The Washington herald., 1909-02-07

WHICH they were current. and their mad
equaey Of volume. There were scarcely
more than Sl5000a.e 600 Of notes. and much
/ less than the sum in coins OF all kinds
circulating IN the loyal States; and no
1 mechanical or credit devices then in
vogue could have suficed 10 move this
money fast enough 70 perform the Ordi-
nary exchanges and at the same time 10
pay into ana out OF the Treasury from
sl.000.A00 10 S20a0G0 per diem The only
immediate resource vas green5acks: to
/ be followed and gradually supplanted by
a bank circulation under Federal regula-
ton and control We had already issued
some $A.000.000 or S5o0a00o Of demand
notes, payable in coin and receivable for
customs dues. We were now TO en-
/ bark upon inconyertibIe issues. whose
value would depend seIely upon their
numbers or volume. their usefulness and
the integrity Of the government was
well aware OF the dangers which lurk
behind an inconvertible currency, but tile
dangers in which the country stood OF
having 20 marshal All immense host for
war without adequate arms, ammunition.
horses. accoUteTments, and supplies, were
even greater. The Union, which meant 50
much not only for Americans. but for the
world at large. had to be saved. The
adoption OF a permanent policy. but mere
I ly a choice Of evils"
LincoIn's Ideas on Finance.
Was Mr.. Lincoln in perfect accord
with you on this subject?"
Mr. Lincoln went further than I do. -
I he replied He entertained the notion
that with the triumph Of our arms and
Z 2 frr 3
Of the government. the wealth Of It's re-
sources, the extent CT its trade, and the
/ prudence of Congress in limiting the is
sues would be sufficient 10 bring the
+ greenbaCks 10 par, and provided they
were not excessive, even 10 render them
worth more than coin OF the same de-
nomination; IN other words. that under
given circumstances a dollar in ire
deemable paper might be worth more
than q dollar in coin This view was
supported by many eminent men in beth
/ Houses Of Congress
1T was the opinion OF Ricardo. Mac
Culloch. Bsstait, and other economists" 3"
I suggested
That's all very we'll reioined Mr..
( Chase. But remember that We had 10
deal with facts, not with hypotheses.
L y q
denied that me circumstances. rendered
/ it practicable, and in this the President
agreed There was no certain wav 20
limit the issues Of iBconvertible notes
/ Therefore, I always and upon ali oc-
I easions held the convertibility OF the
notes in view. and II some people lost
while others gained fortunes through the
decline in the notes and their subsequent
f, rise in value. Il could net be helped
I Fortune Of war
I You say. Judge. that the outbreak Of
the war the hank circulation in the loyal
States was only about SlS0000. coo What
was il IN the Confederate States
Bank Circulation in 1850.
About sao.090, go in the Southern States
and S1200a0o9 TO SI5.0o0O0o in the border
States, making the entire paper circuIa-
tion Of the country about 5.000.000. We
made careful inquiries on this subject.
and the figures have remained strongly
impressed on my memory. But a mere
formal statement Of the bank returns
can afford no adequate idea OF the de-
piOrabIe condition Of this paper currency.
I have here a memorandum which was
prepared by the Treasury for a member
of Congress who took part in the debates
on the subject. The whole number OF
banks in the United States. including
those in insuTTeCtiOn. Was J. f92. say for
round figures. 15O0. According 10 the
"banknote reporters there were Of this
number only 20 whose issues were not
cCUnteTfeited The number Of kinds OF
altered notes was no less than 5000: OF
/ imitation. 1850. and OF spurious notes
1850; altogether $50 different kinds Of
bad notes. or the genuine notes there
were over 700 different kinds-some ex-
ecuted by good artists. but most Of them
by Indifferent ones: so that II usually re-
quired no expert TO determine whether q
note was good OF bad. Even when good,
its value varied in inverse ratio to its
distance from the place OF issue. Some
good notes Of the Middle Western States
were quoted in New York at only s. per
cent Of their face value, and some equal
" good notes Of the Southwestern States
were quoted even lower. These notes
were bought up by brokers. who sold
them at profit 10 the employers Of la
Dor. who in turn paid them 70 working
men Al par for wages. The working men
paid them 70 the retailers from whom
they purchased their household supplies.
and the latter. in order 10 Tecoup them
selves, charged 10 per cent more profit
on their goods than otherwise they would
have been willing 10 accept. The system
was vicious to the last degree, and like
all vicious systems. its chief burdens fell
upon the poor
DO you remember what was The
Treasury estimate Of gold and silver coins
in the whole country at the outbreak Of
the war;"
Perfectly. The estimates varied from
s250.oo0.0oo TO sS00.060.0o0 of which s1oo.-
oo0,oo0 were held By the banks It was out
Of this SlC0.00o.00o that borrowed so 9e0,-
Coo for the Treasury"
Question of National Bank.
Was it. or is IT, in contemplation 10
make the national bank system 8 step
ping stone TO a national bank OF the
United States?"
The judge took some time before an
swering this question He rose from his
chair. took turn or two about the room.
then sat down again and spoke slowly
and deliberately.
Although such was not my design.
wss quite conscious that such wss its
tendency. Was IL -Suliy or Turgot who
said that the structure OF society de-
pended largely upon its system Of
money" ! contend that they are recipro-
cal; that the system of money also de-
pends upon the social structure. Now.
what is this structure Of ours? The first
words OF the Constitution establish IL
beyond controversy: We. the people Of
the United States. not the States as en-
0ties. bat the people of all the States
Such a social structure is national and Il
inevitably demands g -cornespondiHgly
national system OF money The cireula-
ton must NJ the organs and vessels
which are to carry It and the organs
must correspond TO the fluid which they
are 10 distribute
Ny point is, judge, was the national
bank system which you originated de-
signed 20 bring about or 10 hasten this
correSroudaDra -