ments. the Government, in 1878, undertook the resumption of specie payA Government may well issue notes, not legal tender, in anticipation of the revenues and payable in them, the amount not to exceed the demand for such purpose, such currency being symbolic, the incoming dues being its constituent. Such notes, like “Exchequer Bills," usually bearing a low rate of interest, have not unfrequently been resorted to by our own Government, and are very proper expedients, as a corresponding amount of specie, or the money of banks, are discharged from its operations. It is probable that an issue of, say, $50,000,000, the incoming revenues equalling $1,500,000 daily, would, to those indebted to the Government, have a value equal, or nearly equal, to that of coin. Such notes are not money in any sense, as they are not in terms, or in fact, payable in the universal equivalent, the necessary attribute of all kinds of paper money properly issued. Notes issued in the anticipation of the revenues have no tendency to inflate the currency, as they have a specific function, do not enter into general circulation, and are retired by their use. No greater wrong can be committed by a Government than an issue by it of its notes, forms of debt to serve as money. The temptation is always great as the notes are welcomed by all classes, every one seeming to be enriched in ratio to their amount, no distrust at the outset being felt, as the whole means of the people is assumed to be pledged therefor. As their issue sets everything in motion, their retirement involves a contraction of all the operations of society in ratio to the amount of their issue. When issued in vast amounts relative to the means of a people the penalty exacted for their retirement is often too great to be paid, and they are usually repudiated, or retired only with a very meagre provision for their discharge. In 1840 the "Independent Treasury" was established, the act being repealed the following year, the "Whigs" having achieved a momentary triumph. It was finally established in 1846 under the administration of Mr. Polk. At the time the abandonment by the Government of the money of banks of commerce, for coin, did not work great inconvenience. The danger was to come when, from its enormously increased expenditures, metallic money would not suffice for its wants, the alternative being an issue of its own notes to reserve as money, precisely that adopted in the War of the Rebellion. CHANGE OF STANDARDS. ACTS OF 1834 AND 1837. By the act of June 28, 1834, the weight of the gold eagle, no provision having been yet made for the coinage of the gold dollar, was changed from 270 to 258 grains, its fineness from 9163 to 899.225. By the Act of January 18, 1837, the fineness was changed to 900. The value of the gold dollar authorized by the Act of March 3, 1849, corresponded to that of the eagle. By the reduction in the value of the gold coins, no change being made in those of silver, the coin ratio between the two metals was changed from 15 to 16 to 1. The purpose of the acts was the substitution of gold as the standard money of the country in the place of silver which had previously been the standard in use serving as the reserves of banks. The change was called for by the increased transactions of the country, gold, from its higher relative value, having become the more convenient money. By the change gold was undervalued about 3 per cent. The substitution of gold for silver as the money of the country was one of the most important measures of General Jackson's administration, and received his earnest support as well as that of the public, not a voice being raised in opposition. It had the approval which every improved method or process in affairs is certain to receive. DEBASEMENT OF THE SILVER CURRENCY. ACT OF 1853. By the ratio established in 1837, the bullion value of silver coins for a series of years exceeded their coin value, the excess at times equalling 42 per cent. In consequence silver coins of all denominations were taken for export to such an extent as to be a source of very great inconvenience. For the purpose of remedying the evil Mr. Corwin, Secretary of the Treasury, in his annual report for 1852, called the attention of Congress to the matter. He said: So soon as the state of our foreign commerce, as is now the case, requires the exportation of specie, it is obvious that our silver coin must be exported so long as it can be had. There seems to be but one immediate and direct remedy for this evil, and that is the one that has already been adopted in Great Britain, of changing the relative value of gold and silver coin by reducing the intrinsic value of the latter. This could be advantageously done by making the silver dollar weigh 384, in the place of 4121⁄2 standard grains, and the smaller coins in proportion. If such a scale of weights were adopted, the relation of silver in such pieces to gold would be as 14.884 to 1. This plan, if adopted by Congress, will, of course, involve the necessity of making silver coin a legal tender only for debts of small amounts, not, say, exceeding ten dollars, which is about the same limit. forty shillings, which has been established in England. Pursuant to this suggestion, Congress, by an Act of February 21, 1853, reduced the weight of silver in the half-dollar from 206.25 to 192 standard grains, and in the smaller coins in like ratio, such coins to be legal tender in the payment of debts not exceeding five dollars. No reduction was made at the time in the weight of the silver dollar, for the reason, to use the words of Mr. Hunter of Virginia, Chairman of the Committee on Finance of the Senate, "that the great measure of adjusting the legal tender ratio between gold and silver as legal tender in unlimited amounts cannot be safely attempted until some permanent relation in the value of the two metals shall be established," the discovery of gold in California a few years previous having disturbed largely the commercial ratio. which had prevailed between the two metals. The excess in 1852 in value of a dollar in silver over one in gold was 2.57 per cent.; in 1853, 4.26 per cent. Congress could well postpone action upon the matter of the silver dollar as there was none in circulation, nor had any been in circulation from the foundation of the Government. The total coinage up to 1806, when it was stopped by order of the President as involving a needless outlay of the public money, all such coins being exported as fast as they came from the mint, equalled $1,439,517. In reporting the bill to the House, Mr. Dunham, of Indiana, a Western man, Chairman of the Committee of Ways and Means, among other things, said: An objection to this proposed change (i.e., the reduction of the weight of the minor coins) is that it gives us a standard of currency of gold only. What advantage is to be obtained by a standard of the two metals, which is not as well, if not much better, attained