The Providence news. (Providence [R.I.]) 1891-1906, 1893-08-03
TOM J)HNSlN|S Plan
For Helping the Country Out Of Flnan-
cial difficulties.
BONDS ARE TO Be DEPOSITED
With the Treasurer Of the United states'
Who Is to Loan Treasury Notes ON
Them TO Full Value to Increase Cir
culating NJ edium.

culating NJ cdium.
WASHINGTON. Aug. 3.-The following
communication has been furnished to the
press:
To the Cleveland Chamber of Commerce:
Gcntlemen-Be that the financial pres
sure now existing demands prompt ana aue-
quate relief. propose on the first day OF Inc
coming session TO introduce in the house OF
representatives the following bill:
An act 10 permit the exchange OF United
States bonds for treasury notes.
BE IL enacted by the senate and house OF
representatives OF the United States OF Amer.
ica in congress assembled, that any holder OF
bonds OF tho United States may after the pas
sage OF this act deposit such bonds at the treas.
ury OF the United States or NJ the oiiice OF any
assistant treasurer of the United States ana
receive therefor their fncc value in treasury
notes OF the United States as described In the
act of July H. 1891. Such bonds shall be held
az n special deposit TO the credit of the party
proposing them, and during the time they are
80 held shall draw nointerest, and shall be re-
turned on the order of the party depositins
them on the payment of their face value IN
United States currency.
Sect. ?. The secretary Of the treasury shan
make such regulations ms may be necessary
TO save TO the government the payment or in-
tcrest on such bonds during the time they are
held as n special deposit, and he is hereby
authorized TO issue treasury notes to the
amount needed and to provide for the cancel
lation OF an equal amount OF cash notes on
the return of said bonds to their owners and
a sum sufficient 10 carry into effect the pro-
visions of this act Is hereby appropriated out
OF any money in the treasury not otherwise
appropriated.
Sect 3. All acts and parts of acts inconsist-
ent with the provisions OF this act are hereby
repealed.
J0hnson's Comment.
Whatever be the primary causes of the
financial difficulties now paraly2ing business
and stopping industry, il is clear that their
first appearance was largely due 10 the inn
pairment of confidence through fear OF an im-
pending change in the measure OF values.
But the main and pressing difficulty now IS
the scarcity of the medium OF exchange.
While the shrinkago OF credits has increased
the need for money, its available volume has
been greatly lcssened by the strengthening Of
reserves by banks and saving institutions and
by the boarding OF individuals under fear of
or the desire TO bring about still greater
scarcity.
Tho repeal Of the Sherman oct, WI ch con-
fdcntly anticipate, while il will allay fears OF
any change In the measure of values, viii do
nothing directly TO increase the medium Of
exchange. On the contrary, by stopping the
issue Of treasury notes for silver, IL viii lesson
the supply. Tic oaly measure looking To re-
lief CT the need for 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
.Joiids.
A Question Of Interest.
But this. while certain to arouse dispute and
consequently cause delay, would increase the
currency only some S1l.O0o,0D. The bill j
send you, allowing all holders of United Statea
boi.ds no turn them into money for such time
AZ they may be willing To forego interest, af-
forGs q simple, safe, immediate and sufficient
remedy for the abnormal scarcity Of money.
Beyond the boads deposited TO secure the ma
tional bank circulation, there are in existence
S.(D,00 100 OF government bonds largely held
By financial institutions
For instance. ''rhe Society for Savings" o
our own city, the largest and strongest imam
cial institution in Ohio. holds today Ss,0jo60
of these bonds. Yet, though undoubted
security, those bonds cannot at present be
converted into money with which TO meet
any demand OF IT'S depositors wit thout loss to
the society and increase in the general ilnan-
cial pressure. It could only sell them at
present et great sacrifice of their normal
value and could only borrow on them at a
rate much exceeding what they yield. Either
course would increase the general demand
general supply. for the fact that such bank
was sacrificing It's securities to get money
would increase tho feeling OF panic which
grows by what it feeds on.
A Logical Argument.
Now this IL precisely the situation Of similar
institutions not only throughout our city and
state but over the whole Union. so much Is
human ae;ion governed by Imagination, so
strong Is the impulse to do whatever we see
= Al. ~.
are about to do, that IL is entirely possible,
with an abundance OF money In the country to
meet all usual demands, for financial strin-
gency to grow to point that would reduce US
almost TO a state OF barter, all but stop pro-
duction and beggar all but the very rich.
The possibility of az once converting United
States bonds into money would entirely do
away with such danger and at once end the
financial stringcncy IL is not so much the
amount that would be converted that would
tell, but the amount that could be converted
If there was need. The government would
run no risk. Ii would merely exchange in
trrcst- bearing obligations into non-interest-
bearing obligations, with u saving, for the
time, of interest.
Ho,h Sides benefited.
There would be no loss of the selling value
OF bonds 10 the holders and no permanent ex-
pansion OF the currency, for as soon as money,
ccasing TO bo boarded. became normally
abundant again, borrowing rates would fall,
tine price OF bonds would rise, and il would
l. 10 the interest OF the hSlders of the de-
posted bonds 10 reclaim them and return
to the treasury the money issued on them.
introduced into the last congress q bill in
tended 10 add 10 our currency system the
elastic feature of aa iltcrc )nvertibility of
bonds and treasury notes. The bill now pro.
pose puts the same principle in way better
adapted 10 meet the exigency that has now
Risen and 10 avoid matters over which there
might be dispute.
Believing that Il offers n simple, prompt and
unobjcctionahle remedy for the most pressing
evils. AMI desiring its consideration by my
constituents ana the general public, thus lay
IL before you IN advance of presentation.
Yours very truly,
Tom l.. JOHNSON.
Fort Hamilton. y. Y, Aug. l, 1888.
To Train nt Asbury Park.