Mr. HOOPER, of Massachusetts. I thank the gentleman for his explanation. I now resume the line of remark which I was pursuing when I yielded to the gentleman. In Russia, during the wars with France, under the 1st Napoleon, paper roubles were issued by authority of the E.representing the silver rouble, worth about 80 cents of our coined money. But those paper roubles gradually depreciated in value to about 20 cents, or one quarter of the silver rouble; and that paper continued to circulate for many years after peace was restored. It was not left, however, to the brokers and speculators to determine its value in the coin of the country. Each year the Government determined and declared its convertible value as compared with coin. For many years the rate was about 3 and 60 /100ths of paper to one of silver, and at about that rate the paper roubles were gradually withdrawn from circulation. Whatever we issue as currency, by whatever name we call it and whatever laws are passed in reference to it, the foreign exchange will determine its value by the standard of gold and silver; and it will pass as currency according to that standard of value. When a barrel of flour sells here for 15 dollars in currency, and gold is worth 50%. premium, ten dollars will be the price here of a barrel of flour in the coined money of the civilized world. In other words, 15 dollars in currency will be the equivalent of ten dollars in coined money. I am not in favor of an immediate resumption of specie payments, nor am I ready to name a time when I think specie payments should be resumed; but, in my judgment, that most desirable event should be constantly kept in view, and any legislation calculated to retard it should be strenuously resisted by every one who regards the honor and the true interest of the country. The settled policy of the Government should be to resume specie payments at the earliest period that is possible without jeopardizing th: substantial interests of the industry of the country; and all the action of Congress in reference to the currency and to finance should indicate that purpose. Time is necessary to accomplish the resumption of specie payments; but the preparatory steps should commence now. It should be under stood by every one that it is the settled policy of Congress to reduce the amount of paper money until its value is restored and becomes ual to coin. I do not believe it necessary to withdraw all the legal tender notes to accomplish that object, nor I do believe it necessary to contract their amount to such an extent as to derange the business of the country. I am certain specie payments could be sustained with a much larger amount of notes convertible into coin than formerly. One of the great causes of money panics, which so many seem now to apprehend, has heretofore been the absence of any security for the State bank notes. The failure of a few banks produced a distrust of all banks, and there was then a general endeavor among those who held bank notes to get rid of them by passing them to others or demanding coin for them. The note of a failed bank organized under the general law of any State, with security deposited for its circulation, was no better to one who could not afford to wait for payment of the note until the security was realized. When such notes were received in payment for labor oand were relied upon to furnish the means for immediate support, if they would not pass at the shop, they must be sold to the broker for whatever he would give generally 1/2 or less than the note rePresented when it was received. such panics have always been the result of want of confidence, which often extended to the most prudent and best managed bank, as well as to those that had been imprudently managed. Few if any banks, however well managed, can long sustain themselves against a panic caused by the sudden loss of public confidence. The notes of all the national banks are made absolutely as secure as the Government itself; 3. law they are received at parin all parts of e U.S. in payment for taxes and all other dues to the Government, except for duties on imports, and for all debts owing by the U.S., except interest on the public debt. Whenever a bank fails to redeem its notes in lawful money it forfeits the bonds deposited as security with the Treasurer. The Government, then, so far as the holders of the notes are concerned, assumes the liability of the bank, and the notes are redeemable in lawful money on lemand at the Treasury of the U.S. This imparts such a degree of security and confilence to the national bank notes, that they circulate as well after as before the failure of whobank. There is never any general demand for coin ong the holders of bank notes so long as there is confidence in the security of the notes. They are generally held in small amounts for immediate use, except by banks and bankers. When the merchant or trader accumulates any considerable amount of them in his business he sends them to his bank to be exchanged for credit on its books, which is known by the technical name of “deposit, ” and which he ean draw out at any time by checks as he requires money. Nor will there be any general demand for coin among those holding “deposits” in banks so long as the foreign exchanges are not against the country. I say no general demand; there is always more or less specie wanted in. commoderate sums for specific purposes. but when a continuation of high prices has encouraged excessive importations from abroad and has discouraged the shipments of our own products to foreign countries, there is an out ward flow of specie created by the demand for export to pay the foreign debt which has accumulated. But the merchants and bankers owe that foreign debt, and not the community who hold the circulating notes. The merchants and bankers at such a time will demand their deposits