And what is it that successfully discourages us from direct steps toward specie payments?
In the first place, it is the mistrust of the people in our ability to resume, and to maintain resumption. In the next place, the monthly publication of the Treasury discloses precisely our weakness as well as our strength; and the great element of our weakness is the volume of our past-due and demand obligations. In ordinary times,—that is, when the people have confidence in the ability of the banks to redeem their demand obligations in coin,—a reserve of twenty to twenty-five per cent. in coin is more than sufficient to meet any probable demand that may be made. Let mistrust arise in relation to the solvency of any bank or of the system of banks, and the reserve of twenty-five per cent. will vanish as the dew before the sun, and the individual bank or all the banks must close their doors to all demands for specie.
In our present legislation we encounter this mistrust wide-spread among the people; and so long as we ourselves exhibit so great timidity in our attempts at legislation upon this subject, just so long do we minister to and strengthen this mistrust.
The amount of demand obligations which the Treasury must be prepared to meet upon a moment’s notice, including three per cent. certificates and fractional currency, is more than four hundred and forty million dollars. With the existing mistrust, measured by the premium on gold, a reserve of twenty-five per cent. of coin in the Treasury appropriated to these demands would be totally insufficient. This reserve must bear a proportion to the aggregate of liabilities so large as to remove mistrust, and this can be accomplished only by presenting as in the vaults of the Treasury an amount of coin nearly equal to the sum of liabilities.
If during the last three years we had retained the surplus of coin that has reached the Treasury, we should now have enough; but, as a consequence of such accumulation, speculation would have run riot,—and I fear, if we should now by legislative enactment decree that course for the future, we should aggravate the situation.
What, then, is left for us to do? What but to lessen our liabilities?—which, as the laws now stand, must remain the same to-morrow as to-day, and one, two, or five years hence immutably as now.
Difficulties beset the contraction of those liabilities, as there are difficulties that impede the accumulation of coin in sufficient amount to meet our purpose; but the former may be neutralized, if not removed, by judicious compensations that will not in any serious degree retard the object for which I would legislate.
Sound financial authorities unite in declaring, that, if the Government resumes specie payments, the banks of New York can resume; and when the banks of New York resume, the whole country can resume. Evidently, then, our care is the Government.
And what is the first step? To my mind we must lessen the demand obligations of the Government, while the Secretary of the Treasury at the same time strengthens the reserves in the national vaults. Neither should be done suddenly or violently, but gradually, judiciously, and wisely. As the statutes now stand, the obligations cannot be reduced. With the present volume of obligations, the laws of trade prevent the Secretary of the Treasury from sufficiently strengthening his reserves. It therefore devolves upon the National Legislature to take the initiative in the effort to resume specie payments.
The difficulties that impede the reduction of the national liabilities lie in the fact that such obligations are a part, and a large part, of the currency of the country. To withdraw that currency without giving a substitute is to create stringency, burden trade, and invite chaos: at least, so it seems. These obligations, so far as they relate to the currency, are larger in amount than those of the national banks combined; and furthermore, they are the head and front of all. They are so large as to be beyond the point of manageability, and I would therefore reduce them within control. It is their volume that puts them beyond control, and it is our want of control that causes them to be depreciated. Thus, Sir, I would offer inducements to fund them, or part of them, in bonds that would be sought after because of their valuable uses beyond a mere investment, and to neutralize the evils of contraction of Treasury liabilities by authorizing their assumption, with the consent of the people, by various parties in different sections of the country, each one of whom would be fully equal to the task thus voluntarily assumed. I would issue a bank-note for every dollar of Treasury obligation cancelled; but I would issue no bank-note that did not absorb an equal obligation of the Treasury. By this distribution of a portion of the demand obligations you restore to the Government the full ability to meet the remainder; and at the same time the people know, that, so far as the currency goes,—and it is of this only we are treating,—every promise of any bank has its ultimate recourse in the Treasury of the United States.