Evening star. [volume] (Washington, D.C.) 1854-1972, 1879-11-29

| out any material draft on the resumption fund;
and 1t is believed that this voluntary exchange
Will In ordinary times, furnish the Treasury
with all the coin necessary. 1t would be only
likely to arise. that the power to sell bonds for
resumption purposes would be exercised, but 1t
should be preserved to meet any extraordinary
demand for the redemption of notes which
might possibly occur.
The Secretary is, therefore, Of opinion that
the provisions of existing law are ample to ena-
bic the department to maintain resumption even
upon the present volume OF United States notes.
In view, however, of the large inflow of gold
into the country and the high price Of public
securities, it would seem to be favorable time
to invest portion of the sfnking-fuHd in Uni
ted States notes, to be retired and cancelled,
and in this way gradually to reduce the maxi
the amount fixed by the resumption act.
The Secretary respectfully calls the attention
Of Congress to the question whether United
States notes ought still to be a legal-tender in
the payment Of debts The power of Congress
to make them such was asserted by Congress
during the war, and was upheld by the Supreme
Court. The power to reissue them in time of
peace alter they are once redeemed, is still con-
tested in that court. Prior to 1862 only gold
and silver were 1egal-tender. Bullion was de-
posted by private individuals in the mints and
coined in convenient forms and designs, indica-
ting weight and fneness. Paper money is a
promise to pay such coin. No Constitutional
bearing interest to be used as part of the cir
culating medium. The chief objection to the
emission OF paper money by the Government
grows out Of the legal-tender clause, for without
this the United States note would be measured
by its convenience In use, its safety, and its
prompt redemption. In war, and during grave
public exigency, other considerations may pro-
perly prevail; but it would seem that during
peace, and, especially, during times of prosperf-
ty and surplus revenue, the promisSory note of
the United States ought to stand like any other
promissory note 1t should be current money
only by being promptly redeemed in coin on de-
mand. The note of the United States Is now
received for all public Dues it is carefully limi-
ted in amount, it is promptly redeemed on de-
mand, and ample reserves in coin are provided
to give confidence in and security for such re
demption. With these conditions maintained the
United States note will be readily received and
paid on all demands. While tlrey are maintained.
the legal-tender clause gives no additional credit
or sanction to the notes. but tends to impair
confidence and to create fears Of over-ssue. 1t
would seem, therefore, that now and during the
maintenance OF resumption it Is a useless and
Objectionable assertion Of power, which Con-
gress might row repeal on the ground OF ex-
consdtutionality is seriously contested, and
that from its nature it is subject to grave
abuse it would now appear to be wise to with
draw the exercise of such power, leaving it in
reserve to be again reSOrted to in such period
OF war or grave emergency as existed in 1862.
The government derives an advantage in circu-
lat1ng its notes without interest, and the people
prefer such notes to coin, as money, for their
convenience in use and their certain redemption
In coin on demand. This mutual advantage
ttonable power; nor need any inconvenience arise
from the repeal of the legal-tender clause as to
future contracts. Contracting parties may
stipulate for either gold or silver coin OF current
money. In the absence of an express Stipula-
tion for coin the reasonable presumption would
exist that the parties contemplated payment in
current money, and such presumption might
properly be declared by law and the contract
enforced accordingly.
The Secretary. therefore, respectfully sub
m1ts to Congress whether the legal-tender
V,nf fnNy 1r n1fr1
future contracts, and parties be left to stpulate
the mode Of payment. q. S. notes should still
be receivable for all dues to the government,
they should be promptly redeemed on demand,
and ample provision made to secure such re-
demptfon.
The total gold coinage for the year, the Secre-
OF standard silver dollars has been fully kept Up
to the requirements OF the law. The Secretary
says he again respectfully calls the attention OF
Congress to the Importance OF further limiting
the coinage of the silver dollar. The market
value Of the bullion in this coin has been during
the past year from ten to sixteen per cent, less
than the market value Of the bullion In the gold
dollar. The total amount Of silver dollars coined
10 November l, 1879, under the act Of February
2s 1878, was $45 206 200, of which Sl3, ,0a9 $40
In circulation, and the remainder $32 2O3, 1885, in
the Treasury at that time. No effort has been
spared to put this coin into circulation. Owing
to Its limited coinage it has been kept at par;
but its free coinage would soon reduce its cur
rent value to its bullion value, and thus estab-
suit would be to exclude gold coin from circula-
ton. 1t Is impossible to ascertain what amount
OF silver coin, based upon the ratio Of sixteen of
silver to one of gold can be maintained at par
with gold, but 1t is manifest that this can only
be done by the Government holding in its vaults
the great body OF the silver coin. It would seem
that nothing would be gained by an unlimited
coinage unless it is desirable to measure all val
ues by the silver standard. The Secretary can
not too strongly urge the Importance Of adjust
ing the coinage ratio Of the two metals by
treaties with commercial nations, and, until this
can be done, OF limiting the coinage of the sill
yer dollar to such sum as, in the opinion of
Congress. would enable the department to read
lily maintain the standard dollars of gold and
silver at par with each other.
REFUNDING.
A chapter is next devoted to the refunding
cint history OF the sale of the low-priced bonds
to take the place of the six per cent consols.
This shows that since November 49, 1878, to
which date the transactions were brought in
the last annual report, there have been re-
funded $3IO S4s $50 six per cent. and $93 $50 25O
five per cent. bonds OF the United States, into
bonds bearing interest at four per cent. and
making an annual saving of interest hereafter
of s., ,355, $3.50. The Secretary says:
ut Is hoped that the advancing credit OF the
country will enable the Secretary to sell such
bonds and certificates at premium. but it
seems better to maintain the general conditions
OF the four per cent bond rather than to under
take to sell bond at lower interest. The four
per cent. consol is now universally known. The
rate OF interest is as low as will generally main
tain the bond at par, and the premium will
measure its advance above par at favorable
periods. The certificates should bear the same
rate and be sold on the same terms as the bonds
1t is important that the authority granted
should include the power to refund, from the
passage OF the act at the present session. and to
prepay the excess OF interest on the bond to be
refunded prior to its maturity. The present is
believed to be an exceptionally favorable time
for such refunding."
NATIONAL BANKS.
Next the Secretary devOteS considerable space
to the subject of national banks and says
The advantages of this system over any SyS-
tenn Of banks hitherto devised are that their
circulating-notes are secured beyond preadven-
ture OF loss; they are Of universal credit in the
country wherever issued; they are more per-
fectiy protected from counterfeiting; they equal
He exchanges between distant parts of the coun-
try; they are promptly redeemed on demand at
one common place; the banks are subject to
strict and ylgilant surveillance by Independent
Officers OF the government; their condition is
frequently made known to the public; and they
contribute very large percentage of their
pfohtS In the way OF taxes. A system of bank
ing that after an existence of sixteen years,
through war and periods of great imitation and
great depression, has produced such results,
may fairly appeal for the confidence and support
Of Congress-"
CUSTOMS.
Next the Secretary treats of the customs col
lections. The increase OF revenue from spirit
during 1879 was 81. .149 46S.S So and from tobacco
IA T,l,a cfr,