CONGRESS. (PBESIDENT'S MESSAGE.) 



191 



the people would so affect the business of the country, 

 that the sum of $79.864.100 ot' such surplus v. . 

 plied to the payment of the principal and interest of 

 the three-percent bonds still outstanding, and which 

 were then payable at the option of the Government. 



The precarious condition of financial affairs among 

 the people still needing relief, immediately after the 

 80th day of June, 18* 7, the remainder of 'the three- 

 'it. bonds then outstanding, amounting with 

 principal an.l interest to the sum of $18,677,500, were 

 called in and applied to the sin king- fund contribution 

 for the current fiscal year. Notwithstanding these 

 operations of the Treasury Department, representa- 

 tions of distress in business circles not only continued 

 but increased, and absolute peril seemed at hand. In 

 these circumstances the contribution to the sinking 

 fund for the current fiscal year was at once completed 

 by the expenditure of *27,''j84,i83.55 in the purchase 

 of Government bonds not vet due, bearing tour and 

 four and one half per cent, interest, the premium paid 

 thereon averaging about twenty -four per cent, for the 

 former and eight per cent, for the latter. 



In addition to this the interest accruing during the 

 current year upon the outstanding bonded indebted- 

 ness of the Government was to some extent antici- 

 pated, and banks selected as depositories of public 

 money were permitted to somewhat increase their de- 

 While the expedients thus employed, to release to 

 the people the money lying idle 'in the Treasury, 

 served to avert immediate danger, our surplus reve- 

 nues have continued to accumulate, the excess for the 

 year amounting on the 1st day of December 

 1.19, and estimated to reach the sum of 

 '0,000 on the 30th of June next, at which date 

 .nected that this sum, added to prior accumula- 

 tions, will swell the surplus in the Treasury to $140,- 



There seems to be no assurance that, with such a 

 withdrawal from use of the people's circulating me- 

 dium, our business community may not in the near 

 future be subjected to the same distress which was 

 quite lately produced from the same cause. And 

 while the functions of our national Treasury should 

 be few and simple, and while its best conditio'n would 

 be reached. I believe, by its entire disconnection with 

 private business interests, yet when, by a perversion 

 of its purposes, it idly holds monev uselessly sub- 

 tracted from the channels of trade, there seems to be 

 reason for the claim that some legitimate means should 

 be devised by the Government to restore in an emer- 

 gency, without waste or extravagance, such money to 

 its jnace among the people. 



It such an emergency arises there now exists no 

 clear and undoubted Executive power of relief. Here- 

 tofore the redemption of three pcr-cent. bonds, which 

 were payable at the option of the Government, has 

 afforded a means for the disbursement of the excess of 

 our revenues ; but these bonds have all been retired, 

 and there are no bonds outstanding the payment of 

 which we have the right to insist upon. Tlie contri- 

 bution to the sinking fund which furnishes the occa- 

 sion for expenditure in the purchase of bonds has 

 been already made for the current year, so that there 

 is no outlet in that direction. 



In the present state of legislation the only pretense 

 of any existing Executive power to restore, at this time, 

 any part of our surplus revenues to the people by its 

 expenditure, consists in the supposition that tl. 

 retary of the Treasury may enter the market and pur- 

 chase the bonds of the Government not yet due, at a 

 rate of premium to be agreed upon. The only pro- 

 vision or law from which such a power could be de- 

 rived is found in an appropriation bill passed a num- 

 ber of years ago ; and it is subject to the suspicion 

 that_it was intended as temporary and limited in its 

 application, instead of conferring a continuing discre- 

 tion and authority. .No condition ought to exist 

 which would justify the grant of power to a single 

 official, upon his judgment, of its necessity, to with- 



hold from or release to the business of the people, in 

 an unusual manner, money held in the Treasur 

 thus affect, at his will, the financial situation of the 

 country ; and if it is deemed v.i~e to lodge in t! 

 retary of the Treasury the authority in the j 



right and 



cretion, and at the same time relieve him from undue 

 responsibility. 



In considering the question of purchasing bonds as 

 a means of restoring to circulation the surplus money 

 accumulating in the Treasury, it should be borne in 

 mind that premiums must, of course, be paid ujn.n 

 such purchase, that there may be a large part of these 

 bonds held as investments which can not be purchased 

 at any price, and that combinations among holders, 

 who are willing to sell, may unreasonably enhance 

 the cost of such bonds to the Government. 



It has been suggested that the present bonded debt 

 might be refunded at a less rate of interest, and the 

 difference between the old and new security paid in 

 cash, thus finding use for the surplus in the Treasury. 

 The success of this plan, it is apparent, must depend 

 upon the volition of the holders of the present bonds ; 

 and it is not entirely certain that the inducement 

 which must be offered them would result in more 

 financial benefit to the Government than the purchase 

 of bonds, while the latter proposition would reduce 

 the principal of the debt by actual payment, instead 

 of extending it. 



The proposition to deposit the money held by the 

 Government in banks throughout the country, fo'r use 

 by the people, is, it seems to me, exceedingly objec- 

 tionable in principle, as establishing too close a rela- 

 tionship between the operations of the Government 

 Treasury and the business of the country, and too ex- 

 tensive a commingling of their money, thus fostering 

 an unnatural reliance in private business upon public 

 funds. If this scheme should be adopted it should 

 only be done as a temporary expedient to meet an 

 urgent necessity. Legislative and Executive effort 

 should generally be in the opposite direction, and 

 should have a tendency to divorce, as much an.' as 

 can safely be done, the Treasury Department 

 from private enterprise. 



Of course it is not expected that unnecessary and 

 extravagant appropriations will be made for the pur- 

 pose of avoiding the accumulation of an ex 

 revenue. Such expenditure, besides the demoraliza- 

 tion of all just conceptions of public duty which it en- 

 nmulates a habit of reckless improvidence not 

 in the least consistent with the mission of our people 

 or the high and beneficent purposes of our Government. 



I have deemed it my duty to thus bring to the 

 knowledge of my countrymen", as well as to the atten- 

 tion of their representatives charged with the respon- 

 sibility of legislative relief, the gravity of our financial 

 situation. The failure of the Congress heretofore to 

 provide against the dangers which it was quite evi- 

 dent the very nature of the difficulty must necessarily 

 produce, caused a condition of financial distress and 

 apprehension since your last adjournment, which 

 taxed to the utmost all the authority and expedients 

 within Executive control ; and these appear now to be 

 exhausted. If disaster results from the continued in- 

 action of Congress, the responsibDity must rest where 

 it belongs. 



Though the situation thus far considered is fraught 

 with danger which should be fully realized, and 

 though it presents features of wrong to the people as 

 well as peril to the country, it is but a result growing 

 out of a perfectly palpabl'e and apparent cause, con- 

 stantly reproducing the same alarming circum- 

 a congested national Treasury and a depleted mone- 

 tary condition in the business of the country. It 

 need hardly be stated that while the present situa- 

 tion demands a remedy, we can only be saved from 

 a like predicament in the future by the removal of its 

 cause. 



