The New York herald., 1879-12-12
A COIN RESERV OR.
REPEAL THE LEGAL TENDER CLAUSE.
Democrats Bent on Amending the
Federal Election Laws

Federal Election Laws.
T H E U T E P r o B L E M.
FROM OUR SPECIAL CORRESPONDENT.
WASHINGTON, Dec. IL. 1879. .
sEcRETARY sHERMAN's VIEWS CONCERNING THE
LEGAL TENDER CLAUsE-coNGREss SHOULD
REPEAL rr-A STABLE FINANCIAL SYSTEM FOR
THE FUTURE.
Your correspondent has Secretary Sherman's per-
mission to send the following report Of converse.
ton held with the Secretary last evening It will be
observed that Mr.. Sherman explained in this
sation at some length and at your correspondents
request what he thinks would be the practical effect
of the repeal of the legal tender clause. why be-
lieves that ought to be repealed and by Con-
gress rather than by the Supreme Court and what is
the nature of thennancial system which he thinks
desirable to see established. a
Your correspondent asked the Secretary :-"Did
the other day about the repeal Of the legal tender
quality of United States notesr' ges
The sEcRKTAnY-You did. The position taken by
me in the annual report in favor Of the repeal Of the
legal tender clause as to United States notes was
taken after full reflection could easily have
avoided and evaded tnesubject by combining myself
THO good results Of resumption and refundng. but
feel that my official position Obliged to be frank
and explicit on this. the most important financial
question Of the future. believe that my recon-
Eendation will stand tho test Of time and will in
due time be approved by Congress and the people,
CoRaEsposDESr-Is there any difference between
you and the President on this matter?
GOLD SILVER VERSUS PAPER MONEY.
The SEcRErARY-Certainly the Message of the
President dnd my report do show . difference of
not to the legal tender He believes that
policy should be adopted gradually to retire the
United States notes. and to conAne the operations Of
the government in issuing money to the coinage Of
gold and silver. believe that it is both polite and
right for the United States to maintain circulation
carefully limited amount Of United States notes.
always redeemable IN coin, supported by ample re-
serves in coin and supplemented by the circulating
notes Of national banks. Whether you call them
greenbacks. Treasury notes coin certificates.
currency. The government alone can main
tain intact coin sufficiently large to
support such q currency at par with coin. The
saving Of interest the notes would more than
compensate the cost Of such 8 reserve. Banks and
corporations cannot alone do it. for when such
reserve as Is necessary Is scattered the whole
country among 1900 banks it would be attacked in
detail. ana the failure of few banks would impair
confidence in and destroy the whole system Banks
can properly and ought to supply large portion
of the currency to meet tho ebb and flow of
business. but to make assurance douby sure tho
government must hold IN its vaults. under all tho
safeguards of the sub-Treasury laws. coin reserve
and one ample enough and concentrated beyond the
roach Of private speculation to meet any probable
demands that could be made upon it. When it does
benefit of the saving Of interest SO much Of the
public debt is represented by United States notes.
AN ovERrssuR OF NOTES NOT FEARED.
ConnEspoSDEsr-But is there not constant danger
that Congress will authorize an overissue OF notes?
The sEcRErARY-Yes; Congress might dissipate
the reserve or increase too greatly the notes to be
issued; but this danger greatly exaggerated Con-
gress only act after long debate in tho face Of
public opinion and with the approval Of the Execu-
tive. The danger from Congress Is far less than
might come from the independent action of private
corporations scattered over the whole country,
tempted by private interests to overissue. aud in
capable of combined action during panic or drain
of coin. The best way to guard against over
issue by Congress to take from tho the legal
tender quality given them during tho war. and
which no sensible man has attempted to justify
except o necessity of during severe financial
sringency. United States notes such described,
without the legal tender clause will have universal
credit and circulation. and seem to be FREQ from
objection any paper money that has yet been de-
vised While the public confidence in the ability of
the government to redeem its notes IN coin remains
they will be universally received. If Congress should
dissipate the reserve provide for overissue
the evil would become apparent by the depreciation
of the notes and would probably bo corrected.
There is in ono Congress trying to guard
against abuses of power by another Congress-. Con-
gress may. by an abuse of power. destroy tho gov
ernment In many ways. but our government rests
upon the presumption that any gross abuse of power
would be corrected by popular opinion.
REPEAL THE LEGAL TENDER CLAUSE
CoRREsroSpExr--You evidently think the present
to bo thebest tpo tho repeal Of the legal tender
clause?
The sEcRErAnY-Yes; I think IL should have been