IRLF 5fl IflD o# A NATIONAL MONEY SYSTEM, ADDRESSES BY R.M..UDNEY Los Angeles Gal. 1890-W1894. LIBRARY OF THK UNIVERSITY OF CALIFORNIA. run UNIVERSITT A T I Q-N A-L-M N K Y SYSTEM ADDRESSES BY R.M .SIDNEY Los Angeles CaL , PRELIMINARY ARTICLE A NATIONAL CURRENCY, INCREASED VOLUME OF MONEY. Gal, Bankers Association. AS GOOD AS GOLD. Commercial Congress Kansas City. PROPOSED NATIONAL MONEY SYSTEM. Cal. Bankers Association. /OLUME OF MONEY, 7/h AT IS MONEY. American Bankers Association. ESSENTIAL ELEMENTS OF MONEY. Vorlds Congress of Bankers Chicago. MISCELLANEOUS. July 1890. Jctn, 1891. Mar, 1891 Anr, 1891. Oct, 1891 Sep, 1892. June 1893. r rorn the Los Angeles Daily Times of July 7, 1 890. THE CURRENCY An Elaborate Plan Originated by Judge Widney. What He Says About it Suggested in the Form of u a Bill to Provide for a National Circulating Medium," and to Regulate the Same Full Text of the Measure. The extended debate in Congress on the silver question has awakened gen- oral interest in the national financial Astern throughout the country, ami called forth an almost universal de- mand for all information bearing upon this important subject. TiiETiMKsyes- ;erday published a letter from Senator ilenry M. Teller of Colorado, explaining ;it length the provisions of the Silver Bill, the relations existing between gold :md silver as money metals, with a ; trong argument against the demoneti- sation of silver. This .morning another Branch of the general subject is taken up, to wit, paper currency as a circu- lating medium. Judge R. M. Widney, president of the University Bank, has jciven a great deal of attention to the .study of finance, especially with reference to paper currency as a circu- lating medium, backed by the real nstate of the Nation as security, and in which the people are directly and personally interested. Judge Widney lias formulated his views on the sub- ject in the shape of a "bill to provide a national circulating medium, and to provide for the circulation thereof," which he thinks may yet become the subject of Congressional legislation. The bill is an exhaustive document, outlining in detail Judge Widney's plan, and is worthy of a careful perusal. In regard to the measure the Judge yesterday made the following state- ment to a TIMES reporter: JUDGE WIDNKY'S STATKMENT. Every civilized nation must have a suffi- cient volume of circulating medium, of one kind or another, to fully accommodate tne business of the nation. The volume will vary generally in pro- portion to the population and the bulk and activity of business, herein including the development of the resources of the coun- try. If the circulating medium is kept in vol- ume to meet the above demands, the busi- ness of the community will be steady and finances will be trie from what is known as tightness of the money market. The people must, however, bear in mind that fluctuations will occur by reason of ex- cessive production or demand that no finan- cial scheme can obviate. It may be safely asserted that gold and silver cannot be controlled or obtained in ufficient quantities to fully meet the de- mands of the commercial world for a circu- lating medium, and the same is true of each nation. Hence, each . uutiou is forced to supplement the use of gold and silver by an issue of currency. It may be further asserted that no nation has yet fully or sat- isfactorily solved this department of the problem. The proposed bill is limited to the cur- rency department and does not affect the gold and silver questions before the nation. Up to the present all of our legislation on currency has been only a makeshift to meet emergencies in a temporary manner. As a nation we have reached a point where we should, in harmony with the natural laws of business, establish our circulating medium on a permanent basis, so that the whole country may know what to rely on from century to century with only slight changes for adjustment. Arbitrary legislation, in violation of natu- ral laws of business, must sooner or later break down. Therefore the only solution of this question is a national system of finances based upon a natural law, applicable to the case. The present bill recognizes that th na- tion alone should be the bank of issue of all circulating medium, gold, silver or paper. In this way all the property of the people in the nation is the security for the money is- sued. Every inhabitant owning money is interested in the stability of the money and of the Government. The question of redemption is eliminated from the problem, for to redeem implies a uew reissue in some form to keep up the volume. There is, in fact, no such thing as bona fide redemption, for never is there in reserve at any one time gold and silver enough to redeem all outstanding notes. The only possible thing is to provide fully tor exchange of gold and silver tor cur- rency to meet special demands. This is all that has ever been done even under the head of redemption. The proposed bill adopts the present or- ganized department of Comptroller and clerks, so that no noticeable change will oc- cur in this respect, neither will there be any material increase of employe's. A comparison of the following sections in parenthesis will show corresponding sec- tions in the act of June 3, ^864, The first number is of this bill, the second is of said act: (1-1), (2-2), (3-3), (4-22), (5-24), (8-5), (9-6), (10-7), (11-18), (13-9), (14-10-11) (16-12), (17-13), (18-50), (19-33), (20-28), (21-30-31), (23-34-45), (23-35), (24-38) (25-40), (26-44), (28-52), (30-50), (31-59)! (32-60), (33-61), (37-27), (38-53-55), (39-54) (40-63), (43-64.) The peculiar provisions of this bill are principally m sections 4, 6, 7, 8, 9, 12, 13, 17 18, 21, 23, 33, 34, 35 and 36. , The leading points on these sections are about as follows: Section 4 provides for a circulating medium in currency additional to gold and silver of $20 per inhabitant The amount of coin in circulation June 30, 1889, was $856,662,356; in the treasury, $244,050,076. Total, $1,100,712,432. An issue of $20 per capita in a currency, as per this section, would give on the census of 1890 $1.280,000,- 000, making a total of coin and currency circulating medium of $2,380,712,432. The volume of coin and currency would be nearly equal, and the exchange of one for the other would usually balance. On a re* demption plan the results would be per- fectly safe. As population increased between census takings from year to