New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1885-01-11
THE NATIONS MONEY.
SENATOR SHERMAN ON THE BANKING
SYSTEM.

The National banking system was created by
Congress not merely temporary cspedient' pu! IL
VAS believed to he the permanent method OF secur
ing paper rnoney absolutely safe from loss 6" the holder
and readily convertible into coin. these Two were thS
fundamental objects carefully prescribed in the law
supported by provisions that would meet the cohiohs
OF the country at the time the law was passed
In respect the security Of the notes the law ieit no
question OF do,bt The only security permitted was the
bonds United States TO amount sufficient ~ al
tunes to sell the market Tor enough TO ray AL h"les
Those Ia he placed under the custody
OF tie Government with plenary power 10 promptly sell
whenever a failure to pay the notes occurred TO TINS
was added the express guarantee of the United states
that 1t would ay these notes at all events
Tho second ehoc the prompt redemption of these notes
in coin could not az that bc stipulated for as coin
I'm circulation; bnt the promise ana bona OF 'he
Government for the time substituted in place OF
coin and in this respect the bank notes were placed upon
The Same footing rs all other contrasts obligations be-
tween citizens OF the United States. As tho time for
specie payments approached provision was he tha' c
bank notes should redoeued IN the Treasury OF the
United states from redemption fund supplied oi inc
banks and the Treasury solely for that purpose
Of this legislation has fully met all the ez
rctatios Of its authors M soe has ever ost by the
failure bank pay promptly its notes ard the notes
have been maintained always on a par with Un!td
states notes and since resumption at par In coin rho
distribution Of banks among the States gave TO every
eaual opportunity with any other locality. and thus the
s,s,eu was not only Nauouazei hut localized and made
convenience for eyrbange In every part OF the com
w. In this way premiums domestic exchange "hch
were the former systems OF enorouS '"sSs
have an daily disappeared Tho banks contributed
hy equal alton to local wants The soTc'c snrNeh
lance provided by the law has enabled the contreor 10
enforce n. pro, sion AVID this power has been. "A ruiz
Wisely an carefully eKfrolsel and has given The system
credit stability and value that M previous system OF
banking IN this country or any Other has ever sac""
All that was needed he done 10y Congress was from
time to time make such changes In tho lar rs would
the improved conditions OF the public credit ana
the constantly advancing Of the pnlic securities
n became apparcn, that security demanded for The
payment OF the greater than necessary, ani IN
time involved the Investment of greater ahiolnl OF
money IN the purchase Of securities than was ~
quired for the object desgneI thus crnlng tue banks
and vthdrawine undre proportion Of their capital
rom loans 20 the people In tire beginning OF IN" sys
tenn n object 90 sccure market for Government
securities this passed With the War. when this
became matter W Indifference N the Gouveruneit
Unhe, these circumstances the apparent duty OF
Congress 20 reduce the security required and thus leave
tho banks free greater sum IN their busiooss At
the beginning o the Present Congress the fgur per cent
sefities hal adyaocoa in market value 10 twenty per
cent premium. They woe the basis OF bank crcul"-
ton n, 10 the amount o 90 per cent Of their par value
Thus $50 required 70 secure the Issue OF soo OF
currency. mnnifcstly excessive di~proPorton
The attention ~ Congress caHcl ~ tis tuhect hy
,hc cop,rler aud am. we're proposed in The Senate TO
aIoE notes TO ho ssncd 30 Icr cont OF the market
value Of the bonds Deposited This oleoied io AZ
providing al, uncerfan and chnnscaile rule; bat by
common esnscnt. bill was p1saeI by The Senate called
the acPhrr-on b authorizing noics TO be issncd IN the
par va'1e 81 all the securities deposited. Iis would
have enalod The hanks ~ l.o thirty inil'on dollars
moe bank n0fc cis---.ss Hilhoat sdiiii"Hal security
AMI would have prevented te restriction ------ la
caused the diuuaiiou - the ssuo of hank notes The
uassaee Of tlat bal by the House would no doabt
promptly the aesrcrao OF bank circulation 10
the hlshosf amornt s.nod aud. In the opinion Of
sagaeions men, would have removed the only dincuiy
IA ~. way.
Other rrnrdies havc bern gosed. them one
b, Mr. Potter Of 1lse providing for The Issue ni
two per ard thor dopas security for hsnk
note currency. 10 this h.s hee0 al, ected viii con
elusive f.see that two per cent hands woaid nD ~ all
coating bs sufficient security for the payment 81
the nors. We scarcely anticipate The happening 81
time when bond bearing ~ low rate oi Interest
will command par ia tho market The adoption ~ this
proposition would seem to be a fatal blow 10 the
primary OBJECT ~ the whole while tho Ncrrr-
ron hA 'mnshc. rue that ln 10 contingency en-
danger the safety oi the note.
ro bono- lasrng low Of three psr ceut all
paynbe al the peasuo of the United sdalos wio the
0iher bonds command premium depending dpon tsor
duration and rate ~ intcfcat.
Ha feared that Tie rapid payment of the public debt
I
would speedily leave ,ofiiIos 10 deposi or that ho
high price Of thoso securities would deter hsrAs from
paying premium. vticl must be nr In tho Process
~ time n the bonds mature This fear D. not well
founded or IL will ouly period remote thai
Conercs win have ample time 20 pros Ide Cor tho CON
| tmgrney The amount ~ bonds outstanding the 1T
| Of November last was SiI92,f7j 600 willie oniy the
~ $3.50 OOOoOO Is necessary 10 maintain the oirca
Lati0n At the highe-t amount heretofore issued Tho
Ods wonf siy IN prize l. moi hkcly
10 he realized. The constant io~seniBg ~ thc'r duration
Wil tend TO irdace their market value. and n Is not
toly that NJ any time IA the uture viii they bear
higher market value than they do Tho tendency
j. the other way. The total amount 10 he raid upon
existing four cr bond for 800 maturing IN 1907 Is
500. Whiie there Is limited demand for pnbc
without regard the rate OF inercst which tho In
In thom will yield, Yet experience shows thai
they win fall iu yalue proportion duru
ton T,ey have hcen unduiy advanced by the
Iay made from surplus but thus surDlns
IL diminishing bS ihe repeal Of taxes by the
changed condition of business asd by the general feel
nE that 10 II Doi good policy 10 collect taxes for the
dueson the pahlle debt beyond the requirements
the sinking fund That such IL the public feeling IL
shown by the general demand that taxes shall he
levied except meet wants and the require
ments of the law. Ia harmony with this policy the
ccutye branch ~ the has proposed treaty
calculations which vii reduce the and n these
faiI. further reduction u taxes and new objects Of
putdic expenditure such the creation OF - navy.
bvuniios 10 commerce. aud puzzle improvements
hkcy 10 absorb all tie surPlas revenue NOT actually
| needed for pa alie wants.
For reasons. n Congress VIII furnish the Inoier
ale rvhcf contained Ia the McPherson bi do not be
sve that the National banking system l. In any danger
OF being embarrassed by the advancing price OF bonds
u Ia nat well fo us 90 provide beforehand for
ungrucies remote the ultimate rcdaction "
public debt tn sam less than THAT required for banking
| purposes. n viii bo time enough then consider
whether IL se,tsr TO provide n eesl Government
security for baak consider whether some less
valuable sscariv can be safely substituted a. ue
fou,sdaiion of banking whether soue either farm ot