Daily Kennebec journal., 1894-12-05

These facts made it highly imprudent
to neglect any precaution necessary to in
sure the safety of our financial position.
With a current revenue inadeqate to de-
fray the ordinary current expenses, and
practically no receipts of gold, 1t was evil
dent that the treasury would be unable TO
meet even the usual demands for export,
which, however, would probably be very
much augmented by the increased appre-
hension produced by the depleted condi-
ton of the reserve. In this condition of
affairs it was deemed necessary TO again
resort to the sale of bonds.
The secretary then mentions the recent
bond operation and the disposal of the en-
tire issue of $50, 600, 600 to the New York
syndicate, upon the basis of !. S7S per cent.
The secretary states that this transac-
ton iustifies the opinion that a ~ per
cent bond, having reasonable time to
rum could probably have been sold at par,
and certainly that a per cent. bond could
have been disposed of at or above that rate.
He repeats the recommendation made in
his previous report that, in the interest of
the government and the people, power be
conferred upon the secretary of the treas
ury to negotiate loans at a lower rate of
interest and for shorter time than are
now allowed.
The existence of such authority. he says
instead of increasing the probabilities of IA
frequent resort to that means of raising
money, would have the contrary effect,
because, when it is known that the secre-
tary of the treasury is clothed with ample
power and facilities to procure means for
the maintenance of the reserve, public
confidence in the ability Of the govern
ment to meet promptly all demands upon
it will be much stronger than under pres
ent circumstances.
Besides, the policy of limiting the gov
ernment to the sale of an antiquated bond
bearing a rate of interest wholly inconsis-
tent with the existing state of public
credit, and having "a longer time to run
than is apparently necessary at the date
of its issue, cannot be justified upon any
grounds of expediency or principle.
The secretary declares that the law
should be amended to conform TO the pres
ent conditions and requirements of the
public credit and service, and he expresses
the earnest hope that Congress will take
nearly and favorable action on the subject.
He says that if there had been no statute
or public policy requiring the government
to redeem in coin and reissue its own notes
and to maintain the parity of two kinds
of coin of unequal intrinsic value, there
would never have been time since the
close of the war when the funds of the
treasury We're not ample for all other pur-
poses and no issue of bonds could, there
fore, have been necessary.
If, however, the mandatory legislation
L L., ,f
notes in circulation. Notwithstanding their
repeated redemptions in coin, and also I'M
poses upon the government an obligation
to maintain the parity of the two metals
is perpetuated, the treasury will be com
PEELED to procure and furnish gold to all
who demand it. And it will have no
lawful or regular means of obtaining gold,
except by the sale of bonds thus periodi-
cally increasing the interest bearing debt
without making permanent additions TO
its stock of gold, or diminishing to any
extent its obligations on account of the
notes redeemed. This situation is the
necessary result of three features of our
currency legislation, and it cannot be per
manently avoided, or even temporarily
improved, without material changes in
our laws relating TO that subject. These
features are:
On. The circulation of United States
notes AS currency and their current re
demption in coin on demand
(2). The compulsory reissue of such
notes after redemption.
(3). The excessive accumulation and
coinage of silver and the issue of notes
and certificates against it upon a ratio
which greatly over-valucs that metal as
compared with the standard unit of value
in this and the other principal commercial
countries.
These features, the secretary says, con
stitutea monetary system unlike that Of
any other enlightened government. One
of the most obvious effects is to defeat all
attempts of the treasury department TO
procure and keep on hand sufficient gold
to inspire entire confidence at home and
abroad in the governments ability to pre-
serve its credit and maintain "A sound
currency.
The eport states that although our cx-
ports of merchandise, including silver bull
lion, exceeded our imports during the
fiscal year 1898, to the amount of S36,
279, 795, the net export of gold was $50
S97, 275, while during the fiscal year 1894,
the net export of that metal was 81, l12,-
665. notwithstanding the balance in our
favor on account of merchandise and silver
bullion abroad amounted to 1864, 3l4, 663.
The only part of our present currency
possessing any elasticity is that issued by
the national banks, and It'll 5 now generally
conceded that in this respect it has failed
to meet the requirements off the situation
at some of the most critical periods in the
business affirs Of the country.
This failure is attributable, in the
sccretarys opinion, 10 three principal
causes:
l. The large volume of United States
currency of various kinds kept constantly
outstanding. making the contraction or
expansion of the comparatively small ma
tional bank circulation less effective than
it would otherwise have been. .. The
difficulty and delay in procuring, and to
some extent, in retiring ciroulations, and
thirdly and mainly, the provisions of the
law which require the deposit of United
states bonds to secure circulation, and
restrict the issue of notes to 90 per cent.
of the par value of the bonds.
In view of the foregoing consideration
and many Others that might be urged in
favor of a reorganization and reformation
of our paper currency system, | have pre-
pared the outlines of plan which, in NY
oninion will relieve the government to q