Year: 1874

WIS tlle Use OI SOllle new SClGullllC tlSCOftIy
his reply was, ''What is the use of new
born infant? 1t may become man." OF
the millions born many never grow up to USE
fulness, as in the vegetable kingdom there
are many blossoms which do not mature into
fruit. We think it expedient to give the en-
couragement of at least friendly hearing to
every new protector who has anything new to
offer on questions that agitate the public
mind, since in the multitude of such propo-
sitions something may perchance be sug-
gested which may prove a valuable contribu-
ton to public thought. We print to-
day the most striking portions of
somewhat ambitious letter to the chair
man of the Senate Committee Of Finance,
proposing and explaining q new path
to the resumption of specie payments The
subject is SO important that every writer who
assists US to look at it from new point of
view confers sort Of benefit, even if we are
compelled to condemn his proposal. 1t is a
service even to keep attention alive and
stimulate other minds to re-examine an i'm
portant question.


The central idea of Mr.. Friquets plan is
the complete substitution of government
currency for our mixed currency of green
backs and bank notes. He would have the
greenbacks withdrawn and replaced and the
bank notes also withdrawn and replaced by a
new and uniform currency, which, in his
estimation, would bring us to specie payments
at once. The retirement Of the greenbacks
being an essential feature OF his plan we will
first explain how he proposes to deal with
them He thinks they should be redeemed at
once but not at their face value. They are
really worth but about ninety cents on
dollar, and if the government were to make
immediate payment it ought in equity to pay
no more than their real value But he would
not have them redeemed in actual specie
Instead of this he proposes that they be
received in exchange for five per cent gold
bonds, bonds of this description being at
present. very nearly at par. According to
this plan any person might purchase $1OO
five per cent gold-bearing bond for s11O in
greenbacks, and Mr. Friquet thinks it prac-
ticable to fund all the greenbacks in this
manner. Supposing this done, the result, if
nothing further were in contemplation, would
be simply the conversion Of the floating
debt of the government into funded
debt, with a slight contraction Of the
currency. But Mr. Friquet does not
have these bonds Immediately deposited in
the Treasury and ninety per cent of
their amount issued to the owners in the
form OF new currency redeemable by
the government on demand in gold. The
| effect of the change up to this point would be
merely the substitution for the irredeemable
greenbacks Of new redeemable currency in
ferior in amount but equal to gold in value


But if the plan stopped here it would amount
to little. 1t would merely transform the
| greenbacks into an equivalent of gold certifi-
Gates, and derange the currency by making it
consist of two kinds which could never circu-
late together But Mr.. Friquet's plan requires
complete withdrawal of the national bank
notes as well as of the greenbacks, and the
replacing of both by a uniform paper currency
The banks would have to surrender their
present circulation and receive instead notes
issued on the simple credit of the government
and payable on demand in specie at the
national Treasury. They would rest on
somewhat different basis from the
present bank notes. They would resemble
the present bank circulation by pledge Of
government bonds for security, but would
differ from them in the circumstance that the
banks would be under no obligation to re-
deem them. The banks would have to keep
no reserves to meet them, and the holders
could always get specie for them at the ma
tional Treasury. Every bank could receive
as much Of this new currency as it chose to
employ on simple pledge Of the requisite
amount Of bonds. The safeguard against an
excessive circulation would consist in q new
feature-which we incline to think the really
valuable part Of the plan, if it has any value
which abates the interest on all bonds pledged
for the security Of circulating notes. Mr.
Friquet thinks the whole public debt could
be consolidated into uniform five per cent
bonds. and in this supposltion he is no
doubt correct. While these bonds were de-
posted to secure circulation we would have
the interest on them drop from five to three
per cent, thereby creating o motive for
Withdrawing them, and with them CORE
spending amount of circulation whenever
money was abundant and the rate Of interest
low. BY this scheme there would be two
checks on o redundant circulation. One Of
these checks would consist in the converti-
bility of the notes into specie at the pleasure
Of the holders and the other in the interest of
the banks to withdraw their circulation when
the loss of two per cent on the pledged bonds
could not be made up by the interest on loans.


We can perceive many practical objections to
this plausible scheme, but it is SO novel and
suggestive that we are willing to submit it to
the financial thought of the country without