would be the result? In place of the notes rising to par, the bonds would fall, say to 95 per cent. The effect of the provision, making depreciated notes convertible into bonds, would be to sink the value of the latter much more than to raise that of the former. It would be simply a question of supply and demand. With the supply, the demand would fall off. The notes might, and if they were not legal tender would, be converted into the bonds, and so disappear; but while they remained in circulation they would be at the same discount as the bonds. In ratio as they disappeared, both bonds and notes would rise in value. If they were plain notes, no matter the price to which the bonds fell, they would still be converted, for the reason that an interest-bearing security would always be preferred to a non-interest-bearing one. If the notes were in the usual form of those serving as money, this fact would have no influence whatever in causing them to serve as such. Their price would be their real or estimated value. If the bonds into which the notes were convertible were at a premium for coin, the notes would be at a corresponding one. The latter would derive all their value from the former. As the bonds issued by the most stable governments are always fluctuating in price, and frequently excessively, that of the notes made convertible into them would be subject to precisely the same fluctuations. The price of the bonds, consequently, would become the standard by which all the transactions of a nation would be measured. It would not only, in the ordinary course of events, fluctuate largely, but it could be made to fluctuate excessively, by those who were strong enough to affect the credit of the issuer. The standard of value, consequently, might depend upon the success of the machinations or intrigues of the unscrupulous and powerful, who would never hesitate to sacrifice the public welfare to advance their own selfish ends. It would be the same as if they had the making of the weights and measures for every transaction to which they were a party. Mr. Sherman's best currency, consequently, is the worst one that could possibly be created. The alternative is that established by Providence, the quality and value of which can never be impugned by any artifice or contrivance. No one of ordinary sense has ever lived who could be made to believe that it was unsafe to hold the precious metals; while the fears or appre

hensions of the most sagacious are often so worked upon that they eagerly part with all their government securities, for fear that some accident or event may weaken or destroy their value; perhaps soon to lament their folly. Mr. Sherman might at any moment find his bonds, created for the purpose of funding his notes at par, at a discount of from ten to twenty per cent. What, in such case, becomes of his scheme for maintaining government notes, at all times, at the value of coin? "An increased currency," he says, "will follow resumption." How? By bringing into circulation $200,000,000 of currency now hoarded by the people, or idle in SavingsBanks and trust companies; $31,005,000, deposited in the Treasury and represented by certificates of indebtedness; $90,792,290 of National Bank and fractional currency now held, and largely as reserves, by the Banks, and which will go into circulation when specie payments are resumed (for gold and silver will then take their place); and a part of $48,431,409, now held by Savings, State, and other Banks. Deducting from this last sum $20,000,000, as held by the Savings-Banks, which in Mr. Sherman's estimate are counted twice, the sum which is to come into circulation, in addition to the present amount, is to equal $350,228,699! And at what cost is this vast sum to be liberated and added to the circulation? By the provision of $50,000,000 of coin, in addition to that in the Treasury, which when his speech was made equalled $37,120,772. He would indeed add, by borrowing, $40,000,000 of gold, for which he would be authorized to issue coin certificates, payable on demand, to the amount of $50,000,000; that is, for $10,000,000 more than the coin borrowed. amount necessary to be provided for resumption, consequently, would equal only $40,000,000; as the coin which was borrowed, payable on demand or coin certificates, could not be made available therefor. The $37,112,699 in the Treasury could not be made so available, for the reason that the whole amount would be required for the payment of interest on the government indebtedness, unless the Independent Treasury were abolished, and a United States Bank created to take its place. The United States notes, after resumption on Mr. Sherman's plan, "could be made receivable for customs dues, without a breach of the public faith. They would always be the reserves of the National Banks." What kind of notes? Not plain notes,

