The Late Commercial Crisis [pp. 100-126]

THE LATE COMMfERCIAL CRISIS.
cent. gold bond commands only par in gold, and scarcely that,
by proportion a 3.6o5 per cent. bond can only be worth 75 to 80
per cent. gold. Therefore the money convertible into it for its
face can be worth only that, permanently. This plan, therefore,
provides for the permanenlt inconvertibility of our legal tenders,
and their debasement 20 to 25 per cent. with the inflation of the
currency to any extent practicable on that basis.
But the plan more commonly proposed is to have the interest
oD this convertible bond paid in greenbacks. This provides simply for the indefinite expansion, depreciation and permanent inconvertibility of our greenbacks. It is in the slang phrase of
Wall St. government "kiting," supporting one paper promise by
another, and each by nonentity. In fact the bonds would be
but another form of currency. For, if convertible into greenbacks
for their face and accrued interest, they would, so far as in
amounts convenient for the purpose, be used as currency without
the process of conversion into greenbacks. And they would be
more in favor than these, because constantly accumulating a
small interest, and also, because, as U. S. bonds they would be
free from taxation. This scheme, therefore, of issuing conlvertible bonds payable in paper, is nothing else than a scheme for
expanding the curre-ncy to that extent, the only difference being
that it is that part of floating capital which persons and institutions would choose to keep for reserves. It is, therefore, obnoxious to the object-ions already offered against relieving present
difficulties biy an increase of irredeemable paper money.
To the samie complexion must come any scheme for postal or
otiher governmenLt savings banks founded on substantially the
same principles, or the issue of similar bonds. Postmasters, too,
are rarely selected with reference to fitness for such trusts.
While wMe say this, we think, nevertheless, that a reform in saving,s banks is one of the remedies for present financial disorders.
One of the most threatening elements in the recent panic was
the "run" begun on savings banks, and only averted by the exercise of the salutary privilege of requiring thirty or sixty days'
notice from depositors before being obliged to pay them. No
savings or other bank can stand a call for immnediate repayment
of all its deposits. If their deposits acre soundly loaned, as they
largely should be, on the soundest mortgages, in the nature of
tinigs, these mortgages cannot all at once be collected or sol&
116
[January,