The Austin weekly statesman. (Austin, Tex.) 1883-1898, 1884-02-28
CURRENCY CONTRACTION.

question, and it is plain that a very {
arge majority in both houses are in
favor of sustaining the banks, or at
least opposed to reducing the volume
Of the currency. The diversity OF
opinion as TO how these objects should
be accomplished is great, and parties
adopt no formal plan Of solution.
Hence the bank question is no
longer partisan. Not many years
ago John II. Logan and
his followers in Congress passed the
three hundred million imitation bill as
an opposition measure to the banks.
The measure did not become a law,
however owing to the veto Of the |
president. 1t was then that this pres
emit presidential aspirant announced
tina he had devoted three weeks to |
the study of the currency question,
aud was, therefore, its absolute
master. Now Logan and Pendle-
ton and other GTeenback cham
p:ons are silent as the tomb,
while the persistent advocates of
sound currency are trying to devise
ways and means for protecting the
banks in their present relation to the
business of the country, to prevent
the rapid consumption Of currency in
bond redemption, to arrest a serious
threatened contraction of currency.
The banks hold two hundred millions
OF 3 per cent bonds subject to re-
demption at the pleasure OF
the government, while at the
rate the treasury surplus increases,
if it be applied to such redemp-
ton, all the bonds will have been
taken up in less than three years.
The per cent bonds, which are not
redeemable until 1907, command so
high premium that they ara not
available as a basis Of national bank
circulation, and hence, unless some
thing be done soon by congress, a
severe contraction of the currency is
imminent. To meet the situation the
finance committee of the Senate has
decided 10 support the Jefferson bill,
which authorizes the national banks
hereafter to issue notes equal in
amount to the par value of the bonds
deposited in the treasury for their re-
demptlon. BY this measure 10 per
cent could be legally added to the
present bank circulation. Amend
ments proposing to bring the circula-
ton Of the banks nearer to the actual
value of the deposited bonds
were rejected. and it IS probable
that the bill will be passed much in
the shape in which it came from the
finance committee. There is pending
an amendment Of Senator Vest, of
Missouri, which authorizes the issues
Ct treasury certificates, redeemable in
gold and silver, to take the place of
the bonds Withdrawn by this banks,
these certificates to be deposited as
security for the bank notes, or to be
applied by the government to the re-
demption of bonds. The banks might
as well use the treasury certificates at
once IA interchange notes with them,
and the only practical purpose of the
amendment is to meet the threatened |
contraction of the currency with pa
per issues OF the government. This
proposition has the advantage of other
paper initiation schemes, in that the |
issues are to lie redeemed in gold and |
silver, but its object is to provide an
other currency from that supplied by
the national banks, and finally to make |
the government issues the only paper
money Of the country. This is not
a bad bill, and its adoption
would certainly be satisfactory in
a great measure to the country.
The Mcpherson bill also offers the |
banks an inducement to maintain
their circulation by depositing 4 per
cent bonds with the privilege Of issu-
ing currency equal &c their |
market value, with taxes TO |
be paid on circulation. Such bills |
snow the tendency or public thought, |
as directed towards preventing con-
traction, and this must be done OF the |
general financial condition of the |
country will grow worse as bond re-
demption takes place. In the House
there is bill which may finally |
take precedence of all others.
1t is one providing for re-
runding the entire outstanding in
debtedness of the government in long
time bonds. bearing very low rate of
interest. This measure, if adopted,
will admit of the banks acquiring
basis for their currency without pay
ing high premium on bonds. The
issue of certificates should be contin,.
ued, because with even such refund
ing the country would not have
an inflated currency.