The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1901-08-04


try was In state of specie suspension,
and legal tenders had taken the place of
gold and silver, huctuating in value with
the varying operations of the army and
navy. Victories, with the probable sue
cess of the Union arms, advanced the
value of legal tenders, as disasters and
defeats depressed them. Since the re-
sumption OF specie payments and the set
Ting of the finances of the country again
upon a solid foundation United States
bonds have always sold at a most gra IL
flying premium. The conjecture ar this
time doubtless may be wholly academic,
but it is interesting to imagine what
would have been the effect upon the
bonds if the theory had prevailed aGVo-
Gated few years ago by so many of the
leading men of both political parties, OF
paying off United States bonds in green
backs, and discharging in this way
matured interest obligation with de-
mand obligation, bearing no interest
Would the greenbacks then have taken
the place of the bonds as security for
circulation? 1t not, what would have
been the basis? We live in the happy
hope that this dishonest delusion has
vanished forever, but when We recall the
names of Senators Thurman, Pendleton,
Bayard, Beck, Gov. Morton, Gen. Butter
and others who contended for the fight
to pay government bonds in that way,
We cannot safely declare that that VagiJ-
ry Will never again return to plague US.
Suppose the country should be plunged
into a war with some of the formidable
continental powers, what then? Suppose
when President Cleveland so chiValrOuSly
took up the cause Of Venezuela, for
which the United States has never enjoy
cd any gratitude, England had accepted
the challenge and with her tremendous
navy had blockaded some of our great
Atlantic cities, what then would nave
probably been the price OF United Stat 8
bonds and the value of circulation based
upon them? AS the Boer war has reduc-
ed the price of British conSols from IA
or more to 80 or less so there can be no
III
similarly affected. With our bonds below
par, and run upon the treasury for tie
payment of legal tenders in gold, would
the treasury again suspend specie pay
mentS, as 1t did so unfortunately. and
as many believe unnecessarily, during the
Civil war; and with Suspension, in What
would our national bank notes be- re-
deemed? In legal tenders or gold?
With United States bonds as security
for the redemption of bank notes, and
the bonds selling below par, 1t would seem
to be inevitable that general suspen-
sion of specie payments must follow. So
close relation between the perils of gov
eminent and the general business of the
country is surely to be deprecated, and
ought not to exist. That it need not ex-
list was clearly illustrated during our civil
war. While the obligations of the gov
eminent were far below par, and the in
debtedness of the people of the whole
country east of the Rocky mountains was
being paid in deprecated money, the peo-
pie of California determined that their
money operations should be maintained
upon a specie basis, and to the lasting
honor of their splendid integrity let 1t be
said that they never departed from the
gold standard in the payment of their
debts. Does this not teach true business
independence, and that the government
ought TO go out of the banking business
and have no relation whatever with the
banks Of the country, further than to put
in force such regulations as may be nee
essary to protect the people against fraud
and to exercise a wise supervision over
the whole system?
The redemption of bank notes should be
in gold only. To redeem the promise of
the banks to pay dollars in the promise
Of the government to pay dollars, is not
to redeem in the real dollars themselves.
Nothing but redemption in gold dollars
should be recognized as the fulfllnent OF
the promise to pay. This satisfaction of
one promise TO pay with another promise
to pay, is only another illustration of the
noxiouS influence of the evils of the legal
tenders. Indeed, so familiar has become
the idea of paper legal tender money and
so demoralized has become the financial
morality of some bankers that they nave
advocated making bank notes themselves
a legal tender, and permitting the banks
reserves to be held in these legal tender
promises. Is it not time for clearing of
the financial atmosphere and for all to
demand that the government should re-
tire at once and forever these Yitiating
promises and to again establish the
treasury and the banks on the solid
foundation of gold coin? Upon no class
of citizens does the duty of leading IN
this righteous movement devolve with
the same force as upon the bankers. me
imI Scfection and inadequacy of the ma
tiOndl banking act is most seriously eX-
perienced in times OF currency stringency
The banks are then utterly powerless to
afford needed relief at the most critical
period, and at the very time when nat
uraI system would permit them to fulfill
chief their
ence.
In the ranics of 1850, 1884, 1890 and 1898,
when financial storms were sweeping
fiercely over the country and business
houses were topping by the thousands,
the currency famine prevented the banks
from rendering the aid so sorely needed
and which under less rigid system
would have been so gladly granted. The
banks Of New York and other large cit
les saved their reserves and themselves
by issuing clearing house certificates.
These certificates were simple, natural
They had no bonds for the
security of their payment. They were
secured only by the assets of the bank,
the representatives of the exchangeable
wealth of the country. The certificates
were without warrant of law, and proba-
bly, in violation of law, but the emergen-
cy that called them forth justified their
issue, and the whole country ratified the
action Of the banks. In various parts Of
the country banks, railroad companies
concerns, business houses
cities and counties issued paper that
circulated as money, and was accepted
by the people with avidity and gratitude
The amount of the certificates issued by
the clearing houses in 1893 in the princi-
pal cities was upwards of $70,000,000
If, then, there are objections to the
national bank currency, to what shall We
turn? Let me present for your consid-
GRAFTON the alternative of q national
bank currency The provisions of the
national banking act for the regulation
n hq nj haiy -,
national officer, and the uniformity of
note issue should be retained, and no plan
with any of these excellent
features should be considered. They must
be retained and improved, wherever it Is
possible. To illustrate how a natural
currency originates, performs it's func-
tons and then retiFes, let us take a quite
familiar example one you no doubt antic-
lpate, and partaking somewhat of the
character of kindergarten example in
banking: Mr.. A, a customer of bank
Wei known to it's officers to be response
bic for the amount of desired loan uro-
poses to undertake the purchase of some
OF the products of the country in which
he is carrying on his business. For this
purpose he offers his note for $4,000 for
discount, which is accepted by the bank
The proceeds of the discounted note
may may be placed to his credit on the
books of the bank as a deposit, against
Whlcb ne can check as his needs require
or ne may take a cashiers check or
certificate of deposit, or a draft on some
hank conveniently situated. But tao
nature of his purchases does not permit
the use OF any of these Instruments Of
credit, and it is necessary that he shall
pay cash as the purchases are made. In
order to do this, the bank issues to him
its demand promiSsory notes in conveyi-
lent denomination, and with these Mr. 4
proceeds upon his venture. In due time
the purchases are all made. The situa
ton then is as follows: The bank has
Mr.. AS $1,000 note in it's assets; mis-
warehouse contains the valuable products
the banks accommodation has enabled
him to buy, and the parties from whom