The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-02-13


of the treasury. that pistrust did not re-
late to then present situation. but was
born out of doubts and fears concerning
future over which the dark clouds OF uIl-
certainty were gathering with an ever5n-
creasing menace.
LOOKING BACKWARD
Looking backward now TO that dark
period. it is refreshing TO remember that at
the first. sale of government bonds, occur
ring as it did after the depressing fact of
the first battle of Bull Run, one hundred
and fifty millions of these securities We're
subscribed for at par and paid for in gold
by the associated banks of New York, Phil
adelphia and Boston. The gradual degener-
acy of the national credit was marked by a
falling off in realization to the treasury
from par in gold upon its bond issue TO a
price realizing hardly 40 cents on the dollar
That the issue of legal-tender notes, soon
irredeemable in coin by the government,
and further discreditaed by being refused
in exchange at the will of the holder for
Understanding obligations, was con-
tributing agency to the great decline is no
where denied. Whether or not they were
an Indispensable incident to the financial
needs OF the government, is still an un-
settled debate. AS the war progressed and
the country became poorer, this currency
increased, giving new instruments and IA
cilities to expend just in proportion as the
means of payment were consumed
When the war was over the debt of our
government, as then known, amounted to
the appalling sum of $2.3440W,O00. OF this
amount SAIL, 900 was payable on demand
The annual interest charge was $125. 100000
The means secured by this great debt were
not alone sufficient for the war eXpendi-
lures. The revenues of the government had
been increased by taxation upon everything
that could be made to yield revenue; the
income of the treasury from all sources in
the year 1866 was 500 coo 600.
The disbanding of the army, the reduc-
tion OF the navy and discontinuance OF the
great semi-military. semi-civil adjuncts TO
both, relieved almost at once the embar-
raSSment of the treasury, or rather the
source of embarrassment was reversed
Hitherto there had been inadequacy; now
there was redundancy. During the years
1860 there was surplus revenue over
Expenditures of 1913 600 600 1t applied
substantially to the reduction of the inter
eSt-bearing debt. Coin was accumulated to
me extent OF ss60V0o0O BY the SAFE OF ponds
preparatory to the redemption of the de-
mand debt. In 1879 the hour of test had
come Would the government be able TO
redeem its notes in gold? Had the credit
of the government become fully restored?
A nation waited for the fateful day of jan
l. 1879, which many had prophesied would
end in shame and humiliation. That day
witnessed a triumph, peaceful liz kind, but
scarcely less determinative than victories in
the field.
THE expectation existed that redemption
meant retirement, at least a gradual re-
tirement of the demand obligations States
men, with scarcely an exception. While sup
porting their issue. deprecated the seeming
necessity and plead for the narrowest and
briefest use of the dangerous agency.
why were these notes not retired? BY
what strange witchery Of the Imagination
has it come about that they are widely re-
but as money itSelf2 That has happened
which Mr.. Sumner forebOded when, speak
ing of such forms of government issues, he
said The medicine of the Constitution must
not become its daily bread
WHAT THE BANKS DID.
1--WE have seen that at the beginning of
the war, with a banking system heteroge-
nous, unrelated by any common laws or
rules OF action, yet with these disabilities
tile associated banks had advanced $15O,O00,-
00J in gold to the government without en-
dangeriEg specie payments. Indeed, the
record shows that so rapid were the govern
ments disbursements, and so strong the cir
culating current, that with the payment OF
$3.50, 600, 600 completed, the gold reserve of
the banks had been depleted only 100000.
I'VE have seen that the intersection of
government notes into the field of circula-
tion-excuSable as it may have been-crowd-
ed bank note issues back for redemption,
filled bank vaults with government notes IN
place of specie, and led to the suspension
of specie payments by both the banks ana
the government. Viewed from the present
point of time, there is q consensus OF the
best opinion that had there then existed
banking system uniform in its general fea-
lures, operative in all the States, the de-
ranging influence of government notes
would not have appeared; that specie pay
ments would have been maintained; that
not far from a normal standard; that the
sudden fortunes won from legitimate indus
try by speculative craft and cunning would
not have appeared in dazzling mockery or
a nations distress; that hundreds OF mil
lions lost through depreciation of govern
ment notes would have been saved to the
IF this be true or approximately true.
the inquiry may be repeated. Why, out OF
as the most dangerous part of the war debt,
retired and Cancelled? Was it considered,
is it now considered. that our war banners
have been forever furled? Resting as we
NAV in a sense of security as to peace at
home have all the nations given us salts
factory pledges against unjust aggressions
from without? Why do we build war ships
and spend millions in coast defenses ana
maintain an army? Experlehhee,tD o1ohf
us that behind the army and the navy
must be strongly intrenched treasury and
an unquestioned public credit. toatlng
debt. payable on demand, is an element of
weakness. 1t is the very opposite OF
strength.
''In pointing out the dangers of govern
ment paper money, Secretary Chase en-
phasized The ever-present liability to be
called on for redemption beyond the means
of payment however carefully provided and
managed; the hazard of panics precipitating
demands for coin. concentrated on lew
points aud q single fund.
at requires but little reflection to con-
vince the mind that this danger to which
for many years we have been exposed
would be realized to its fullest extent in
the initial movement of great war. In
such a movement the folly of our present
stua Ason would be fully revealed. The i'm
| munities of peace cannot be accepted as
safe conditions against the contingencies of
war 1t is this which Justifies navies and
coast defenses. 1t is this which not only
ilstifes but demands that in its finances
the government shall nursue that policy
which shall be safe, not only in time of
! peace yet one so guarded and protected
| that no surprise can throw it in confusion
| IA policy which will always be able to re-
| inforce the army and the navy with the
| supporting power of an impregnable
credit.