Year: 1872

MIR. Woods Bill to Regulate tho Cur


rency and Money Market.


The bill which Mr.. Wood introduced in the


House of Representatives on Monday, 'to pre-


vent the contraction and expansion Of the


money market and to give elasticity to the


currency" would make the United States


Treasury banking institution and assign to


it functions and business never intended.


Congress may have the power to legislate for
such purpose, but the policy of doing so is
questionable. The bill authorizes and directs
the Secretary Of the Treasury to set apart
twenty millions in coin and to issue twenty
five millions of legal tender notes of denomi-
nation not less than one thousand dollars
forty-five millions in ALTO be loaned out at a
rate of not less than eight per cent interest
per annum, and the loans to be secured by
the deposit of United States bonds
Of the forty-fve millions there is to
be assigned to New York twenty. nine
millions, to Chicago seven millions, to Phila-
delphia five Millions and to Boston four mil
lions. There is to be O certain, though not an
exact proportion of coin and legal tenders to
each city. The loans are to be made for not
longer than one year, ''to any and oil corpora
tions or individuals who may apply for the
same, on the pledge of United States bonds"
The bonds pledged to be received at ninety per
cent of their par or face value for the legal ten
ders and eighty per cent for the coin loans. If
passed, the act is to take effect Immediately.


The loan of twenty millions of legal tender
thousand dollar notes and Of twenty-five mil
lions Of coin in the way proposed might give
some ease or stimulant to the money market
for time, but the whole would soon be
absorbed After this we see no provision for
regulating the money market, or, in the words
of the title to the act to prevent 'sthe contrac-
ton and expansion of the money market" 1t
would be simply an expansion at first, whereas
the professed object of the bill is to prevent ex-
pansion as we'll as contraction. The government
would derive an advantage to the amount Of
three millions six hundred thousand dollars a
year in the eight per cent interest it would re-
ceive in the loans; but is this a legitimate and
safe business for the Treasury to engage in2
It would turn the Treasury Department into
banking house. It would be new feature in
the financial operations of the government and
country. Heretofore we have regarded the
proper financial functions of the government
as limited to raising revenue, paying the dues
and expenses of the United States out of that
revenue, and providing a currency for the
country. The government has never yet, we
believe, gone into the loan business on inter-
est the same as our banks do. Such
on enlargement of the powers of
government interference with private business
and extension Of the functions of the Treasury
Department mag be productive Of more evil
than good. But if the government is going
into this loan or banking business why limit
the amount to forty-fve millions? Such a
sum would not 60 far in the vast commercial
transactions Of this country. But few individ-
uals or corporations, comparatively, could be
accommodated with loans. It strikes US that
the proposition is crude and :mpoliic, if not
fraught with danger in the end. The least the
government interferes with private business or
the money market, except to disgorge the
Treasury Of its enormous and superhuous
money, the better.