The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-07-21

against some other credit.
Thus such credits are passed on and on,
performing the functions OF money, and, be-
ing divided or consolidated, their identity is
soon lost In the great seas of commercial
credits. In the ebbing and flowing of the
mighty sea OF the worlds commercial credits,
old credits are settled by offsets or renewals,
and new credits are created to take the place
OF those extinguished, and so the volume Is
always maintained, and, as commerce in
tity.
1t was through this wonderful system of
changing, transferring, renewing and Offset
ting that the London merchants and bankers
were enabled during the civil war, in effect
SO far as the international problem is con-
cerned: to buy United States bonds with the
use or their credit alone, and to gradually
pay the agreed purchase price with about six
years coupons cut from the bonds them
selves.
PURCHASES N d.
Having thus obtained a billion and a half
of 8 per cent bonds, the subsequent accumu-
latioh Of American railway and other bonds
and securities, without exporting to America
either money or merchandise in exchange,
became easy, For every six months they
had a coupon amounting in the aggregate, at
the end of the first six months, to, say, $45,-
OO0, 600, and at the end of the next six an
other $45, 200, 900, and in addition the interest
on the first $45, 900, 900, and the amount an
nually available from this source, has kept
on increasing in the geometric ratio of the
compound interest tables ever since, until
now 1t probably amounts to the full average
value of an entire wheat crop of the whole
United States.
Such was the consideration as between the
nations, the international consideration-if
such an expression is allowable-for the billion
and a half of government bonds sold abroad
during the war years. But it does not follow
that, because intangible, such consideration
was unsubstantial.
The superb credit of the London merchants
and bankers passes as money, the same as
gold, the world over, and is even more val
uaDle Tor many of the Transactions of com
merce because more easily transferred and
more cheaply transported. A chunk of that
credit would buy a cargo Of tea in China,
OF wool in New Zealand, of coffee In Brazil,
of silks in Japan, Of guano in Peru, Of wheat
IN the United States, or of cotton inside the
Confederate lines.
An acceptance of those merchants or bank
ers written in English, French, German,
spanish or any other Language or jargon
could be exchanged in any country for the
coin OF that realm or for any of it's prod
uctS.
1t is the legitimate and useful function Of
banks to create such credits as shall take
the place of money in most of the larger
transactions of commerce. And the only re-
narkable parts of the transaction were the
absurdly low price at which the government
bonds were sold and the fact that there were
not sufficient bank credits at home to clear
the transactions, which involved the compare
lively moderate amoulnt of $500, 900, 900, an
amount slightly less than one average weeks
clearings of the New York city banks at the
present time.
BANK OF Il UNITED STATES.
In order to present the reasons why the
United States government in 1862 was COM
PEELED to sell its interest bearing bonds at 40
per cent OF their par value and the scarcity
or bank credits at home, 1t is necessary to
hastily review the history of the Bank of the
United States and the establishment of the
subtreasurieS Of the United States.
AS early as 1871 the United States bank was
chartered for the period of twenty years with
d capital or $lO, 600, 900. In 1911, on the ex-
plration of the charter. it was refused a re-
newal, but in 1916 a second bank, called the
Bank of the United States, was chartered,
also for twenty years. This bank proved most
useful to the government in adjusting and ex-
tendlng Its loans and in making the collections
ana disbursements of its revenue, also to the
ommerc of the country, and gave promise
OF becoming the keystone Of a solid banking
and monetary system.
Unfortunately, as l think. the government
owned one-ffth of its shares, and had the
right to nominate a proportionate number Of
its directors.
1t was the depository of the government
funds, and hence, whatever balances the gov
eminent possessed were not withdrawn from
circulation and the uses of commerce and
locked up idle and useless as now. During
its short existence it acquired a reputation and
the confidence of the people both at home and
abroad.
1t had a main office in Philadelphia and
twenty-five branches in different towns and
cities of the Union. In every county of the
United States and in every country there
49, VI lIlc DdIlh OIL the OnlC6Q
States" One-ffth of it's stock was held in
foreign countries. One-fourth of it's stock was
owned by women. orphans and the trustees
of charity funds; so high. so unuuestioned
was its credit. It's bank notes were as good
as gold in every part of this. country and
IN London, Paris, Rome, Cairo, Calcutta, st.
Petersburg, the notes of the Bank of the
United States were worth a fraction more or
d fraction less than at home, according to the
current rate of exchange. The notes issued
by the bank amounted to $12, OGO, 600. a con-
siderable SIM for thOcn dave and S1Iab DOtn-
with gold and silver, constituted the princi-
pal circulating medium.
There had been some opposition in congress
to the chartering Of the bank in 1916, but
long before Gen. Jackson came into power
the bank appeared to have lived down all OPP
position. In the presidential campaigns of 1924
and 1928 is was not so much as mentioned.
I'm all the political pamphlets, volumes,
newspapers, campaign papers. burlesques and
caricatures of those years there is not the
most distant allusion to the bank as a politi-
cal ISSUE" The bank had become a univer-
sally accepted fact and had apparently
dropped out of politics.
The first intercourse between the bank and
Gen Jackson after being elected president
was in the highest degree courteous and
agreeable.
A large payment was to be made of the
public debt early in the summer, and the
manner in which the bank managed that af-
fair, at some loss and inconvenience to itself,
but greatly to the advantage of the public
and to the credit of the government, won
from Gen. Jackson's secretary of the treasury
a warm eulogium.
But unfortunately for the country, one of the
party tenets, which brought Gen. Jackson into
the presidential chair, was expressed by the
party slogan THAT to the victors belong the
spois."
The party just coming into power then, as
now, was besieged with applicants for official
positions. Some time before the election
Jeremiah Mason, one of the three great
lawyers of New England. a man Of capacity
and integrity and in all respects fitted for the
position Except that he was a Federalist in
politics., had been appointed to the presidency
of the branch of the United States Bank at
Portsmouth, N. H.
Isaac Hill, a Democratic politician of New
HAMPSHIRE, and a political supporter of Gen.
Jackson, demanded that Mr.. Mason should be
removed, and that a political supporter of
Jackson should be given the position. The
bank refused. Then the secretary of the
treasury made the same demand, and the
bank again refused. There was a correspond
ence extending over several months, which
was the beginning of the conflict which ended
in the destruction of the bank.
Mr. Parton, in his life of Andrew Jackson,
publishes the correspondence in full. and says:
81 believe myself warranted in the positive
assertion that this correspondence relating to
the desired removal of jeremiah Mason was
the direct and real cause of the destruction of
the bank. If the bank had been complaisant
enough to remove a faithful servant Gen.
Jackson, l am convinced, would never have
opposed the rechartering of the institution"
Gen. Jackson was of that imperious tenn
permanent which admits of no opposition. Be-
ing thus thwarted, with characteristic vigor,
carried at last to INSCRIPTIONS and almost in
decent extremes, he assailed the bank, and
finally destroyed it by the exercise of the
veto.
In 1898 this reputable, solvent national bank.
which was directly under the supervision of
the treasury department., for party purposes,
under the pretenses of doing away with paper