New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-02-28
THE SITUdTION.

disaster. Everywhere there is feeling OF III
tense relief and thankfulness, as substantial
people come to realize how terrible a revulsion
the enactment of the Carlisle section would have
caused. But it is we'll not to forget that the
danger has been escaped only upon condition
that the fatal section is defeated. If Congress
or the President is led to believe that disaster
has been and can be averted by any action of
the Treasury Department, SO that the pending
bill can now be passed without causing
great calamity, the consequences of that error
NAV be intellectually disastrous. Let the situa-
ton be fully understood.
l. The Treasury was able to buy only
S5, 1886, 900 bonds in two days, though it
offered to take $35, 0O0,O 900, and money COM
manded from 1l2 to u per cent per day
premium above legal interest. The obvious
reason Is that people who hold five and six
Der cent bonds do not believe that three per
cents can be sold In such amount as to enable
Government to retire their bonds and deprive
them of their high interest. That fact would
equally make 1t impossible for the Treasury
to put money into circulation rapidly by
purchase of bonds after three per cent bill
had passed. 1t makes the Treasury virtually
HELPLESS If the odious measure should drive
the banks to surrender over 5000, 100000 Of
circulation as fast as possible.
H. The banks here have no power to control
the 1000 banks of the interior, which have
circulation that they Will be anxious to reduce
or surrender If the Carlisle section becomes a
law. These country banks have deposits here.
If they demand those deposits the demand
must be met and the money placed to
their credit with the Treasurer. or the
city bank that refuses must confess
itself broken. Even refusal would not
arrest the retirement Of circulation or the
monetary contraction. The outside banks
could arrange through either of hundreds of
brokers to sell its bonds in open market and
deposit the proceeds in the Treasury. AS long
as the city banks honor the checks of their
depositors who wish to buy bonds, the with
drawal of money for deposit in the Treasury
would thus continue. The fact is that the
banks of this and all other reserve cities are
powerless, as well as the Treasury. to prevent
O great disaster, If the banks of the interior
are driven TO surrender circulation.
III. The surrender will go on just the same,
if the bill passes, because it does not touch
the provisions of existing law respecting lqui-
dation, or retirement from the National sys-
tenn, and the law officers of the Government
and the Courts would be compelled so to de-
eide. Thus nothing can prevent disaster ex-
cspt the defeat of the unjust features Of the
fifth section.
~. There is every reason to believe, at this
time. that the bill will fail to pass the House
in its present form, and a strong body of
members intend to prevent its passage in any
form. if the dangerous provisions of the fifth
section are retained. 1t ia to be hoped that
they will succeed, even though all other leg
islation at this session should thereby be pre-
vented. Once before, the House trusted the
conservatism of the Senate to draw the fangs
from this bill, and trusted in vain.
V. Yet there is good reason to believe that,
If the bill gets back to the Senate in any
form, it will be sufficiently altered or killed.
There was but three majority in favor of the
fifth section before, and at least one Senator
of the majority has stated that he has been
convinced by subsequent events that the
measure would do mischief. A change of one
other vote would suffice. On the whole, prob
ably 1t would be the best result of all IL the
bill should DO killed. BY adopting the coercive