(THE PRESIDENT'S MESSAGE.) 



155 



tuted at par for the 4-per-cent. bonds described in 

 tin- agreement. 



On the day this contract was made it< terms were 

 communicated to Congress hy a special executive 

 i which it was statc<l that more than 

 $16,000,000 would be saved to the Government if 

 gold bonds lieariiiir ''> per cent, interest were au- 

 thorized to be substituted for those mentioned in 

 the contract. 



The Congress having declined to grant the !! 



authority to secure this saving, the contract. 

 unmodified, was carried out. resulting in a gold re- 

 amounting to $107,571.230 on the 8th day of 

 July. 1895. The performance of this contract not 

 only restored the reserve, but checked for a time 

 the withdrawals of gold and brought on a period of 

 restored confidence and such peace and quiet in 

 business circles as were of the greatest possible 

 value to every interest that affects our people. I 

 have never had the slightest misgiving concerning 

 the wisdom or propriety of this arrangement, and 

 am quite willing to answer for my full share of re- 

 sponsibility for its promotion. I believe it averted 

 a disaster the imminence of which was. fortu- 

 nately, not at the time generally understood by our 

 people. 



Though the contract mentioned stayed for a time 

 the tide of gold withdrawal, its good results could 

 not be permanent. Recent withdrawals have re- 

 duced the reserve from $107,571,230 on the 8th day 

 of July, 1- 'f,6. How long it will re- 



main large enough to render its increase linn 

 sary is only matter of conjecture, though quite 

 large withdrawals for shipment in the immediate 

 future are predicted in well-informed quarters. 

 About $16.000.000 has been withdrawn during the 

 month of November. 



The foregoing statement of events and conditions 

 develops the fact that after increasing our int- 

 bearing bonded indebtedness more than $162.000,- 

 000 to save our gold reserve we are nearly where 

 we started, having now in such reserve s7 l .i.:;:!3.966, 

 insl si;-"i.4::^.::77 in February. 1894. when the 

 first bonds were issued. 



Though the amount of gold drawn from the 

 Treasury appears to be very large, as gathered from 

 the facts and figures herein presented, it actually 

 was much larger, considerable sums having been 

 acquired by the Treasury within the several periods 

 stated without the issue of bonds. On Jan. 2s 

 . it was reported by the Secretary of the Treas- 

 ury that more than $172.000,000 of 'gold had been 

 withdrawn for hoarding or shipment during the 

 preceding. He now reports that from Jan. 1, 

 . to July 14. 1890, a period of more than eleven 

 years, only a little" '.000 was withdrawn, 



and that 'between July 14. IN! to. the date of the 

 .ge of the law for an increased purchase of 

 silver, and the 1st day of December, 1895, or with- 

 in less than five and a half years, there was with- 

 drawn nearly s375.000.000. making a total of more 

 than $403,000,000 drawn from the Treasury in gold 

 since Jan. 1. ls7!i. the date fixed in 1875 for the 

 retirement of the United States notes. 



Nearly 3C'7.000.000 of the gold thus withdrawn 

 has been paid out on these United States notes; 

 and yet every one of the $346.000.000 is still un- 

 canceled and ready to do service in future gold de- 

 pletion. 



More o.OOO in gold has. since their 



creation in 1890. been paid out from the Treasury 

 upon the notes given on the purchase of silver by 

 the Government : and yet the whole, amounting to 

 $155.000.000. except a little more than sl6.000.000, 

 which have been retired by exchanges for silver at 

 the request of the holders, remains outstanding and 

 prepared to join their older and more experienced 



allies in future raids upon the Treasury's gold re- 



. 



In other words, the Government has paid in gold 

 more than nine tenths of its United States notes 

 and still owes them all. It has paid in gold about 

 one half of its notes given for silver purchases with- 

 out extinguishing by such payment one dollar of 

 these i: 



When added to all this we are reminded that to 

 carry on this astounding financial scheme the ' 

 eminent has incurred a bonded indebtedness of 

 MI.IIOO in establishing a gold re.-erve. and of 

 115.400 in efforts to maintain it : that the an- 

 nual interest charged on such bonded indebt" 

 is more than $11.000,000: that a continuance in 

 our present course may result in further bond 

 -. and that we have suffered or are threatened 

 with all this for the sake of supplying gold for for- 

 eign shipment or facilitatinir its hoarding at home, 

 a situation is exhibited which certainly ought to 

 arrest attention and provoke immediate'legislative 

 relief. 



1 am convinced the only thorough and practi- 

 cable remedy for our troubles is found in the retire- 

 ment and cancellation of our United States notes, 

 commonly called greenbacks, and the outstanding 

 Treasury" notes issued by the Government in pay- 

 ment of silver purchases under the act of 1890. 



I believe this could be quite readily accomplished 

 by the exchange of these notes for United States 

 bonds of small as well as large denominations, bear- 

 ing a low rate of interest. They should be long- 

 term bonds, thus increasing their 'desirability as in- 

 vestments, and because their payment could be 

 well postponed to a period far removed from pres- 

 ent financial burdens and perplexities, when with 

 increased prosperity and resources they would be 

 more easily met. 



To further insure the cancellation of these notes 

 and also provide a way by which gold may be added 

 to our currency in lieu of them, a feature in the 

 plan should be an authority given to the Secretary 

 of the Treasury to dispose of the bonds abroad for 

 gold if necessary to complete the contemplated re- 

 demption and cancellation, permitting him to use 

 the proceeds of such bonds to take up and cancel 

 any of the notes that may be in the Treasury or 

 that may be received by the Government on any ac- 

 count. 



The increase of our bonded debt involved in this 

 plan would be amply compensated by renewed ac- 

 tivity and enterprise in all business circles, the re- 

 stored confidence at home, the reinstated faith in 

 our monetary strength abroad, and the stimulation 

 of every interest and industry that would follow 

 the cancellation of the gold-demand obligations 

 now afflicting us. In any event the bonds proposed 

 would stand for the extinguishment of a trouble- 

 some indebtedness, while in the path we now follow 

 there lurks the menace of unending bonds, with 

 our indebtedness still undischarged and aggravated 

 in every feature. The obligations necessary to 

 fund this indebtedness would not equal in amount 

 those from which we have been relieved since 1884 

 by anticipation and payment, beyond the require- 

 ments of the sinking fund, out of our surplus reve- 

 nues. 



The currency withdrawn by the retirement of the 

 United States notes and Treasury notes, amounting 

 to probably less than $486,000,000, might be sup- 

 plied by such gold as would be used on their retire- 

 ment or by an increase in the circulation of our na- 

 tional banks. Though the aggregate capital of 

 those now in existence amounts to more than $664.- 

 000.000, their outstanding circulation based on bond 

 security amounts to only about $190.000.000. They 

 are authorized to issue notes amounting to 90 per 



