Year: 1870

States of the West-tbe majority OF
Senators and Representatives being
from those States having less shan
one seventh of the whole circulation
This endangered the whole system,
and would inevitably overthrow it
unless it was soon corrected.


Sherman referred to the advantages
of the National Banking system over
that of State Banks, which with the
correction Of the Injustice of distrib
ution would be the best permanent
banking system that could be adopted
The West demanded more circulation,
and were deprived of it by a viola
tion Of law. The States enjoying its
monopoly demanded a contraction,
yet was not willing 10 yield the West
one dollar Of circulation for three
years. 4 remedy for this had long
been sought During the last Con
gress the Senate and House
each passed bills recalling from
some of the Eastern States a
portion of their excess for dis;ribu
tion Ia the West and South, but there
was q difference as TO the manner 2ad
extent in doing it. The House in
sisted upon its being made general,
and the Senate consented only to
partial distribution, not exceeding
forty million. Objection was made
that the Eastern banks we're inno-
cent of fault, and the Withdrawal of
their circulation would derange busi-
ness aud iDhict greater evil than the
one now existing.


The Committee on Finance made
the following suggestion to the PFesi
dent and Secretary Of the Treasury.
proposing to increase the limits of
bank circulation forty FIVE millions
dollars, the circulation to be distrib-
uted 10 the Southern aad Western
States, which was the proposition of
this bill: The fir objection was that
this was an expansion of currency, to
which the Committee was opposed, and
Sherman said in no eveut during
the suspension of specie payments
would be favor a proposilioR to in
crease the banking circulation, with
out withdrawing the circulation In
another form. TO avoid thcexpan-
sion of the currency. two measures
had been proposed. First, the with
drawal of the greenbacks, but this
plan weuld not receive the sanction
of the House. The other plan was
the one adopted by the Seuate Com
mittee, the withdrawal OF the three
per cent. certificates now held by
the banks as a part of their
circulation 10 place of legal tender
notes. He then gave the history
Of those three per cent. certificates
which were substituted for compound
interest notes, and were temporary
expedient to avoid an increase of the
bonded debt They were the least
Objectionable, being payable on de-
mand. They might be presented to
the Treasury when most inc01ve-
nieut. They draw interest, and
are mainly held in Eastern banks.
where the circulation is in ex
cess. By their payment the United
States saves three per cent interest;
and will not three per cent. taxes on
the new banks to be organized,
thus leave the curreocy without eithe-
expansion or contraction?


The remaining propositions Of the
bill authorized, he said, free banking
or coin notes. This was an inaugu-
ration of the true system Of banking,
embracing absolute security 20 tn
note holder and the United S ates.
The attempts of private corporations
as banks to derive fex bility to cur
rency, and to meet the ebba and flow Of
exchange in IT'S redemption on de-
mand in gold coin, and freedom from
monopoly and restrictions, except
such as are necessary to protect the
debtors aud creditors TO be author
ized, will be organized only on the
Pacific coast or New York and the
South, where large transactions are
based on gold values