by a single standard, I am unable to perceive. Wherever the experiment of a standard of a single metal has been tried, it has proved eminently successful. Indeed, it is utterly impossible that you should long at a time maintain a double standard. Gentlemen talk about a double standard of gold and silver as a thing that exists, and that we propose to change. That has been, and now is, gold. We propose to let it remain so, and to adapt silver to it, to regulate it by it. Up to and including 1853 the total coinage of silver dollars equalled $2,506,890; of subsiduary silver, $66,716,481; of gold, $276,169,529. By the Act of 1853 the country was put wholly upon a gold basis, the coinage of silver dollars having been practically abandoned, the minor coins being too debased in value for export. CONSEQUENCES RESULTING FROM THE ABANDONMENT BY THE In the long period from 1829 to 1860 there were but two apparent breaks in the tule of the Democracy, the first made by the election of General Harrison in 1841, to the presidency, which was without result, as his death almost immediately followed his inauguration. Mr. Tyler, of Virginia, a prominent advocate of States' rights, and of a strict constructionist, became president. The Democracy was defeated in 1848 in the contest for the presidency, but held both branches of the national Legislature, so that its control may be said to have been unbroken through a period of thirty years. The result of its rule, during this long period, was drawn in striking colors by Mr. Buchanan in his annual message for 1857: We have possessed all the elements of material wealth in rich abundance, and yet, notwithstanding all these advantages, our country, in its monetary interests, is at the present moment in a deplorable condition. In the midst of unsurpassed plenty in all the productions of agriculture, and in all the elements of national wealth, we find our manufactures suspended, our public works retarded, our private enterprises of different kinds abandoned, and thousands of useful laborers thrown out of employment and reduced to want. The revenue of the Government, which is chiefly derived from duties on imports from abroad, has been greatly reduced, whilst the appropriations made by Congress at its last session for the current fiscal year are very large in amount. Under these circumstances a loan may be required before the close of your present session; but this, although deeply to be regretted, would prove to be only a slight misfortune when compared with the suffering and distress prevailing among the people. With this the Government cannot fail deeply to sympathize, though it may be without the power to extend relief. It is our duty to inquire what has produced such unfortunate results, and whether their recurrence can be prevented. In all former revulsions the blame might have been fairly attributed to a variety of coöperating causes; but not so upon the present occasion. It is apparent that our existing misfortunes have proceeded solely from our extravagant and vicious system of paper currency and bank credits, exciting the people to wild speculations and gambling in stocks. These revulsions must continue to recur at successive intervals so long as the amount of the paper currency and bank loans and discounts of the country shall be left to the discretion of fourteen hundred irresponsible banking institutions, which, from the very law of their nature, will consult the interest of their stockholders rather than the public welfare. The framers of the Constitution, when they gave to Congress the power to coin money and regulate the value thereof, and prohibited the States from coining money, emitting bills of credit, or making anything but gold and silver coin a tender in payment of debts, supposed they had protected the people against the evils of an excessive and irredeemable paper currency. They are not responsible for the existing anomaly that a government endowed with the sovereign attribute of coining money and regulating the value thereof should have no power to prevent others from driving this coin out of the country and filling up the channels of circulation with paper which does not represent gold and silver It is one of the highest and most responsible duties of government to insure to the people a sound circulating medium, the amount of which ought to be adapted with the utmost possible wisdom and skill to the wants of internal trade and foreign exchanges. If this be either greatly above or greatly below the proper standard, the marketable value of every man's property is increased or diminished in the same proportion, and injustice to individuals as well as incalculable evils to the community are the consequence. Unfortunately, under the construction of the Federal Constitution, which has now prevailed too long to be changed, this important and delicate duty has been dissevered from the coining power, and virtually transferred to more than fourteen hundred State banks, acting independently of each other, and regulating their paper issues almost exclusively by a regard to the present interest of their stockholders. Exercising the sovereign power of providing a paper currency instead of coin for the country, the first duty which these banks owe to the public is to keep in their vaults a sufficient amount of gold and silver to insure the convertibility of their notes into coin at all times and under all circumstances. In a recent report made by the Treasury Department, on the condition of the banks throughout the different States, according to returns dated nearest to January, 1857, the aggregate amount of actual specie in their vaults is $58,349,838, of their circulation $214,778,822, and of their deposits $230,351,352. Thus it appears that these banks, in the aggregate, have considerably less than one dollar in seven of gold and silver, compared with their circulation and deposits. It was palpable, therefore, that the very first pressure must drive them to suspension, and deprive the people of a convertible currency, with all its disastrous consequences. From this statement it is easy to account for our financial history for the last forty years. It has been a history of extravagant expansions in the business of the country, followed by ruinous contractions. At successive intervals the best and most enterprising men have been tempted to their ruin by excessive bank loans of mere paper credit, exciting them to extravagant importations of foreign goods, wild speculations, and ruinous and demoralizing stock gambling. When the crisis arrives, as arrive it must, the banks can extend no relief to the people. In a vain struggle to redeem their liabilities in specie, they are compelled to contract their loans and their issues; and, at last, in the hour of distress, when their assistance is most needed, they and their debtors together sink into insolvency. 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 |