from the banks in specie. If any national bank fails under that demand, the security for its circulating notes is not affected; and their notes will continue to circulate as before until they are paid into the Treasury of the U.S or brought there for redemption. The banks in the city of NewYork, under the exploded State bank system, almost always held specie enough to pay their circu lating notes twice over. It was their “depos its, ” and not their circulation, that troubled them whenever a general demand for specie occurred. Any general demand for specie is usually at the shipping ports on the sea board for export, to meet an unfavorable condition of the foreign exchanges, and is mostly concentrated in the city of NewYork. For that reason the city of NewYork should be the common redeeming point for the bank note circulation. It may e said that there was no foreign demand for specie when the banks suspended specie payment in December, 1861; i. that was an exceptional case. The banks then suspended voluntarily, as a matter of expediency, under the apprehension that the effects of the war and the urgent demands for money by the Govern ‘ment would deprive them of their specie. An oli.condition of the foreign exchanges is immediately indicated by an increased demand for specie. Under a prudent system of bank management that demand for specie could generally be met without seriously disturbing the business of the country. At 1st a moderate contraction of bank loans would be a sufficient check to it. But if the indications are disregarded, and the banks, competing with each other, continue to stimu late the high prices by increasing, instead of contracting their loans, the demand for specie will increase until it becomes so intense that it can neither be met nor controlled. The only relief, then, is a suspension of specie payments. I have been supposing and calling attention to a condition of specie payments with no other lawful money but coin, in which banks could redeem their liabilities, which has always been the case in this country heretofore when the banks paid specie. We have yet to learn what the effect would be in a condition of specie payments in which the banks are authorized to redeem their liabilities in legal tender notes, as well as coin, both being lawful money. Experience alone can indicate to us what that condition will require. if I supposed that we could not resume specie1.until all the legal tender notes were withdrawn from circulation, I should feel that resumption was removed to a distant future. I am by no means certain that the same % age held by the Treasury in coin of the legal tender notes in circulation, which the bank law requires to be held in lawful money by banks in the city of NewYork of their liabilities, namely, 25%., might not be sufficient to secure specie payments on the part of the Government as well as the banks. But experience only can teach us what amount of paper money the Government can sustain, and what amount of liabili the banks can safely sustain, under the condition of being redeemable on demand in specie. I admit that there is a good deal of joi. in any views that may be Presented on this subject, as we have had no experience to guide us; yet it is a road we must travel over, as we progress in settling the future financial policy of this nation. Of one thing we can be certain, which is, that the larger the amount of specie held in reserve to meet the redemption of the paper money, and the larger the amount of specie in the country, the larger will be the amount of paper money that can be sustained in circulation. It must be obvious to eve one that 100 millions of coin would sustain a larger amount of circulating notes than ten millions of coin. The resumption of specie payments cannot be brought about by a contraction of currency so sudden and extensive as to disturb the industry of the country; it must be by such action on the part of the banks and the Government as will render coin as valuable here as it is in other countries. Until that is the case it is use less to talk of resuming specie payments. This country is now the largest producer in the world of the precious metals; but it may well be questioned whether the country derives any benefit from this unrivaled production so long as we treat it as merchandise, and of no use except to be shipped abroad and its proceeds returned to us in foreign manufactures. The injury this inflicts upon our own manufactures and our own industry more than counterbalances the gains of the miners. The fact that the precious metals are exported shows conclusively that they are more valuable abroad. The Bank of England and the Press in GreatBritain never consider and rePresent specie to be a mere product of labor t.o exported, and its accumulation as an incumbrance to be got rid of as soon as possible; but it is valued as a basis for the prudent extension of accommodations to the business and industry of the people. The banks of England and of France are able to hold large amounts of specie by pursuing at all times the policy of watching and guarding carefully the “exchanges” with other countries, and by discouraging and counteracting all unusual inducement or tendency to export specie. Under wise laws and prudent management the banks in the city of NewYork would be practically, to a great extent from their position, the guardians and conservators of the currency of this country. It is to be hoped that Congress will resist all attempts to remove the limitations and restrictions in the bank law, which were intended as bounds, outside of which the banks could not lawfully move with impunity to endanger the prosperity of the country; and that the amount of their circulation will not be increased, nor the amount of reserve of lawful money be decreased. There is a common misrePresentation in regard