Year: 1873

a specie basis is reached, and that spe-
Gle basis cannot be reached and main
tained until our exports, exclusive of
gold, pay for our imports, interest due
abroad, and other specie obligations, or
so nearly so as to leave an appreciable
accumulation of the precious metals in
the country from the products of our
own mines.


The development of the mines of prec-
ious metals during the past year, and
the prospective development of them
of years to come, are gratifying in their
results. Could but one-half of the gold
extracted from the mines be retained at
home, our advance towards specie pay
ments would be rapid.


THE CURRENCY.


To increase our exports, sufficient cur
rency is required to keep all the indus
try of the country employed Without
this, national as well as individual bank
ruptcy must ensue. Undue imitation,
on the other hand, while it might give



initiation of prices, the impracticability
of competing in ournaarkets for the pro-
ducts of home skill andEiabor, and re-
peated renewals of present experiences.
Elasticity to our circulating medium,
therefore, and just enough of it to trans
act the legitimate business of the country
and to keep all industries employed, is
what is most to be desired. The exact
medium is specie-the recognized medi-
um of exchange the world over. That
obtained, we shall have a currency of an
exact degree of elasticity. If there be
too much of it for the legitimate pur-
poses of trade and commerce, it will
flow out of the country; if too little, the
reverse will be the result. To hold what
we have, and to appreciate our currency
to that standard is a problem deserving of
the most serious consideration OF Con-
gress. The experience of the present
panic has proven that the currency of
the country, based as it is upon the
credit of the country, is the best
that has ever been devised. Usual
| ly in times of such trials, currency has
become worthless, or SO much .deprecia-
ted in value as to initiate the value of all
the necessities of life as compared with
currency. Every one holding it has
been anxious to dispose of it on any
terms. Now we witness the reverse
Holders of currency hoard it as they did
4 gold in former experiences of a like ma
ture. 1t is patent to the most casual OBJ
server that much more currency or mon
ey is required to transact the legitimate
trade of the country during the fall and


winter months, when the vast crops are
being removed, than during the balance


of the year. With our present system


the amount in the country remains the


same throughout the entire year, result


ing in an accumulation of all the sur


plus capital of the country in few


eenters, when not employed in the NOV


ing of crops, tempted there by the offer


of interest on call loans. Interest being
paid, this surplus capital must earn


this interest paid with profit Being
subject to call, it cannot be loaned on
ly in part, at least, to the merchant or


manufacturer for fixed term, hence,


no matter how much currency there


might be in the country, it would be


absorbed, prices keeping pace with the


volume, and panics, stringency and dis


asters would ever be recurring with the


autumn. Elasticity in our monetary


system, therefore, is the object to be at


tanned first, and next to that, as war is


possible, prevention of the use of other


peoples money in stocks and other spe-


cies of speculation. To prevent the lat
ter, it seems to me that one great step


would be taken by prohibiting the ma


tional banks from paying interest on de-


posits, by requiring them to hold their


own vaults, and by forcing. them into
resumption, though it should be only in


legal tender notes. For this purpose l


would suggest the establishment of clear


ing houses for your consideration. To


secure the former, many plans have been


suggested, most, if not all, of which look


to me more like imitation on the one
hand, or compelling the Government on
the other to confer interest without cor
f responding benefits upon the surplus
/ funds of the country during the season
when otherwise unemployed. / submit
} for your consideration whether this diff
/ fculty might not be overcome by au-
/ thorizing the Secretary of the Treasury
: to issue at any time, to national banks
5 of issue, any amount of their notes be-
low third percentage on their issue
: say forty per cent, upon the banks de
/ posting with the Treasury of the United
States an amount of Government bonds
D equal to the amount of notes demanded
t the banks to forfeit to the Government
: say four per cent, of the interest accru
t ing on the bonds so pledged during th'
: time they remain with the Treasurer a
i security for the increased circulation
e the bonds so pledged to be redeemabl,
= by the banks at their pleasure, either il
n whole or in part by returning their owl
d bills for cancellation to an amount equa
: to the face of the bonds withdrawn
1 I would further suggest for your con
) sideration the propriety of authorizing
i national banks to diminish the standing
e issue at pleasure, by returning for con
e collation. their own bills and withdraw
: ing SO many United States bonds as ar
n pledged for the bills returned.


e In view of the great actual contraction
,t that has taken place in the currency
e and the comparative contraction contin
le uously going on due to the increase @
N population, increase of manufacture
< and allthe industries, do not believ
g that there is too much now for the dull
n- est period of the year. Indeed, if cleai
ir ing houses should be established, thu
k forcing redemption, it is question fc
le your consideration whether bankin