Year: 1877

day, would not adjourn without reaching
some definite conclusion as to the part
which it is expedient for the national banks
to take in promoting the resumption of
specie payments That conclusion, reached
another column. 1t would be practically
impossible for the government to resume on
January l, 1879, against the united opposi-
ton Of the banks. 1t is desirable that these
powerful institutions should not only
refrain from obstructive measures, but
assist the government in its great
task by intelligent and helpful co-opera-
tion. Whether the plan proposed by Mr..
George S. Coe, President of the Exchange
National Bank, is the best that could be
devised may admit of question but Mr..
Coe has still rendered an important SER
vice in calling attention so prominently to
the necessity of concurrence between the
Treasury and the banks.


We think Secretary Sherman has made
too light of the obstructive power of the
national banks. It is a danger which he
may not have to confront, but it is his duty
to measure it and take precautions against
it. He cannot very well afford to depend
on the forbearance of the banks in matter
which SO nearly touches their interests.
Their opposition would bea great deal more
potent and formidable than it would have
been prudent for Mr.. Coe to set forth, since
n full statement by him might have had an
air Of menace inconsistent with tender by
| ha hoV of fhoir ~,
But, as Secretary Sherman overlooks or
undertakes the facts, it may not be out of
place for the press to state them in their full
force.


In order to understand the situation it is
necessary to bear III mind that Nh. Sher-
mans preparation for specie payments, as
explained by himself, consists merely in ac-
cu,nulating gold reserve of one hundred
million dollars or more, and that the
amount of outstanding greenbacks on Janu-
cry l, 1879, is likely to be about three hun
dred and forty millions. Of course he does
not expect that with hundred millions of
gold be can redeem three hundred millions
of legal tender notes. His expectation is
that when the volume of greenbacks
is reduced to less than three hundred
millions they will be at par and that there
will be no longer any motive for offering
them OF the Treasury for redemption. This
is venturesome and probably mistaken
calculation. It can be verified only by the
voluntary forbearance Of the national banks.
These institutions are at full liberty to sub
stitute gold for green backs in the reserves
they are required to keep by law. There
are obvious reasons why they should prefer
gold when gold becomes equally cheap. It
will be for their interest to send their green
backs to the Treasury and exchange
them for gold as soon as the Treasury
opens its doors for redemption. Now
the greenback reserves of the national
banks, on January l, 1879, will be nearly
double the gold reserve then accumulated
in the Treasury. 1t will, therefore, be in
the power of the banks to drain the Treas
ury of all it's gold at once and force sus-
pension of specie payments within five
days after the experiment begins. If any
considerable portion of the banks avail
themselves Of this legal right there will at





all to get their several shares Of the gold
before it is exhausted, and in this
scramble several thousand brokers will
join. The consequences would be an
utter breakdown of resumption in the
first stages Of the experiment, accompanied
with universal shattering of public conf
dence. 1t would be insane for Secretary
Sherman not to take precautions against so
fatal possibility, and the only effectual
safeguard lies in such an agreement or un-
derstanding with the banks as will secure
their cooperation by motives Of interest


Besides, Secretary Sherman must not ig-
more the dangers which threaten him on the
side of Congress. The democratic party is
pledged to repeal the law fixing the date for
resumption. They demanded it's repeal in
their national platform last year and the dem
ocratic House passed an act to that effect
The same party has control OF the new
House, and the republican majority in the
Senate has been reduced to a slender mar
gin Of less than half dozen votes. So
many of the Western republicans are op-
posed to immediate resumption that the
Senate cannot be relied upon to prevent
repeal Of the date. TO be sure the Presi-
dent might, and probably would, interpose
his veto. But with the President on one
side of this question and majority of both
houses on the other resumption would lack
the moral support which is indispensable
to its success. In such state of things the
banks would be encouraged to exhaust the
government reserve of gold as soon
as it was opened and the experiment
would speedily end in disastrous fasco.
With majority OF the House pledged
against resumption in 1879 it would be i'm
possible to carry an act through Congress
compelling the banks to maintain their re-
serves in greenbacks, and unless they do
oithnr iax. u Linn Or from