Year: 1878

The Secretary and Resumption.


The course which Secretary Sherman will
adopt in his efforts to accomplish the re-
sumption of specie payments, though not
FULLY apparent is pretty clearly indicated by
his statements before the banking and cur
rency committee in the conferences he has
held with that body. He met the committee
again Monday, and In answer to inquiries by
Mr.. Chittenden, gave his opinion as to the
probable effect of the reconciliation of sill
yer upon resumption in January next. He
is inclined to believe that we can maintain at
par In gold no less than fifty millions of silver
dollars, and perhaps hundred millions. As
even the smaller amount cannot be coined
This year there will be no depreciation for
some time to come, and the Secretary is SAN
guine enough to believe that Congress will
stop the coinage of the cheaper metal as
soon as any great depreciation sets in.


The Secretary does not anticipate anv diff
Guilty in collecting and maintaining sufi,
clent coin reserve. He believes that with
such auxiliary legislation as is pending in
both Houses we can sell enough four per
cent. bonds to prepare for resumption. We
can certainly easily dispose of either 4 10 or
5 per cent bonds. Already certain bankers
have proposed that if the government will
sell them IL per cent. bonds, at par in coin,
they will guarantee enough coin for resump-
ton. So we are sure of the fund, and the
only question is one of interest on the bonds.
When 1t becomes clear that money cannot be
mad at four per cent. it will be time enough
to pay IL. The silver bill has crippled the
power of the Treasury to sell the low-interest-
bearing bonds, but wise savings bill that
enables it to deal directly with the people
will, the Secretary thinks, go far to repair
this. The Secretary further said that if there
was any doubt about the ability of the gov
ernment with its present means to meet all
the demands of the resumption act, there
would be no doubt whatever about it If he
were authorized either to issue a popular 4
per cent. loan, or to sell A 1-2 per cent. bonds
to the bankers. He had guarantees of all the
specie that could be required if he would sell
these IL per cent. bonds, and it should be
recolected that that rate of interest was low
er than had heretofore been known in the
history of this government.


As to the power to reissue the legal-tender
notes after the amount has been reduced to
$500, 100000 Mr.. Sherman contends that the
power to reissue is plainly given by section
347O of the Revised Statutes, and is not cut
off any more by the notes coming into the
Treasury in exchange for coin than in the
payment of tax. Even if the Supreme
Court hold them no longer full legal-tender
they are as much so as a bank note. On this
assumption he went on to show that all the
Government had to do in the matter of re-
sumption was to take care of some $500 OOO,-
600 Of legaltender notes, while the national
banks on their side were to take care OF the
national bank currency, and be undertook to
demonstrate that both the government and
the banks were abuudantlv able to do this.


In answer to the expression of apprehen-
sion that1he national banks may throw upon
the Government the burden of tho resump-
tion OF bank notes as well as of United States
notes the Secretary said: "The attempt
would be suicide. They are bound to redeem
their notes on demand at the Treasury with
United States notes or coin, and to maintain
in their vaults very large reserves of United
States notes. Any effort of theirs to force
redemption of their reserves of United States
notes in coin would at once cau.e the Gov
ernment to withdraw all Government deposits
from them. Such struggle as these gentle-
men contemplate would end in their losing
their power to issue circulating notes at all.
Their talk about forming line to break the
Government is not discreet and is not dan
gerous. am more concerned about what
you will do than about what they will do.
The United States government holds a larger
cash reserve for the redemption of its notes,
in proportion to the demand liabilities, than
any bank represented by these gentlemen,
and 1t has the power to increase 1t. Our GER
tlficates OF deposit, the most dangerous form
OF demand liabilities, are secured, dollar fol
dollar, by coin or United States notes actually
in hand, while the banks owe over six hun
dred millions to depositors, the great body Of
which is represented by notes and bills dis
counted. The only demand liability we owe,
not covered by actual cash on hand, is the
United States notes, and of these seventy
millions are in our vaults, and seventy mil
lions more the banks are bound to maintain
in their reserves. With coin reserve of one
hundred to one hundred and fifty millions,
the redemption Of three hundred millions ol
United States notes would be easy, and that
reserve could not be diminished to any con.
siderable extent by the banks or any combi
nation of bankers without a continuous
draft upon the banks to make it good. We
can rely upon the intelligent self-interest O
the banks to prevent such a struggle. Moth
ing would provoke it more quickly thar
threats by bank officers, and if such a struggl,
comes the government with Its reserve, will
ample revenue and the power to sell bonds


can easily maintain resumption without the


fear OF line Of bank cashiers anxious tC


break the Treasury or to force high rates o.
| interest,""


The course of the Secretary is certainly al


experiment, and one which has great chances


OF success, and brings no harm it it fails


lie should be permitted to make his attempt


Indeed there seems to be general dlsposi