Year: 1873

gree of elasticity. If there be too


much of it for the legitimate purposes


of trade and commerce, it will flow out


of the country; if too little, the reverse
Will result. To hold what we have and


to appreciate our currency to that
standard is the


PROBLEM


deserving of the most serious consid-
Grafton of congress. The experience of
the present panic has proven that the
currency of the country, based as itisu up
on the credit of the country, is the best
that has ever been devised. Usually in
times of such trials the currency has
become worthless or so much depressed
in value as to initiate the values of all
the necessaries of life as compared with
the currency. Every one holding it has
been anxious to dispose of them on any
terms. Now, we witness the reverse.
The holders of currency heard it as
they did gold in former experiences of
a like nature. 1t is patent TO the most
casual observer that much more curren-
cy or money is required to transact the
Legitimate trade of the country during
che fall and winter months when the
vast crops are being removed than dur
ing the balance of the year. With the
present system, the amount In the coun-
try remains the some throughout the
entire year, and results in an accumula-
ton of all the surplus of the country
IN a few centres when not employed in
the moving of crops, tempted there by
the offer of interest on call loans. In
terest being paid, this surplus capital
must earn this interest paid with a pro-
fit. Being subject to call, it cannot be
loaned only In part at least to the mer-
chant or manufacturer, for fixed loan.
Hence, no matter how much currency
there might be in the country it would
be absorbed, prices keeping pace with
the volume, and panics of stringency
and disaster would ever be recurring with
the autumn. Elasticity in our money
system, therefore, is the object to be
obtained first, and next to that, as far
as possible, prevention of its use in
stock and other species of speculation.
To prevent the latter it seems to me
that one great step would be taken by


PROHIBITING THE NATIONAL BANKS


from paying interest on deposits, by re-
quiring them to hold their reserves in
their own vaults, and by forcing them
into resumption, though it would be
only in legal tender notes. For this
purpose I would suggest the establish
ment of clearing house for your con-
sideratiOn.


TO SECURE ELASTICITY.


To secure the former many plans
have been suggested, most, if not all of
which, look to me like imitation on the
one hand or compelling the government
on the other to pay interest without cor
responding benefits upon the surplus
funds of the country during the seasons
when otherwise unemployed. I submit
for your consideration whether this
difficulty might not be overcome by
authorizing the secretary of the treasu-
ry to issue at one time to the national
banks of issue any amount of their
notes below a fixed per centage of their
issue, say forty per cent. upon the
banks depOsiting with the treasurer of
the United States an amount of govern
ment bonds equal to the amount of notes
the banks to forfeit to the
say four per cent. on the
interest ACQUIRING on the bonds so
pledged, during the time they remain
with the treasury, as security for the
increase of circulation the bonds so
pledged to be redeemable by the banks
at their pleasure, either in whole or in
part, by returning their own bills for
to an amount equ l to the
face of the bonds withdrawn. l would
further suggest for your consideration
the prOpriety of authorizing the Ma
tional banks to diminish their standing
issue at pleasure, by returning for can
collation. their own bills, withdrawing
so many United States bonds as are
pledged for the bills returned.


FREE BANKNG-sPECIE RESERVES.


In view of the great actual cOntrac-
ton that has taken place in the curren-
cy, and the comparative contraction
constantly going on, due to the increase
Of speculation, the increase of manu-
features and all the industries, l don't be-
lieve that there is too much of it now
for the dullest period of the year. In
deed if clearing houses should be cs-
thus forcing redemption, it is
a question for consideration whether
banking should not be made free, re-
tanning all the safeguards now required
to secure bill holders In any modifca-
tiOn of present laws regulating the ma
tional banks; and as further step to-
wards paying the way for resumption of |
specie payments, I invite your attention
to the consideration of the prOprietv
of exacting from them the retention, |
as a part of their reserve, either the
whole or part of the gold interest ac-
cruing upon the bonds pledged as secu-
rity for their issue. have


NOT REFLECTED ENOUGH
on the bearing this might have in pro-
ducing a scarcity of coin with which to
pay duties on imports, to give it my |
positive recommendation, but your at |
tention is invited to the subject.


INVERSE CONTRACTION.


During the last four years the curren-
cy has been contracted directly by the |
of three per cent. certif-
Gates, compound interest notes and 7;2O /
bonds outstanding on the 4th of March, /
1869, all of which took the place of le-
gal tenders in the bank reserves to the /
extent of S63, 900, 900. During the same /
period there has been much larger /
contraction of the curren- |
CIV. The population of the country has /
largely increased More than twenty |
five thousand miles of railroads have |
been built, requiring the active use of /
capital to operate them. Millions of |
acres of land have been opened TO Guilt |
vatiOn, requiring capital to move the |
products. Manufactures have multi |
piled beyond all precedent In the same
period of time, requiring capital week
ly for the payment of wages and for the
puICudAS5 VI LAo'CAlaAS ANU pLODhD1y Jue
largest of all was the comparative con-
traction arising from the organization of
free labor In the south. Now, every Ia
borer there receives his wages, and for
want of savings banks the greater part
Of such wages is carried In the pocket
or boarded till required for use.


These suggestions are thrown out for
your consideration without any recon-
mendation that they shall be adopted
but hoping that the bestmeth-
od NAV he arrived at TO secure such an
of the currency as viii keep