New-York tribune., 1918-01-06
that year took this critical view Of

that year took this critical view of
affairs:
Unfortunately the Secretary thought
paper promises were capital, and that,
for the Treasury to borrow, it was first
necessary to supply the paper to be
borrowed, in the form Of money. He
thought large issue Of paper money
must precede loan. The only capital
which can be loaned is derived from
profit on industry and commerce."
The banks refused to accept the gov
crnmcnt's paper. They ceased to pay
out specie.
In the face of these untoward con-
ditons, Chase said:
"There has been no expansion Of the
currency, only contraction"
The census for 1860 showed a total
national investment in industry Of
$900,000,000, and total industrial out
put Of $1,700,000, 0,000 These resources
remained in great part untapped in
1862
The disappearance of specie obliged
the government to issue "shinplasters, ;"
small paper currency. Postage stamps
we're in common use for small change
Pennies coined out of nickel made their
appearance. Later these worn postage
stamps were repudiated by the govern
to the unfortunate holders. Interest
rates ran exceedingly high in spite
OF the plethora of paper, because in
tercst was payable in gold. Rates ran
as high as 10 per cent and bonds sold
as low as o6.
In January, 1868, Congress provided
for National Banking System, and
authorized the issuance of 100000, 900
addltlonal ao government notes, and
$500 100000 in current SO bonds and
S600,000,000 bonds for issuance in
1864, also s40O,000,00o in go Treasury
notes, legal tender, redcemable in gov
ernmcnt notes, also S1500O0,O0O addi
tlonal government notes. The taxation
of state bank bills now sounded the
death knell of state currency. If the
investing public rose to the situation,
and II the people gave moral courage
to the new National Banking system,
the financial crisis might pass.
From Charles Summers speech in tho
Senate, in 1864, we get this remarkable
parallel between Civil War banking
conditions and our 1917 railroad con-
ditions:
THE measure under consideration
seeks to create new CURRENCY bv a
system Of national banks which shall
supersede the existing state banks as
agents of currency. I entreat you not
to allow these national banks to be
sacrificed to states rights by exposing
them to state taxes.
State banks are not competent to
meet the present crisis. We must have
another system, especially at time of
national peril. The state banks are in
the way. 1t is no longer expedient that
state banks should have the power to
issue money.
colbert founded the commercial
system Of France; Peel founded the
fiscal policy Of Britain. The present
Secretary of the Treasury may boast
in the end that he gave new cur
rency to this country.
".An improved currency will be like
a new levy of national troops-a new
navy ahoat.
"Wc have been warned not to slav
the goose that lays the golden eggs,
meaning by this goose the state banks.
But there is another bird Of mightier
plumage which lays such eggs as no
state bank can hatch, eggs not merely
of gold, but Of victory. 1t is the na-
tlonal credit"
Meanwhile. the vast sources of ma
tlohal wealth had been tapped by jaw
Cookies bond distribution methods. In
1861 he tried it in the face of the Bull
hun disaster. In 1862 he had restored
the credit of the government with re-
spect to ITS bond issues by exhibiting
TO the world the confidence of the peo
pic IN their own government and
destiny.