OUR MONETARY EQUILIBRIUM 157 



under it when the gold reserve was replenished. Congress accordingly 

 reenacted it in the year 1900, at which time the amount of old 

 certificates outstanding (held mostly by banks for clearing-house 

 purposes) was $228,000,000. The volume of certificates has since 

 increased by leaps and bounds. It is now above $500,000,000 and 

 is still growing, and most of the increment has gone into general 

 circulation, in obedience to a demand for a paper medium of exchange 

 that could not otherwise be satisfied. 



While nothing of this kind was contemplated by Congress in the 

 original enactment of the law, it must be regarded as most fortunate 

 in two particulars. It has contributed to cure the prime defect 

 in the national banking system - - the rigidity of its note issue - 

 and has saturated the currency with gold. Each new certificate 

 is a prop to our monetary equilibrium, since it increases the pro- 

 portion of gold to the credit circulation. That proportion at the 

 present time, counting only the gold in sight, is as 66 to 100, being 

 about the same as that of the Bank of England. Our proportion 

 would be even greater than it is if gold certificates could be issued 

 of lower denominations than twenty dollars. There is no valid 

 reason why ten-dollar certificates should not be issued. They are 

 greatly needed now, the Treasury being unable under present laws 

 to meet the public demand for the smaller denominations in any kind 

 of paper circulation. Of course, gold eagles, halves, and quarters can 

 be had without limit as to quantity, but our people do not like to 

 carry metal in their pockets, except for small change; moreover, 

 the frequent handling of gold involves waste and loss by abrasion. 

 The very next reform in our money system should be the lowering 

 of the denominations of gold certificates to ten dollars, both as a 

 public convenience and as a further support to our monetary equil- 

 ibrium. 



What we mean by monetary equilibrium is a state of absolute 

 confidence that every dollar in circulation, whether of paper or of 

 metal, is the equivalent in the hands of the holder of 25.8 grains of 

 standard gold. Have we reached that state of confidence? If not, 

 how far do we still come short of it? 



Probably ninety-five per cent of our people are perfectly satis- 

 fied on that point now. Yet the remaining five per cent think 

 that there is still some room for doubt. They know that the con- 

 tinued redemption of the greenbacks depends upon the will of 

 Congress, and they remember that only ten years ago Congress 

 refused to do anything whatever to replenish the redemption fund 

 when the Treasury was only two days removed from bankruptcy. 

 What protects us against a similar crisis hereafter? 



I have already alluded to the action or non-action of the St. Louis 

 Convention, which assures us that no political party now calls in 



