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Page 79
'The first of these plans was partially adopted at the last session
of Congress in the provision authorizing the Secretary to issue
United States notes, payable in coin, to an amount not exceeding
fifty millions of dollars. That provision may be so extended as to
reach the average circulation of the country, while a moderate tax,
gradually augmented, on bank notes, will relieve the national from
the competition of local circulation. It has been already suggested
that the substitution of a national for a State currency, upon this
plan, would be equivalent to a loan to the Government without
interest, except on the fund to be kept in coin, and without
expense, except the cost of preparation, issue, and redemption;
while the people would gain the additional advantage of a uniform
currency, and relief from a considerable burden in the form of
interest on debt. These advantages are, doubtless, considerable;
and if a scheme can be devised by which such a circulation will be
certainly and strictly confined to the real needs of the people,
and kept constantly equivalent to specie by prompt and certain
redemption in coin, it will hardly fail of legislative sanction.
'The plan, however, is not without serious inconveniences and
hazards. The temptation, especially great in times of pressure and
danger, to issue notes without adequate provision for redemption;
the ever-present liability to be called on for redemption beyond
means, however carefully provided and managed; the hazards of
panics, precipitating demands for coin, concentrated on a few
points and a single fund; the risk of a depreciated, depreciating,
and finally worthless paper money; the immeasurable evils of
dishonored public faith and national bankruptcy; all these are
possible consequence of the adoption of a system of government
circulation. It may be said, and perhaps truly, that they are less
deplorable than those of an irredeemable bank circulation. Without
entering into that comparison, the Secretary contents himself with
observing that, in his judgment, these possible disasters so far
outweigh the probable benefits of the plan that he feels himself
constrained to forbear recommending its adoption.
'The second plan suggested remains for examination. Its principal
features are, (1st) a circulation of notes bearing a common
impression and authenticated by a common authority; (2d) the
redemption of these notes by the associations and institutions to
which they may be delivered for issue; and (3d) the security of
that redemption by the pledge of the United States stocks, and an
adequate provision of specie.
'In this plan the people, in their ordinary business, would find
the advantages of uniformity in currency; of uniformity in
security; of effectual safeguard, if effectual safeguard is
possible, against depreciation; and of protection from losses in
discount and exchanges; while in the operations of the Government
the people would find the further advantage of a large demand for
Government securities, of increased facilities for obtaining the
loans required by the war, and of some alleviation of the burdens
on industry through a diminution in the rate of interest, or a
participation in the profit of circulation, without risking the
perils of a great money monopoly.
'A further and important advantage to the people may be reasonably
expected in the increased security of the Union, springing from the
common interest in its preservation, created by the distribution of
its stocks to associations throughout the country, as the basis of
their circulation.
'The Secretary entertains the opinion that if a credit circulation
in any form be desirable, it is most desirable in this. The notes
thus issued and secured would, in his judgment, form the safest
currency which this country has ever enjoyed; while their
receivability for all Government dues, except customs, would make
them, wherever payable, of equal value, as a currency, in every
part of the Union. The large amount of specie now in the United
States, reaching a total of not less than two hundred and
seventy-five millions of dollars, will easily support payments of
duties in coin, while these payments and ordinary demands will aid
in retaining this specie in the country as a solid basis both of
circulation and loans.
'The whole circulation of the country, except a limited amount of
foreign coin, would, after the lapse of two or three years, bear
the impress of the nation whether in coin or notes; while the
amount of the latter, always easily ascertainable, and, of course,
always generally known, would not be likely to be increased beyond
the real wants of business.
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