The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1890-05-02
ANOTHER FINANCIAL SCHEME.

The reduction of the national bank cur
rency from $500, 600 ten years ago 20 less
than $40, $1,000 to-day is leading to the
birth of number of schemes to supply
the deficiency. Some of these have already
been reviewed in this column. The latest
of the lot, which is the offspring of Senator
Hiscock of New York, resembles all the
others in that it proposes a new issue of
legal tenders based on property; but as
coming from Senator who in part repre-
sents the wealthiest State in the Union and
the one which contains the largest amount
of banking capital, it naturally commands
more attention than projects emanating
from persons unfamiliar with finance.
In single sentence, the bill authorizes
the national banks to apply for and the
General Government to grant them an APP
parently unlimited amount of new national
bank notes, which are to be a legal tender,
on the deposit of State, railroad or NUM-
cipal bonds, first mortgages on real estate,
or warehouse receipts for pig-irOn, cotton
or wheat. Under the law as it stands the
holder of United States bonds may take
them to Washington and the Government is
required to lend him on demand national
bank notes for 80 per cent of their face
value-such notes not being a legal tender,
but being redeemable by the Treasury in
legal tenders on demand. Under the His
cock bill, State, railroad and municipal
bonds, real estate and merchandise are to
be placed on the same footing as United
States bonds and to serve as the basis of
legal tender currency. In word, the bill
proposes to mobilize all the property in the
country, movable and immovable, and to
convertit into money without the formality
of a sale.
We observe that the Eastern papers are
disposed to ridicule Mr.. Hiscock's project
and certainly there is nothing in the pres
ent condition of the country, nor even in
state OF the market for agricultural produce,
which warrants Congress in flooding the
country with an issue of legal tenders
apparently unlimited in amount. Such an
issue could not but be followed by dis
turbance of values, which would involve
more mischief than its fancied advantages
could compensate. Property of all kinds
railroads, real estate or merchandise-pos-
sesses no potential energy so long as it re-
mains in its original shape and lies idle in
the hands of its owners. 1t is like coined
money which is boarded in a stocking. But
as the coined money becomes a source of
increment. and a potential agent, the mo-
ment 1t iSaOdged in bank and loaned to those
who can use it in enterprise and industry,
so property would become an active factor
IN material development if its value could
be modified in the shape OF tokens that
would pass from hand to hand, and sup
ply capital to undertakings which are Grip
pied from the want of it.
Financiers have admitted this proposition
for years. but no attempt to put it into prac-
tice has ever succeeded. The nearest ap-
proach to successful experiment of the
kind was witnessed when the Credit Mo-
bilier and the Credit Foncier of Paris were
established 1t was their i'll fortune to
spring into existence in society which was
sOdden with corruption and under Gov
eminent which was saturated with fraud,
and they took on the color of their sur
roundings, and failed to meet the purpose
for which they were established. Under
more favorable auspices, the Credit Foncier,
at all events, might have proved a success
full institution.
The snag upon which such schemes have
gone to wreck in this country has been the
wild notion that the mobilization of property
required simultaneous issue of new legal
tender money. This, in the homey lam
guage Of Senator Benton, has always been
the stump speech in the body of the bill"
In point OF fact there is no necessary con-
nection between the utilization of real and
personal property as a banking basis, and
the issue of practically irredeemable paper.
But some people confound currency with
money, and imagine that money can be
made abundant by printing dollar bills;
though, in reality, money has often been
most stringent when the currency was
most inflated. MIR. Hiscock will have to
eliminate this feature from his bin before it
will command serious attention.