Year: 1873

try, is the best that has ever been devised.
Usually, in times of such trials, currency
has become worthless or so much depre-
ciated in value as to initiate the values of
all the necessaries of life. As compared
with the currency, every one holding it
has been anxious to dispose of it on any
terms now we witness the Teverse-hold-
ers of currency hoard it as they did gold
in former experiences of like nature.


1t is patent to the most casual observer
that much more currency or money IS re-
quired to transact the legitimate trade OF
the country during the fall and winter
months, when the vast crops are being re-
moved, than during the balance OF the
year. With the present system, the amount
in the country remains the same through
out the year, resulting in the accumulation
of all the surplus capital of the country,
when not employed in the moving OF
crops. Tempted then by offers OF protita-
BILE loans this surplus capital must earn
the interest paid, with a profit. Being
subject to call it can be loaned only in
part at best to the merchant or mannfac
turer for fixed term. Hence, no matter
how much currency there might be in the
country, it would be absorbed. prices keep
ing pace with the volume and panics, striT-
gency and disasters would ever be occur



system is the object to be obtained first,
prevention of the use of money
in stock and other species of speculation.
70 prevent the latter, it seems to me that
one great step would be taken by prohib-
iting the national banks from paying in
terest on deposits, by requiring them to
hold their reserves in their own vaults, and
by forcing them into resumption, though it
would be only in legal tender notes. For
this purpose / would suggest the establish
ment of clearing houses for your consider
alton. To secure the former many plans
have been suggested, most of which look
to me like imitation on one hand or COM
pelling the Government on the other to
pay interest, without corresponding bene-
fits, upon the surplus funds of the country
during the seasons when otherwise unenl-
ployed. | submit for your consideration
whether this difficulty might not be over
come by authorizing the Secretary OF the
Treasury to issue at any time national bank
notes of sufficient amount below fixed
percentage of their issue, say forty per
cent, upon the banks depositing with the
Treasurer of the United States an amount
of government bonds equal to the amount
of notes demanded, the banks to forfeit to
the Government say four per cent. on the
interest accruing on the bonds pledged
during the time they remain with the Treas
ury, as security for the increase OF circula-
ton; the bonds so pledged to be redeem
able by the banks at their pleasure, either
in whole or in part, by returning their own
bills for cancellation to an amount equal to
the face of the bonds Withdrawn. Iwould
further suggest for your consideration the
propriety of authorizing National Banks
to diminish their standing issue at pleasure
by returning for cancellation their own
bills and withdrawing so many United
States bonds as are pledged therefor.


In view of the great actual contraction
that has taken place in the currency and
the comparative contraction constantly GO
ing on, due to the increase Of speculation,
increase of manufactures and all the indus
tries. do not believe there is too much of
| it now, for the dullest period OF the year.
Indeed, if clearing houses should be estab-
| lished, thus forcing redemption, it is q
question for consideration whether bank
| ing should not be made free, retaining all
safeguards now required to secure billhold-
ers. In any modification of present laws
regulating national banks, and as further
| step towards the resumption of specie pay
ment, invite your attention to the con-
! sideration of the propriety OF exacting from
| them the retention as a part of their reserve.
either the whole or part of the gold interest
aecruing upon the bonds pledged as securi-
/ ty for their issue.


| have not reflected enough on the bear
ing this might have in producing a scarcity
of coin with which to pay duties on inn
ports to give it my positive recommends


ton, but your attention is invited to the
subject.


/ During the last four years the currency
| has been contracted directly by the with
| drawal of three per cent certificates, COM
pound interest notes and Government
bonds outstanding, on the 4th of March,
| 1869, all of which took the place of the legal
tenders in the bank reserves to the


extent of $63,000,000. During the same


period there has been a much larger


comparative contraction OF the currency.
/ The population of the country has largely
increased; more than twenty-five thOus-


and miles of railroad have been built, re-
quiring the active use of capital to operate
them: millions of acres of land have been
opened to cultivation, requiring capital to


move the products; manufactures have


multiplied beyond all precedent in the


same period of time, requiring capital


weekly for the payment of wages and fol


the purchase of material, and probably the


largest of all is the comparative compe


tition arising from the organizing of free
labor in the South. Now every laborel


there receives his wages, and for want O


savings banks the greater part of sucf


wages is carried in the pocket, or hoardet
till required for use. These suggestions
4 are thrown out for your consideration
\ without any recommendations that they


shall be adopted literally, but hoping


that the best method may be arrived at tx


secure such an elasticity of the currency a
will keep employed all the industries o
the country, and prevent such an initiation
as will put off indefinitely the resumption


of specie payments, an object devoutly Il
be wished for by all, and by none NOR
earnestly than the class of people mos
f directly interested, those who earn thei


bread by the sweat Of their brows.


The decision of Congress on this subjec
will have the hearty support of the exeeu
: tive.


sHIP-BUILDING AND COMMERCE..
, Tn r)reyioI1s noaSsaoes T have called al