Rensselaer Union, Volume 6, Number 35, Rensselaer, Jasper County, 21 May 1874 — Senator Morton’s Views on the Financial Question. [ARTICLE]

Senator Morton’s Views on the Financial Question.

In a recent letter to the Indianapolis Journal Senator Morton gives his views upon the vetoed Currency bill and the President’s veto message. We give the following extracts from this letter, as probably embodying the views of those members of Congress who sustained the bill in opposition to the President’s veto: Mr. Morton says there appears to be a misapprehension in regard to the provisions of the bill from which the President withheld his approval. He soys the bill Is criticised as If It authorized a new emission of United States notes, which would increase the difficulty of a return to specie payments, and thereby involve a breach of the nationalfaith pledged for the redemption of these notes in coin. The first section of the bill, and the only one which relates to United States notes, is in these words: “ The maximum amount of United States notes shall be four hundred million dollars.” To understand the effect of this provision reference must be had to previous legislation. By the act of June 30, 1864, it was declared that the United States notes in circulation, or to be circulated, should not exceed the sum of $400,000,000. By the act of April 12,1866, it was provided that “ of United States notes not more than $10,000,000 may he retired and canceled within six months of the passage of this act, and thereafter not more than $4,000,000 in any one month.” On the 4th of March, 1868 another act was passed forbidding any further reduction of United Statesnotes. At that time the amount outstanding was $356,000,000, and that is the limit below which the United States notes cannot be reduced without Congressional enactment. Under the operation of these statutes successive Secretaries of the Treasury have assumed the right to reissue at their discretion $44,000,000, that is, the difference between $356,000,000 and $400,000,000, and to withdraw the same again from circulation. Since the Ist of October last there have been issued of these notes by the Secretary of the Treasury $26,000,000, making the whole circulation of United States notes $382,000,000. The right of the Secretary to reissue any part of this forty four millions, or to increase the circulation to! these notes above three hundred and fifty-six millions, has been continually denied by many lawyers in Congress and out of it, and a large portion of the press; and the question cannot be said to be free from doubt. In his veto message, and in his letter to Messrs. Ciaflin and Anthony on the 28th of September last, the President treats the fortyfour millions as being an existing reserve, a sum of money already in the Treasury, as much so as a like sum received from taxes, to be used at the discretion of the Secretary of the Treasury for certain purposes. The first section of the bill declares the law to be what thd President and Secretary have assumed It to be. It declares that the maximum amount of United States notes shall be $400,000,000, that is, the amountbeyond which the issue shall not be extended. The word “ maximum” means the greatest. It does not mean the precise! amount, but simply the. amount beyond which the Issue cannot go. The section relieved the Government from the exercise of a doubtful power, which had been the occasion of severe animadversion. It was the wish and expectation of the friends of the bill that the Secretary should put into circulation the remaining $18,000,000 of the $44,000,000, and it was proposed by some that the language of the section should be so changed as to require that amount to be put into circulation and kept outstanding. But it was determined otherwise, and that the bill should simply declare the maximum amount of circulation, and leave the power and discretion of the Secretary what they had been claimed to be. The other section of the bill authorizes the increase of bank-note circulation to the amount of $46,000,000, to be distributed among the States having less than their proportion upon the basis of the act of 1865, the new banka to be established upon the terms, liabilities and restrictions imposed upon existing banks, being required to secure their bills by deposit of bonds, redeem them in United States notes upon demand over their own counters or in one of tbe redemption cities, and with the additional restriction that ail banks, old and new, shall keep one-fourth of the coin Interest they receive upan their bonds deposited for the security of their notes. This provision looked forward to the resumption of specie payments, and was the first step that had been taken in that direction by Congreu. The $46,000,000 provided for came full SBO,000,000 short of equalizing the distribution among the States upon the basis of the act of 1865. Under that act the New England'States were entitled to less than $40,000,000, but received $110,000,000, and tbe other Eastern States had an excess or nearly $12,000,000. Whether the volume of the currency Is sufficient for tbe business' of the country is a question of fact about which men may honestly differ. During the four years preceding the panic there had been an actual contraction of the currency, and a much larger comparative contraction resulting from the growth of

population and business. A majority of Congress were of the opinion that, to produce a restoration of confidence, a speedy revival of business and a return to the prosperity which was so suddenly destroyed by the panic, some addition should be made to the volume of the currency. That the bill which has failed to become a law would have produced some contraction is undoubtedly true; but it would have been almost entirely in the stock market in New York. It is a well-understood- fact that the reserves of the Western and Southern banks kept in New York have been loaned by the New York banks almost exclusively upon call to dealers in stocks, and have thus contributed to stimulate unwholesome speculation, and have been of very little benefit to the mercantile or manufacturing community. The evil resulting from this fact was strikingly illustrated during the panic last fall. The stockholders who had borrowed the money were not able to repay the New York banks, and they in turn were not able to pay the country banks from which the money had been received, and thus the disaster of the panic was greatly aggravated. This bill in effect required the banks outside of the redemption cities to keep three-fourths of their reserve at home, and would have withdrawn some millions from the stock market in New York, which would strengthen the banks to which they belonged, and would have produced contraction in a quarter where it is pretty well understood that contraction would do no harm. The act of 1860, to strengthen the public credit, declares that “ the United States solemnly pledged its faith to maw' provision at the earliest practicable period for the redemption of the United Btates notes in coin.” In the debate upon this bill nobody has denied the character or binding force of that pledge, but the question as to the “ practicable period” for its performance remains as open as it was upon the day it was passed. Very few mem* bers of either house of Congress have agreed upon any method for the resumption of specie payments. A few are in favor of hoarding the gold in the Treasury until enough has been acquired to begin the redemption of the notes. Others have proposed to acquire the requisite amount of gold by selling our bonds in Europe; others to fund a portion of the legaltender notes in bonds baring 5 per cent, interest, and retire them in that way, to bring the rest to par by contraction; others to fund them into a bond bearing 5 per cent, interest, to be issued and again funded. While the Government is pledged to redeem the legal-tender notes in com at the earliest practicable period—while the purpose to do so should ever be kept in view—yet that period is by many not deemed to be practicable when there is great stagnation of busiuess, much labor unemployed, the revenues largely fallen off, and much distress and suffering in every part of the country.