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Page 82
'The Secretary has already mentioned the support to public credit
which may be expected from the proposed associations. The
importance of this point may excuse some additional observations.
'The organization proposed, if sanctioned by Congress, would
require, within a very few years, for deposit as security for
circulation, bonds of the United States to an amount not less than
$250,000,000. It may well be expected, indeed, since the
circulation, by uniformity in credit and value, and capacity of
quick and cheap transportation, will be likely to be used more
extensively than any hitherto issued, that the demand for bonds
will overpass this limit. Should Congress see fit to restrict the
privilege of deposit to the bonds known as five-twenties,
authorized by the act of last session, the demand would promptly
absorb all of that description already issued and make large room
for more. A steady market for the bonds would thus be established
and the negotiation of them greatly facilitated.
'But it is not in immediate results that the value of this support
would be only or chiefly seen. There are always holders who desire
to sell securities of whatever kind. If buyers are few or
uncertain, the market value must decline. But the plan proposed
would create a constant demand, equalling and often exceeding the
supply. Thus a steady uniformity in price would be maintained, and
generally at a rate somewhat above those of bonds of equal credit,
but not available to banking associations. It is not easy to
appreciate the full benefits of such conditions to a government
obliged to borrow.
'Another advantage to be derived from such associations would be
found in the convenient agencies which they would furnish for the
deposit of public moneys.
'The Secretary does not propose to interfere with the independent
treasury. It may be advantageously retained, with the assistant
treasurers already established in the most important cities, where
the customs may be collected as now, in coin or treasury notes
issued directly by the Government, but not furnished to banking
associations.
'But whatever the advantages of such arrangements in the commercial
cities in relation to customs, it seems clear that the secured
national circulation furnished to the banking associations should
be received everywhere for all other dues than customs, and that
these associations will constitute the best and safest depositaries
of the revenues derived from such receipts. The convenience and
utility to the Government of their employment in this capacity, and
often, also, as agents for payments and as distributors of stamps,
need no demonstration. The necessity for some other depositaries
than surveyors of ports, receivers, postmasters, and other
officers, of whose responsibilities and fitness, in many cases,
nothing satisfactory can be known, is acknowledged by the provision
for selection by the Secretary contained in the internal revenue
act; and it seems very clear that the public interest will be
secured far more certainly by the organization and employment of
associations organized as proposed than by any official selection.
'Another and very important advantage of the proposed plan has
already been adverted to. It will reconcile, as far as practicable,
the interest of existing institutions with those of the whole
people.
'All changes, however important, should be introduced with caution,
and proceeded in with careful regard to every affected interest.
Rash innovation is not less dangerous than stupefied inaction. The
time has come when a circulation of United States notes, in some
form, must be employed. The people demand uniformity in currency,
and claim, at least, part of the benefit of debt without interest,
made into money, hitherto enjoyed exclusively by the banks. These
demands are just and must be respected. But there need be no sudden
change; there need be no hurtful interference with existing
interests. As yet the United States note circulation hardly fills
the vacuum caused by the temporary withdrawal of coin; it does not,
perhaps, fully meet the demand for increased circulation created by
the increased number, variety, and activity of payments in money.
There is opportunity, therefore, for the wise and beneficial
regulation of its substitution for other circulation. The mode of
substitution, also, may be judiciously adapted to actual
circumstances. The plan suggested consults both purposes. It
contemplates gradual withdrawal of bank note circulation, and
proposes a United States note circulation, furnished to banking
associations, in the advantages of which they may participate in
full proportion to the care and responsibility assumed and the
services performed by them. The promptitude and zeal with which
many of the existing institutions came to the financial support of
the Government in the dark days which followed the outbreak of the
rebellion is not forgotten. They ventured largely, and boldly, and
patriotically on the side of the Union and the constitutional
supremacy of the nation over States and citizens. It does not at
all detract from the merit of the act that the losses, which they
feared but unhesitatingly risked, were transmuted into unexpected
gains. It is a solid recommendation of the suggested plan that it
offers the opportunity to these and kindred institutions to
reorganize, continue their business under the proposed act, and
with little loss and much advantage, participate in maintaining the
new and uniform national currency.
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