to the reserve of lawful money required by the law, in the statement, that no purpose is accomplished by requiring a bank to i.the reserve, as the bank is forbidden to use it. The truth is, however, that a bank is expected to use its reserve whenever the occasion calls for it; but when by such use it is reduced below the Prescribed proportion to the liabilities of the bank, no new loans can be made by the bank until the proportion is restored, either by reducing the liabilities or increasin the lawful money. It is a minimum reserve o power, to be used when necessary; but when: ever reduced below that minimum, to be restored again at the earliest time from the 1st income and before any other use can be made of the funds of the bank. It has been urged that an increase of paper money is needed to encourage industry, and to lift the business of the country out of the languishing condition into which it is said to have recently fallen. I am told that importations of foreign merchandise have recently been so great that importers are sustaining heavy losses, and look to Congress to relieve them by authorizing the issue of more.money to raise the prices of their merchandise, and the sale of the surplus gold in the Treasury to furnish 'greater facilities to pay for their importations. At the same time an increase of the tariff is demanded by the manufacturers to prevent this competition of foreign merchandise, attracted here by the high prices arising from the abundance of money and the inflation of the currency during the past year. It is difficult to perceive how the increase of paper money at this time could benefit the manufacturers or promote the interest of labor. It would only promote speculation, and, by rend ering prices still higher, increase the cost of manufacturing and the expense of living to the workmen. On the other hand, a judicious reduction of currency might cause a gentle and healthy contraction of bank loans sufficient to reduce the cost of materials, so that manufacturers could again afford to start their works, and their workmen could afford to live. The extraordinary prices, mad speculations, and the extravagance and fraud which have prevailed ought to satisfy every one that it is time to establish a sounder policy in the management of the financegy and of the currency. Any increase of paper money, either in bank notes or legal tender notes, would not render money cheaper nor remedy the evils which the industry of the country is now laboring under. In the cities of NewYork and Boston the cir culation of the banks when they were State institutions was in each about 8 million dollars. Now the circulation of the national banks in the city of NewYork is over 30 millions, and in Boston over 24 millions, and yet the banks often cannot, or do not pay the checks drawn upon them by their depositors, because, as they say, they have no currency to F. with. So much of their reserve of law ul money is in compound interest Treasury notes, which they really hold for investment, that they decline to pay checks drawn upon them by their depositors, but require the checks to be passed as money until they are settled at the “clearing house” as an offset for similar checks on other banks received in the business of the day.. This bill discourages the accumulation of bank balances in NewYork by prohibiting banks from returning as part of their reserve any balances bearing interest, as no bank can afford to pay interest on such balances unless it can loan them. such balances are generally loaned, therefore, “on call, ” as it is termed; that is, to speculators, who pledge stocks or gold with a margin, and with the understanding that they may be at once sold on failure to respond romptly to the demand to pay back the [. " he stock and gold speculations in the large cities, and particularly in the city of NewYork, are generally sustained by such loans; hence the panics and decline in stocks which occur whenever there happens to be any unusual demand for money. such loans cannot be prohibited, but they should be discouraged. They may be profitable to the banks, but they are fraught with danger to the security of the community. I understand that we are not legislating to increase the profits of the banks, but to increase their safety and usefulness to the public. These balances are accumulated in NewYork from banks in all parts of the country, not for the redemption of their circu lating notes, but for the sake of the interest received on them and their ready command for o It is not proposed that banks shall not pay interest on balances, but that such balances bearing interest shall not be counted by any bank as part of its reserve of lawful money. There is great danger if interest is paid on them that balances will be kept in the weakest banks; the weaker a bank becomes the more tempting will be its offers for such balances. If no interest is paid by any, there will be more care in regard to the character and management of the institutions selected as redeeming agents. It is unpleasant to many persons to listen to the suggestion that a bank can be weak or fraudulent or imprudent; they seem to consider it irreverent. They think of well man aged banks with which they have been familiar, and feel as many do when they hear of back sliding in a clergyman, as if it was a reflection on the pure, devoted, high minded pastors they have known. For the benefit of those who entertain the imPression that all banks are immaculate and do not require any restraining influences of law, I would refer to the frauds developed among banks during the past year; for example, in the Merchants' National Bank of Washington. And I will ask the Clerk to read a few short extracts from a recent letter published by Hon. C. V. CULVER, a member of this House, which gives some insight into the actual management of banks.