FINANCES OF THE UNITED STATES. 



288 



prepare to provide for the redemption of nil legal- 

 tcinier nol.cn which may be presented on and after 

 tliut (.lute, iiinl that the means at his command, to tin.-, 

 (.nil. arc tin' surplus revenues existing ut that time 

 notothcrwi.su appropriated. and the proceeds i>f tho 

 . sale, and diapOBal of certain descriptions of 

 I I States bojids at par in coin to the extent ne- 



oe*sary to carry this act into ctt'ect. This involves 

 tlif necessity of the accumulation of coin to the 

 amount of the actual demand for redemption of 

 the-e notes on that day and any day thereuftcr. 

 The n; will likely be attluit time not lews than $800,- 

 000,000 outstanding, and probably no inconsiderable 

 amount in excess of that sum. 



IK re, it will l>e seen, is an imperative requirement 

 of the Secretary to redeem in coin, on a given day. 

 the legal-tender notes amounting to $800,000,000, ana 

 authority to prepare and provide for it. He may sell 

 United States bonds to obtain the needful co'in to 

 the extent, necessary to carry this net fully into effect. 

 The act contemplates the accumulation of the need- 

 ful amount of coin against the day of resumption ; 

 but, as the necessary amount on a given day is de- 

 terminate only at the option of the holders of the 

 notes to be redeemed, the amount to be provided for 

 ia necessarily uncertain, and, as it will depend upon 

 events or a condition of things over which he lias 

 little or no control, impossible for him to determine. 

 He is authorized, if in his judgment deemed neces- 

 sary to carry the act into effect, to accumulate an 

 amount of gold equal to the entire amount of the 

 legal tenders outstanding on that day ; but this, if 

 it were not morally impossible, would be so inex- 

 pedient, as a financial measure, that it is not to be 

 presumed to have been contemplated by Congress, 

 and so not incumbent on the Secretary. Still he is 

 expected and required to meet the demand of redemp- 

 tion by the accumulation of coin adequate in amount, 

 ut his discretion, with no certain data for his guid- 

 ance in the exercise of it. What is essential for him 

 to know in order to the performance of the duty is, 

 what amount r.f notes will certainly be presented for 

 redemption on the 1st of January, 1&79. As this is 

 clearly not attainable he is left to deal with what is 

 probable, determinable. upon the condition of such 

 general causes as will he likely to attend that event. 

 It would not be difficult, in the present state of mon- 

 etary affairs, to make a probable estimate of the 

 amount required if the redemption were to take 

 place in January next ; and it is probable that accu- 

 mulation of an amount of coin equal to a moiety of 

 the sum total of these notes would be an ample prep- 

 aration ; but, while it is to be hoped that the credit 

 of our bonds may not be less in 1879, it may not be 

 known that in other respects the situation will favor 

 such result. It is, however, deemed probable in any 

 supposable condition of monetary affairs, that, if no 

 inconsiderable reduction of the volume of these 

 notes should be made in anticipation of the redemp- 

 tion of 1879, the preparation required by accumula- 

 tion of coin for tnc damands of January, 1879, and 

 immediately thereafter, must be at least an equal 

 proportion of the sum total of the notes outstanding. 

 As to the surplus revenues as a measure of redemp- 

 tion, such is the present and probable future of these 

 revenues and the demands upon them, that it is not 

 deemed at all probaMe that any considerable sum 

 not otherwise appropriated could be devoted to this 

 end. In this connection, however, it is proper to 

 observe that now, for the first time in many years, 

 owing to the larec reduction of currency payments, 

 the sales of gold, to obtain the equivalent currency 

 therefor, are no longer necessary, and thus a consid- 

 erable accumulation of gold may be anticipated from 

 tbe surplus from the customs revenue. 



By the act of January 14, 1875, the limitation upon 

 the issue of national-bank notes was repealed, nnd 

 the volume of currency left to be determined by the 

 business demands of the country. The Secretary 

 of the Treasury was required to retire, of legal-ten- 



der notes, eighty cr cent, of the unrn of national- 

 bank notes then miiutd in CXCUBH of $300,000,000. 

 The amount of additional currency issued kincc the 

 passage of this act ia $18,080, 866, and legal-tender 

 ! the amount of $14,404, lib'J have been n tired. 



By the act of June 20, 1874, national banks might 

 withdraw their circulation in whole or in part 

 positing lawful money with the Treasurer, and w ith- 

 draw a proportional amount of the bonds; und it 

 was made the duty of the Secretary to retire legal- 

 tender notes to the extent of eighty per cent, of the 

 bank-notes thereafter issued. Under this act, f f/2,- 

 858,560 of legal-tender notes have been deposited in 

 the Treasury 1 , and $87,122.069 of bank-notes, accord- 

 ingly, have been redeemed and destroyed. 



Tiie amount of legal-tender notes outstanding 

 November 1, 1876, was $867,585,716. The amount 

 of said notes on deposit for the purpose of r< tiring 

 circulation was $20,910,946. The amount of national- 

 bank notes in circulation on that day was (2V, 148,- 

 464 less, and of legal tenders $14.464,284 Uss, than 

 on January 14, 1875 a total di crease in circulation, 

 under the operation of the act, of $48,607,748. 



From these facts, as well as from the large accumu- 

 lations of money at the money centres nnd the lack 

 of demand for it, it is apparent that the volume of 

 currency is largely in excess of the real den.'cnda of 

 legitimate business, and that a portion of the legal 

 tenders might be gradually withdraw n without em- 

 barrassment to the business of the country. 



In the interest of permanent redemption, and as a 

 means of maintaining the same, it is dicmcd impor- 

 tant also, if not quite indispensable, that provision 

 should be made requiring the national banks to grad- 

 ually provide coin in such ratio as the Secretary of 

 the Treasury may direct, and to hold the same as a 

 part of their legal money reserve, so that said reserve, 

 on the first day of January, 1879, shall be equal in 

 amount to the entire reserve required by law. To 

 the same end, as the fractional currency is with- 

 drawn, it is deemed expedient that not only the 

 vacuum caused thereby in the matter of change 

 should be made good, but that, as additional charpe, 

 the volume of silver should be increased to the 

 amount of at least $0,000,000, and silver mode a 

 legal tender to the amount of $10 in all cafes, ex- 

 cept the obligations of the Government of the United 

 States and the customs dues. 



On the 24th of August, 1876, a contract was 

 made for the negotiation oi $40,000,000 of tlie 

 four and a half per cent, bonds authorized by 

 the acts of July 14, 1870, and January 20, 1871, 

 and giving to the contracting parties the rif.'ht 

 to subscribe for the whole or any part of the 

 remaining $260,000. The agreement provides 

 that the Secretary is to allow the parties named 

 one-half of one per cent, commission upon the 

 amount they may take, they to assume and de- 

 fray all expenses which may be incurred in pre- 

 paring, printing, transporting, and issuing said 

 four and one-half per cent, bonds, and for trans- 

 mitting to the Treasury Department at Wash- 

 ington, coin, United States five-twenty bonds, 

 matured United States coin coupons received 

 in payment for the four and one-half per cent, 

 bonds issued, or which may be issued, to the 

 contractors ; and the Secretary agreed to issue 

 notices for the redemption of an equal amount 

 of six per cent, five-twenty bonds of the United 

 States, upon the dates of subscription by the 

 contrncting parties for four and one-half per 

 cent, bonds, as provided by the act of July 14, 

 1870. Issues to the extent of $85,674,550 of four 

 and one-half per cent, bonds have been made. 



