River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1895-12-05
NATIONAL FINANCES.
Cause and Cure of Bond Issues-Dire Ef-
feet Of Free Coinage.


Cause and Cure Of Bond Issues-Dlre Ef-
feet of Free Coinage.
AS we turn from a review of our foreign
relations to the contemplation of our ma
tiOnal financial situation we are immedi-
ately aware that we approach a subject OF
domestic concern more important than ans
other that can engage our attention, ana
one at present in such a perplexing and del
lcate predlcament as TO require prompt ami
rhe compulsory purchase and coinage OF
silver BY the government unchecked and
unregulatcd by business conditions and
needless of our currency needs. which for
more than 10 years diluted our circulating
medium, undermined confidence abroad in
our financial ability, and at last culminat-
ed IN distress and panic at home, has been
recently stopped by the repeal of the laws
which forced this reckless scheme upon
the country
Review of Financial Legisistion.
The currency denominated United States
notes, and commonly known as green
the late civil war aud was intended origin
ally to meet the eXigencies of that period.
IN congress at the time the laws were
passed authorizing the issue of these notes
that their advocates declared they were in
tended for only temporary use and to meet
the emergency of war. In almost IL not all
the laws relating to them some provision
was made contemplating their voluntary
THY OF them, however, were kept on foot
and mingled with the currency of the
country. so that at the close of the year 1874
they amounted to 1881 1895. 073.
Immediately after that date, and I'm jan
uafy, 1870, law was passed providing for
the resumption of specie payments. by
which the secretary of the treasury was
required, whenever additional circulation
was ISSUED TO national banks, to retire
United States notes equal In amount to 81
per cent. of such additional national bank
circulation until such notes were reduced
TO $500, 0o.0o0. This law further provided
that on and after the LIST day of January,
1879, the United States notes then out
standing should be redeemed in coin, and
in order to provide and prepare for such re-
demptlon. the secretary of the treasury
was authorized not only to use any sur
plus revenues of the government, put to
issue bonds OF the United States and dis
pose of them for coin, and to use the pro-
statute
In May. 1875 and before the date thus APP
pointed for the redemption and retirement
of these notes. another statute was passed
forbidding their future cancellation and
retirement. Some of them had, however
Teen previously redeemed and cancelled
upon the issue of additional national bank
circulation, as permitted by the law of
1915 so that the amount outstanding at
the time of the passage Of the act forbid
ding further retirement was s34s.6si .Ol6.
Creation of the Reserve.
This was the condition of affairs On the
lst day of January. 1873, which had been
fixed upon four years before as the date
for entering upon the redemption and re-
tIrement of all these notes. and for which
such abundant means had been provided.
The government was put in the anomalous
situation or owing to the holders of its
notes. debts payable in gold on demand
which could neither be retired by receiy-
ing such notes in discharge of obligations
Payment in gold. IL was forced to redeem
acquittance.
In the meantime and in July. 1890. an act
had been passed directing larger govern
mental monthly purchases of silver than
had been required under previous laws, and
treasury notes of the United States should
be issued, payable on demand i'm gold or
silver coin. at the discretion of the secre-
clared i'm the act to be 1.-THE established pol
icy of the United States TO maintain the
upon he present legal ratio, or such ratio
as may be provided by law" In view OF
this declaration II was not deemed per-
TO exercise the discretion in terms con-
fe.red upon him by refusing to pay gold en-
these notes when demanded. because by
such discrimination in favor of the gold
dollar the so-called parity of the two metals
would be destroyed and grave and danger
Gus consequences would be precipitated by
affirming or accentuating the constantly
widening disparity between their actual
values under the existing ratio.
Cause of Depletion of the Reserve.
II thus resulted that the treasury notes
issued in payment OF silver purchases un-
der the law of 1880 were necessarily treated
as gold obligations at the option of the
vember. 1888. when TIE law Compelling tho
monthly purchase of silver was repealed
amounted TO more than s155000.000. The
notes of this description now outstanding
added TO the United States notes still IN
diminished by redemption or cancellation
to nearly $500. oo0ooo. These oh.
legations are the Instruments which ever
since We have had a gold reserve. have
Among the causes for this constant and
Uniform shTinkage in this fund may be
under the operation of the tariff law until
recently IN force. which crippled our ex-
change of commodities with foreign ma
tions and necesstated to some extent the
payment of cur balances in gold: the un-
natural infusion of silver into our currency
and the increasing agitation for its free
as TO our disposition or abil
ity to continue gold payments. the conse-
quent hoaratng of gold at home and the
stoppsge OF investments of foreign capital
as well as the return of our securities sold
abrosd: and the high rate-cf foreign ex-
change. which induced the shipment of our
gold 10 be drawn against. as a matter OF
speculation.
Bond Issues Necessitatrd.
In consequence of these to1ditions. the
gold reserve on the LIST day Of February.
more than SSl. 000.00o during the preceding
nine months. or since April. 1898 Its re-
Pc NJ nnsnt being necessary. ana no other
resort was had to the issue and sale OF
bonds provided for by the redemption act
of 1873. Fifty millions of these bonds were
sold. yielding SIS. ga. 1871. which was add
y TO the reserve fund of gold then on hand.
As a result of this operation this reserve.
which had suffered constant and large
Withdrawals in the meantime. stood on the
9th day OF March. 1874. at the sum OF SlG,-
as. It's depletion was. however. inn
mestietely thereafter so accelerated that
on the S0th day of June. 1894 II lad fallen
to se4. szs.o25. thus losing by ~ithdrawals
more than A2.ooo.o00 in Eve months, and
dropping slightly below its situation when