Year: 1878

NOTES md COIN.


Secretary Sherman has taken another very
important step toward resumption. All Col
lectors of Customs have been informed that
on and after January 1 they will treat legal
tender notes precisely as coin cerflhcateS
have been treated. Mr.. Shermans elrcu-
lar has the merit of giving both
the authority and the reason for the
contemplated change. After referring 10
the Resumption Act, which requires that
after January 1 the Secretary shall redeem
in coin the United States notes then out
standing. the circular says: "By reason OF
"His act YOU are authorized to receive
I" United States notes as well as gold coin
"apd standard silver dollars in payment
I" of duties on imports on and after the
"1st day of January, 1879. Notes thus re-
"celved will in every instance he deposited
"with the Treasurer or some Assistant
"Treasurer of the United States, as are
"other collections of duties, to be redeemfd
from time to time IN coin on Government
" account, as the cORrenienee Of the SER
"rice man require.r In these few words
of royal cOmmOn-sense, the Secretary
disposes of vast deal OF fustlau
which some hypercritical persons have inflicted
upoD the public. Whenever the Government
is reouired by law to redeem its notes in coin,
it is by any cOmmOn-sense CONSTRUCTION
Obliged to receive the notes III place OF com
for anv purpose for which coin has been pre-
viously reouITed. Surrender Of its notes to the
Government then becomes payment OF coin
Indebtedness and redemption of the notes, IN
one act, so far as the people are concerned.
We have never been able to see the force OF
the reasoning that the Treasury ought to re-
caive nothing but actual com for duties, after
RESUMPTION, because it gave a pledge to re-
ouire navment of duties III com where
the notes were not redeemabe. Ii Is
the right of any nOte-hOders, who have du-


ties to nav, to ask any Collector to redeem
the notes in order that they may have the
coin for use. 1t is clearly within the power


of the Secretary of the Treasury to empower
any Collector to redeem notes thus presented.
But il would be mere nonsense to require
payment of coin for notes in order that the
very same ccin might be instantly paid back
for duties.


Within a few days, the relative demand for
gold coin and lcgal-tender notes has so COM


pletely changed that many important trans
actions are already mentioned, In which


persons have either delivered actual coin
to the Treasury, requesting notes in


stead. or have received at their own re-
ouest large sums in legal-tenders in
satisfaction of claims legally payable in gold.


In every such case the note is actually pre-


ferred to the coin which it represents to
the receiver, it is really more valua-
ble than the coin. Between notes issued
under such circumstances, and notes held in
circulation only because no one will give coin
for them, there is as wide difference both
theoretically and practically as there pos
sibly can be between specie payments
and forced use of Irredeemable paper
currency. Yet many persons, IN the
intensity of their zeal to get rid of
a bad currency, have quite lost sight of the
fact that q strictly representative paper diff
fers radically and essentially from promise
to pay at any future time, named or not
named. The representative currency will re-
main in use because commerce and industry
caIifnt get along without it; the uDredeemed
promise, on the contrary, remains in use only
because commerce cannot get value for it.
Ignorance of this difference, apparently, has
led to q great deal of the lamentatiOn uttered
ON account of those provisions of law which



hermit or require continued circulation
of notes after redemption. The Gov
ernment cannot keep in circulation
single dollar more than the receivers or holders
may prefer TO the coin, and if they prefer the
note, and demonstrate the fact by refusing to
ask redemption of it, no mischief can be done
by such a circulation, strictly representative
in character. Such note is no longer a prom
lse it IS an evidence of value obtainablc on
demand.


One practical effect of this distinction will
be made very clear it is probable, when the
order of the Secretary goes into effect. There
will be no demand whatever for silver. No


body can make anything by paying it into the
Treasury for duties, because nobody can get q
standard silver dollar from the Treasury at less
cost than gold or paper dollar. Nobody
can make anything, for the same reason, by
getting silver for the payment of workmen
or the discharge of debts. IL some banks ac-
cumulate little silver in order to be pre-
pared to arrest any possible run upon
them, they will be careful to conceal