Year: 1874

CONTRACTION AND EXPANSION.


The discussion of the currency question
in the Senate yesterday developed the fact
that there is general desire on the part of
Senators to arrive at just and equitable
financial policy, which shall be uniform in
its operation and permanent In its character.
To attain this desirable conclusion q COM
mendablo spirit of compromise was evinced
"A disposition to yield something of pet
schemes and favorite theories, which will
go far toward producing harmony regarding
essentials. This is one important point
gained. The next is to ascertain and agree
upon the precise difficulty with the present
system of currency. Having done this, the
simplest possible method of correcting that
difficulty should be applied.


The complaints against the present ma
tional banking system are, first, limitation
of issues and second, the monopolizing of
circulation which results from that limita-
ton, thus debarring certain sections from
the enjoyment of their proper quota
of local banking facilities. No one
questions the entire safety of the system
in SO faT as the circulation of the currency
is concerned, and it is also conceded on all
hands that we have never before had
paper currency that was of uniform value
in every portion and section of the coun-
try. In these two important respects our
currency is all that can be desired. Its
only drawback consists in its depreciation
below the coin standard, while it is secured
by gold-bearing bonds that command daily
premium in coin. And why this depre-
ciation2 Simply from the fact that these
national bank notes are made redeemable
in the irredeemsble due bills of the United
States Government, which have no fixed
date of maturity at which payment can be
compelled except in receipt of certain classes
of dues. 1t is impossible that the thing re-
deemable should command greater value
in market than its ST lndard of redemption.
Hence our national bank notes, secured as
they are by gold bearing bonds worth three
to eight per cent premium in coin, are to-
day twelve per cent. discount in the mar
ket. Virtually gold-notes, entirely secure,
current in every section and corner of the
country, they are popular with the people,
and would command their face in gold, If
not dragged down by the deprecated Gov
ernment notes in which they are made re-
deemable. 1t is, therefore, plain that all
that is wanted to make our currency par in
gold is that Government should redeem its
greenbacks in coin.


Will Mr. Sherman s bill accomplish this
1t purports to provide for free banking; but
how is it to be brought aboutH If banks
organize OF once under it they must take
from s115, 600 to $120, 900 with which to
obtain 100000 in currency. If they wait
three years the bill assures them that they
shall have these bonds at par in greenbacks.
Who Will not loan his $120 900 the best he
can for three years and then purchase his
bonds for 800, 0O0t to deposit as security for
the 800 600 circulation? The banks derive
no profit now from circulation, but then
they will have this advantage of fifteen or
twenty per cent. lower prices for bonds.
Should this bill pass the banks may deposit
greenbacks in the Treasury, thereby releas.
ing their bonds, upon which they can real
ize fifteen to twenty per cent. premium; and
there is little doubt that they would do so
to the extent of s1oO. .OOO.0O0 per annum.
On and after January 1, 1877, they can re-