New-York tribune., 1918-03-04

National Clty Bank of Ne1U orh.)
T%HE enormous increase Of govern
mental expenditures made nee
cssary by war has been so often
the occasion for issues Of paper money
that many people are ready to assume
that great war cannot be carried on
without them.
That idea is strengthened in this
country by the fact that this govern
mont resorted to paper money during
the Civil War, was victorious in the war
and eventually brought the green
backs" to par with gold and has re-
tanned them as part Of the permanent
currency stock.
great many people were so IA
; vorably impressed by the apparent SER
vices of these paper issues during the
war that they could see no reason for
retiring or redecming them at any time,
and for fifteen years after the war was
over the political life Of this country
was intensely agitatcd by controversies
over them.
"E1allOwcd" Currency
In the eyes of many people the
"greenbacks" had become hallowed as
an agency by which the life Of the
: nation had been saved. They were
Landed as means by which the country
had escaped from the clutches of the
money lenders, and suggestions for
: their retirement were usually attrb-
uted to bankers, who were supposed to
want them out Of the way for selfish
reasons.
The influence Of the paper money
upon prices and wages was too obscure
10 be traced by the average man, but
he thought he could see that the gov
ernment got something for nothing
when it issued them, instead of hir-
ing money from bankers, and this was
held to account for all antagonism in
that quarter.
: It was difficult question to deal
with in popular discussion. No issue
could be injected into politics that
a would be more easily subject to misrep-
resentation or that would better serve
the purpose OF demagogues than the
paper money issue which dominated oul
politics from 1865 to 1879. 1t is one of
the most serious objections to any de-
parture from sound principles in deal
ing with money, credit or banking that
the controversies which inevitably re.
suit are sure to be distorted into the
form of class conflicts-of antagonisn
, between those who have caDital arf
those who haze not.
The greatest mischief wrought by
: the "greenbacks" has been in fomcntino
agitation of this kind.
The Silver Agitation
The country escaped the odiur of
, rcpudlatlon i'll connection wi.h its Civil
War financing, but it was a grave cues.
ton for time what the outcome would
be, and it escaped by compromise which
kept the government notes in circula-
ton with provisions for convertibility
so inadequate that in every time Of
financial stress they have been an cle-
ment of weakness.
no competent student of our finan-
cial history doubts that in each one OF
r our crises they have cost the country
lar more thar their face value,
. Moreover, the seeds of that agitation
over the "@reenbacks" sprang up again
in the demand for free coinage of sill
Yer, and all Of the Misrepresentation
AL OF the talschoods and sophistrics
and insldious appeals to class feeling
which had characterized the paper
money campaigns had 10 be met again
Situation in 1861
When Salmon p. Chase assumed the
} duties of Secretary of the Treasury
III arch d, 1861, he found very difficult
situation confronting him. The Treas
ury was empty, revenues were running
much below current ordinary expenses
s the country was on the verge of civil
= war, financial and general business con
q ditions were greatly disturbed and tho
public mind was in a state Of wild con.
: fusion and alarm.
e Revenues had been below expend
= Nures in every year since 1857, tn,
deficits having beer met by floating
j., obligations OF various kinds, and gov
u crnment credit was at low ebb. Ir
8 September, 1860, Howell Cobb, Sccre
L tary OF the Treasury, invited bids or
:, $1o,000,000 fiftccn-year per cent bond.
: and accepted offers on about 1000, 900
g but only per cent had been paid or
{ them when the election of Abraham
Lincoln to the Presidency, in Novem
9 her, and thc Immediate threat of seccs
= sion which followed paralyzed the mon
3 cy markets, and most Of the subscrib
g ors Withdrew their tenders, forfcitin{
t their advance payment
: Chase had been 4 prominent lawyci
= and political leader in Ohio He hat
y served term in the United State.
g Senate, two terms as Governor of Ohio
8 and was prominent candidate for tn,
e Republican nomination for the Presi
u dency against Abraham Lincoln. II,
$ was a man Of high qualifications as ;
lawyer and of unqucstioned integrity
=. but had no special qualifications fo
the post OF Secretary of the Treasury
? He was not prcdisposed toward pape
! money; on the contrary, he had def
mite opinions in opposition to it, par
ticularly against bank issues, but h,
shared to some extent the popular sus
L picion Of Wall Street bankers, or con
?? sidered it polite to keep them at ,
y distance.
d The First War Loans
e Nevertheless, circumstances com
! pelled him to look to Wall Street To-
, help. 1T was impossible to borrow
- money abroad, and New York was tn,
- financial metropolis of the country
- Congress was convened in extra ses
= sion, and on July II and August 5
= 1861, passed loan bills authorizing tn,
4 Secretary to borrow $3.50, 900. 900 OF
three-ycar Treasury notes, drawn,
7.30 per cent interest, or twcnty-vea,
hoDIa Ir,wiuc por cou+