Year: 1873

President Grant on the FInaucIaI Situation.


WASHINGTON, Oct. 12-The views of President
Grant on the financial question were expressed
in substance, yesterday, during a conversation
between him and the agent of the New York As
sociated Press -


In the first place he thought that the panic
generally through the country differed essen
TALLY both in cause and effect from any similar
event Of which he had knowledge. When snch
events have heretofore taken place distrust has
been occasoned as to the currency in circula-
tion. Every one in possession of currency would
rush to the banks with IL. or spend It in the
most liberal manner but now currency instead
OF being deprecated. ia actually becoming daily
more valuable.


In response to question, he said he thought
he saw in passing events the first
steps toward the resumption of spe-
Gle payments, for the reason that PAN
les generally occur when the country lacks
prosperity such as from the failure of crops,
over purchases from abroad, etc In this in
stance the panic has occurred in the midst OF
the greatest general prosperity. He believed he
was correct in saying that our exports since the
beginning of the present fiscal year have eK-
oeeded our imports, that, too, at time when
comparatively no cotton, the largest single item
OF exports. was moving


Everything we produce is in great abundance,
and the demand for it abroad is beyond the sup
ply we have to spare. Our manufactures are
prosperous. and many articles which have been
imported are to large extent not only being
produced at home, but we are actually compet-
ing in the supply of foreign markets. The aid
recently rendered in the purchase OF an unusu-
ally large number of bonds was not 30 much
real as moral. The fact is. the money corpora
tiOns OF the country had become stampeded, and
in turn startled and stampeded the whole coun-
try


Had not the Treasury seemed to aid in some
way the fright would have become more gener-
al and the consequences to the country more
fatal, AS 1t was, he really believed the effect
was going to be beneficial in many ways to the
country at large though the cost to some indi'
vduals deserving Of a better fate may be severe:
A return to specie basis can never be effected
except by shrinkage of values. This always
works hard to large class OF people, who keep
all they are worth In margins. This shrinkage
has now taken place.


Disasters to individuals have already overta
ken them and he sincerely hoped the advantage
might be retained In order to reach solid f.
nancial basis. Already the currency has appre-
ciated to about par with silver, and he wonder
ed that silver was not p uring out. When this
should take place his theory was that he coun-
try would absorb from 5000, 000OOO to 800 0O0,-
900 OF it. This would prove great benefit in
several ways. 1t would supply market for
number of years for product of our mines now
becoming drug 1t would take the place OF
$40, 000, 900 of fractional currency, about the
amount of change that experience has proved
to be necessary to the transaction OF business,
and will become the currency, Which Will Dc
boarded in small amounts.


He believed that silver once more In circula-
ton, greenbacks would never be at Il discount
for silver. ALI fluctuations from that point
would be in appreciation OF the value OF our pa
per money. As to legislation he said he had
thought much upon the subject and il he were
now engaged in writing his annual message to
Congress, he should recommend positive author
ity to reissue the ga QUO, 900 of reserve. free
banking law with the same protection to bill
holders as now, a repeal of the clause requiring
a reserve of the protection OF depositors. a per
c9ntage of the other reserve to be III gold and
that increased in regular ratio, while the whole
reserve could be in gold


This could be solely effected by requiring such
institutions to save the whole or large percen'
tage OF the gold interest paid 10 banks on their
bonds held by the Treasurer OF the United States
for the protection of bill holders. he also raw
ored an absolute prohibition to the payment OF
interest on deposits. He did not contend that
he would be right in these recommendations.
but they embodied the views which his unaided
retl. ctions had brought to him There was no
question but that much demoralizing and 1nJu-
rious speculation and gambling was caused by
the accumulation of capital in large centres dur
ing portion Of the year when money ID not re-
qnired for the moving of products by the pay
meDt OF interest on deposits.


This leads country bankers merchants ana
others to deposit III city banks, principally Ill New
York, to make their money earn something dur
ing the period when they do not wish to use II
Banks paving interest on deposits cannot afford
to hold the money idle, and hence gambling in
fancy stocks, millions of which, as an invest
ment would not support family even in the
most economical manner, the building OF rail-
roads that are not wanted, and which cannot,
for many years, pay running expenses. etc
Such gambling and speculation had, he
trusted, receiv ID blow from which he hoped
they never would recover. He said that
unless his mind should undergo change he
would recommend post office bank. This would
give an institution in which everybody would
have great confidence, within the reach OF every
one who can approach money-order post office


He should recommend the payment OF foul
per cent. to depositors, and the conversion oi
deposits either into outstanding United Statei
bonds or into new AZ per cent bonds, and the
taking up of corresponding amount OF those
outstandil g.