Year: 1878

of great service to the government in


this process of refunding by negotiating


and absorbing q avery considerable part


of the new issues. Should the National


bank system continue there is no doubt


that the present rapid reduction In


the burden of interest will continue, but


il the National bank system Is to


be abolished, and an additional amount


of United States notes is to be issued,


all hope of reducing the rate OF interest


on the public debt must be abandoned.


Twenty-one million dollars yearly may


be saved to the Government by funding


the five and six per cent bonds into four


cents, while the amount which 1t is


claimed may be annually saved by the


repeal OF the National bank act, and the


issue OF $500, 100000 of unconvertible


Treasury notes, is Sl3,OO0,0O0 only.


With the issue of this large amount of


Government notes, the funding of the


public debt will be rendered impossible,


ior the pledge of the Government will


then be violated, and its credit


permanently injured. Which is wiser


course? To continue the work offunding


the debt, which has so successfully pro-


gressed during the present year, thus


saving greater amount Of the interest


named, while adding to the credit of the
country or to attempt by repeal Of the


National bank act to save the less
amount, and at loss as well OF a repu-


tation and credit? Is there not danger


that the attempts to remove any imagi-


nary evil may be followed by an intro
duction of real and much greater evil?
Success in funding the National debt


through the cooperation OF 1000 Of the
principal monetary institutions of the
country may be assured, but the effects
of the issue of large amount OF IRE
deemable government CURRENCY can not
he fOretold. 1t is not probable that ad-
ditional legal tender notes can be Consti-
tutionally issued. II, therefore, treasury
notes shall be substituted for the present
national bank notes, it is doubtful if
they can be made legal tender in pay
ment of debts. Two kinds of treasury
notes will be in circulation. one OF which
will be full legal tender and the other
not even between the National banks,
as is now the case with their own notes.
The full legal tender notes will be OF
greater value than the other class, un-
less both are alike redeemable in gold ut
the commercial centres. 1t is believed
by the Comptroller that this proposed
substitution is impracticable and
that the repeal OF the National


Bank Act will result, not in
an additional issue OF treasury notes,
put in the restoration of state systems
similar to those which were previously
in operation. In regard to resumption
the Comptroller says: Congress has
fixed day for the restoration of specie
to the standard, and the legislation
needed il that which will not overthrow
but cooperate with the present we'll
managed monetary institutions OF the
country in accomplishing this result.
When this is done the present
banking system, il then thought
desirable, may be modified without
danger to the creditor or the business
and commercial interests OF this great
nation. Then follows the table show
ing that the amount OF reserve held on
the lst OF October last was greater than
that required by law The Treasury De-
partment owns $40, 100000 of coin,
which is equal to more than 40 per cent.
of the entire issues OF legal tender notes,
and is available for their redemption,
while the banks hold nearly One-thiri
of the legal tender notes. II, therefore,
the banks Of the country cooperate
with the treasury, it is impossible that
resumption shall fail; but even il the
cooperation should not universal, it
could not affect the ultimate result, for
if any considerable portion of the legal
tender notes be exchanged for coin Tor
the treasury and withdrawn from use,
the notes will become scarce, and can be
forced into circulation to supply the re-
quirements of business and fill the gap.
The coin will soon thereafter be returned
to the Treasury in payment OF customs
duties and internal revenue taxes, and
offered in exchange for greenback coin
certificates, which will be more gener-
ally acceptable to the people, for the
same reason that the notes OF the Bank
OF England and the Bank of France are
preferred to coin.