20 



W. G. Langzvorthy Taylor 



After the 

 civil war, 

 retirement of 

 government 

 money by 

 Secretary Mc- 

 Cullough was 

 stopped by act 

 of Congress, 

 but retirement 

 of bank note 

 circulation by 

 Secretaries 

 Manning and 

 Windom was 

 allowed to 

 proceed. 



The Balti- 

 more Plan pro- 

 posed to re- 

 move the cause 

 of the inelastic- 

 ity of notes — 

 the bond 

 deposit. 



The Indian- 

 apolis Con- 

 vention. 



restrictions imposed on the circulation, as a decided favoring 

 (or salutary neglect) of deposit business. On the other hand, 

 it followed the prevailing fashion in concentrating the regulating 

 and paternal care of government upon the circulation, following 

 in this respect the so-called " free banking system " of New York, 

 as well as Peel's Act. The inconveniences connected with this 

 fussy preoccupation with notes were keenly felt by the business 

 world at the time of the rapid payment of the national debt under 

 Secretaries Manning and Windom in the ninth decade of the 

 last century. As the indebtedness was raised the bonds deposited 

 were rapidly retired, and much needed circulation vanished with 

 them. 



§17. Consequently, in 1894, the convention of bankers in Balti- 

 more formulated a new plan henceforth known as the Baltimore 

 Plan, which proposed to follow the so-called " safety fund 

 system " also of New York, the central idea of which was simply 

 the formation of a fund to secure the circulation through a tax 

 upon the banks. This proposition, of course, marked a step 

 towards more ideal conditions, for it removed the government 

 guaranty, to that extent placed the circulation more on an 

 equality with the deposits, and gave it freedom of expansion. 

 But it was merely a project, and, as such, was the starting point 

 of a long agitation, the end of which has not yet been reached. 

 This movement was followed by the Indianapolis Convention of 

 January, 1897, which discussed thoroughly the principles of 

 monetary finance from a scientific point of view, and made 

 progressive recommendations.^" 



After the strenuous monetary political campaign of 1896, and 

 in view of the then impending campaign of 1900, Congress was 

 compelled to take action upon the question of the currency, and 

 passed the act of March 14, 1900,^^ which is a monument of 

 timidity. The first object of the act was to secure the gold 

 standard, and this it sought to do by increasing the treasury 



" Vid. Report of the Monetary Commission of the Indianapolis Conven- 

 tion, 1898, by J. Laurence Laughlin. 



" F. W. Taussig, " The Currency Act of 1900,'' Quarterly Journal of 

 Economics, XIV, pp. 394, 450. 



