Evening star. [volume] (Washington, D.C.) 1854-1972, 1893-08-03
CONGRESSMAN JOHNsON,s REMEDY.
He Proposes an Interconvertible Bond
System to Give nm Elastic Currency.

He Proposes an Interconvertible Bond
System to Give IN Elastic Currency
Congressman Tom l.. johnson, in a letter
to the Cleveland Chamber of commerce,
says that believing the financial pressure
now existing demands prompt and ade-
quate relief. he proposes on the first day
or the coming session to introduce In the
House Of Representatives a bill to permit
the exchange Of United States bonds for
treasury notes.
Mr.. Johnson's bill declares that any
holder OF bonds Of the United States may
deposit such bonds with the treasurer or
any assistant treasurer OF the United
value in treasury notes of the United
states. as described In the act Of July IA.
These bonds shall be held as a special de-
post to the credit Of the party deposit
ing them. and during the time they are 80
held shall draw no interest, and shall be
posting on the payment of their face value
In Cniteu States currency. The Secretary
OF the Treasury shall make the necessary
Mr.. johnson in his letter says:
Inc main and pressing difficulty now is
{ ms,i scarcity of the medium Of exchange.
creased the need for money. its available
volume has been greatly lessened by the
sare;ngthsning OF reserves by banks and
sayings institutions and by the boarding by
individuals under fear of or a desire to
bring about a still greater scarcity.
The repeal of the Sherman act. which l
fears of any change in the measures of
values. will do nothing directly to increas Sc
the medium OF exchange. On the contrary.
by stopping the issue of treasury notes for
silver. it will lessen the supply. The only
measure looking to relief of the need for
money money yet proposed, with any hope of the
necessary consent, Is that Of permitting the
national banks to extend their issue to the
face value Of their deposited bonds But
TINS. while certain to arouse dispute. and
the currency only some sl7, 900. This
bill, by allowing all holders Of United
States bonds to turn them into money for
such time as they may be willing to fore
go interest, offers simple, safe and imme-
diate and sufficient remedy for the alb
b normal os searGsy Of Beyond the
banks circulation there are in existence
$500 100000 government bonds, largely held
by financial institutions. For instance the
Society of Savings of our city, the largest
and strongest financial institution in Ohio,
holds today. S.e0o0 600 Of these bonds Yet,
cannot at present be converted into money
with which to meet any demands of its de-
positors without loss to the society and
increase in the general financial pressure.
This is precisely the situation in similar
institutions not only throughout our own
city and state. but over the whole Union
agination, so strong is the impulse to do
what we see our neighbors doing, or even
think they are about to do, that it is en-
money in the country, to meet all usual
demands, for financial stringency to grow
to point that would reduce US almost TO
state of barter. all but stop production
and beggar all but the very rich. The pos
sibility Of at once converting United States
bonds into money would entirely do away
with such danger and at once end the
financial stringency. 1t is not SO much
the amount that would be converted that
would tell, but the amount that could be
converted If there was need.
1.-The government would run no risk. 1t
would merely exchange interest-bearing OBJ
legations into MISUNDERSTANDING obliga
tions, with a saving, for the time, of in
terest There would be no loss OF the sell
Ing value OF the bonds to the holders. and
no permanent expansion of the currency
for as soon as money. ceasing to be
boarded, became abundant again. borrow
ing rates would fall, the price Of bonds
would rise, and 1t would be in the interest
of the holders Of the deposited bonds to
reclaim and return again to the treasury
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