Year: 1876

lake their place with Government, State,
and other corporate and prij
vate bonds, of which thousands of mill
lions exist among US. In the perfect
ease with which they can he changed
from currency into investments lies thel
only danger to be guarded against in the
adoption of general measures intended
to remove a clearly ascertained surplus
THAT is, the withdrawal Of any which
is not permanent excess beyond the
wants of business Even more mischiev
ious would be any measure which affects
public imagination with the fear of an
scarcity. In a community
where credit is so much used fluctuations
in values and vicissitudes in business are
largely caused by the temporary beliefs
of men, even before those beliefs can
conform to ascertained realities.


THE AMoUNrioF NECESSARY CURRENCY
At given time cannot be determined
arbitrarily, and should not be assumed
on conjecture The amount is subject
to both permanent and temporary chan
ges. An enlargement of it, which SEEM
ed to be durable, happened at the begin
ming of the civil war by a substituted
use of currency in the place of individual
credits. 1t varies with certain states of
business; it fuctuates with considerable
regularity at different seasons of the
year. In the autumn, for instance, when
buyers of grain and other agricultural
products begin their operations, they
usually need to borrow capital or circu.
iating credits by which to make their
purchases, and want these funds in cur


rency capable of being distributed in
small sums among numerous sellers
The additional need Of currency at such
times is five or more per cent of the
whole volume, and if surplus beyond


what is required for ordinary use does
not happen to have been on hand at
money centers. scarcity of currency
ensues. and also stringency in the loan
market. 1t was in reference to such ex.
periences that in a discussion of this
subject in my annual message to the
New York Legislature, Of January 5,
1875, the suggestion was made that the
Federal Government is bound to redeem
every portion of its issues which the
public do not wish to use. Having as.
sumed to monopolize the supply of cur
rency and enacted exclusions against
everybody else, it is bound TO furnish
all which the wants of business require
The system should passively allow the
volume of circulating credits to ebb and
flow according to the ever changing


wants of business. 1t should initiate as
closely as possible the natural laws of
trade, which it has superseded by arti-


fetal contrivances. And in a similar
discussion in my message of January 4,


1876, it was said that resumption should
be effected by such measures as would
keep the aggregate amount of currency
self adjusting during the process without
creating at any time an artificial scarci
ty, and without exciting public imagina-
tion with alarms, which impair conf
dence and distract the whole machinery
of credit and disturb the usual opera
tions Of business.


PUBLIC ECONOMIES,


Official retrenchments and wise finance
are the means which the St. Louis Con-
vention indicates as the provision for
reserves and redemption. The best re
sources is to reduce the expenses of the
Government below its income, for that
imposes no new charge on the people.
If. however, improvidence and waste,
which have conducted US to a period of
falling revenues, oblige US to supple
ment the results of economies and re-
trenchment by some resort to loans, we
should not hesitate. The Government
ought not to speculate on its own dis
honor in order to save the interest of
its broken promises which it still COM
pels private dealers to accept at ficti
tious par The highest national honor
is not only right but would prove profit
able. OF the Public Debt, nine hun.
dred and eighty-five millions bear inter-
est at 6oper cent. in gold. and S65,000,-
600 at per cent in gold. The aver
age interestis 5 per cent. A financial
policy which should secure the highest
credit wisely availed of ought gradually
to obtain reduction of l per cent. in
the interest on the most of the loans
A saving of per cent ON an average
would be S17, 100000 year in gold
That saving regularly invested at Al per
cent. would, in less than thirty-eight
years, extinguish the principal The
whole s1,700.0O0,00O of funded debt
might be paid by this saving alone,
without cost to the people.


/ THE PROPER TIME FOR RESUMPTION


Is the time when wise preparations shall
have ripened into perfect ability to &C.
complish the object with certainty and
ease that will inspire confidence and en-
courage the reviving Of business. The


earliest time in which such result can
be brought about is the best even when
preparations shall have been matured =


The exact date would have to be chosen


with reference to the then existing state
of trade and credit operations in our


country, the course of foreign com


merce and condition of exchanges with
othor n pot;opos