The Financial Situation

It is most unfortunate that, with such ii strong recuperativo tendency as now j -xists in almost every branch of business, eyerything should be throwu into uncertainty by couditions at the national capital which legislation on certain vital questions almost impossible. ïhe House and the Administrationl representing the opposïïe poles in politics, can hardiv 'e expected to agree on anything: anu the Senate is so perverse I y j constituted that it may expected to j agree on wbatever the House might adopt or the President sanction. In such a plight of mpractieabilities, no legislation of iinportance seems to be vvithiu reacli, and the country must remain in uneeitainity for fifteeu months as to what is to be the policy of the country on the great flnancial issues of the day. ]t would seem, however, if theie were a majority at Washington of men of both parties loyally willing to make some moderate concessions of political preference to the urgent necessities of public conüdence, there should be no difficulty in providing reasonable compromises on financial questions that would materially help to mend the situation and to encourage a betterfeelings in business circles. o far as respects currency questions, opinión lias its extremes, favoring on the one hand, an adherence to oíd ideas and, on the other, advocating a total reconstruction of our bank note system and a withdrawal of both forms of legal tenders as fast as new bank currency could be brought out; while the Senate as a whole, is a cabal of Philistines, impracticable for eyerything but free coinage. In such a situation, while deferring a broad and final settlement for the future, certain midway measures might be accepted without doing unbearable violence to the policies of any of these three divisions of sentiment. For instance ; what objection need either of the three parties present to the retirement of the 140 milhous of Sherman notes, at the moderate rate of say flve millions per month, thereby so far reducing the exposure of the Treasury to a drain oa its gold reserve and increasing conlidence in the remaining 345 millious of greenbacks? Such a reductiou of the large volume of Treasury paper would impart confideuce to the conseryative sentiment among our people, and would be au important evidence to the foreign holders of $2,000,000 of our securities that we may be trusted to put our curreucy system upon sounder basis; and, in that sense, it would be an invaluable contributiou towards the restoration of confidenee. To tlose who may desire a more sweeping retirement of legal tenders, it naight be a concession in principie, but it but it would be a valuable experiment as showing what may and may not be prudently done in the way of pruniii our legal tender money. Sucli a withdrawal of paper would 'cali for its substitution by some other kind of notes. At tuis point also it should be possible to measurably satisfy tlie preferences both of those who cling to the present National bank guar auty of bonds and those who advocate issuing notes on the guaranty of a tírst claim upon the assets and on the second liability of the stockholders. What sufücieut reason can be offered, whether ui principie or expediency, why an issue of jN'ational bank notes should not be auihorized, guarauteed to tiieir luit iace value by say two-thirds in United Otates uunds and one-third in asseis of the bank? In other words let any iSational bank be empowered to issue circulating uoiea to tlie extent of 50 per cent in exceea of tlie par sum of its bonds lield against circulation; and make all the assets of the bank, mcluding ers liability, available for liquidatiug portion of the notes as is uot covered by bonds. ïiiis would very largeiy increase the ratio oí notes to Dond üeposit ; but that increase would be more tium compensated by the added preferred claim on assets and the notes wuuld be as safe as those now existiug. Some such increase iu the issuing ability of the banks (as eornpared witli that now aiiowed) would be indispensable to briuging out au amount of nevv circulation sutricient to set olf the withdrawu Nherinan notes. The National banks now issue eireulation because iliey have to keep on, haud a certaiu amount of bonds - not because the issues yield a satisfactory protit - and they make up tor the low rate obtained on the bonus by putting out notes against them. The President's proposal to .reduce the tax on notes trom 1 to } per cent and allow issues up to the par value of the bonds would be entirely inadequate as a dependence for drawing out 140 millions of hew ciruulation. The banks must have a margin for issuing upon their credit, and without tying up tneir working resources, before they can be expected to materially expend their nole issues. Some sucli arrangement as that here suggested would satify that requirment to the amount needed. It is also a question for caudid cousideration whether it would be just to all sections and thereiore also politically prudent, to broaden the resource for issuing notes by authoriziug the tiou oi National banks witli a capital oí uot less than $25,000, instead of continuing the existiug minimum of $ÖO,ÜÜÜ. This would lead to the i'onnatioii of many new banks in the West aud txmth, where ciroulatiou is mach needed, and would therefore be ui important eontribution towards increasing the volume of this forin of currency. At the same time, it would add materially to the credit of the greenbacks if the silver set free by the retirement of the Sherman notes were held as n assett for guaranteeing the h'nul redemption of those legal tenders, whenever such redemption might be determinad apon. As to providing the means for taking upou the Shermaus, a three per cent bond issuable to the amount of $250,000,000, at the pleasure of the President, could be made available for that purpose and also as a resource against future deficiences of revenue ; such bonds sbould be redeemable alter a few years at the pleasure of the Government. The f'orgoing suggestions are made not with a view to settling all possible fioancial questions, but as affording a mensure which should be aceeptable to both parties as a compromise and which would teud towards a large recoverv ot confluence aud would insure a partial but real aud material bettering of the j financial sitnatïon.