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RESUMPTION OF SPECIE PAYMENTS.

to other countries and radically changing the substantial basis of our monetary system, as established by the wisdom of our forefathers, then we have nothing to hope of good from them. One rotten system will have been broken down to give place to another which, if possible, exceeds it in impotence to do good and in power to work mischief.

The National banks will be a boon to the country if Congress brings them and holds them to a strict specie basis. As at present organized and conducted, they are worse to the prosperity of the country than the old State banks, which held to specie payments, in name at least. If they are not compelled to specie payments they will work nothing but ruin in the republic.

It is so easy to do this—to do it and have it rest upon a basis so different to what our currency has ever rested heretofore, as I have proven above, that I will not despair of favorable action by Congress in the premises. The National banks will be useful to the country in direct proportion as they approximate to a specie basis; they will be disorganizing, mischief making, spreading the evils of Pandora's box through the country, in direct proportion as they reject the specie basis and substitute for it a basis of debt.

Whenever Congress shall take from the government circulation-commonly called greenbacks-the legal tender qualification, or the Supreme Court of the United States shall decide that this circulation is not a tender between citizens, then will the first step have been taken toward the Government resuming cash payments. Then the greenbacks can be funded; but while they remain money, and legal tender too, it will be nearly impossible to fund them. This act is indispensable, and must be a condition precedent to the resumption of specie payments by the Government, unless we remain in a state of bankruptcy through the present generation. The Government must resume before the banks will think of the measure. But it is in the power of the Government to coerce the banks into resumption gradually, if it has the nerve to do it.

All the coupons of interest upon the bonds held by the Government for the security of the circulation of the

HOW GOVERNMENT CAN AID THE BANKS. 137

banks, should be retained by the Government in gold; the old circulation should be withdrawn from time to time, and new circulation issued to the amount of these coupons, the new circulation would then be based on gold. All the profits of the banks should be converted into gold, this gold deposited in the Treasury of the United States, and an equal amount of the old circulation called in and canceled, and new circulation based on gold coin be issued to the banks. The bonds could be returned to the bank in an amount equal to the amount of this lastnamed new circulation. Lastly; the Government should, from time to time, appropriate every dollar of its surplus revenue from customs, after reserving enough to pay the interest upon that portion of the debt which is payable in gold coin, to taking up and canceling the bonds which have been deposited to secure the circulation of the National banks. This should continue until the entire capital of the banks becomes gold coin in the Treasury of the United States, and their entire circulation of bills will then be gold bills-bills of substance —not bills of credit, which are forbidden by the organic law of the Federal Government.

Some may object to making the first payments of the national debt to the National banks: but, beyond doubt, the Government has the right to pay off first that portion of the debt where the advantages of such payment shall inure most signally to the benefit of the people. War, debt, the legislation of Congress, and the necessity of the times, if you will, have brought on the suspension of cash payments. This suspension has raised prices, so that the people are ground, as it were, beneath the upper and nether millstone. The Five-Twenties of the Government will soon be due. The Government can, if it chooses, pay them at any time after five years from their date. When the Government shall pay them, such payment will, of course, stop interest. The interest and happiness of the people are certainly relevant matters for national legislation. Besides, this changing of the basis of the National Banks from Government debt to gold coin, will bring these institutions into harmony with the supreme law of the land. And, if we are to have any constitutional Government hereafter, it is meet that Congress should make M*

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HOW GOVERNMENT CAN AID THE PEOPLE.

its laws to conform, at least so far as is possible, to the organic law. The National banks when brought on to this basis, having all their circulation secured, dollar for dollar in gold coin, will be very different institutions from the old State banks. In case of war, or any great national calamity, they would have the sinews to stand by the Government in time of need. They would have something more than credit to lend.

It will not be possible for the Federal Government to render the people a greater boon, than to pay off that portion of the public debt held by the Treasury department for security of the circulation of bills of the National banks, and hold the gold as security in lieu of the bonds. In this way the interest will stop running on the bonds, while the banks will be coerced into specie payments. The advantages will be felt both by the Government and the people. It will require an assorting and clearing house to be attached to the Treasury department in the cities of New York, Boston, and, in time, in other commercial cities of the Union. All the banks should be required to redeem their notes in gold as fast as they were returned to the Treasury. This would make a domestic requirement for gold coin, exactly equal to the amount of gold bills in circulation. The bills, however, would not be sent to the Treasury for redemption only as gold was required for shipments abroad. The mines of the country will yield $75,000,000 a year, and, through the customs, the Federal Government will receive the whole of this amount, and probably $50,000,000 more of the gold in the hands of the people. This will leave a large excess of gold in the Treasury, after paying the coin interest on the public debt, to be applied to paying off the bonds, and making the basis of the circulation coin.

