IM 



FIN'AXCES OF THE UNITED STATES. 



look an extent as the condition of the Treasury 

 would allow, and thu* releaie a considerable amount 

 of currency from iU vaults. Purchases of bonds 

 were commenced on the morning of the 20th of 

 September, and were continued until the 24tli, when 

 it became evident that the amount offering for pur- 

 chase was increasing to an extent beyond the power 

 of the Treasury to accept, and the purchasing was 

 doted after bonds to the amount of about thirteen 

 million dollars had been bought, and without the 

 use of any part of the forty-four millions of United 

 State* notes, generally known as the reserve. 



It should be stated that in the excitement there 

 were many persons in the city of New York who 

 instated with (treat earnestness that it was the duty 

 of the Executive to disregard any and all laws wliicli 

 stood in the way of affording the relief suggested by 

 them a proposition which indicates the state of 

 feeling and the excitement under which applications 

 were made to the Secretary of the Treasury to use 

 the public money, and which, it is scarcely necessary 

 to add, could not be entertained by the officers of 

 the Government to whom it was addressed. 



The currency paid out of the Treasury for bonds 

 did much to strengthen many savings-banks, and 

 to prevent a panic among their numerous deposit- 

 ors, who began to be alarmed, and, had there de- 

 veloped an extended run upon those useful insti- 

 tutions, it would inevitably have caused wide- 

 spread disaster aud distress. It also fortified other 

 banks, and checked the general alarm to some ex- 

 tent. But the loss of confidence in the value of a 

 great amount of corporate property which immedi- 

 ately followed the failure of banking-houses con- 

 nected with largely-indebted corporations, the dis- 

 trust of the solvency of many other institutions, the 

 doubt as to the credit of firms and individuals 

 whose business was supposed to be greatly extend- 

 ed, aud the legitimate effect thereof in disturbing 

 the business of the country, could not be avoided 

 by any amount of currency which might be added to 

 the circulation already existing. 



The following letters were written by Presi- 

 dent Grant and mado public at this time : 



EXICDTIVK MANSION, ) 

 WASHINGTON, Stptomber 28, 1878. ) 

 Mam. IT. 3. ClajUn and Charla B. AnUumy.qf Ma York. 



GCNTLKMIN : In response to the news you have 

 communicated to me touching the present strin- 

 gency in the money market of the country, and the 

 necessary steps to restore confidence and legitimate 

 trade and commerce, I have the honor to commu- 

 nicate the following: The Government is desirous 

 of doing all in its power to relieve the present un- 

 settled condition of business affairs, which is hold- 

 ing back the Immense resources of the country now 

 awaiting transportation to the seaboard. 



A marked confidence on the part of the people is 

 the first thing needed to relieve this condition and 

 to vert the threatened destruction of business with 

 its accompanying disasters to all classes of people. 

 To reestablish the feeling, the Government is will- 

 ing to take all legal measures at its command. But 

 it i evident that no Government efforts will avail 

 without the active cooperation of the banks and 

 money corporations of the country. With the four- 

 teen millions already paid out in the purchase of 

 Government Indebtedness, and the withdrawal of 

 their large deposit* from the Treasury, the banks 

 are now strong enough to adopt a liberal policy on 

 their part, ana by a generous system of discounts to 

 sustain the business interests of the country. 

 Should sueh a course be pursued, the forty - four 

 millions of reserve will be considered aa money In 

 the Treasury to meet the demands of public neces- 

 sitjr as the circumstances of the country may re- 

 quire. Close attention will be given to the course 

 pursued by those who have the means at their 

 command of rendering all the aid necessary to re- 



trade to its proper channels and condition, 

 i a view of strengthening the hands of those 

 who carry out the measures, above indicated, orders 

 have already been issued for the prepayment of the 

 interest accruing in November. 



(Signed) U. 8. GRANT. 



EXECCTIVE MANSION, I 



WASHINGTON, D. C., October 6, 1878. ) 



MT I'EAB MK. COWDBZT, PrttidtiU of the i 

 nental National Jlant, New York: Your letter of the, 

 29th ult. was duly received and read, as was your 

 previous letter. Neither required an answer partic- 

 ularly, and hence I did not answer them at that time. 

 Your last letter, however, contains one sentence Unit 

 it seems proper I should reply to, that is, as to an im- 

 plied threat to the National banks contained in my 

 letter to Messrs. Anthony andClaflin. Nothing was 

 further from my mind than a threat. My whole ob- 

 ject was to restore confidence to the public mind, 

 and to give assurances that the Government ould 

 give all the aid in its power, keeping in view at the 

 same time the solvency of the National Tnu-ury. 

 You. and all bank presidents, know more about the 

 condition of your banks than 1 can possibly know. 

 In turn, I. through the Secretary of the Treasury, 

 know more about the financial condition of the i ,..\ - 

 eminent, its ability to render aid, etc.. than any per- 

 son disconnected with the administration of its affairs 

 can know. I allude to the fact that the (40,000,000 

 reserve notes in the Treasury would be regarded as 

 money in the Treasury subject to use, for the pur- 

 pose of showing that the means are at hand to give 

 the relief we promise. I do not believe the present 

 panic will work to individuals half the injury it will 

 work general good to the country at large. Our 

 monetary system is the creation of necessity. It has 

 no elasticity; but, in other respects, it i.- the best 

 that has ever been devised. No one now .li- 

 the value of his paper dollar; on thfe contrary, it is 

 seized and hoarded with the same avidity now that 

 the gold dollar has been in former like adversities. 

 The panic will call attention to the defects in our 

 monetary system, and will, no doubt, lead to legisla- 

 tion to relievo the want of elasticity. 



This panic has brought greenbacks about to a par 

 with silver. I wonder that silver is not already com- 

 ing into the market to supply the deficiency in the 

 circulating medium. When it does come and 1 pre- 

 dict that it will soon we will have made a rapid 

 stride toward specie payments. Currency will never 

 go below silver after that. The circulation ot silver 

 will have other beneficial effects. Experience has 

 proved that it takes about $40,000,000 of fractional 

 currency to make the small change necessary for the 

 transaction of the business of tne country! Silver 

 will gradually take the standard of values, which 

 will bo hoarded in a small way. I estimate that t his 

 will consume from $800,000.000 to $300,000,000 in 

 time of this species of our circulating medium. It 

 will leave the paper currency free to perform tho 

 legitimate functions of trade, and will tend to bring 

 us back where we must come at last, to a sp< < 

 sis. I confess to a desire to see a limited hoarding 

 of money. It insures a firm foundation in time of 

 need. But I want to sec the hoarding of som. 

 that has a standard of value the world over. Silver 

 has this; and, if we once get back to that, our strides 

 toward a higher appreciation of our currency will bo 

 rapid. Our mines are now producing almost unlim- 

 ited amounts of silver, and it is becoming a question, 

 " What, shall we do with it t " I suggest here a so- 

 lution that will answer for some ycarSj and suggest 

 to you bankers, whether you may not initiate it ; to 

 put it in circulation now; keep it there until it is 

 fixed, and then we will find other market*. Tho 

 South and Central American countries Imvr. asked 

 u to coin th"ir silver for them. There bos never 

 been authority of law to do so. I trust it will now 

 be given. Wnen it Is given, it will be more than 

 the equivalent of becoming exporters of articles of 



