('I'm: PRESIDENT'S MESSAGE.) 



157 



alone and still maintain the parity between that 

 metal and the currency representing gold. 1'.' 

 thr accumulation in the TreaMiry of currency of 

 any kind exacted from the people through taxation 

 is justly regarded a~ an evil, and it can nut proceed 

 far without vigorous protest against an unjustifi- 

 able retention of money from the business of the 

 country and a denunciation of a scheme of taxation 

 which proves itself to be unjust when it takes from 

 the earnings and income of the citizen money so 

 much in excess of the needs of Government support 

 that large sums can be gathered and kept in the 

 Treasury. Such a condition has heretofore in times 

 of surplus revenue led the Government to restore 

 currency to the people by the purchase of its un- 

 matured bonds at a large premium and by a large 

 increase of its deposits in national banks, and we 

 easily remember that the abuse of Treasury accu- 

 mulation has furnished a most persuasive argument 

 in favor of legislation radically reducing our tariff 

 taxation. 



Perhaps it is supposed that sufficient revenue re- 

 ceipts would in a sentimental way improve the situa- 

 tion, by inspiring confidence in our solvency and 

 allaying the fear of pecuniary exhaustion. And yet 

 through all our struggles to maintain our gold re- 

 serve there never has been any apprehension as to 

 our ready ability to pay our way with such money 

 as we had : and" the question whether or not our 

 current receipts met our current expenses has not 

 entered into the estimate of our solvency. Of course 

 the general state of our funds, exclusive of gold, 

 \\;t> entirely immaterial to the foreign creditor and 

 investor. His debt could only be paid in gold, and 

 his o'nly concern was our ability to keep on hand 

 that kind of money. 



On July 1, 1892, more than a year and a half be- 

 fore the first bonds were issued to replenish the gold 

 reserve, there was a net balance in the Treasury, 

 exclusive of such reserve, of less than $ 13,000.000; 

 but the gold reserve amounted to more than *114.- 

 000.000, which was the quieting feature of the 

 situation. It was when the stock of gold began 

 rapidly to fall that fright supervened and our secu- 

 rities held abroad were returned for sale and debts 

 owed abroad were pressed for payment. In the 

 meantime extensive shipments of gold and other 

 unfavorable indications caused restlessness and 

 fright among our people at home. Thereupon the 

 general state of our funds, exclusive of gold, be- 

 came also immaterial to them, and they, too, drew 

 gold from the Treasury for hoarding against all 

 contingencies. This is plainly shown by the large 

 increase in the proportion of gold withdrawn which 

 was retained by our own people as time and threat- 

 ening incidents progressed. During the fiscal year 

 ending June 30. 1894. nearly $85.000.000 in gold 

 was withdrawn from the Treasury and about - 

 000.000 was sent abroad, while during the fiscal 

 y-ar ending June 30, 1895, over $117.000.000 was 

 drawn out. of which only about 66,000.000 was 

 shipped, leaving the large balance of such with- 

 drawals to be accounted for by domestic hoarding. 



Inasmuch as the withdrawal of our gold has re- 

 sulted largely from fright, there is nothing appar- 

 ent that will prevent its continuance or recurrence, 

 with its natural consequences, except such a change 

 in our financial methods as will reassure the fright- 

 ened and make the desire for gold less intense. It 

 is not clear how an increase in revenue, unless it be 

 in gold, can satisfy those whose only anxiety is to 

 gain gold from the Government's store. 



It can not therefore be safe to rely upon increased 

 revenues as a cure for our present troubles. 



It is possible that the suggestion of increased 

 revenue as a remedy for the difficulties we are con- 

 sidering may have originated in an intimation or 



distinct allegation that the bonds which have bet n 

 issued ostensibly to repli-nii-h our gold n - 

 really issued to >upply in.-uih'cient revenue. Nothing 

 can be further from the truth. Bonds were issued 

 to obtain gold for the maintenance of our national 

 credit. As has been shown, the gold thus obtained 

 has been drawn again from the Treasury upon 

 United State- notes and Treasury notes. This, 

 operation would have been promptly prevented if 

 possible, but these notes having thus been passed to 

 the Treasury, they became the money of the Gov- 

 ernment, like any other ordinary Government funds. 

 and there was nothing to do but to use them in pay- 

 ing Government expenses when needed. 



At no time when bonds have been issued has there 

 been any consideration of the question of paying 

 the expenses of Government with their proceeds. 

 There was no necessity to consider that question. 

 At the time of each bond issue we had a safe sur- 

 plus in the Treasury for ordinary operations, ex- 

 clusive of the gold "in our reserve. In February. 

 1894. when the first issue of bonds was made, such 

 surplus amounted to over $18,000.000 : in Novem- 

 ber, when the second issue was made, it amounted 

 to more than $42.000.000, and in February, 1895, 

 when bonds for the third time were issued, such 

 surplus amounted to more than $100,000,000. It 

 now amounts to $98,072,420.30. 



Besides all this, the Secretary of the Treasury 

 had no authority whatever to issue bonds to in- 

 crease the ordinary revenues or pay current ex- 

 penses. 



I can not but think there has been some confu- 

 sion of ideas regarding the effects of the issue of 

 bonds and the results of the withdrawal of gold. It 

 was the latter process and not the former that by 

 substituting in the Treasury United States notes 

 and Treasury notes for gold increased by their 

 amount the money which was in the first instance 

 subject to ordinary Government expenditure. 



Although the law compelling an increased pur- 

 chase of silver by the Government was passed on 

 the 14th day of "July, 1890. withdrawals of gold 

 from the Treasury upon the notes given in payment 

 on such purchases did not begin until October, 

 1891. Immediately following that date the with- 

 drawals upon both these notes and United States 

 notes increased very largely, and have continued 

 to such an extent that since the passage of that law 

 there has been more than thirteen times as much 

 gold taken out of the Treasury upon United States 

 notes and Treasury notes issued for silver purchases 

 as was thus withdrawn during the eleven and a 

 half years immediately prior thereto and after the 

 1st day of January, 1879, when specie payments 

 were resumed. 



It is neither unfair nor unjust to charge a large 

 share of our present financial perplexities and dan- 

 gers to the operation of the laws of 1878 and 1890 

 compelling the purchase of silver by the Govern- 

 ment, which not only furnished a new Treasury 

 obligation upon which its gold could be withdrawn, 

 but so increased the fear of an overwhelming flood 

 of silver and a forced descent to silver payments that 

 even the repeal of these laws did not entirely cure 

 the evils of their existence. 



While I have endeavored to make a plain state- 

 ment of the disordered condition of our currency 

 and the present dangers menacing our prosperity, 

 and to surrgesT ., wav which leads to a safer finan- 

 cial system. I have constantly had in mind the fact 

 that many of my countrymen, whose sincerity I do 

 not doubt, insist that the cure for the ills now 

 threatening us may be found in the single and 

 simple remedy of the free coinage of silver. They 

 contend that our mints shall be at once thrown 

 open to the free, unlimited, and independent coin- 



