State Bank Notes. 47 



It may here be seen clearly how the whole volume of 

 money has responded to the needs of increased business; 

 the growth was rapid in the revival of business following 

 1879, and then fell to a much lower rate, averaging little 

 over 80 millions annually from 1882 to 1890. But the fact 

 which now most concerns us is that the needs of business 

 were not provided for by the creation of bank notes, nor 

 of any kind of notes, except the note-element in the silver 

 dollars and the notes of 1890, and a small increase in the 

 greenbacks outside of the Treasury. More than that, the 

 nominal bank-note circulation was reduced in the thirteen 

 years by 151 millions, and the true bank-note circulation 

 by about 170 millions. If 1882 and 1892 be compared, the 

 reduction in the ten years is 185 or 175 millions; a reduc- 

 tion greater than the amount now outstanding. That is, 

 we have only to do once more just what we have done since 

 1882, and the whole of the national bank notes will be re- 

 placed by other money. 



But the matter is not quite so simple, because we shall 

 not do just what we have done since 1882. The effect of 

 the Act of 1890 needs to be considered, and the effect of a 

 possible repeal of that Act. Before weighing these, it is 

 desirable to look closely at the nature of the past additions 

 to the money-supply, in respect to their real cost. Their 

 cost to the country is measured approximately by the export 

 value which the gold and silver would have had if not used 

 for money purposes here. The cost of coinage and storage, 

 and other such minor corrections, may be disregarded, in 

 view of the wide allowance for error that will be used in 

 the inquiry, and of the unequivocal result. Of course the 

 government purchases have steadily "bulled" the silver 

 market; how much, it is not possible to know. Against 

 whatever such enhancement of the price of silver there 

 has been, acting as a diminution of the cost to the country 

 (not the government only) of the silver used for money, 

 there is a partial offset in the increase of cost to the country 

 of all its money-metal, through the necessity of making 

 slightly lower average prices for exported goods in order 



