158 MONEY AND CREDIT 



question the standard of value. This is perhaps the strongest 

 guarantee we could have against a recurrence of the crisis of 1893, 

 but our position has been improved in other ways. The Act of 

 March 14, 1900, increased the gold reserve for the redemption of 

 legal-tender notes by fifty per cent, and provided for its replenish- 

 ment in case of need, and it made the notes expressly redeemable 

 in gold, whereas they had previously been redeemable in " coin." 

 It separated the fiscal from the currency transactions of the govern- 

 ment and prohibited the use of the gold reserve for any other pur- 

 pose than the redemption of notes. But it authorised the Secretary 

 of the Treasury to pay the notes out again " to purchase or redeem 

 any bonds of the United States, or for any other lawful purpose the 

 public interests may require, except that they shall not be used to 

 meet deficiencies of the public revenues." 



Now a deficiency of the public revenues cannot be judicially 

 ascertained without a standard of a full or non-deficient revenue. 

 The law does not supply such a standard. Apparently a deficiency 

 means a shortage of ordinary income as compared with ordinary 

 expenses during one fiscal year, regardless of any preexisting surplus 

 or deficit in the Treasury. But there are extraordinary expenses 

 and extraordinary receipts in time of peace and still more in time of 

 war. Where is the line to be drawn which shall separate the ordinary 

 from the extraordinary? A little reflection will show that this 

 saving clause in the Act of 1900 is meaningless, or, at most, only 

 advisory. The Secretary of the Treasury must determine for himself 

 whether a deficiency of the public revenues does or does not exist 

 at any time. In other words, the paying out of redeemed greenbacks 

 is optional with him, as it was before. This is a defect in the law 

 which ought to be cured by an explicit proviso that legal-tender 

 notes presented for redemption shall not again be put in circulation 

 except in exchange for gold deposited in the Treasury by private 

 persons. Thus the reissued greenbacks would be gold certificates 

 in fact, although not in form; and in time public opinion would require 

 that the form be changed so as to correspond with the fact. 



Are our silver dollars to be considered a source of anxiety? Theo- 

 retically they are. They are a part of the fiat money of the country. 

 They are like the greenbacks in all essentials. They circulate by 

 virtue of the government's stamp, and the government accepts 

 them in all payments to itself. There are $576,000,000 of them, 

 $70,000,000 being in circulation as coin and the remainder as cer- 

 tificates. The field of retail trade has been practically reserved for 

 them by law, and the growth of the country has been so rapid that 

 the redundancy of 1894 has become a deficiency in 1904. There is 

 not enough currency of denominations under ten dollars now to 

 meet the legitimate demands of trade, and while this condition lasts 



