FINANCES OF THE UNITED STATES. 



rency it largely In excou of the possible amount of 



. uilublu "lor that purpose whidi m:i\ o inr int.. 



roasury in any year, and while no provision is 



i..r tho oonvcniou of this paper-money into 

 any thing having a near relation to coin; nor i* it 

 possible for the Dunks or people to resume 10 long 

 UH tho large auiuunt of irredeemable paper now in 

 circulation continues to be by law legal tender for 

 nil (irivutu debts with reference both to the past and 

 tlu- ni tu iv. While this Btate of things lasts gold will 

 c Mtiiiiu- IK ilow t'ruiu Ub, and flnd employment where 



mil laws of trade, unobstructed by rcstrain- 

 ii...' l.^'i-huion, make its daily use indispensable. 



twry, therefore, recommends Congress 



vide t>y luw that oftor on early and fixed day 



t-s notes shall cease to be lojjul tender as 



- thereafter made. But this provision 



should not apply to official salaries or to other ordi- 



-1'i'ii.lit invs of tho Government under then ex- 

 i.-ting contracts or appropriations. Between the day 

 thus to be fixed ana the time of final resumption a 

 MiihVu -lit period should elapse to enable the people 

 and banks to prepare for the latter by such gradual 



-.-.- in business as will neither lead to violent 

 contraction in credit and values, nor suddenly in- 

 crease the obligations of debtors. The sudden and 

 immediate appreciation of the paper dollar to its par 

 value in gold is not only no necessary element of re- 

 demption, but, as far as practicable, should be avoid- 

 ed. If during the period of the war the legal-tender 

 acts operated as a bankrupt law, compelling creditors 

 to give acquittances upon the receipt of less than the 

 full amount of their debts, this is no reason why the 

 law for resumption should now compel debtors at 

 once to pay essentially more than they have con- 

 tracted to pay. The adoption of such measures as 

 will not suddenly increase the obligations of debtors, 

 will go far to allay and disarm whatever popular op- 

 position to resumption of specie payment may now 

 exist, and, besides, would be but just to the debtor 

 class. The day from which new contracts must be 

 discharged in coin should be fixed sufficiently far in 

 advance to give the people and the banks time to 

 understand it and to prepare themselves for it. It 

 is believed that not many months will be necessary 

 for that purpose ; but, to avoid the mischiefs already 

 indicated, this day should precede the day of final 

 resumption by a longer period. The time should not, 

 in the opinion of the Secretary, be extended beyond 

 three years, and might safely be made as much less 

 as in the judgment of Congress would sufficiently 

 protect the interest of debtors and avoid the evils of 

 too sudden contraction. 



The law should also authorize the immediate con- 

 version of legal-tender notes into bonds bearing a 

 low rate of interest, which, while inviting conver- 

 sion, should not be so high as to appreciate the legal- 

 tender notes rapidly, and thereby operate oppres- 

 sively on the debtor class. As an additional induce- 

 ment to the conversion of United States notes into 

 these bonds at a low rate of interest, authority should 

 be given for making them security for the circulation 

 of national banks. The law should further provide 

 the means for the redemption of such notes as may 

 be presented for that purpose when the period of re- 

 sumption shall have been reached. To this end, the 

 Secretary should be authorized to make a loan not 

 exceeding the total amount of notes remaining un- 

 converted at the time of resumption, less the surplus 

 revenue to be made applicable to such resumption. 

 It is probable that the gradual and continued revival 

 of business will so far increase the revenues that a 

 large loan will not be required for this purpose ; but 

 it is advisable that the Secretary be authorized to 

 make it in order to meet the contingency of a failure 

 of sufficient surplus revenues. Such a loan should 

 be mode by issuing bonds to run for such time as the 

 wisdom of Congress may suggest, and to be disposed 

 of from time to time as the necessities of the cose 

 may require. In the opinion of the Secretary, these 



bonds should run for a long period, and should bear 

 int. rc*t at a rate not exceeding the lowest ratu which 

 the (iovernment may then !-< paving in refunding it* 

 his per cent, securities. Any nubnUtntial or um.-1'ul 

 movement for resumption necessarily involves sup- 

 plying the Treasury with increased amount* of coin, 

 t-it In r by increased revenues or on adequate loan. 

 The present condition of tho credit of the Govern- 

 ment, which would be further enhanced by the adop- 

 tion of measures for return to a specie basis, leaves 

 no room for doubt that a loan for such purpose would 

 be readily taken at a low rate of interest. Measures 

 should also bo adopted requiring the banks to hold 

 gold reserves preparatory to resumption on their 

 part. 



But the Secretary does not deem it proper to pur- 

 sue the matter into further detail. If Congress snail 

 conclude, as he earnestly hopes it will, that the time 

 has arrived for the enactment of a law having for its 

 object resumption of specie payments, its own wis- 

 dom will supply tho necessary methods. 



The act of Congress which became a law 

 provides that the amount of United States 

 notes outstanding and. to he used as a part of 

 the circulating medium, shall not exceed tho 

 sum of $382,000,000, and no part thereof shall 

 he held or used as a reserve. It further pro- 

 vides for the repeal of the reserve required to 

 be held by the national banks upon circula- 

 tion ; 



For the redemption of all national-bank notes 

 at the Treasury in legal-tender notes, for which 

 purpose the banks are required to keep on de- 

 posit with the Treasurer 5 per cent, of their 

 circulation; which amount is to be counted as 

 a part of the reserve required to be held on 

 deposits ; 



For the deposit by any national bank of law- 

 ful money with the Treasurer, in sums of not 

 less than $9,000, and the withdrawal of the 

 bonds on deposit as security for such circulat- 

 ing notes, provided that the amount of such 

 bonds shall not be reduced below $50,000 ; 



For the withdrawal of $55,000,000 from na- 

 tional banks in States which have received 

 more than their proportion, and its redistribu- 

 tion to national banks in States which have 

 received less than their proportion, upon an 

 apportionment made on the basis of popula- 

 tion and of wealth, as shown by the returns of 

 the census of 1870, not more than $30,000,000 

 of which shall be withdrawn and redistributed 

 during the fiscal year ending June 80, 1875. 



Twenty-two hundred national banks have 

 been organized since the establishment of the 

 national banking system, under the act of Feb- 

 ruary 28, 1863. Thirty-five of these banks 

 have failed, and one hundred and thirty-seven 

 gone into voluntary liquidation by a vote of 

 two-thirds of the shareholders, under section 

 42 of the act, leaving 2,028 banks in existence 

 on the 1st day of November, 1874. During 

 the year, seventy-one national banks have 

 been organized, with an authorized capital of 

 $6,745,500. Three banks have failed and 

 twenty have gone into voluntary liquidation. 



The following table exhibits the resources 

 and liabilities of the national banks in operation 

 at corresponding periods for the last five years: 