The

certainly, as these could not be got into nor maintained in circulation. Plain notes, if made convertible into them, would be simply orders for bonds, which would be executed as soon as issued. Such notes would exert no influence over prices, as they would not serve as money. Bonds would fall in ratio to the amount of notes issued. If the public should be found indifferent whether they held interest or non-interest bearing securities, the sooner government should stop the payment of interest the better. It is assumed, however, that the historic preference for interest-bearing securities is founded in reason, and must be still respected. If the notes were legal tender, then they would be at a discount, for the reason that they would be instruments in excess of the means of expenditure. As they would not be convertible into coin, how could government provide itself with the latter, wherewith to pay the interest on its indebtedness? By selling its legal-tender notes, in which its revenues would be collected, in the market, to the highest bidder. With one or two sales of the kind it would find its notes at fifty per cent of their nominal value. How could they serve as reserves of the Banks, as Mr. Sherman asserts they always would? There would be no plain notes to serve as such, as they would not be money, only orders for bonds. The latter could not serve as reserves, especially after resumption, as these would have to be in that form of capital whose value was uniform and absolute. If the notes were legal tender, their reserves would be in that which would always be at a discount compared with coin. In other words, so long as this kind of reserves was used, the Banks would not have resumed. All this is plain enough, if any distinction is to be made between things which possess value and those which do not. Upon this distinction turns the whole question of money. Mr. Sherman declares, in substance, that there is no difference between reality and fiction. His great factor in resumption is "confidence"! That secured," who," he triumphantly asks, "will want gold for the notes?" That secured, "the present volume of United States notes need not be largely, if any, reduced. . . . They can then, and no doubt will, be reissued, without or with the legal-tender clause; and, with their credit secured and established at par for coin, they will not only circulate in Texas and on the Pacific slope, as well as in other parts of the United States, but, like the Bank of England

notes, in all other countries having relations with us." There is the same sense in all this as to say, that people will no longer want food, when they know they can have it for the asking. But would resumption bring an additional amount of some $350,000,000, now claimed by him to be in great part hoarded, into circulation? What do men hoard, and why do they hoard? They hoard only the highest kind of property,that which is the universal equivalent, not the lowest kind, as government notes often are, and as our own threaten to be. They hoard when great social or political convulsions are imminent. Why do not the holders of the government notes invest them in good securities, as Mr. Sherman assumes they will do after resumption? The latter are as valuable now as they will be then. This talk about hoarding is the idlest of tales. Resumption would not bring an additional dollar of currency into circulation. It is, however, in view of what has preceded, useless to comment further. His assumptions and arguments are too puerile and absurd to deserve the least notice. They would receive none but for the fact that they show the method by which, as Minister of Finance, he proposes to conduct the country to specie payments. The alternatives are a complete and radical change in his views and policy, or certain and terrible disasters to the country, if he remain in his present position. To resume, every dollar of government notes is to be taken in as the condition precedent thereto. The currency furnished by Banks, including deposits, will have to be retired by an amount equalling probably $300,000,000. The notes of the National Banks now in circulation equal that sum in round numbers; their deposits, $650,000,000; the deposits of the State Banks, $159,000,000: making an aggregate of $1,100,000,000. It is very doubtful whether resumption can be had with a circulation exceeding $800,000,000. This sum is nearly twice as great as that outstanding on January 1, 1860; and probably equals the amount which would now be outstanding, at a normal rate of increase since that time.

If, as is demonstrable, the condition of resumption be the previous retirement of currency to the amount of $650,000,000, is there any mode by which the vacuum can be so well filled as by the creation of a National Bank, to become possessed of the specie now in the Treasury, to serve as reserves for its issues, these to be further supported by being made receivable

in the payments and disbursements of the revenues? Is there any other mode by which even the first step can be taken, preserving the present fabric till another can be provided in its place? If such mode be not adopted, the new can only arise out of the ruins of the old. There are now (June, 1877) in the Independent Treasury $108,137,083 in coin or bullion, a sum sufficient for the issue of a convertible currency equalling three times its amount. Why should not this sum be allowed to repeat itself three times its amount? for with the creation of a Bank, that portion of it represented by coin certificates, as well as that belonging to the government, will alike go into it, and serve as reserves. Would not every one, government and people, be equally benefited? It may be urged that a Bank with a capital of $100,000,000 would be a great and dangerous monopoly. There could be no monopoly, no matter the extent of its operations, as it would supply only a small proportion of the currency. The Bank of England, which enjoys privileges which would by no means be granted to a Bank of the United States, does not, including deposits, supply one-tenth that in use in that country. Where the issue of a currency is perfectly free, it can no more be monopolized by one institution than can the entire capital of the country. Currency is but a symbol of capital, and will always have in this country, as at present, thousands of issuers. But suppose all the currency in circulation in the United States, amounting to, say, $1,000,000,000, were issued by a single institution, would the public safety and welfare be imperilled? What would be its position? It would be liable to be called upon at any moment to take in all its liabilities in coin, while it could not get in its means in a less time than three or four months. As any disturbance or distrust might drive it into suspension or bankruptcy, it would be compelled to observe the most scrupulous moderation and justice in all its dealings. Its advantage would be promoted in the degree of the morality, social order, and intelligence which prevailed. It would seek to promote the general welfare, as the surest means of advancing its own. Suppose such a Bank should undertake, as General Jackson asserted the old Bank undertook, to subvert the liberties of the country. This could not be done without a revolution which would involve all interests those of the Bank, as well as of the country-in common ruin. Is it cred