Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-11-19
THE WHITE METAL.
Secretary Fosters Letter Read Before the
Bankers Convention at
New Orleans.
WASHINGTON, D. C., Nov. c. 1891.

OGENTLEIES-In response to the request
contained in your communication of the 18th
ult., that l prepare letter upon the opera
ton of the act of July IA, 1890, to be read
before the annual convention of bankers, l
have the honor to submit the following:
The essential provisions OF the law of
July IA, 1890, are these:
l. Monthly purchase by the government
of 4, 800, 600 ounces of silver at the market
price.
.. Payment to be made in new form of
paper money denominated treasury notes.
3. These notes to be full legal tender for
all debts, public and private, and to be held
by any national bank association as part of
its lawful reserve.
4. 1t is declared to be the policy of the
United States to maintain the two metals
on parity with each other at the present
legal ratio, or such ratio as may be provided
by law.
5. Two million ounces OF silver shall be
coined monthly into silver dollars until July
/, 1891.
6. After July l, 1891, the compulsory coin
age of silver dollars ceases; only such dol
lars need be coined Us are necessary for the
redemption of treasury notes.
Z. The provision of the act of February
IS 1873, requiring the monthly purchase
and coinage into silver dollars Of not less
than g, Co., GOO nor more than 81, 600, 900
worth of bullion, is repealed.
5. The moneys on deposit with the treas
ury for the redemption of national bank
notes are covered into the treasury, and re-
tired bank notes are to be redeemed from
current cash. The amount OF silver bullion
purchased with treasury notes under the
provisions of the new law, from August -,
1896. to November l, 1891, has aggregated
sc, 5oS, $50 fine ounces, costing SOS, 626, sos.
an average cost of 81. 03 per fine ounce.
From this q, SIS, AS dollars have been
nd hn al, hoe haar, ct
in the shape of fine bars in the vaults of
the minis as reserve against the treasury
notes outstanding.
While the new silver law provides for the
purchase of nearly two and a half times the
amount of silver required by the act of
1873, the compulsory coinage and issue of
2000,000 silver dollars monthly and of
silver certificates representing such dol
lars) is done away with. In lieu of such
dollars United States notes of full debt
paying power redeemablc in gold or silver
coin at the option of the secretary Of the
treasury, and having behind them practi-
cally gold dollars worth Of silver bullion,
have been substituted.
The new law provides for an annual in
crease of our currency, approXimating 500
000.O00, or deductlng the average retire
ment of national bank notes in recent
years, an annual addition to our circulating
medium of S24 1000, 200.
While it IS true that the amount of money
in circulation in this country at the present
time is greater than 1T any previous period
in our history, and more per capita than in
any of the leading commercial nations
of the world, with the single eXCep-
ton of France | am of the opinion that ow-
ing to our rapid growth in population and
wealth ana the extraordinary development
in all kinds of business, 4 yearly increase
o uIur circulating medium, somewhat pro-
pOrtiOnate to our growth in population, is
imperatively demanded. The issue of
treasury notes under this contract affords
such an increase of L perfectly convenient
and sound currency, based dollar for dollar
upon the cost value of silver bullion, re-
deema bic on demand in gold coin, and with
the pledge of the government to maintain
it at par.
That this addition to our circulation has
proved beneficial was forcibly exhibited
during the spring and summer Of the present
year, when, through the necessities of
Europe, gold was withdrawn from this
country in large quantities, aggregating. in
brief period of five months, over 81, 0O0,-
600. But for the substitute provided for
domestic trade in the form of treasury
notes, issued by the government in the prr-
chase of silver bullion, it is probable that
this country would not have been able to
stand this enormous drain of gold without
producing stringency in the money mar
Another object of the act of July IA, 1890,
was to provide home market for the sill
yer product of the United States by requir-
ing the purchase of a quantity of silver
approximating the monthly product of our
mines.
That it has again refrigerated in price is
owing in part to the fact that because of the
liberal policy exercised by the treasury, as
required by law, in the purchase of silver,
both as to the quantity purchased and the
price paid, large amounts of foreign silver
were attracted to this market.
Other cases, which l cannot enlarge
upon, have operated to produce this result,
prominent among which is the large falling
of in the shipments of silver to India and
China. The shipments of silver from
London TO India during the first nine
months of the present calendar year shows
a reduction of over S1T, 100000 as compared
with the same period of the prior year,
while the shipments of silver to China
show even greater decrease.
1t is claimed by those conversant with the
product and movement of silver, that when
the visible stock upon our market is dis
posed of, the monthly absorption of AGO.
coo ounces of silver by this government
viii have the tendency to efectually and
permanently steady the price of that metal.
If the reconciliation of silver. as full
legal tender money is ever accomplished, it
can only be done by the action of nations of
sufficient commercial importance TO MAIN
tain some fixed ratio in coinage between
the two metals.
That this large absorption of silver by
the government for currency purposes
would cause a rapid enhancement in the
value of silver was very generally believed.
Indeed, it was hoped that the increase in
the value of silver under the operations of
this law would be so great and of so perma-
nent nature that point would soon be
reached when we could with safety open
our minis to the free coinage of silver
Under the operations of this law silver ad-
varced from So cents per fine ounce on the
1st of January, 1890, to S1.2l on August 10,
1890.
The new silver act is an important step
in that direction: l. Because the compul-
sorry coinage and issue of silver dollars of
less intrinsic value than their nominal
value is repealed 9. Because it provides
for much larger absorption of silver by
the country than heretofore for currency
purposes. And g. Because the new law
de lares that it is the established policy
of the United States to maintain the
1t seems 10 me that the act under considera-
provisions of the act of 1878, which it re-
peals, in that it furnishes sound currency
to meet the growing wants of our country
and has tendency to reduce the difference
in value between the two metals and thus
sired. Very respectfully,
CHARLES FOSTER, Secretary.