[943] people, but I propose we should enact in some proper form that the Secretary of the Treasury should each month retain in the treasury all the national bank bills which have been collected by the collectors of the internal revenue, or which have come through other means into the Treasury of the United States, and at the same time should issue to the banks, if they desire to receive them, or to issue in payment of the interest-bearing notes which are payable in currency an equal amount of legal tenders. In a very few months, four or five, the national bank notes would be drawn from circulation and their place supplied with greenbacks without any shock to the business of the country; and, pari passu,1 the bonds of the banks held as security for these notes could be restored to them. This proposition, sir, if carried out would put into circulation some three hundred million dollars more of national legal-tender notes without increasing that circulation, and release the country from the payment of between twenty and thirty million dollars in currency which is now paid to the national banks on these bonds, and the place of their bills would be taken by the non-interest-bearing notes of the United States without any shock to the business of the country. What objections are urged to this proposition? The first is that it would be a breach of faith with the banks. I would like some gentleman to put his finger upon any act of Congress by which we pledged ourselves for a single day longer than good pleasure and discretion of the Congress of the United States thought best to allow this bank currency to exist. What effect would it have upon the banks? Those dependent wholly upon their circulation, which are not in fact banks of loans and deposits, would wind up, and their managers would seek some other and equally honest employment. Banks that are needed would still be banks of loan and discount, but not of circulation. It is said that the banks furnish now the best currency this country ever saw, because it is the same in New Orleans, Boston, New York, and Chicago. But what is the currency? It is the notes of the bank. What makes them equal all over this country? It is the indorsement of the United States. So that we have come into this very remarkable position, that when a bank breaks its currency is better than when it was solvent, and sells at a slight premium.2 Therefore, as the United States is primarily
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1 Pari Passu, with equal step.
2 At the time of this speech, the amount of bank currency was limited, so that no new bank could be formed until an old bank broke and its bills became redeemable. Then the capitalists who wanted to start a new bank (and this was very profitable) would buy up the bills of the broken bank, and when they got enough would apply for a bank charter and get it. Therefore bills of a broken bank would sell for three or four per cent. premium to be used for that purpose.
A. M. Thayer and Co. 1892.
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