The herald., 1897-12-07
To the Congress Assembled in Fifty
Fifth Session
The Currency Question TO Be Solved by the Adoption
Of Plans Submitted by Secretary Gage--Recog-
u milton Of Cuban BeIIigerency Deprecated.
Vast Deal Of History and Mod
icum Of Recommendation

rowing. 1t can get 1t in no other way
when 1t most needs 1t. The government,
without fixed gold revenue. Is pledged
TO maintain gold redemption, which 1t
has steadily and faithfully done, and
which. under the authority now given 1t,
It will continue to do.
The law which requires the govern
ment, after having redeemed it's notes,
to pay them out again as current funds,
demands q constant replenishment Of
the gold reserve. This Is especial
ly SO in times of business panic and when
the revenues arc insufficient to meet the
expenses Of the government At such
times the government has no other way
to supply it's deficit and maintain re-
demptior but through the increase of
it's bonded debt, as was done by the ad-
ministration Of my predecessor when
$2C2. SIS, 400 four and a half per cent bonds
were issued and sold and the proceeds
used to pay the expenses Of the govern
ment in excess Of revenues and sustain
the gold reserve. While it is true that
the greater part of the proceeds of these
bonds were used to supply deficient revc-
nues. Il considerable portion was re-
quired to maintain the gold reserve.
With our revenues equal to our ex-
penses, there would be no deficit requir
ing the issuance Of bonds But IL the
gold reserve falls below 100000, 900 how
will it be replenished except by selling
more bonds? Is there any other way
practicable under existing law? The
serious question is, shall we continue the
policy that has been pursued in the past;
that Is, when the gold reserve reaches
the point of danger, issue more bonds to
supply the needed gold, or shall we pro-
vide other means to prevent these re-
curing drains upon the gold reserve? :?
If no further legislation is had, and the
policy of selling bonds is to be continued,
then Congress should give the Secretary
of the Treasury power to sell bonds at
long or short periods, bearing less rate
of interest than Is now authorized by
law.
AN OBVIOUS DUTY
1 earnestly recommend as soon as
the receipts of the government are quite
sufficient to pay all the expenses of the
government that when any Of the Unit
ed States notes are presented for re-
uCAtPtAOAA AA sun 0AAN IA z ACACCAiACu IA
gold such notes shall be kept and set
apart and only paid out In exchange for
gold. This Is an obvious duty. If the
holder of the United States note prefers
the gold and gets 1t from the govern
ment he should receive back from the
government United States note with
out paying gold in exchange for it. The
reason for this Is made all the more ap-
parent when the government issues an
interest bearing debt to provide gold for
the redemption Of a United States nom
interest bearing debt Surely, it should
not pay them out again except on de-
mand and for gold. If they are put out
in any other way they may return again
to be followed by another bond issue to
redeem them-another interest bearing
debt to redeem u non-interest bearing
debt.
GOLD REDEMPTION
In my view, it is of the utmost i'm
portance that the government should
he relieved from the business of provid-
ing for all the gold required for ex-
changes and export. This responsible
ity is alone borne by the government
without the usual and necessary bank
ing powers to help itself. The banks
do not feel the strain of the gold re-
demption. The whole strain rests upon
the government and the size of the gold
reserve in the Treasury and comes to
be, with or without reason, the signal
OF danger or of security. This ought
to be stopped. If we are to have an
era of prosperity in the country with
sufficient receipts for the expenses of the
government we may feel no immediate
embarrassment from our present cur
rency; but the danger still exists and
will be ever present, menacinS us as
long as the existing system continues.
And, besides, 1t is in times of adequate
revenue and business tranquility that
the government should prepare for the
worst. We cannot avoid, without SER
ious consequences, the wise considera-
tion and prompt solution OF this qucs-
ton.
CAGES PLAN
The Secretary OF the Treasury has out
lined plan in great detail for the pur-
pose or removing threatened recur-
save us from future embarrassment on
that account. To this plan invite your
careful consideration.
COuSuA Will tuc NcCIctdIy OIL Cno
Treasury in his recommendation that
national banks be allowed to issue notes
to the face value of the bonds which
they have deposited for circulation and
that the tax on the circulating notes
secured by deposit of such bonds be re-
duced to one-half of / per cent per
annum. also join him in the recon-
mendation that authority be given for
the establishment of national banks
with minimum capital of $4,000. This
will enable the smaller villages and
agricultural regions Of the country to
be supplied with currency to meet their
needs
I recommend that the issue of national
bank notes be restricted to the denom-
ination Of ten dollars and upward. If
the suggestions I have herein made
shall have the approval of Congress,
then would recommend that national
banks be required to redeem their notes
in gold.
THE CUBAN QUESTION