286 



FINANCES OF THE UNITED STATES. 



It will be noticed that the amount of gold 

 coin and bullion held by the Treasury has in- 

 creased during the year about $15,000,000; 

 silver dollars $21,000,000, and United States 

 notes $10,000,000. The increase of gold coin 

 arose mainly from an order of the Treasury 

 Department, under which gold coin was re- 

 ceived from depositors in exchange for silver 

 certificates, redeemable only in silver dollars. 

 Such was the demand for certificates in ex- 

 change for gold, that on November 1st almost 

 the entire amount of silver dollars held by the 

 Treasury was represented by outstanding cer- 

 tificates, and in consequence the order was re- 

 voked, the law not permitting an issue of such 

 certificates in excess of the coin held for their 

 redemption. At that time there were of these 

 certificates outstanding $66,327,670, an increase 

 in three months of about $15,000,000. As these 

 certificates are redeemable, as stated, only in sil- 

 ver dollars, which are worth in intrinsic value 

 only about eighty-eight per cent of the gold coin 

 received, there has been an apparent advantage 

 to the department in these transactions of about 

 twelve per cent on the amount issued, the Gov- 

 ernment having by these transactions trans- 

 ferred to private parties at par the ownership 

 of the silver dollars. But the certificates are 

 also receivable by the department in payment 

 of all public dues, at the par of gold, the trans- 

 actions of the country being conducted on a 

 gold basis, and the certificates, as well as the 

 coin they represent, consequently, for the 

 present, circulate at a gold valuation, and will 

 doubtless continue to do so as long as there 

 are no more of them afloat than can be conven- 

 iently used in payment of public dues. The 

 certificates are not legal tender in private trans- 

 actions, and when there comes an excess of 

 them beyond the amount needed in public pay- 

 ments the holders can have no redress but to 

 accept in their stead the silver dollars which 

 they represent, and which the Treasury is 

 obliged to hold for their redemption. The dol- 

 lars thus received are a legal tender for all pur- 

 poses, and in time, if the coinage of them con- 

 tinues imperative, must furnish the basis of 

 value for the circulation of the country, and 

 that basis then will be in accordance with the 

 intrinsic value of the coins, not with the ficti- 

 tious value at which they now circulate. Were 

 the coinage of silver dollars unrestricted, as in 

 the case of gold coins, the circulation of the 

 country would at once fall to the silver basis, 

 as the holders of silver bullion could have the 

 same converted into dollars worth for circula- 

 tion as much as so many dollars in gold, though 

 containing but eighty-eight per cent of value, 

 while the holders of gold bullion would find 

 more profit in selling the same for commercial 

 or other purposes at market rates. But hold- 

 ers can not have silver bullion converted jnto 

 a lawful equivalent in weight of silver dollars, 

 for the Government purchases the silver bul- 

 lion at the best rates obtainable, and manufact- 

 ures the coins only on its own account, turn- 



ing the profit into the public Treasury, getting 

 for about $88 in gold enough bullion to make 

 100 silver dollars of standard weight. Already, 

 to November 1, 1881, there have been coined 

 from silver bullion thus purchased more than 

 100,000,000 silver dollars, of which there re- 

 mained in the Treasury, as before stated, about 

 $66,000,000, the remainder being in active 

 circulation. Under existing law the coinage 

 of these dollars must continue at a rate of not 

 less than $2,000,000 per month, and, as all 

 further issues have recently returned to the 

 Treasury, it would seem that the limit of cir- 

 culation of these coins has practically been 

 reached. Hereafter they must accumulate in 

 the vaults of the Treasury, to be represented in 

 circulation either by certificates issued thereon, 

 thus steadily inflating the paper circulation of 

 the country with certificates actually worth, as 

 before stated, only the value of the coin they 

 represent, or the dollars will remain in the 

 Treasury to the exclusion of gold coin, and be- 

 come the only currency with which payment 

 of public dues can be met, or the redemption 

 of United States notes be made. In either 

 event there is but one result foreshadowed 

 the reduction of the currency of the country 

 to the standard of the silver dollars, and the 

 exclusion of gold coin from circulation. This 

 cloud in the financial horizon has not arisen 

 unexpectedly. Foreseeing it, Congress em- 

 bodied, in the act of February 28, 1878, author- 

 izing the coinage of the standard silver dollar, 

 a provision directing the President of the Unit- 

 ed States to invite the Governments of the so- 

 called Latin Union, and such other European 

 nations as he might deem advisable, to join the 

 United States in a conference to adopt a com- 

 mon ratio between gold and silver for the pur- 

 pose of establishing internationally the use of 

 bi-metallic money and securing fixity of rela- 

 tive value between those metals. The Latin 

 Union referred to consisted of France, Belgium, 

 Switzerland, and Italy. Under a treaty the 

 Union had issued silver and gold coins from 

 its respective mints at the ratio of 151 of sil- 

 ver to 1 of gold, but, on account of the great 

 depreciation in the value of silver, it had been 

 compelled to suspend such coinage, to avoid 

 driving the gold coins from circulation. The 

 invitation to join the United States in the pro- 

 posed conference was accepted by the Union 

 and by several other states, and the conference 

 was held in Paris, in August. 1878. The dele 

 gates from the United States requested those 

 invited to pronounce upon the two following 

 propositions : 



1. It is the opinion of this assembly that it is not 

 to be desired that silver should be excluded from free 

 coinage in Europe and the United States of America. 

 On the contrary, the assembly^ believe that it is de- 

 sirable that the unrestricted coinage of silver, and its 

 use as money of unlimited legal tender, should be 

 retained where they exist, and, as far as practicable, 

 restored where they have ceased to exist. 



2. The use of both gold and silver as unlimited le- 

 gal-tender money may be safely adopted : first, by 



