Year: 1874




intent of the trainers oft substitute, they
have shot very wide Of their mark. Re-
sumption may be the name Of the play, but
that character Is wholly forgotten in its
composition. A careful analysis of. the bill
discloses al the features that could be
wished for by the most ardent of imitation
lists, while the hard money advocates are
put off with provision leaving it optional
with the Secretary of the Treasury three
years hence to redeem the legal tenders in
coin or five per cent. ten-year gold d-bearing
bonds. Can. anyone doubt, after three
years of unlimited expansion, what the
option of the Secretary would be at the end
of that timer With gold at fifty per cent
premium-and the bill ma5esno provision
q for any accumulation of coin for the pur-
pose of fredemption-whatw will be the pros
pect of any option1 Is not the exchange
of bonds for greenbacks a foregone con-
clusionH


The one fourth Of coin isterest required
to be retained by the banks would in three
years amount to about eighteen millions.
And this is to lie unemployed in the vaults
ofthe banks, adding nothing to their prac-
tical strength, because they cannot use 1t,
and they are obliged to continue the hoard
until the day of specie payment arrives.
The tendency of this provision is to make
money scarce.


If the reserves, which are now allowed
to be held in New York and other redemp
ton cities, were actually and literally held
in reserve. as the law would seem to con
template, the letting loose of one half Of
them by this bill. amounting to fifty or
sixty millions, would involve an immediate
and dangerous expansion. But if the full
amount of these reserves, as now seems
most probable have been all along loaned
out upon CALI to aid in the speculations
of stock gamblers, what will be the imme
diate effect of releasing the one half to enter
legitimate business channels-.hlt which
secures the circulating notes-and packing
off the other half-Which secures the de-
posits-in grecnbaCks to be locked up in the
vaults of the various proprietary institu-
tions7 Perhaps but few of the members Of
the present Senate can preserve vivid re-
collection of the removal of deposits by
Gen. jackson, and the widespread disaster
resulting from the revRlsion which that act
occasioned. But the immense change of
deposits proposed in this bill. equivalent, if
onr supI,ositias, that all the
serves have heretofore been used as the
basis of loans, to the locking up in the vaults
of the country banks for the pretended Sc
curity of depositors of something over fifty
millions. If the paying out of twentysix
millions ofthe greenback reserve last autumn
had the effect to appreciate gold eight per
cent, what will be the effect of withdraw
ing from the money centres and locking
up fifty millions within ninety days?
When General jackson changed the de-
posts he alsO at the same time, ordered
that coin only should be received in pay
ment for the public lands, thus causing an
immediate demand for coin when it was
most difficult to obtain. In imitation of
this policy, the trainers of this substitute
insist upon the banks boarding their coin
interest when they have no demand what |
ever for it, thus adding to the scarcity Of
gold some six or seven millions per annum.
These changes would precipitate a panic
far greater than the one of September last.
1t would probably break nearly all the
banks as well, for deposit in New York
to draw against in the sale of exchange is
to them a necessity. Now, their reserve
deposit answers double purpose-that of
fund to draw against for exchange as &C.
casion requires, and that of the reserve
which is required by law. Besides, these
deposits pay the banks a low rate of in
terest If this Dill passes, requiring them
to keep fifteen per cent of their circulation
idle in their own vaults, they will still be
obliged to keep deposit in New York, or
sacrifice their exchange business VIII
not this change, therefore, be equivalent to
contraction of fifteen per cent. of their
circulation?


Again. the clause requiring Government
to redeem circulation is utterly impractica-
ble. II wo4d involve great expense in
counting and transportation, for it is hardly
to be supposed that banks will entrust Gov
ernment employees with the redemption
and destruction Of notes without oversight.
They must either have an agent here then
or transport the redeemed and mutilated
currency home again for count or reissue.
The five per cent. redemption fund under
this substitute added to the fifteen alluded
to above will make contraction of twenty
per cent, or one fifth of whatever may be
at the time the aggregate of circulation of
the national banks Within the next
ninety days it would involve contraction
upon the hypothesis that the present re-
serves all enter into the money market in |
the shape of loans-of no less than seventy
millions No one doubts that this would
break every merchant in active business,
and ultimately every bank in the country.


The enly compensating means Of preven-
ton provided by the bill is the repeal of the
limitation Of national bank issues. And of
these it permits the issue Of two dollars for
each one Of legal.tender notes retired until
the national bank issues shall have reached
i've hundred and eighteen millions, and the
legal tenders have been reduced to three
hundred millions, after which free banking
Is fixed fact-inhation triumphant. But
will it be possible 10 reach this point under
this billH Can we issue enough national
bank notes in ninety days to take the place |
OF the seventy millions of legal tenders re- |
quired to be locked up, and also to replace
the fifty per cent. which must be retired as
the new issues take their placer Can the
capital be found to take up, under the pro-
visions of this bill, the one hundred and
fifty millions necessary to keep good our
present volume of currencyf With the
promise made in this BILL that on and after
January 1, 1877, they shall have five per
cent gold-bearing bonds at par for green
backs, will bankers go now and pay fifteen
per cent. premium for them in order 70 OBJ
tain ninety per cent. Of their face in circu-
htion, twenty to thirty per cent. more of
which must be locked up as reserves and