Year: 1861

wherever the Government extends. He also
proposes that they shall be redeemable in spe.
Gle at the respective Banks upon presentation,
and that they shall be accepted by the Govern.
ment 10 payment Of all demands except for du.
ties upon imports. l.u


IL ID cbvious to all the. bill thus capable Of |
being converted instantly into specIe, and at
the same time secured against loss from
the failure of the party issuing IL, must be OF
the highest value 10 the community at large,
protecting them from ruinous exchanges and
discounts, If the security Ia only sufficient l
have said that this security Is the highest
known to the Government: II is the pledge of
is own bonds; II is.its own contract to pay the |
money.


The Secretary Of the Treasury, in his very
able report, picturing tho immense resources of
the nation, and the ease with which, at much
earlier period of its history it freed tself from
an indebtedness proportionably as large as the
one now required, has shown US conclusiyely
that the capabity of this Government to pay
debts OF vastly greater amount than those
which II etpresent proposes to contract, cannot
DO doubted. With a revenue amounting, even
in these times, to nearly hundred million dol |
lara per year; with large and constantly in.
creasing industrial population, and with millions
OF acres OF land growing daily in value and in |
|
debtedness is beyond dispute. The only possible |
apprehension that could exist, then, OF the non-
payment Of these bonds would be either that oil
reputation on the rart of tho Government, or
d change in the form Of the Government But
the answer 10 that apprehension will, under the
system proposed by the Secretary Of the Tre6e-
ury, be found In every mans pocket. The peo-
| pie, who are the foundation of every Govern.
ment, would never consent to an act of bad
faith, or change iu the form of administra.
ton, BY which the currency in their own purses
would be rendered worthless. By accepting
auch currency, tho people at large would be-


come, in fact as we'll as in name, the creditors


Of the Government; and, If everything else


fliled or changed, their debt would have to be


paid Ia this view OF the case, the scheme


proposed would not only benefit the people by


giving them uniform paper currency, but


would actually give the Government an addl-


tonal element of strength, by uniting them


more closely TO O form Of administration upon


whose stability the value Of their own property


would depend.


Not content, however, with affording to the


people security against eventuai loss from the


paper currency thus recommended to them by


the Government, let every possible safeguard


be thrown around it which human Ingenuity


cah dev Sc, To strengthen the bonds upon


which they arc issued, let sinking fund be


provided by the imposition Of moderate direct


tax upon the people, sufficient to insure the


prompt payment OF the interest upon them; and,


in given number of years, to absorb the prin-


cipal. This alone would tend 10 prevent de-


probation in their market value to q very great


degree. The only thing which gives credit 10


the national debt of England is the fund pro-


vided by it's Government for the payment of the


interest thereon, The debt itself is known to
be worthless go far as the realization of the
principal is concerned; 1t is 30 large that 1t


never can be cleared off; but yet the knowledge


that it yields an interest fixed, permanent, and


sure, imparts to II real value in the eyes of
the people. They purchase it as On heritable


annuity, capable of being enjoyed By them dur.
ing life, and after death transmitted to their


heirs. So let the debt of tho United States be


provided for by fund set apart for that partio


ulsr purpose, rendering its creditors sure Of


their interest, and allow them to see It's surplus


accumulatiDg from year TO year, and there can


possibly be no decline in the value of the secu-


rites. This sinking fund could not only be


thus made to enhance the immediate value of


the bonds and provide for their gradual pay
ment, but il could be used to keep the paper
currency always steady. The value of paper


currency always depends almost wholly upon


its being capable of speedy transnluta tion into


metal,


If any one Bank, then, should fall under this


system, the Government, out of this sinking


fund, could Immediately pay to the holders OF


its bills their full value and reimburse the fund
at leisure from the sale of its hypothecated
stock. The holder, then, Of bill need not
wait till the tedious operation of windingup the
affairs of the Bank is performed. He can d:aw
his money Immediately from the Government,
, and the Government can protect itself against
. loss in any form by compelling tho Banks to
maintain such margin of securities in liz
hands as will enable it to realize the full value
of the notes issued by a sale in the market al
any time. The management of the surplus oil
this sinking fund, after the payment Of interest


should be LEFT, in large degree, to the discre
ticn of the Secretary Of the Treasury. Solit
advantages can often be derived from its pru
dent use in sustaining the market value of Gov
ernment securities. Mr.. Pitt and Lord Castle
reagh made use of the English sinking fund il


that way, at times, to the great benefit of tn,
= = country. Theee bills, thus secured and render
: ed easily convertible, should then be made q
q legal tender In payment OF debts in the places


where they are respectively issued.
q Having thus shown that the proposed scheme
), would not only aid the Government, but wOulC
a be q benefit to the community at large, it re
4 mains now 10 consider the effect which it woult
q have upon the particular institutions upon which
=. it is designed to operate. It would be difficult
4 to imagine any general law upon such subiec
q which would not de attended with cases of indi
# vidual hardship; but there are some points il
which the Secretary's plan would be OK sucl
4 plain and palpable benefit to the banking insti
q tutlons as class, that it is hardly necessary Il
o advert to them.


2 2 In the hrst place, it would tend greatly t.
. nrotect the Banks from the effect of that suddel
9 dread as to their solvency which sometime
. sezes the popular mind, and which terminate
n in what is called 'run upon the Bank" Th
\ holder of their bills, feeling himself secure a
4 to their payment, in any event, will not be i
that haste TO have them converted into specie
! which has caused so many suspensions, an
o has driven so many institutions into prematur
!. bankruptcy.


r In the next place, Banks which do businep
d upon q legitimate basis, issuing no more bill


than the state of their assets will wal rant, will
i be benefited rather than injured by the change
r. for, while they have correct substitute, o
;. equal utility, in their ordinary business, Wit
N gold and silver, they at the same time draw
"a fixed interest from their hypothecated bonds
q thus reaping all the advantages of a pei
q manent Investment of their capital, while the
i arc using tho same capital in their daily eI
q changes.


d The institutions which will suffsr the most ar
1t those which do business upon credit, that is I
10 say, those who issue bills in excess Of thei
e. assets, thus deriving profit upon false repre-
ut sentatioDs Of capital that does not exist Thee
l. Banks will by the operation Of the Secretary
e. plan, be obliged to reduce their business and oil
g. culation to legitimate standard. II is hardl
it questionable thas their private loss will, in th
III T..