The herald., 1895-12-17
cheney will be supplied eithtr from ABROAD
in exchange for our product Hs ana s'ecuri-
ties or by the banks at home, or po'h'

: in exchange for our produt us and siecurl
ties or by the banks at home, or po'h.
THE RESERVE DEPLE.r E.rED
The Tinted States notes and the treas
ury notes issued in payment for shver pu
lion, together amounting at the lMglnnin
to $500 ,612,0lS, have been used a hu ar
still being used 10 withdraw gold II o III ~
government whenever our people [" y,
| government or peoples of other cou U 'rie "
see proper to demand it for any puri ose
i and under the laws now eNls ing the SET 'e
| tary of the treasury has no means OF con
! Dlying with these demands except by tn
! issue and sale of interest bearing bonds un'
| der the act of January 4, 1879, or by the
purchase of gold coin with bonds or notes
1 of the United States under section o|o Oh
! the revised statutes.
! Against these demands the treasury has
no available means OF defense except at
! the sacrifice of the public credit and the
| immediate depreciation of the entire VOL
ume of our currency. Long adherence 10
false system has to great extent un-
dermined our national credit. so far as
| il is related to the maintenance OF a
sound currency, and it must be recon-
structed not merely propped up by frail ana
temporary supports. No surplus revenue,
however large, could extricate us from our
present difficulties or give assurance OF
safety in the future unless it should be re-
which would exempt the government from
the obligation to furnish gold when de-
manded to be used in making the pay
ments and it is scarcely necessary to sug-
gest that such system is Impossible as
long as the Uni ed States notes and treas
ury notes are kept in circulation and are
redeemable in gold by the government it.
self on presentation. The opinion seems
to prevail to some extent that the mere
possession of surplus in the treasury
would prevent Withdrawals OF, gold and
thus render the issue of bonds for the pro-
lection of the reserve unnecessary, but this
view of the subject is founded, in my judg-
ment, upon an entire misconception of the
causes that have produced the Withdraw
ais. Unless am wholly mlstaken,they have
very little, if any relation 10 the amount
of money held by the government or to the
amount of money the government has
ability to raise by taxation or otherwise,
but they relate primarily and almost eX-
clusiyeiy to the character of money that
it might be able TO supply and keep in cir
culation. In other words it was appre-
hension as TO the kind of money to be
used and not as TO the amount of money
on hand that brought our securities back
from abroad for sales. caused foreign in
vestors TO withdraw their capital and for
eign creditors to collect their debts aud
compelled our own people 10 suspend or
contract their business operations and
thus diminish the incomes OF employees and
greatly reduce or entirely stop the wages
of labor.
NEW POLICY DEMANDED
Large Withdrawals have been made dur
ing the last three years simply because
gold was wanted, and the desire to secure
gold was due TO growing distrust of the
other kinds of circulation and not at all to
any apprehension that the government
moi ha ahia n displarua "a III O.1li-
cations in some kind of paper or coin.
When the receipts from customs consisted
very largely of gold, as was the case prior
to July l, 1892, before the results of our
defective currency system had been fully
developed, a surplus revenue enabled the
treasury to pay out gold without disturb.
ing the reserve, and, besides, there was
at that time no great demand for
gold by the presentation of notes for
redemption. and there would there
fore have been no difficulty in main-
tanning the reserve, even if there had been
no surplus in the treasury; but the condl-
tions have entirely changed, and an en-
tirely different policy is demanded to meet
the situation now existing. With or with
out a surplus revenue, the government can
now procure gold only by negotiating loans
or by making purchases under the statutes,
and this state of affairs, which is the nat
ural result of causes still operative, is al
themselves are removed.
WAY TO PROTECT THE TREASURY.
"There is but ons safe and eifectual
way" the secretary says, "to pro ect our
! treasury against these demands, and that
is to retire and cancel the notes, which
| constitute the only II cans through which
the Withdrawals can be made. Many par
| tial and temporary remedies may be sug-
| gested and urged with more or less plaus-
billy, but this is the only one that will
certainly remove the real cause of our
troubles and give assurance of permanent
protection against their recurrence in the
future.
TREASURY BONDS.
"This can be most successfully and
economically accomplished by authorizing
the secretary to issue from time 10 time
! bonds payable in gold. bearing interest at
a rate not exceeding 8 per cent per annum
| and having a long time 10 run. and to eX-
change the bonds for United States notes
and treasury notes upon such terms as may
| be most advantageous to the government,
| or to sell them abroad for gold whenever
! in his judgment It is advisable to do, and
to use the gold thus Obtained in redeeming
| the outstanding notes, Under the opera
! ton of such plan, if judlciously executed,
there can be no improper contraction of
the circulation, because if it should at any
| time be found that other forms of cur
Tency we're not being supplied TO the eX-
| tent required, exchanges OF bonds for
| notes would be suspended and gold would
! be procured by selling the securities
! abroad. In order to facilitate the substitu-
| ton of other currency for the retirement
| of legal tender notes, the national
| banks should be authorized to issue notes
equal in amount to the face value of
bonds deposited to secure them, and the
tax on their circulation should be reduced
TO one-fourth OF per cent per annum.
THE NATIONAL BANKS.
"As part of the plan for the retirement
and cancellation of the legal tender notes
the trea sury should be relieved from re-
sponsibility for The redemption of national
| bank notes of failed banks and each asso.
| citation should he required to redeem its
| circulation a its own Office and at agen'
cies to be designated by the comptroller oil
! the currency, as was the case prior TO the
| passage of the act of June 80, 1894 or il
| this is not considered expedient and the
present system of currency redemption by
| the treasury is continued the secretary
| should have the power after a future date
to be fixed in the law to require the banks
! to keep their > per cent redemption fund
| in gold coin and to deposit gold coin for
| the withdrawal of bonds whenever circula.
ton is 10 be permanently secured or re-
! duced."
| The secretary also favors the passage of
| a law allowing national banks to establish
! branches in smaller towns with a view tC
! bringing them closer to the people in parts
of the country remote from large towns