taught him nothing. The disappointment is more acute for the reason that he is the first man trained in affairs who has for a long period been appointed to the high office which he now holds, generally the reward of political partisanship. From the Committee of the House appointed, as it were, by lot little was to be expected. From the Indianapolis Convention, which was assumed to embody the highest experience of the country, great things were naturally hoped. Its recommendations, however, show it to be as incapable of dealing with the great subject as the Secretary himself, or the Committee of the House, while the Report of the Commission, appointed by the Convention and reflecting its views, only serves to render the situation still more involved. It may seem presumptuous in such a presence to speak so freely, but in vindication it is assumed that the premise laid down, that money must be capital or the symbol, discharged by its use, of capital, is unassailable. All that has followed has been the proper application of it. All that the writer has had to do was to rescue from oblivion the priceless records of the past and apply the lessons which they teach. It was General Jackson, that high priest of Populism, who dealt the stunning blow from the effects of which the country has never recovered.

ANSWERS TO THE INTERROGATORIES OF THE

MONETARY COMMISSION.'

METALLIC CURRENCY.

Q. I. Should or should not the silver dollars and silver certificates be redeemed on demand in gold? If redeemed, what reserves should be provided and how?

A. They should not be redeemed in gold, from the disturbance which might be created by its provision. They should be funded into a long bond of the Government having the value of gold, no other provision or reserves being required.

Q. 2. What in your judgment would be the probable amount of silver dollars and silver certificates presented if direct redemption were enacted.

A. All, from the distrust in which they are universally held by our people; every one preferring money of full value to money worth only half its nominal value.

Q. 3. To insure the permanent inviolability of the gold standard, what legislative measures would you recommend?

A. The "inviolability" of the gold standard is insured by the same natural law that insures the "inviolability" of steel as a tool, or a railroad bar, in place of lead. The superior fitness of gold over silver as money is as palpable as that of steel, for the uses to which it is applied, over lead. Legislation in the premises would be wholly superfluous.*

Q. 4. For the purpose of facilitating the use of existing silver currency, what do you recommend as the smallest denomination of United States notes and bank notes which would be put into circulation?

A.

Instead of " facilitating the use of existing silver currency the great object should be its discharge, equally with gold, from use as money, to be applied as capital to production, more convenient instruments of distribution than either being provided. The disuse of both as the money of exchange establishes a law not to be overthrown so long as cheap and convenient processes have the preference over costly and inconvenient ones. No Government notes should be in circulation. Those of banks should be of

1 See page 291.

denominations (not less than a dollar) suited to the wants of the public.

DEMAND OBLIGATIONS.

Q. I. Do you consider that there are any dangers arising from allowing the United States notes to remain as a permanent part of our circulation?

A. Very great danger, as no promises to serve as money should be issued for the retirement of which, previous to their issue, adequate means are not provided. They are all of the nature of issues made in the discount of "accommodation paper" by banks.

Q. 2. On what grounds, if any, would you favor the gradual but entire withdrawal of the Treasury notes of 1890 and of the United States notes?

A. On the ground that for their retirement no provision is made previous to their issue, such provision being the essential condition of issue of every form of paper money proper for use. They are a wholly superfluous form of currency.

2. 3. If it shall be decided to retire the United States notes, how can it be done without adding to our bonded debt?

A. It cannot be done except by funding.

Q. 4. How, in that case, can provision be made for maintaining an adequate amount of currency available for purposes of business?

A. By returning to the banks the bonds now put up for the security of their notes, and by allowing them to issue notes, without any restrictions as to amount, in the discount of merchants' bills, -business paper, -of bills that have behind them merchandise adequate to their full discharge. By removing the restrictions now imposed as to issues all the State banks would become national banks subject to the supervision of the National Government.

A.

Q. 5. If it be thought inexpedient to fund the United States notes, how can they be redeemed with an assurance that bank currency will take their place? If banks were allowed to issue currency limited only by the amount of merchants' bills offered for discount an adequate amount of currency would be provided an amount equalling the wants of the public, or to that which should be in circulation, such amount never to exceed the subjects of expenditure, money as such being simply an instrument for the purpose of reaching them.

