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

posed wants of the Treasury, TO which
Hamilton refers, Government notes issu-
ed as currency have in the circumstances
of their emission an irresistible tendency
to redundancy and consequent initiation Of
prices, from which bank notes, under pro-
per regulations, are in large measure free.
The bank note is issued and loaned 10
meet the borrower, and represents prop
erty in processes Of adaptation to or
distribution for the satisfaction Of mans
wants at a fixed rental or interest,
which insures first, that no more will
be wanted by borrowers than their busi-
ness actually requires and, and second-
ly, that the notes loaned will be returned
to be retired when they are no longer
wanted.
The Government note, on the other
hand, is issued because of the necessities
of the lender and not the borrower, and
for property consumed, which cannot be
used to satisfy the obligation. The per-
son who receives the note from the Gov
eminent comes into possession Of it in
satisfaction for debt, and instead of re-
turning it or its equivalent to the issuer.
he adds it to the volume of circulation.
There is thus no pressure for the return
Of Government notes to the issuer even
when the circulation is redundant, while
on the other hand every consideration
which seemed to justify their original is
sue invites an increase.
now come to the most serious, and in
practice insurmountable objection to the
use Of Government notes as permanent
circulating medium and that is the diff
Guilty Of maintaining their convertibility
into coin on demand of the holder-an
indispensable requisite Of any safe credit
currency.
1t is asked: "Are not the demand notes
OF rich and powerful government like
ours, issued as currency, as certain to be
redeemed in coin as the demand notes of
of banking associations :" The answer
of experience is that they are not. And
the reason that they are not is evident to
any one who will consider the essential
characteristics of the two kinds Of credit
currency, and the situation Of the issu-
ers.
A bank is an organization having cap
ital and assets far beyond the value Of
the notes which it issues; having assets
deposited in the United States Treasury
more than ample to secure the payment
of every dollar having shareholders with
a personal liability equal to its capital
and the payment of its notes on demand
is secured by the fact that the Govern
mert has in its hand in trust sufficient
money and other assets Of the bank for
this purpose, and by the further fact that
their payment may be enforced in the
courts by levying on its assets and
bringing suits against its shareholders.
A government on the other hand can
not be sued, has not dollar Of property
which can be reached by attachment, and
has not cent deposited with any one in
trust for the payment of its promises
and whether or not it will pay its notes
issued as currency, depends upon its sense
of honor and convenience and this con-
yenience in the case of notes issued as
currency which are always regarded as
less binding promises than other Govern
ment obligations is sure to be subordi-
nate to partisan considerations.
Again the notes issued by bank re-
present quick property, e., property in
process of adoption or distribution which
is practically set aside for their prompt
payment. But the notes issued by Gov
eminent represent property already con-
sumed in war or public expenditures, and
the only resources for their payment are
taxes and taxes are always unpleasant,
and in time of financial stress, when the
payment of the notes is sure to be de-
manded, the revenue receipts are certain
to so far fall off as to leave no margin
for the liquidation Of demand notes. The
most difficult thing for any government
to maintain is permanent redemption
fund of sufficient strength TO maintain
public confidence in its demand notes is
sued as currency. When the current re-
ceipts are in excess of the expenditures
and all goes smoothly the cry is started
and gains daily strength that it is useless
to maintain so large a fund that nobody
calls for; and when the current revenue
falls below the wants of the Government
and troubles begin to come. it is impos-
sible to resist the temptation to use q
fund which avoids increased taxation and
saves the party in power.
WHAT HISTORY rRACHQ.