to issue circulating notes. Their talk
about forming line to break the Government
| is not discreet and is not dangerous. l an
| more concerned about what YOU will do thar
about what they will do. The United Slater
Government already holds a larger cash re-
serve for redemption Of its notes in proportion
| to demand liabilities than any bank represented
by these gentlemen, and it has power to in
crease it. Our certificates Of deposit, the most
| dangerous form of demand liabilities, are Sc
cured dollar for dollar by coin or United States
notes actually IN hand, while the banks owe
over 5000, 900, 900 to depostors, the great body
| Of which 10 represented by notes and bills dis
counted. The only demand liabilities we owe not
covered by actual cash on hand is United States
| notes, and Of these $40, 000, 900 are ip
banks are bound to maintain in their reserves.
| With u coin reserve of 800, 900, 900 to
$3.50, 200, 900, the redemption of $500, 200, 600
United States notes would be easy, and that re
| serve could not be diminished to any consider
| able extent by banks or any combination of
bankers without continuous draft upon the
bankers to make it good. We can rely on the
| intelligent self-interest of banks to prevent
such a struggle. Nothing would provoke it
more quickly than threats by bank officers, and
il such a struggle comes the Government, with
its reserve, with ample revenue and power to
| sell bonds, can easily maintain resumption
without fear Of line of bank cashiers anxious
to break the treasury to force high rates of
interest.
On the last point The power to reissue is
| plainly given by section 1873, Revised Stat
utes, and is not cut of any more by notes
coming into the treasury in exchange for coin
| than in payment of tax. Even If the Su-
preme Court hold them as being no longer a
| full legal tender they are as much so az a
bank note. IL a choice must be made between
| the two, the common interest would decide in
| favor of the United States note. / believe
they both ought to circulate and both be at
par with coin but nothing il 81 discouraging
IN the progress for resumption as for national
| banks to shrink from their share Of the burden
of resumption, or to make threats such as are
stated by some of these gentlemen and moth
| ing is 30 injurious to the banking system, or
will precipitate it, overthrow more certainly,
than popular conviction that the banks are
endeavoring to embarrass the Government in
maintaining resumption.
Mr.. Chittenden defended the bankers who
participated in the New York conference from
any suggestion of holding out threats against
the treasury, and he appealed to Mr.. Ewing
for confirmation of that avowal, which MIR.
Ewing promptly gave.
Secretary Sherman went on to show that all
the Government had to do in the matter OF re-
sumption was I o take care of some $500, 600 900
legal-tender notes. while the national banks on
their side were to take care of the national
bank currency, and he undertook to demon
strate that both the Government and the
backs were abundantly able to do this.
Mr.. Ewing pressed him closely on this point.
As to the effect of the presentation Of $50, OOO
600 of legal tenders for redemption tho Score.
tary took the ground that, under all circum-
stances, and in view of the fact that the last
weekly. report of the New York associated
banks showed only an amount Of some S12,-
600, OU0 of legal tenders on hand such suppo-
stion was not to be regarded as possibility,
particularly as the banks themselves had to re-
tain a reserve Of legal tenders in order to re-
deem their own outstanding notes.
Mr.. Eames suggested aquestion as to whether
the existing paper currency was not restricted
enough for the business of country, and
whether there was any likelihood of a consd-
cradle diminution Of it by its conversion INTO
specie.
Secretary Sherman conceded to large ex-
| tent in this view of the case. He thought that
a paper circulation of $500, 000 900 was not too
| large to meet the demands of business.
In further reply to Ewlng's question, he took
the ground that, il there was any doubt about
the ability Of the Government, with its present
means, to meet all the demands Of the Resump-
| ton act, there would be no doubt whatever