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CURRENCY-Continued.

On May 31, 1878, an act was passed forbidding the further retirement of United States legal-tender notes, and providing that "when any of said notes may be redeemed or be received into the Treasury under any law from any source whatever and shall belong to the United States, they shall not be retired, canceled, or destroyed, but they shall be reissued and paid out again and kept in circulation." When this act was passed there were $346,681,016 of United States notes outstanding, and there has been no change in the amount since.

CURRENCY-Losses from Bank Failures.

No. 109.

Thompson's Bank Note Reporter was the standard authority before the war. In the issue of Jan. 2, 1858, is published a list of 758 broken and worthless banks. This authority estimated that from 1850 to 1860 the people lost $75,000,000 from worthless bills alone; while other creditors or these banks scarcely realized aùything, and their losses must have been many times that amount. In his report of Nov. 25, 1878, the Comptroller of the Currency says of these State institutions: "The losses upon currency are estimated to have been 5 per cent. annually upon the amount issued, but no estimate has ever been made of the losses to creditors and stockholders." The losses from the failure of five State banks in Chicago in 1877-'78, he says, was $3,819,500, more than half as much as from the failure of 69 national banks in 16 years, which amounted to $6,415,423. The failure of the one City of Glasgow Bank entailed a loss of $26,000,000. These facts illustrate the value of Government inspection. Not a dollar has ever been lost by the bill-holder of a national bank by its failure; the Government redeems them all out of the proceeds of their bonds.

CURRENCY-Metallic Reserves.

No. 110.

The total issue of Government paper money, including all certificates, but excluding national-bank notes, with the gross amount of gold and silver in the Treasury, and the ratio of reserves to currency outstanding, are shown as follows:

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At the close of the Revolutionary war the public debt amounted to about $80,000,000. The script had become worthless. The confederation had no power to levy taxes, and its financial credit had disappeared. The money of the several States was in utter confusion, both as to kinds and value. To bring order and credit out of this financial chaos was accomplished by a series of financial measures: 1. Assumption of the revolutionary debts of the confederation and the States, with promise to pay them in full.

2. Passage of a tariff law to provide for the support of the Government, the payment of these debts, and the encouragement and protection of manufactures.

3. A mint act, to give unity to the denominations and value of

money.

4. The establishment of the Bank of the United States, to provide a fiscal agent, and a sound and uniform paper currency.

NATIONAL.

The Whig party was in favor of a national currency, to be supplied through a national bank and branches, and throughout its

CURRENCY-Continued.

existence strove to secure such an institution, but in vain. The Democratic party having defeated all such attempts, was fully committed to the system of State banks, declaring in its national platform of 1840, "That Congress has no power to charter a United States Bank; and we believe such an institution one of deadly hostility to the best interests of the country, dangerous to our republican institutions and the liberties of the people." Yet Washington signed one national-bank act, and Madison another.

STATE.

As long as the Democratic party was in power the currency was local, issued under authority of the States, in accordance with their fundamental principle of State sovereignty. Before the rebellion

free trade and State currency had produced their invariable effects. In spite of the Mexican war, the Irish famine, European revolutions, and the Crimean war, creating extraordinary demands for our food products, the low tariff and excessive bank issues stimulated speculations, the balance of trade ran heavily against us, and all the gold of California could not save us. The crash came on the heels of Buchanan's election, and its effects are thus described by him, in his message of Dec. 8, 1857:

"It is this paper system of extravagant expansion, raising the nominal price of every article far beyond its real value, when compared with the cost of similar articles in countries whose circulation is wisely regulated, which has prevented us from competing in our own markets with foreign manufactures, has produced extravagant importations, and has counteracted the effect of the large incidental protection afforded to our domestic manufactures by the present revenue tariff. But for this, the branches of ou- manufactures, composed of raw materials, the product of our own country-such as cotton, iron, and woolen fabrics-would not only have acquired almost exclusive possession of the home market, but would have created for themselves a foreign market throughout the world."

WAR CURRENCY.

This was the condition of the currency when the Republicans came into power in 1861, and found the country with an empty Treasury and a broken credit, and in the arms of a formidable rebellion. It was found impossible to carry on the operations of the war with this currency. The first call of the Treasury exhausted

CURRENCY-Continued.

the specie, and the banks promptly suspended payments. A national currency had to be created or the nation must perish. Legal-tender Treasury notes (greenbacks) were issued to take the place of the disappearing specie; a system of national banks was devised, with circulating notes secured by a deposit of Government bonds; the rubbish was cleared away by a 10 per cent. tax on the circulaing notes of State banks; and revenue was provided by means of a protective tariff.

GREENBACKISM.

After the war the Democratic party, dazed at the constant failures of its own evil prophecies, the rapid recovery of the country from the tremendous strain, and the popularity of the national currency, completely lost its head, plunged into the vagaries of Greenbackism, and demanded the indefinite issue of Treasury notes. But this was not its settled conviction, could in no wise be reconciled to its principles, and has measurably passed away. It has never forgiven the capitalists of the country for furnishing the "sinews of war," nor relaxed its hostility to anything in the shape of a national bank. In its national platform, all false pretenses are laid aside, and it recommends "that the prohibitory 10 per cent. tax on State bank issues be repealed." And here the currency issue is joined. The Republican party insists that all circulating notes shall be issued by national authority, under national inspection, and upon a pledge of national securities. The Democratic party insists that State banks shall be allowed to issue circulating notes on such conditions as the States see proper to impose. National versus State paper currency is an issue to be again fought out. If the people prefer Wild Cat and Red Dog to Greenbacks and national notes, they will have the opportunity to say so.

No. 112.

CURRENCY-Postal and Fractional.

The scarcity of "small change" during the war, caused by the disappearance of fractional silver, led to the use of postage stamps and of metallic tokens issued by individuals. Congress took the hint, and provided for the issue of a paper currency in denominations of less than $1, known first as postal currency, and afterwards as fractional currency. The different issues were as follows:

CURRENCY-Continued.

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The act of June 30, 1864, was amended by acts of March 3, 1865, April 7 and May 16, 1866. Some $15,000,000 of fractional currency has never been redeemed.

No, 113.

CURRENCY-Redemption of,

The Government is responsible for the redemption of five classes of currency which it has issued: (1) Legal-tender notes issued during the war as promissory notes; (2) Treasury notes of 1890 issued in the purchase of silver bullion; (3) Currency certificates issued for legal-tender notes deposited with the Government; (4) Gold certificates issued for gold deposited, and (5) Silver certificates issued for silver deposited.

CURRENCY-Redemption of Treasury Notes by Use of Silver Bullion in Treasury.

No. 114.

We have in the Treasury as a redemption fund under the act of 1890 silver bullion that cost $124,000,000 and $13,000,000 of coined silver dollars, against one hundred and thirty-seven millions of Treasury notes. Under that act it is provided that this silver bullion shall be coined as fast as it may be required for the redemption and cancellation of Treasury notes that may be presented for redemption in silver dollars. How does it happen that while this volume of Treasury notes was originally over $155,000,000, it was on January 31, 1896, only $137,000,000? It is explained by $18,000, 000 being redeemed by using this coined bullion in the last eighteen months. There is going on a process of redemption and cancellation of Treasury notes by the substitution of silver certificates, gradually and safely, as business demands. This comes under a provision of the act of 1890, which provides that the volume of outstanding Treasury notes shall at no time exceed the silver dollars coined from the bullion purchased under this act and the cost of the uncoined bullion; so that when a Treasury note is redeemed in silver it must be immediately canceled, as the silver dollar or silver cer tificate representing the silver dollar goes into circulation in its place.

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