The preceding measures only reach the reform and purity of the bills in circulation. Some may say it is not radical enough-that it ought to reform the deposit account in banks as well as their circulation. There is no doubt but the liability of banks, in proportion to their constant specie reserve, should be rigidly enforced by legislative enactments. But it is not well to attempt too much at once. The reform of the "circulation without" is sufficient to begin upon. The preceding chapter

RESPONSIBILITY OF THE TREASURY.

139

Be

is in the right direction of reform so far as it goes. sides, when the outside circulation is made entirely pure, the deposits will be made corresponsively more sound. This will be proper matter for another chapter. So far as reform of the currency in circulation goes, the banks ought not to object to it, while there remains to them the power to work such efficient mischief through the deposit account, or their internal circulation.

There remains one point of great importance for consideration, which is this: Is it safe to trust the Federal Treasury with such an immense amount of gold coin? Immense trusts must devolve upon every generation. Man is mortal; and however much of wealth he may amass in life, it must all descend to future generations. Our lives, liberties, and properties, we trust in the hands of statesmen, jurists, legislators, and generals. These are quite as important trusts as our monetary interests. In deciding this question we may inquire-Are the moral qualities of our people on a par with those of other nations? If they are, the trust may be made. No doubt the Federal Government would be as legally responsible for any embezzlement of funds left in the Treasury for the redemption of bank bills, as it would for embezzlement of gold left at the mints for coinage. The bank of England has often on hand £20,000,000 in coin and bullion, besides all its bills of exchequer, bank-notes, rest, government deposits, and private deposits. The bank of France had on hand recently £26,000,000 sterling in specie, besides all its other trusts. I believe neither of these institutions have suffered any severe losses by embezzlements. It is safe to say that the trusts in the Treasury of the United States, if they held the gold to cover the entire circulation allowed the national banks, would not be equal to the trusts in the bank of England or the bank of France. The deposits of gold to secure the circulation of the bills would of necessity be divided among the sub-treasurers of various commercial cities, probably not less than four or five in number. The New York branch would be the largest-that being the commercial and fiscal centre of the Union. The Federal Treasury holds in gold frequently for customs' duties collected, seventy-five to eighty millions of dollars; and

140 THE REFORM OF THE CURRENCY WILL MAKE

there has never been any large direct robbery of the Treasury. The trusts which a deposit of gold would require, to cover the circulation of the banks, in the Treasury, would not exceed the trusts of the bank of England or the bank of France, or of the actual trusts which have already been committed to the Treasury.

The treasure could be under the keeping of a dozen officers, each holding separate keys, which could not be reached by any one of them without possessing all of the keys, and which would require the combination of all these officials in crime, to commit an embezzlement.

The general banking law of New York was a demonstrated failure in 1857. The Government should not desire to renew upon a grand scale the old New York system, nationalizing it, and preparing it for a gigantic swindle on the vitality of the people. Every dollar of gold which goes from the mines of California to the old States, should be the means of retiring from circulation one credit dollar, which is now based upon the national debt. To effect this salutary reform, our legislators in Congress should amend the National Currency Bill. With the coupons of interest attached to the national bonds which are held in the Treasury to secure the circulation of the banks, and which the Government must pay semi-annually to these institutions, with the profits of the banks converted to gold, and the excess of gold which the customs will put into the Treasury; from these three sources the Treasury may, in less than five years, have gold enough to secure the entire circulation of the National banks, dollar for dollar. Neither the people, nor the banks, nor the Government, need be at all oppressed or burdened, to effect all this salutary reform quite speedily.

This reform will immediately make a domestic market for about $68,000,000 of the yield of our gold mines; and it is as certain as the laws of gravitation, if we allow the "promised dollar" to circulate, and continue to usurp the uses and functions of the gold dollar, that the whole annual yield of our mines in the precious metals will go from us to other countries in dead loss. We shall get it in goods advanced in prices enough to cover it. We shall get it balanced in extra prices, not in real values. We