Belmont chronicle. [volume] (St. Clairsville, Ohio) 1855-1973, 1879-09-18

THE question is, does the Govern |
ment now redeem or have the respon-
sibility for the redemption of the bank |
notes? We saw not. Let us follow the |
process when such notes are presented |
for redemption. If they are presented
at the counter of the bank, the bank it
self pays out for them either gold or
greenbacks. In either case no reSpOn-
sibility comes upon the Government,
whose stock of coin on hand of paper
outstanding remains absolutely unalter-
ed. Suppose they are presented at the
Treasury at Washington, and, to deal
with a sum sufficient to have a per
ceptible effect, to the amount of ten mil
lion dollars in one lot, by one person.
What then happens? The Treasury, as
the agent of the banks for the redemp-
ton of their notes, pays to the person
presenting the notes out of the five per
cent. redemption fund, which, it can not
be too carefully borne in mind, is part
of the assets of the banks, the sum often
million dollars in greenbackS. The re-
ceiver thereupon takes the greenbacks
to New York, and obtains for them from
the sub-treasurer ten million dollars in
gold If this were the end of the trans
action, the result would stand thus:
The gold reserve has been depleted by
ten millions, the greenbacks outstanding
I Io |, 10,
millions of bank notes on hand. In other
words, the Treasury has redeemed ten
millions of bank notes, and if the process
were to continue, the end would be that
all the bank notes would be redeemed by
the Government as those with whom We
have controversy assert they must
be.
But, and it is a but of the greatest
Importance, the transaction does not end
there. The redemption of the bank
notes has been effected, not out Of the
money owned by the Government, but
out of fund contributed by the banks.
That fund must be kept whole. Imme-
diately upon the fund being impaired
the Government calls for money to make
it good, and the banks must Immediately
respond. They respond with green
backs, which go into the fund from
which a sum had been taken, and their
notes are returned to them. How now
stands the account with the three sorts
of money, and with the three parties to
the transfers that have been made? The
person who presented the baIk notes
has ten millions in gold for those notes;
the banks have ten millions less green
backs and ten millions more of their
own notes; the Treasury has ten mil
lions more greenbacks, ten millions less
gold, and 10 bank notes. The result is
further, as to bank notes, return of
ten millions to the isSueTs; as to green
backs, depletion and filling up again of
the five per cent. redemption fund at
Washington, the movements balancing
each other, and gain of ten millions to
the sub-Treasury at New York; as to
gold, a loss of ten millions by the sub
treasury at New York. In short, ten
millions of greenbacks and ten millions
of bank notes have been fully redeemed
according to law, and to the satisfaction
of the person presenting them. The
greenbacks were redeemed by the Coy
ernment. the bank notes by the issuing
banks The proof is that the Treasury
has ten millions less gold and ten mil
lions more of its own notes, while the
banks have ten millions less greenbacks
and ten millions more of their own
notes. We shall be obliged to any per-
son who can show how or wherein, in
this process, the Government has been
responsible.
"While we have no fear that anybody
will succeed in finding the smallest flaw
in this process, or will endeaYOr to show
that while things are working smoothly
the redemption of bank notes is re-
sponsibility resting upon the Govern
ment, either directly or indirectly, yet it
may be said that the Government is ul-
timately responsible for the redemption.
Again we say not, in the sense intended.
But before we examine that point we
desire to call attention to the fact that
the presentation of bank notes for re-
demption does not in any way affect the
state of the Governments gold reserve.
1t is only the greenbacks that may be Of
fered for redemption which do that, and
be it observed that the greenbacks OBJ
tanned in exchange for bank notes are
not the property of the Government, but
of the banks, and consequently the issue
of them in no way increases the Govern
ment's obligation. To return: Suppose
that large sum of money in bank notes
has been presented at Washington, and
paid out of the banks redemption fund.
The banks, on being notified to make the
fund good, by concerted action refuse to
do so. Then, the banks have violated
the law and their charters, and may and
must be wound up. The Government
undertakes the supervision of the liquid
alton, and it pays at sight all the notes
of the banks closing up their business.
But does this payment put burden up
on the Treasury? Not in the least. For
every ninety dollars worth of notes is
sued to the banks the Treasury holds
bonds which are worth at par one hun
dred dollars. Moreover, five per cent.
of the outstanding circulation either has
been or may be redeemed out of the
fund in the Treasury. Consequently for
every SS5 80 of circulation the Govern
ment has bonds worth 800, which by
Section $3.50 of the Revised Statutes it
may sell by public auction in New York
on thirty days notice, retaining at the
same time permanent lien on all other
assets of the banks for the deficiency.
No matter whether the bonds are sold
for legal tender notes or for gold, the eff
feet is the same. The whole burden of
redemption comes upon the banks. When
the process has been completed the
Treasury will have just as much gold
and just as much in greenbacks as if not
dollar of bank notes had been redeem
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