Year: 1868

The practica sense of commercial and financial
circles all oyer the world, and through many CEN
turies. has decided that banks are essential to
the public convenience and are even
public necessity. But banks must be invested
with the power of issuing their own notes,
in order to keep them in profitable operation.
1t is not likely that this long established conviction
is going to suddenly give place to anybody's crude or
ingenious theory of better plan to secure similar
results And thus the long threatened scheme OF SUD-
stitutng greenbacks for the existing bank note cir
culation which still agates Congress, and was the
theme of elaborate argument of Gen. Butler at the
opening of the session. must fall to the ground


The scheme is broached though it would be
about as easy to overset 1900 banks doing business
all over the country with their endless and intricate
business notifications as it would to slide so many
bricks out of the tail of cart. pure bullionist
if such is to be found, need not object to such a
policy if it were capable of accomplishment Except
for its fOlly) with the system ofmutual exchanged
bility established proposed to wit: the greenDack
to be always redeemable at the Treasury in coin
bearing bonds, and, rice uersG, the greenDack
always obtainabe for the same bonds. 1t is the
pleasing conception of the advocates of the plan that
this exchangeabty feature would always relieve
the circulation of any plethora which might at any
time exist and, what is of even greater consequence
would always the country against the scarcity
of the circulating medium. The first part OF the
conception might be realized 1t would be in the
natural course of things to run home a redundant
circulation, and receive specieearning bonds IN lieu
of it. But the redundancy having disappeared by
this process, and the currency, it might be, made
scarce i'm this way it could be rendered what
would be called plentiful again, by process which
looks entirely TO the exchange of invested capital
like that Of Government securities, drawing SIX per
cent interest or even five per cent in specie, for
money For this reason, the moment the value OF our
consolidated debt to par, in coin which would
be very soon after our credit is fully reestabished,
our circulation would be on specie basis and when
our bonds became thus valuable, there would be no
more object in exchanging them for greenbacks than
for coin The circulation would conform itself TO
that state of things. and become as infexible as
a coin circulation itself When the rate of interest
fell below the rate borne by the bonds as 1t some
times would, we should then experience even worse
state of things than though had specie circula-
ton only For the greenbacks would be returned to
the Treasury till they became than con The
upshot would be that we shOuld thus find ourselves
supporting an artificial paper currency bearing pre-
MUM in specie OF coursei it would then. during this
period of appreciation longer be used as crcula
ting medium and hard money would take its place. Is
it worth while TO institute paper money machinery
that would produce absurd q result as this But
thus it is and neoessarilymust be- with all schemes
to support the uniform standard of value established
throughout the commercial world with view to
found better system. We may invent, and devise,
and try to circumvent the natural laws this sub
ject to the end of time and shall end just where
we began. There can be but one universal standard
of value and the attempt TO substitute anything else
for it will inevitably fail; legisate how you will,
contrive how you WILL this standard thrusts itself
among all your contrlyances in season and out OF
season; and, whether you will or no, regulates and
measures every commercial and financial transaction.
In spite of every effort in defiance of every law to
prevent it, there will be for every commodity Of
trade and to every financial engagement actual,
positive and irresistible specie value Pile legisla
tive enactments mountain high, saying there shall
not be, and it will be all the same.


We wish to make one other observation on this
Congressional project to dispense with the banks and
substitute the notes of the Treasury for bank bills.
Its great enticng feature is proclaimed TO be that 1T
offers to the business world the simplest possible pro-
cess of making money plenty whenever it is scarce.
This is by making it obligatory on the Treasury TO
issue greenbacks for government bonds whenever
they are demanded.


But this plan will not work, for this reason: The
men who want to borrow money are never the men
who have their pockets stuffed with United States
bonds The money borrowers are the merchants,
the manufacturers the producers, whose capital is
invested in their business The only securities which
they have to offer their own notes. the notes of
their debtors their domestic or foreign exchange.
These may be all of the very first class such any
bank or banker would be glad to get; but they
would be no better than so much waste paper when
offered to the Treasury. Even a rich mans notes
might go 70 protest every day in the year. if he had
no but the Treasury, operating the basis
of this exchangeabty feature.


1t is strange that these ingenious theorists overlook
such palpable considerations as these.


What trade and commerce need are agencies which
will take the notes of men of business, and give
money for them. That is the commodity they have
to offer in exchange for money; they have nothing
else. How idle to say to them bring along Govern
ment bonds and we will furnish you all the money
you require. The merchant might just well be asked
to furnish bullion gold coin security for the
money he wants TO borrow. The security demanded
is what he does not deal in. The requirement is
equivalent TO insisting that aman shall be capitalist
before he becomes merchant.


With the banks demolished the money borrower
would find himself without any more ability to bor-
row than if we had only currency of gold and silver
The reenback under any system Of redemption,
would become just as unelastic as coin.


II is the one great and useful function Of the bank
that it plants itself in every little mart of trade and
offers its money to everybody who has good note
draft to sell. And these notes and drafts daily
maturing, it can every day take new In this
way the moneycirculation of the country furnished
by the banks is elastic and flexible and responds ex
actly to the wants of business when it is in natural
and healthy state The Treasury note can never act
as substitute for the bankbill. in ordinary times,
unless the Treasury turns banker and sells its green
backs for the kind of securities that the bank
takes for its bank notes Nobody will pretend that