The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-12-04

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1bs wishing National banks or others to be organ
lied avail themselves OF the proposed encourage
ments TO issue circulation and promptly MI any
vacuum and supply every currency needed. II
has always seemed 10 me that the provisions or
law regarding the capital OF Natlonal oanks' when
opprate as q limitation TO their location, 1all 10
M ol-a proper compensation for the suppression of
state banks. which come near 10 tne people IN all
sections OF the country aua re"uiiS lutisu tnem
',jI6 banking accommodations and facilities
Anx Inconvenience or embarrassment arising
Tror1 these restrictions on the location OF National
ilIi-S n5ight we'll be remeded by better adapting
The present system to the creAliou VI banks IN
large capitai TO establish branches IN such loca-
lions as would serve the people so regulated and
restrained 10 secure their safe anG conservative
control and management: but there might not be
the necessity for such addition 10 the currency
by new issues OF bank circulation as al hrst glance
is indicated. II we should be relieved from main
tanning a gold reserve under conditions that con-
stftute 1.-THE barometer of our solVency would rise
ana if our treasury should no longer be the foolish
puTveyor OF gold Tor nations abroad or for specula
tion and boarding by our citizens AT home, should
expect see gold resume ITS natural and normal
functions IN the business analis oiLhe country and
cease TO be an object attracting the timid OF our
people and exciting their sensitive imaginations.
I do not overlook the fact That the cancellation
OF treasury notes issued under the Silver-purchas
Ing act OF 1890 would leave the treasury in the
actual ownership OF sufficient silver Including
sefgniorage. TO coin nearly Sl7S,000 900 in STAN
dard dollars Ii IS worthy of consideration
whether this might not from time to time be con-
verted into dollars or fractional coin and slowly
put into circulation as in the judgment OF the Sec
rotary OF the Treasury, the necessity OF the couu-
Is
be entered upon FULLY approaching the fact that by
careless, easy descent we have reached a danger
Gus depth, and that our ascent will not be accom-
puShed without laborlouS ton and struggle. We
shall be wise if realize that we are financially
i'll and that restoration to health may require
heroic treatment and unpleasant remedies
In the present stage OF our difficulty ii is not easv
10 understand how the amount OF our revenue re-
Ceipt%directly affect it. The important ouestfon
is the amount of money received in revenue
DavmentS. but the kind of money we n,ain-air ond
our ability 10 continue in sound financial condi-
70 are der rIaf
ings OF gold as related 10 the soundness of our
money and as affecting National credit and
monetary strength. If our gold reserve had never
been impaired or II no bonds had ever been issued
replensh il, If there had been no fear and fiid
lty concerning our ability 10 continue gold pay
llen' II any part OF our revenues not paid in
gold and if we could look TO our gold REGENTS as n
means OF maintaining safe reserve the amount
OF our revenues would be influential fac or in
the problem, but unfortunately all the circum-
stances that might lend weight to this consdera-
non are entirely lacking in our present predica-
ment. No gold is received by the Government in
payment OF revenue charges, nor would
there be If the revenue were increased The re-
Celpts OF the treasury, when not in silver Certi-
Gates consists OF United States notes and treasury
notes issued for silver purchases. These forms OF
money are only useful to the Government in pay
ing us current ordinary expenses and its quantity
IN Government possession does not in the least
contribute toward giving us tokens of safe finan-
CiAI STANDING or condition, which is built gold
alone II 1t is said that these notes. if held by the
Government, can be used 10 obtain gold for our re-
serve, the answer IS easy. The people drew gold
from the treasury on demand upon United States
and treasury notes, but the proposition that the
treasury could draw gold from the people upon
them would be REGARDED in these days with won
der, and If this could be done there is nothing to
prevent those thus parting with their gold from re-
gaining II the next day or the next hour by the
presentation Of notes they received in exchange
for il.