A.

Q. 6. Meanwhile, what security or gold reserves would you recommend? If the share capital of banks were fully paid up, and if no issues were made but in the discount of merchants' bills, the matter of reserves might be well left to take care of itself, as the issues made

in the discount of such bills would be returned in their payment. In such case no balances could arise to be paid in coin. Still, as some bills will not be paid, to such extent reserves are to be provided.

2. 7. In case provision should be made for the retirement of United States notes, how could their presentation for redemption be best secured?

A. If provision were made for the issue of the currency of commerce up to the value of merchandise in process of distribution for consumption, as this was issued the notes of the Government, being debt without interest and wholly superfluous, the channels of circulation being otherwise filled, would be exchanged for bonds drawing interest or converted into capital to be made the basis of production. If voluntary conversion into bonds did not proceed at a sufficiently rapid rate the notes received in the payment of the revenues could be cancelled, provision of means for carrying on the Government to be made by an issue of bonds.

Q. 8. Should Government issues be withdrawn only as bank notes are put out? That is, if an elastic system of bank issues should be adopted, would it be desirable to define and maintain any given quantity of circulation?

A.

The first step in the way of reform should be the provision of an adequate currency of commerce of the issues of banks. This made, the retirement by the holders of the government notes would immediately begin. When these were retired the currency would be wholly elastic, being abundant as the merchandise symbolized was abundant and scarce in ratio as merchandise was scarce. Where there was no merchandise for distribution there would be no money; silver and gold equally with cotton and corn being the subjects of exchange and consumption. The only limit to the issue of banks would be the amount of bankers' bill offered for discount represented by merchandise of an equal value in process of distribution for consumption.

Q. 9. Would the banks in fact furnish the currency which the country needs, if the Government notes were withdrawn?

A. They would supply all the currency wanted, or entitled to be issued.

BANKING.

Q. I. Is it possible to rely upon national bonds as security for bank-note issues?

A. No other provision is necessary for the convertibility of the

issues of banks into gold, or for their return to the issuers in the payment of their bills, than that they represent merchandise in demand for consumption. With such provision the additional one of the United States bonds is wholly superfluous. It is as absurd to require banks to put up security for their notes other than their capital and reserves, these further supported by the full constituents of the bills discounted, as it would be to require merchants seeking discount to put up security equal to the full amount sought. Losses may arise from the employment of untrustworthy or incompetent agents, but these bear no proportion to the advantages of discharging capital from distribution.

Q. 2. Can any safe and practical plan be devised for using any other securities as a basis for bank-note issues?

A. The answer to this question is included in the preceding

one.

2. 3. If bonds should be used exclusively as a basis for issues, would it be possible thereby to secure an elastic note circulation?

A. It would not. A currency to be elastic must represent the subjects of consumption; it would then vary necessarily with the amount of the latter. To repeat if the subjects of consumption are scarce, money will be scarce; if plenty, money will be plenty. When there are no subjects of consumption there should be no currency. The one is the reflection of the other.

Q. 4. If bank-note issues be based exclusively on assets of the bank, is the nature and extent of the security such as effectually to protect the note-holder? What limit should be set to such note issues?

A. No. The assets of a bank may afford no immediate protection to the note-holder. They may largely consist of real estate not presently convertible into money, the standard of value, the universal equivalent. Other assets, such as bonds and mortgages, may have the same infirmity in not being presently convertible into gold, or exchangeable into subjects of consumption. The only assets of banks competent to protect note-holders are gold, or subjects of consumption, to reach which gold as money would be used. The only limit to be set to the issues of banks is the amount of bills representing merchandise in process of distribution for consumption.

Q. 5. Since bank assets (including stockholders' liabilities, etc.) must be the means of ultimate redemption of such issues, what funds would you deem