Year: 1873

activity in legitimate business these temporary in
vestments are called in, and jeopardize, in their
sudden withdrawal the whole business of the
banks, both affecting legitimate deDositors; on the
one hand by excitement and distrust, and, ON the
other creating condition of things in which bor-
rowers on call are also unable to respond. The
banks have borrowed their money of depositors on
call. They have loaned it on call to spectators,
who, by its use, have contributed to initiate the
| prices of stocks or merchandise which have been
the subject of their speculations. The speculator
wants it to carry stocks till he dispose of them
without loss This he is unable to do in strin-
gent money market. The banks, their depositors,
and borrowers, all want it at the same time, and,
OF course, astringency is developed which spreads
distress throughout the country. The system Gre
ates an immense amount of debts payable on de-
mand, all of which thus suddenly and unexpected
ly mature at the first shock of financial or CONNER
cia embarrassment in the country, and at the very
time when most needed by the debtors, and when
they are least able to respond. There is safety
for corporations or individuals whose capital en-
ployed is wholly or mostly borrowed on call.


SPECIE PAYMENT.


There can be no doubt that, during the eight
years since the rebellion, there has been growing
desire among the people to restore paper circula-
ion to specie standard, and that any steps taken
to accomplish that object will be received with
general favor. 1t is not possible to resume and
maintain specie payments with so large an amount
of notes in circulation and small amount ef gold
in the country. The volume of currency must be
reduced, or that of coin greatly increased.
Should National Banks be prohibited from selling
the coin received by them as interest upon bonds
pledges to secure circulation, retaining the same
in whole or in part in reserve, or loaning 1t in the
discount of bills and notes payable in coin, as
Congress might prescribe, there would be gradual
accumulation of gold in banks which would do
something towards preparing for resumption.
This, with constant increase of coin in the Treas
ury, undertaken with the approval of Congress,
would ere long lead to the desired result, when
other conditions required for maintenance of
specie payments should become favorable


THE S44,000,0 600 RESERVE.


On the 4th of February, 6SfCongress passed
an anfcu hn n
cy, when the amount outstanding was 1856 600,
and that sum is now the minimum limit of issue;
but the law authorizing the issue of the maximum
of $4OO, 900 has never been repealed and has
uniformly been held by the Treasury Department
and the law officers thereof to be in full force In
view of the uncertainty which exists in public
sentiment as to the right of the Secretary of the
Treasury to issue United States notes in excess OF
the minimum, and the conflict of opinion as to
the policy of doing SOL respectfully recommend
that Congress shall set these questions at rest by
distinct enactment. Until that is done, whenever
there is a stringency in the money market, there
will continue to be pressure upon the Treasury
Department by those who favor the policy of ex-
pansion to increase the issue of notes to the maxi
mum by the purchase of bonds or otherwise While,
on the other hand, those who conceive that public
interests will be better served thereby will bring
equal pressure to keep the issue down to the mini
mum. Assuming that it is the settled policy of
Congress, as declared in the act of June 30, 1864
above stated, that the total amount of United
States notes issued and to be issued shall never
exceed $40O 000 am of opinion it would be
necessary to require the amount in actual clrcua-
ton to be kept up to the maximum or to any
amount above the present minimum.


FOREIGN TRADE.


The Secretary then discusses the subject of the
Foreign Trade of the United States, showing that
for many years the balance of trade in merchandise
has been largely against this country, and that
during the last two decades we have exported
over 800, COO, 600 in gold over and above
the amount imported. At present the advantage
is with the United States. With the balance of
trade in our favor return of specie payments
may be easily reached, and when reached may be
if such wise financial measures are
adopted as will prevent over-trading, extravagance
and speculation and encourage economy, industry.
thrift, and well-directed and prudent enterprises.


THE TARIFF. a#


Certain notifications of the Tariff laws are rec
ommended including the abandonment of dis
tinctions based upon commercial usage; the aban-
donment of "charges and commissions" as an ele-
ment of dutiable value; the repeal of all proyls-
isions of laws for what are commonly known as
damage allowances, rproportionate abatements
of duties on merchandise injured during the voyage
of importation; the adding of articles imported in
small quantities, and which do not come in COM
petition with those manufactured in this country,
to the free list; the abolition of the fees for SER
vices on the Northern frontier, and the abolition
of the tonnage tax.