The Hawaiian gazette., 1879-08-20
Paper Currency.

well as necessity, Tor a new departure by tnls
Government on the question of paper cur
rency. we recur to the subject again. Our
object upon this question, as upon all others
touching the welfare of the Kingdom and the
people, has been, and shall continue to be,
simply to throw out suggestions for the care
full consideration of those sensible men among
us, who desire to think and act for the good
Of the people, With drivellers and trifers we
have nothing to do.
We have, in former articles, endeavored to
show that there is a necessity now existing
for action on the part of this Government on
the money question, and that that necessity is
so pressing, that to postpone action much
longer will be blunder, which is equivalent
to crime. 1t is contended by those who have
very superficial knowledge of the history of
paper money in other countries, and especially
in the United States, that all paper money is
sues should be based upon coin, dollar for
dollar, and that any departure from this dog
ma will result in disaster. This position we
utterly discard as not only fallacious, but as
contrary to the facts.
When the war of the rebellion broke out in
the United States, in 1861, the entire banking
system of that country was under the control
of the State banks, which derived their authority
to issue paper from their respective State Leg
islatures, by special charters granted them
for that purpose. These State banks were
then doing all the business of the country,
amounting to upwards of two thousand mil
lions Of dollars per annum, with but a fraction
above four hundred millions of specie, all told,
in the country. When the war broke out the
Government needed large sums of money to
recruit and equip large armies for immediate
service in the field, with Treasury so deple-
ted that it was impossible to do SO without
moneyed aid from some source. In this di-
lemma, Mr.. Chase, the then Secretary of the
Treasury, issued circulars to all the State
banks calling upon them to furnish the Gov
ernment the necessary funds but strange to
say, the response after delay of some three
months, did not amount to a sum above S275,-
600. 1t then became evident that something
must be done to replenish the then exhausted
Treasury of the United States, and in bis ex-
tremity, Mr.. Chase got up the National Bank
ing law, which is now in existence, by which
all the State banks were compelled to relin-
quish their State charters and accept the new
situation, by becoming National banks, re-
ceiving their entire paper circulation directly
from the Treasury Department, and thus alb
sorbing the whole banking capital of the
States, and making it an auxiliary of the Gov
ernment instead of a hindrance. Now, the
paper issue of the United States Government
which amounted to more than a thousand
times larger than the entire sum in specie in
the country, had to be based upon something
else than specie, and to meet this contingency
the Government received its own bonds, in lieu
of specie, upon which it paid to the National
banks six per cent. per annum in gold, giving
in return, ninety per cent. of paperissu to the
banks, the Government merely guaran teeing
the ultimate redemption of the paper issue, and
thus it is seen that the enormous paper issue
of the United States, during the war and
since, gGS based upon bonds, and moi upon spe-
Gle. This wise measure carried the Govern
ment through the gigantic rebellion, and the
people had circulating medium in paper,
with which they were satisfied, because it was
guaranteed by the Government, and the Ma
tion had the control of all the paper issue, with
uniform paper currency throughout all the
States. We do not deny that, for number of
years, the brokers and capitalists took advan-
tage of the fact that the Government had
rather unwisely agreed to pay six per cent in
gold on the bonds of the United States, as well
to the banks and all other purchasers, and at
the same time gold was exacted by the Gov
ernment for all custom duties, fact, which
necessitated the purchase of gold in open mar
ket, both by the Government and the impor-
ters, and thus kept up difference between
gold and paper, out of which the brokers
made millions upon millions, by depreciating
the paper. But if the Government had made
the paper legal tender for all purposes, and
paid a less percentage in interest on its
bonds to the banks the case would have been
widely different, and the millions made by the
brokers and sharpers, would have been saved
to the Government and the people. How is
the case now The national bank paper is at
par with gold, not because there is gold enough
in the country to equal the paper, for that
never was the case, and never can be, but be-
cause the paper based upon the faith of the
Government for its ultimate redemption, is a
safe, sound and convenient factor in the busi-
ness of the country; the people prefer it to the
more cumbersome metallic agent, and use it as
such, and hence the ability on the part of the
United States to say to the world, that she can
pay spe Gle for all demands against her. But
this is really fiction. The United States may
be able to pay specie interest upon her bonded
Indebtedness to her foreign creditors; but if
she were called upon 10 redeem the national
bank paper now issued and in circulation, she
could not do it. Of this she need fear nothing,
because the people are content with the ma
tional bank paper, and therefore the danger
cannot come.
With these lights before us, we assert with
out fear of successful contradiction, that this
| Government can with entire safety issue a
paper currency, upon scale commensurate
with her ability, be that large or small, that
would be as satisfactory and as secure as that
of the United States All that Is reouired ia