The Secretary OF the Treasury might use sucb
notes taken from surplus revenue to buy god in
the market. OF course he could not do this with
out paying a premium. Private holders of gold
unlike the government, have no parity TO main
TAIN and would not be restrained from making the
best bargain possible when they furnished gold to-
the treasury, but the moment the Secretary of the
Treasury bought gold on any terms above par he
would establish general premium upon il. thus
breaking down the parity between gold and silver,
which the Government IS pledged 10 maintain, and
opening the way 10 new and serious complications
In the meantime the premium would not remain
stationary and the absurd spectacle might be pre-
sentet OF a holder selling gold to the Government
and with United States notes and treasury notes
in his hand Immediately Camoring tor its return
and resale at higher premium. 1t may be
Claimed that a large revenue and redundant re-
ceipts might fayorably effect the situation under
discussion by affording opportunity OF reclaim
ing these notes in the treasury when received and
thus preventing their presentation for gold. Such
retention 10 be useful ought 20 be at least meas
urably permanent, and this is precisely what is
prohibited, far United States notes are con
cernedr oy the law or 1878, forbidding their fur
ther retirement. That statute in so many words
provides that these notes, when received into the
treasury and belonging TO the United States, shall
be paid out again and kept in circulation"
Il will, moreover, readily be seen that the Gov
eminent could not refuse 10 pay United States
notes and treasury notes in current transactions
when demanded, and insist paying out silver
alone and still maintain the parity between that
metal and the currency representing gold. Besides
the accumulation IN the treasury OF currency OF
any kind exacted from the people through taxa
tion is Justly regarded evil and it cannot
proceed lar without vigorous protest against
unsuitable retention of money from the business
OF the country and denunciation of q scheme OF
taxation which proves itself 10 be unjust, when it
takes from the earnings and income OF the citizen
mOnev SO much in excess OF the needs OF the
Government support that large sums can be
gathered and Kept in the treasury. Such condi-
nFf.Tfap
led the Government to restore currency The peo-
PIE by the purchase OF its unmatured bonds at
large premium and by a large increase OF its de-
posts IN National banks, and we easily remember
that the abuse of treasury accumulation has FUR
nIshed most persuasive argument in favor OF
legislation radically reducing tariff.
Perhaps It is supposed that sufficient revenue re-
ceipts would in a sentimental way improve the
situation by inspiring confidence IN our soivency
and allayng the fear of pecuniary exhaustion, and
Yet through all our struggles 20 maintain gold
reserve there never has been any apprehension as
ready ability to pay way with such
money as we had, and the question whether or not
our current receipts met our current expenses has
NOT entered into the estimate OF our solvency. Of
course the general state of our funds exclusive of
gold entirely immateral to the foreign creditor
and investor. His interest could only be paid in
gold and his only concern was our ability 10 keep
hand that kind Of money.
On July l, 1898, more than a year and a half be-
fore the first bonds were issued to replenish the
gold reserve, there net balance in the treas
ury. exclusive Of such reserve, of less than S13-
0O0,0OU, but the gold reserve amounted to more
than STA 900, 600, which the quieting feature
OF the situation 1t when the stock of gold be-
gan rapidly 10 fall that fright supervened aud our
securities held abroad were returned for sale and
debts owed abroad were pressed Tor payment. In
the meantime extensive shipments Of gold and
other unfavorabe indications caused restlessness
and fright among our people at home.
Thereupon the state of our funds, exclusive OF
gold became also immaterial to them and they,
too, drew gold from the treasury for boarding
against all contingencies. This is plainly shown
by the large increase in the proportion of gold
withdrawn which retained by our own people
time and threatening incidents progressed.
During the fiscal year ending June 30, 1894 near
" SS5,0O0000 in gold was withdrawn from the
treasury and about ST. DOC. 600 was sent abroad,
while during the fiscal year ending June 30, 1895,
over Sll7 ,O00, 600 was drawn out. of which only
about SS6,000000 shipped, leaving the large
balance OF such Withdrawals TO be accounted for
by domestic boarding.
1nasmuch the withdrawal OF our gold has re-
suited largely from fright. there is nothing appar
with its natural consequence except such a change
in our financial methods will reassure the
frightened and make the desire for gold less in
tense II is not clear how an increase in revenue,
unless it be in gold can satisfy those whose only
anxiety Is to gain gold from the Government store.
II cannot therefore be safe to rely upon increased
revenues cure for our present troubles, 1t is
possible that the suggestion OF increased revenue
as a remedy for the difficulties are considering
may have originated in an intimation of distinct
allegation that the bonds which have been issued
ostensibly to replensh gold reserve were
really Issued TO supply insufficient revenue.
Nothing be further from the truth. Bonds
were issued to obtain gold for the maintenance Of