Oxford Democrat. [volume] (Paris, Me.) 1833-1933, 1882-06-06

| The simple answer to this objection is
that under wise regulations for the issue
Of circulation such a course of actor
would be contrary to the interest Of thu
banks, and contrary to the rule Of human
conduct in all other affairs. It is fol
the interest of banks to increase their cir.
culation when there is legitimate de.
mand for increased loans, on the suppo.
sition that the law is such as to give 9
moderate profit to circulation just as il
is for the interest Of manufacturers to in
crease their products when buyers de.
mand more. On the other hand it is fol
the interest Of banks to reduce their cir.
culation when there is decreasing de-
mand for loans, because. in that case,
they would not only be obliged to pay
taxes on unused circulation, but also be
obliged to provide additional capital to
redeem an excess of circulating notes.
am aware that there have been few
instances in which banks have Withdrawn
circulation, not so much because of d.
minished demand as because they could
make profit by taking advantage of q
temporary advance in Government secur-
tiles and selling their bonds. This shows
the necessity Of such an amendment of
the banking laws as will make it impos-
sible to have this done to an extent suffi.
Gent to affect the currency. The reme-
dy, to be ultimately applied, however, is
the establishment Of system of CONNER
cial redemption, and having thus secured
a prompt return Of every unused note to
the bank issuing it, to provide that no
circulation shall be withdrawn except on
the return Of the notes to the Treasury.
All kinds of business rest upon this in
flexible rule of human conduct the rule
that men will make more cloth, raise
more grain, and build more mills, stores
and dwellings, and that banks will sup
ply more Of their circulating notes, when
there is profitable demand for them /;
and will manufacture, build, and supply
less when the demand decreases.
The assumption that banks can ever
find it for their interest, in we'll ordered
currency system, to disarrange business
and bankrupt their customers is too alb
surd to require refutaion. To be sure,
legislation which it was believed would
directly or indirectly destroy the profits
Of circulation would induce them to with
draw their notes and contract their loans
for in this case legislation would take
away the motive which moves all kinds
Of business. Banks have no interest in
initiating or depressing prices they do not
deal in merchandise. On the contrary it
is for their interest to have as stable
prices as possible, because great fuctua.
tons are liable to bankrupt some of their
customers, and thus involve the banks in
loss.
EVILS OF GOVERNMENT NOTES.
1t is one of the most serious evils Of
Government notes issued for currency
that their volume is not controlled by the
laws of trade, but by the wants of the
Treasury or the supposed necessities Of
party majorities in the Legislative depart
ment. All experience shows that even
if it were desirable, it is practically i'm
possible to maintain fixed volume OF
Government notes when these are the
sole reliance for credit currency, because
of the great temptation to increase the
volume when financial stringency come:
or the Government is in need. Many
nations have issued government note:
with the fixed determination to not in
crease their volume; but in every case
resolutions have been broken and the vol
ume has been increased again and again
until disaster has oyertaken the circulat-
ing medium and the business and indus
tries dependent on sound currency.
There is not an authority in monetary
science who does not recognize the fact
that government notes issued as currency
in a volume sufficient for the wants oil
trade are the most dangerous circulating
medium that can be devised, sure to
sooner or later result in over issues and
depreciations, and that they should never
be resorted to except as a temporary ex-
pedient in necessity. Alexander Hamil-
ton, the greatest finance minister that
this country or perhaps any country ever
had, in his exhaustive report on the cur
rency in 1890, only gave expression tc
the concurrent judgment Of the great
statesmen and fnanciers of the century
when he said:
1.-THE emitting Of paper money by the
authority Of the government is wisely
prohibited to the individual States by the
| natinnal Constitution. and the snir;t NJ