The weekly clarion. [volume] (Jackson, Miss.) 1863-1882, 1881-05-12
The Funding Bill and Its Issues.

BY GEN. J. r. CHALMERS.

Garfield IN his inaugural That gTeenDacks
are bot money, have revived interest IN the
( currency question. 4 careful reader Of the
debates on the Funding Bill Of 1870 and the
Resumption Act viii see that Mr.. Sherman
correctly expressed The intention OF his par
ty and the meaning Of those when he said,
+ March IUth. 1870 We are about 10 with
draw from circulation the greenb backs OF the
/ country. We are about To give them, re-
.erring 10 the National Banks, the mOnopO-
+ lyof the circulation Of this country-the sole
/ and exclusively privilege Of issuing paper
/ mOneY-we have destroyed the State banks
After thus clearly announcing the psrpos
/ e. and meaning OF this Funding act, Mr..
. Sherman said And now what do We require
/ IN returu-thag they shall join u in reduc-
I lng the burdens OF the public debt-that
/ they shall bear some little OF their share OF
{ The losses oil income winch every holder OF
/ the public securities must suffer TINS WAS
said IN explanation Of the sta section Of nIs
/ b. b. then pending before the Senate which
I required tne National Banks within twelve
months from the passage of that act to sell
/ tle 3 per cent. bonds on which they were
then banking and invest equally IN the D,
1 ( u * per cent bonds provided for in that
/ bill. This section asserted the power and
/ duty OF Congress to call on National banks
/ To- aid the Government in refunding at a low
/ er rate of interest. This principle was dis
Z
and On a direct vote on this section
10 passed the Senate by large ma
jJrIly. 1t was defeated in the House, as
afterwards charged by Mr.. Sherman, through
( the power ana Vaccinations OF the National
! BIuk., as the recent funding bill was defeat
I ed by a veto of the President obtained
through this same power and influence. The
same principle was asserted IN the 9th sec
1 ton OF the Funding Bill reported to the 10th
! Congress by the Committee of Ways and
Means. Of which MeS-rs. COuger and Frye
I were both members and without any dissent
/ from them a. 70 this section. Mr.. Lapham
/ a distinguished lawyer and leading Republic
can from New York, speaking of this bill,
with the 9th section included, said, eff the
committee reporting IL had been content to
ask and advocate Its passage as thus proposed
1 do not believe it would have encountered
amy serious opposition.
But the bill was amended changing the
rate OF interest from 81 to 3 per cent which
met with Republican opposition. 1t was
further changed by the addition OF what is
known as the Carlisle amendment.
Under the original act chartering Nation
al Banks it was provided that whenever
a bank desired to wind up and quit business
1t could deposit with the Treasurer green
| backs equal ia amount to its notes outstand-
ing and withdraw its bonds. But there was
no provision for any bank to withdraw a
portion of its bonds in this way and still
continue business under the same name.
Whenever a bank desired to retire only
part of it, notes and take up its bonds it
was required to produce its own notes for
this purpose. In 1874, when it was deemed
necessary to make Il more geographical
distribution of United States bank notes,
certain banks were required to give up a
portion OF their circulation. In order to
facilitate this distribution the law provided
that these banks should have the same
privilege in retiring their circulation that
WIS given to banks closing up, tO-wit: to
deposit greenbacks to the extent Of their
currency to be retired and Withdraw the
bonds deposited To secure this much of their
notes This law was passed for good and
specific purpose but certain National Banks,
and among them the First National Bank
of New ork, the pet of the last admins
tratiOn, perverted it to speculative uses
When bonds were high, these banks would,
under pretence of retiring portion of their
circulation, deposit grecnbacks and with
draw their bonds for sale. When bonds
were low they would buy and again deposit
them for more CIRCULATION under the s s;tsG
BANKING name. Inc gTceuDacks deposited
were meant to be a redemption fund for the
notes Of the bank then outstanding, and IN
ordinary course Of business these greenbacks
could not be recovered by the banks but
held for use as its outstanding notes were
redeemed by the Treasurer and cancelled.
But on receiving new notes under the same
banking name it could present them and
demand a return of the greenbacks, thus
doing indirectly what it could not do
directly Under the law rs it now stands
= combination Of National Banks can thus
alternately bull and bear the bond market
with great advantage to themselves and with
great injury to the business interest of the
country. Again, under the original act
| banks were required to keep
bond deposit equal to one-third of their cap
ital. The 4Jh section Of the act of 1874 as
| construed by the Attorney General requir
ed a bond deposit of only $4,000 without
regard to the amount Of capital held by any
bank. The Carlisle amendment WAS in
tended to stop this speculation In bonds and
| also require tine banks to again keep bond
| deposits equal to one-third of their capital.
! This amendment was denounced by the
| banks aud their allies as an effort to make
forced market for 3 per cent. bonds by
! requiring National Banks to buy them or
| quit business when it was known that
| they must, az the IS and SIS were called in
| accept 3 per cent bonds at par or buy the
| per cent. ut a great premium, and when a
simple calculation shows that 1t would be
! cheaper for the banks to use per cent.
! bonds at par, than per cents. ut the market
| value. The Carlisle amendment was also
| denounced upon the pretence that under it
| National Banks desiring to quit the busi-
/ ness could not withdraw their bonds until
| they produced their own notes, when this
| was wholly untrue. The banks and their
/ attorneys knew better but were attempting
! through this false impression to create sym
pathy for themselves.
| They desired to continue their speculatiOns
on bonds and they were unwilling to protect
their customers, by keeping bank deposit
as eQuired equal 10 One-third of their
capital, and hence their clamor against the
Carlisle amendment.
The President and the Republican leaders
may have been deceived by them but Gus-
picious persons will believe that the Nation
| nj Banks hold a mortgage on the Republic
can party They advanced the money to
elect the Republican officers and demand
| that these officials shall in turn protect them
When it was proclaimed by Democrats
and Nationals that there was danger to be
feared from a combination of National
| Banks, it was derided as the defamation of
! vaporiug politicians who desired to dis
turb the business interest of the country.
But the recent action of the National Banks
has aroused the business men themselves
to a sense of their danger, and they will
demand of the next Congress the Carlisle
amendment or its equivalent to protect
| them.
The declaration Of President Garfield in
bis inaugural that greenbacks are not
, money, awakes still further the financial
issues between parties. If they are not
money they have so long answered all the
purposes and performed all the functions OF
money, both without and with the aid OF
coin that any interference with them now
may produce disaster.
E During the long suspension of specie pay
, ments in England the celebrated Bullion
5 report was made, in which the committee
5 doubted whether since the new system o.
the Bank of England payments, has been
: fully established, gold has in truth eontin
Z | ued to be our measure Of value" and
: | thought that ian increase in the quantity
: Of the local currency of particular country
: will raise prices on that country exactly il
the same manner as increase in the genera
surnlx of precious metals raises prices al