Year: 1865

shah he thought tat tle pubic interests wlu DC pro-
| ms pEsEnGAL Krrkcr sucu POWER.


The jadiois Of the power possessed BY the Bank
of England OF checking by advance Of the of In
tcres speculation, and the creation Of foreign
debt to be lquidatcd by shipments of coin, has fre-
aucuty prevented financial in Great Britain The
same power, prndenty and resolutey welded by the
banks Of New York unit would years past have
saved millions TO the United States Il may be many
held by the State banks in that city but they may
have II IN due time and when this is the tact no statu
tory restrictions should prevent them from using Tor
the benefit Of the country.


EFFECT or AN INFLATED CURRENCY.


Is frequently the that money is apparently the
most plenty when there is the least Of in circulation,
and the scarcest when has attained the highest pon.
before financial crisis An increase y ne crca@ sng
crculao and 20 ey act and react JPN zach Other and


re appears 70 bs no rednda~ey Of currency 20 na.ssr s
AND what supposed % Be raj property Is so'on 70 %
without a substantial foundation


The following extracts are from Mr. AcCuoch's last
report, which he made in November, 1904
GOVERNMENTS SHOULD NOT RANKERa
Governments should not be bankers. None has ex-
listed which could be safely trusted with the privilege OF
permanently issuing its notes money. Under
popular institutions like dangerous, more
coupag could be lodged in the hands ct he party
in possession Of gvernmsn none more paItcus to ?c,a
prbf and free elections Give to party dominant In the


legislative and executive branches Of the government the
authority of issuing paper money for the purpose OF fur
be restraint butts pleasure and what guarantee
would there be that this authority would be honestly and
III
ton OF the notes. and checks were provided to make
fraudulent issues impossibiy, the Poocr V issuing
government ponss as c.rcag MEDIUM Is zoe aamgsr s
traordinary circumstances


MONEY


Now, what is needed in paper circulating medium Is
that should b. ccnuebe into coin that should be
sufficient in amount to answer the purposes Of legitimate
business; hdt 10 should sa0t the hand, ty being
overiSsed encourage eUravdgance and speculation, and
give artificial and unreliable UdLus TO properly
a In Interrupt and unsets tile" values t should
be supplied just the extent of the demands Of healthy
trade should be increased the regular business Of
the country may require its increase and be dnshcd
as the pr per demand for it is di'ni'rishcd


II is not pretended that banks of issue have furnished
this kind Of circulation Bank notes ,cM cU ezceptons
hape been convertible into coin ,oes there demand
for coin, and tncoavertibLe Uhe there They have
generally been issued for the exclusive benefit Of the
bankers and not for the convenience of the public and
sion facilitate trade. II has been the bane Of
bank note circulation that has been expanded by the
avarce of the bankers and contracted by the disrust
that overssues have created.


GOVERNMENT IssUEs


Now, this objection to bank note circulation applies
with much greater force TO government issues There is
always inducement enough for banks TO keep up full
circulation and against excessive issues there the
srctions Of law and the liability TO redeem. Govern
ment notes. in the issue thereof would be regulated only
by the necessities Of the government er the interests n
creased altogether beyond the needs of commerce
and trade, thereby enhancing prices and inducing
sesSeed a. embarrass 'sy sn. and nre 80
cipitatc financial disasters They mould be incoapara,ly
crss IN this rep Ct tran bank noe currency because the
that should control circulation would be the
that furnishes 1t. Supplied by authority not In SYM
pathy with trade, they would not be accommodated
the requirements Of trade They might he the fullest in
volume when there the least demand for full cir
culaon and the most contracted when there
healthy demand for an increase They would eventually
become undesirable ccadGion because there would be
way IN which the redemption Of them could be
they would be under the control Of political parties
nveliaTe ciyrutio because having connection with
trade and commerce, they would not be regulated by
their necessities.


TaE EFFECT PLETHORA MONEY


When money is plenty, ana fortunes being rapidly
acquired, the country is always in fcverish and
healthy state. This is espec ally true at the present
tme The enormous expenditures OF the government,
and the great advances IN prices since the
mcnt of the war have made many persons suddenly |
rich, and upon fortunes suddenly acquired, have fol-
lowed reckless Expenditures extravaganza waste Specu-
laton taking the place OF sober and perseverng indus
try and thousands deluded with the notion that the
wealth Of the nation being increased by the increase Of
THE CONTROLLER NATIONAL RANKS
The naug ration of new system of banking, under
such circumstances is peculiarly hazardous, and have
been from the time OF my arp nmcnt, more apprehen
that many banks would be organized than that
the system would not be suicenty attractive 70 induce
Is the great borrower Its bligations compose large
portion of the discount line of the banks, which are
making large profits government securities ut little
apparent risk and the danger that the national bank
ing system with all its restrictions may, during the
peson OF specie payments and the continuance Of the
war; the plethora Of paper money and that when
the war is over the banks deprived OF the existing
mcans OF Investment in government obligations and |
fnding no legitimate use for their capitals may |
be tempted to them in encouraging operations that
will eventually prove to be Improbable to themselves
they will be injurious to the country For the double
purpose therefore, Of keeping down the national crcua
ton far has seemed possible TO do it, consistently
with the establishment Of the system throughout the
country and preventing increase OF banking capital
that might hereafter be instrumental In keeping up the
imitation and the =, ~ o. pay
10 be my duty TO discourage in many instances the
organization OF new banks, and in more instances TO
sanction 10 the increase OF the capital OF those
already organized. In doing so may to have
ciscd power not warranted by the act but If not
tanned by its letter have been by its spirit and
willing to let the future the
incorrccness Of my course
The expenditures OF the government have created
great expansion Of currency and of prices There would
have undoubtedly been expansion In less degree II
l. true but still an expansion, If the war had been car
RED on upon specie basis Prices of all the necessa-
res life well luxuries and OF everything which
must purchase in the prosecution Of the
war; are enormously high and the penalty Is yet to be
pid; the initiation, in increased taxation and the
ruin which must overwhelm the thousands who believe,
and act upon belief that the apparent prosperity Of
country real, and Is not to be interrupted. Foru
will the country be II tho war can be closed and
prices reduced former standards without collapse
which win greatly excel in the extent Of It's disaster
that winch occurred at the close of the last with
England the present war exccs that In costness and
magnitude.


riIE NATIONAL BANKS OUGHT REDEEM ssw YORK.


There are too many points al which The banks may
deem their notes ALI with the exception OF those in
Philadelphia and Boston, should redeem in New York.
RANKS siarLp PREPARE Return srkcfE pAyMrNrs


The banks OUGHT 10 be compelled by law TO retain
rar II not all the coin received by them for interest
their gold bearing bonds In order that they may be pre-
pared 10 their influence In favor OF return specie
payments and provisions should be introduced by
which. when specie payments resumed, excessive
importation Of goods be checked and dangerous ex
portations OF coin mav be prevented


FINANCE


OF the greatest importance that the national cur
rency system should be independent OF politics and freed
from political influences To effect this, and 10 facili
tate the business of the banks with the COMPTROLLER,
am clearly Of the opinion that the bureau should be madc
nm independent department and removed from Washing
ton To Philadelphia Now York


EXTRACTS PROM LETTERS INSTRUCTION. TO THE NATIONAL





Bear constantly in mind although the loyal States
PEAR supcrfciay 10 be in prosperous condition, that
such Is nc the fact That while the government II
gagged In the suppression of rebellion OF unexamplcd
aerccusss and magnitude and s constantly draining the