Year: 1867




lI lsio What are Legal Tendersf ,5


"A lesaltender note is simply npte of hant


from the United States Government to the
holder. The inscription on the face of tht


note declares THAT the United States promise
to pay to the bearer the sum OF money ind


| Gated by the denomination of the bill The
note is not Therefore money, though by law
i it is made 10 perform some of the functions o


money. 1t is simply an evidence of indebted


ness. The legal tenders are counted every
month in the statement OF the Secretary the
/ Treasury as a part ofthe .debt bearing no in
terest" They are therefore symbols Of debt
bearing no interest and payable at no definite
| time. Such debt is forced loan, and the
law authorizing the issue OF legal tenders has
been appropriately though rather harshly cali


ed "a law for the collection OF forced loan
| Congress did perfectly right to pass such a
law The exigency of the hour demanded it


and the country was saved byit If31fig


But the law having been passed, the debt
| having been contracted, what Is now the duty
OF Congress? What class Of public creditors
| should first be paid, those who hold the inter
| est paying bonds of the Government, or those
| who hold the naked promise to pay? Necessi-
| ty knows no law. So long as the maturing
| debt of the Government absorbs the revenue,
SO long the promises to pay at date fixed
must in some way be met. but when the
condition OF the treasury will permit, there
| can be no doubt that those creditors who ex-
pect no interest and rely wholly upon the
honor of the Government for the redemption
| of its promise to pay the principal due them,
should be promptly relieved. That has been
| the policy ofSecretary McCulloch from the be-
ginning. He is now collecting in and destroy
ing these promises TO pay, at the rate OF about
ionr millions month. ,siF ,.u atqas tEa / p


There is an alternative which has found and
still finds some favor. 1t is proposed in some
quarters that the Government should go into
the banking business, recall the national
banking currency, and issue greenbacks to
supply the want thus created. In this way
every citizen would become stockholder in
the great national banking house at Washing
| ton, and the profits Of the concern would be
| applied to the reduction of the public debt
| Whether this would be wise measure OF not
| it is unnecessary now TO consider. 1t viii
never be adopted The traditions. and Gus
| toms OF the American people are opposed to
the establishment ofa agovernmentb bank. Right
or wrong, the people ofthe United States hold
the opinion that the function OF a government
is to coin money and not to buy and sell mon
ey. Our banking system in New England
was very satisfactory before the war, and we
prefer to have the business lett in the hands
of our friends and neighbors who understand
the wants and ways OF their several commur
mites laGaoaI IA1GdAa 4
| As it seems clear then that the legal ten
ders will remain as they are NOW, simple eyi-
denees.of an unpaid debt, what is to be done
about payment? Thepayment of these prom
ises will be equivalent to a general resump-
ton of specie payments, since the national
banks are already obliged to redeem their
notes in legal tenders How then shall we
reach this solid basis of specie payments R. To
that end we need first, to absorb portion OF
the legal-tender paper which the substitution
of gold would render superfluous; second, to
accumulate a reserve of specie; third, to fix a
definite date for resumption siain agii15
To meet these three requirements the New
York Nation offers the following plan, which
aims iii the right direction ii it does not hit
the mark.ii /. To absorb the supeffiuous' Gun.
rency, issue bonds desirable enough to sell
~ aac
market and not when money is scarce. The
| 10 40 FIVE per cent. bonds meet these condi-
| tions perfectly, selling in easy times little
above par and in hard times a little below,
2. To accumulate specie reserve, require the
banks to substitute the gold interest on the
United States bonds in which their capital is
invested, per cent. every six months, for the
reserve of greenbscks which they are now re-
quired to keep. 3. AT the rate of per cent


per annum the banks would have received in


four years "a per ccut. upon their capital, and
this sum, in addition to the surplus which the
Government might easily hold in gold, would
be amply sufficient for circulation Of $500.
100000, which is all that is now authorized by
law. II due notice were given OF compulsory
resumption in four years, sound bankers would
prepare Tor it in ample season, and the proba-
bility is that long before the appointed date
legal tenders and national notes would have
risen TO par and business would be re- estab-
lished ON a solid footing. For those branches
Of business in which we have to meet foreign
competition, for shipbuildingsparticu'arly, the
restoration of gold to its normal function as a
measure of values, is consummation which
cannot be brought to pass too soon. ''''