St. Paul daily globe., 1895-12-17

London. P~ "-~'o1. US. A.
credit so far as 1t is related to the
maintainance of a sound currency and
it must be reconstructed, not merely
propped up by frail and temporary
supports. No surplus revenue, how
ever large. could extricate us from our
present difficulties or give assurance
of safety in the future unless it should
be required to be paid in gold under
system which would exempt the gov
ernment from the obligations to fur
nish the gold when demanded to be
used in making the payments and it
is scarcely necessary to suggest that
such system is impossible as long as
the United States notes and treasury
notes are kept in circulation and are re-
deemable in gold by the government
itself on presentation. The opinion
seems to prevail to some extent that
the mere possession of a surplus in
the treasury would prevent withdraw
ais of gold and thus render the issue
of bonds for the protection of the re-
serve unnecessary, but this view of the
subject is founded, in my judgment,
upon an entire misconception of the
causes that have produced the with
drawalS. Unless | am wholly miStak-
en-, they have very little, if any, rela-
ton to the amount of money the gov
ernment has ability to raise, by taxa
ton or otherwise, but they relate pri-
marily and almost exclusively to the
character of money that it might be
able to supply and keep in circulation.
In other words. it was apprehension as
to the kind of money to be used, and
not as to the amount of money on
hand, that brought our securities back
from abroad for sale, caused foreign
investors to withdraw their capital and
foreign creditors to collect their debts,
and compelled our own people to sus-
pend or contract their business opera
tions and thus diminish the income of
employers and greatly reduce or entire
ly stop the wages of labor.
PUBLIC DISTRUST.
Large Withdrawals have been made
during the last three years simply be-
cause gold was wanted, and the desire
to secure gold was due to a growing
distrust of the other kinds of currency
in circulation and not at all to any ap-
prehension that the government would
not be able to discharge all it's obli,
cations in some kind of paper or coin.
When the receipts for customs con-
sisted very largely of gold, as was the
case prior to July 1882, before the
results of our defective currency sys-
tenn had been fully developed, sur
plus revenue enabled the treasury to
fpay out gold without disturbing the re-
serve; and besides there was at that
time no great demand for gold by the
presentation of notes for redemption
and there would therefore have been
no difficulty in maintaining the reserve,
even if there had been no surplus in
the treasury. But the conditions have
entirely changed, and an entirely diff
ferent policy is demanded to meet the
situation now existing. With or with
out a, surplus revenue, the government
can now procure gold only by negotiat-
ing loans or by making purchases un-
der the statute, and this safe of af-
fairs, which is the natural result of
causes still operative, is almost GER
tain to continue until the causes them
selves are removed
REMOVE THE CAUSE.
'There is but one safe and effectual
way" the secretary says, "to pro-
tect our treasury against the demands.
and that is to retire and cancel the
notes which constitute the only means
through which the Withdrawals can
be made. Many partial and temporary
remedies may be suggested and urged
with more or less plausibility, but this
is the only one that will certainly re-
move the real cause of our troubles
and give assurance of permanent pro-
lection against their recurrence in the
future This can be most successfully
and economically accomplished by au
thorizing the secretary of the treas
ury to issue from time to time bonds
payable in gold, bearing interest at a
rate not exceeding 8 per cent per an
mum and having a long time to run,
and to exchange the bonds for United
States notes and treasury notes, upon
such terms as may be most advan-
tageous to the government, or sell
them abroad for gold whenever in his
Judgment it is advisable to do so, and
use the gold thus obtained in redeem
ing the outstanding notes. Under the
opera ton of such plan, if judiciously
u,
contraction of the circulation, because
if it should at any time be found that
other forms of currency were not
being supplied to the extent required,
exchanges of bonds for notes would
be suspended, and gold would be Sc
cured by selling the securities abroad.
In order to further facilitate the sub
stitution of other currency for the re-
tirement of legal tender notes, the ma
tional banks should be authorized to
issue notes equal in amount to the
face value of bonds deposited to Sc
cure them, and the tax on their clrcu-
lation should be reduced to one-fourth
of one per cent per annum. AS a part
of the plan for the retirement and can
collation. of the legal tender notes, the
treasury should be relieved from re-
sponsibility for the redemption OF ma
tional bank notes, except worn, multi
ated and defaced notes and the notes
of failed banks, and each ASSOCIATION
should be required to redeem its CIR
culation at it's own office and at agen-
cies, to be designated by the comp
troller of the currency, as was the
case prior to the passage of the act
of June 20, 1884; or, If this is not con-
sfdered expedient and the present sys-
tenn of current redemption by the
treasury is continued, the secretary
should have the power, after a future
date to be fixed in the law, to require
the banks to keep their 5 per cent re-
demption fund in gold coin and to de-
posit gold coin for the withdrawal OF
bonds whenever circulation is to be
permanently surrendered or reduced"
NATIONAL BANK BRANCHES.
The secretary also favors the pass
age of a law allowing national banks
to establish branches in small towns,
with a view to bringing them closer
to the people in parts of the country
remote from large towns and cities,
by which their usefulness would be
greatly enhanced. The secretary, in
closing his report, says that it is not
probably that any plan for the per-
manent retirement of United States
notes and treasury notes will be adopt
ed that will not require considerable