The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1894-12-12

Of a feeling CT uneasiness in the public
mind. w,7''e foreign exchange was almost
constantly at or near a rate which made l.
more profitable to export gold than 10 pur-
chase bills. and consequently Withdrawals
for shipment We're daily threatened. In adj
dltiOn TO these causes Of anxiety, the vast
accumulation Of money at our financial cen
ter5 and the general depression IN business
which prevailed In this country, had 50 re-
duced the rates Of discount that the induce
.nent TO keep funds abroad, where better
investments could be made. were much
greater than in ordinary times, and TINS,
together with the other facts stated, made
it highly imprudent 10 neglect any precau-
ton which appeared necessary to insure the
safety Of our financial position.
Therefore. the second issue of S5O,OOO,OOO
was decided upon. For this issue, pro-
posals for which were issued last month,
4S6 bids were received, amounting to SITS
S36 $50. nearly all OF which were at rates
which would yield to the investor 3 per cent.
or less. one bid for the whole sum Of $aO,-
900 000 upon the basis Of 2.S1S per cent, and
being the most advantageous offer for the
government that was made either singly or
by aggregating the separate bids. was ac-
cepted. and the proceeds Of the sale, sos
53S 500 have nearly all been paid into the
treasury according TO the terms Of the
sale.
NeEOtlutAon Oh
On this subject the secretary says:
The transaction justifes the opinion
that a 21k per cent. bond, having a rea-
sonab.e time to run, could probably have
been sod at par, and certainly a 8 per
/ cent. bond could have been disposed of al
or above that rate As the authority to
issue and sell bonds already exists. and
the present state of our financial legis.a-
lion cOmpels its occasional exercise, l re-
! peat the recommendation made in my ,ast
annual report that, in the interest Of the
government and pe0p.e, power be conferred
! upon the secretary Of the treasury TO ne
/ E0tate loans at a lower rate Of interest
and for a shorter time than are now al
/ lowed The existence Of such authority,
instead Of increasing the probabilities Of a
frequent resort 10 that means Of raising
l money, would have the contrary effect,
because when Il Is known that the secre-
: tary Of the treasury is clothed with amp-e
power and facilities TO procure means for
/ the maintenance Of the reserve pubic con-
I hdence in the ability of the government %
/ meet promptly all demands upon it vii be
much stronger than under present circum-
/ stances.
Present System Defective.
Under our present currency system, SO
| far as it consists Of notes issued by the
| United States government, the volume of
| circulation was intended to be, and is, in
/ fact. Interchangeable II IS unalterably fixed
/ at a certain amount, and no matter how
! great the emergency may be, it can be
neither enlarged nor diminished. The only
/ part of the currency possessing in any de-
| gree the quality Of elasticity is that issued
/ by the national banking associations. and it
| is now generally conceded, 1 believe, that
/ in this particular, al least, il has failed 10
-eAr
/ some Of the most critical periods in bust
| ness affairs Of the country. is failure is
/ credible, in my opinion. 70 three principal
I causes: Cd To the large volume of United
! States currency of various kinds kept con-
| stantly outstanding, making the cOntrac-
! ton or expansion Of the comparatively
| small national bank circulation less effect
! i've than 1T would otherwise have been.
/ % The difficulty and delay in procuring
| and to some extent. In retiring circu-a-
! ton. CD And, mainly, the provisions Of
/ the Jaw which require the deposit Of
! United States bonds to secure circulation
| and restrict the issue of notes to 30 per
cent. Of the par va-ue Of the bonds.
With $500 900 in United States notes,
| treasury notes of 1890, silver certificates
I and gold certificates. besides about S625.-
| 100000 in gold and silver coins, constantly
! outstanding, none Of which can be law
| fully retired by the government without
| the substitution of other currency in its
| place. the national bank notes, which
amount 10 only 1907 800 900. or about u per
| cent. of the whole can not exert a very
| effective influence upon the volume of
! outstanding currency at any time, and
| especially at times when large contrac-
! tons or expansions are most needed. but
| the greatest difficulties are encountered,
K and the national banking system as now
] organized is least effective. when the
! business Of the country demands quick
| expansions Of the currency to meet sud-
den emergencies.
Another obstruction.
In addition to existing Instructions to
| the prompt increase and decrease of cir
| culation, the ninth section of the act OF
| July y, 1852, which provides for the ex-
tension Of the corporate existence of ma
| tional banks, expressly prohibits them
| from retiring their notes to a greater
! amount than 100000 in the aggregate
| per month and advocates that no bank
| which made a deposit of lawful money
| in order to withdraw its circulation
| shall be permitted 10 make any increase
| in its circulation for a period of six
| months thereafter These provisions are
| 50 manifestly in conflict with the die
| tates Of sound policy that they require
| no comment
SO long as there are in circulation,
] under the authority of the government
in legal tender qualities, every consid-
Grafton of good faith and sound policy
/ requires the prompt redemption Of the
| notes on presentation in the kind of
| coin demanded by the holder, and the
| constant Observance of such admins
| trative methods as may be necessary to
| preserve the purchasing power OF the
| less valuable metal This is essential to
| the continued circulation of our stand
1 ard silver dollar, and their paper repre-
sentatives at par, and to abandon this
| policy without substituting a better one
| in It's place would not only fail to cure
many of the evils now existing, but
would entail upon the people Of the
| country additional and greater ones.
Three Features.
This situation is the necessary result of
| three features Of our currency legislation,
and it cannot be permanently avoided OF
even temporarily improved without ma
| terial changes in our laws relating to that
subject. These features are: Cd The circu-
lation Of United States notes as currency
| and their current redemption in coin on
| demand. (2) The compulsory reissue Of