year an additional issue is provided for annually. Section 4 also makes it legal tender for all debts. This prevents a corner on gold when needed to pay Government revenues. Where needed for foreign use it can be had as easily as at present. Section 6 provides for a new issue every twenty years. This is for the purpose of re- placing in circulation notes to replace the volume of those lost and destroyed; also to check incidentally couaterfeiting, or the use of stolen plates, etc. Section 7 is very important. This pro- vides for returning to circulation among the people the money that is first issued* and as it returns in revenues and taxes to the Gov- ernment. This is done by taking up all outsanding notes of the Nation; also by loans to States, cities, counties, etc., on bonds issued for public improvements. This will at one stroke reduce interest on all such bonds to 1 per cent, per year. This of course reduces taxes in all such cases for the masses, and is a sweeping public benefac- tion to all. Sections 8, 9, 12, 13, 17 and 18 provide that real estate may be used as security, by which banks can obtain capital at a low rate of interest of 1 per cent, per year on real estate security, and in return must loan it at not to exceed 4 per cent, per year. The Nation can never safely do the detail bank- ing business of the people, for the simple reason that such a business now requires the talent and time of all the banks, bank- ers and employes now in that business. To succeed in this there must be the responsi- ble, personal inspection and attention of deeply interested persons, persons who realize that failure, a bad debt mean per- sonal financial ruin or loss. Again to throw these out of employment to put in others is no gain to the people. Section 21 provides that the rate of in- terest shall not exceed 4 per cent. The 3 profits of a bank are not regulated alone by the rate of interest it charges, but by the differences between the cost of the money to the bank and the rate charged by the bank. If the Government furnish, capital to the bank at 1 per cent, and the bank gets 4 per cent., the gross prof- it to the bank is 3 per cent. In addition to this the bank receives the current inooniH from the real estate pledged to the Govern- ment as security for the capital issue. This plan substitutes, in the present system, real- estate tor United States bonds as security, and leaves no dead capital lying idle in the United States Treasury as collateral secur- ity for bank notes, as at present. This one plan will of necessity cheapen money by removing dead capital, in United States bonds, trom an interest drawing condition. Section 33 introduces a matter of very vital importance to all the people. It pro- vides for the publication of all the valuable financial news of the Nation in a National Bulletin of Finances. From this quite an accurate trace can be kept of the journey ana stoppings of the volume of money. A careful consideration of its provisions will fully show its importance. Section 84 is designed to correct existing abuses and regulate taxation. The rich be- come richer and the poor poorer is a proverb throughout the land, and the poor cry aloud for work. Under this section, by taxation and revenue the rich will be con- stantly paying into the national treasury. It is tht'ii the people's money, and by ihi> Government must be returned to circulation. If the Gov- ernment will employ the idle laboring classes on public works, postoffices, build- inirs. parks, military and naval matters, it will furnish labor and bread to the needy. The rate of wages should be on the basis of employing or helping the greatest num- ber, and, generally speaking, not the best laborers. The best laborers command good wages from private parties, and thus crowd out the weaker. At a low rate of wages these would find employment and food from vernment, and in return woald give us public Improvements at about the same cost as if higher wages were paid to better laborers. Our Nation must provide labor, food and clothing for its poor labor; no other one will 80 provide. This section prevents such Government expenditures being made in a few localities, thus drawing an over-supply there. It re- quires the expenditures to be made approx- imately to the population in the different States" and communities. This is right, for in that proportion the people have paid in taxes, and it should be expended where it came from, as near as may be. Of course, the above principles are appli- cable to many changes of detail, and Congress would make such changes as were deemed best. _ THE BILL. Full Text of Judge Widney's Finan- cial Scheme. A bill to provide a national circulating medium, and to provide for the circula- tion thereof. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled: That there shall be established in the Treasury Department a separate bureau, which shall be charged with the execution of this and all other laws that may be passed by Con- gress respecting the issue and circulation of a national circulating medium. The chief officer of said bureau shall be denomi- nated the Comptroller of Finance, and shall he under the general direction of the Secre- tary of the Treasury, lie shall be ap- pointed by the President of the United States, with the approval of the Secretary of the Treasury, by and with the consent of Congress, and shall hold his office for the term of ten years, unless sooner removed by tne President, with the consent of Con- gress; he shall receive the annual salary of $8000; he shall have a competent deputy appointed by the Secretary, whose salary shall be $2500 per year, who shall possess the power and perform the duties of the Comptroller during a vacancy In said office or during the ab- sence or inability of the Comptroller. The Comptroller shall employ from time to time the necessary clerks to discharge such duties as he shall direct, which clerks shall be classified by the Comptroller, sub- ject to the direction of the Secretary of the Treasury, which clerks shall be classified in the manner now prescribed by law. Within fifteen days after his appointment he shall take and subscribe the oath of office pre- scribed by the Constitution and laws of the United States, and shall give to the United States a bond in the penal sum of $100,000, with no less than four responsible securi- ties, to be approved by the Secretary of the Treasury, conditioned for the faithful dis- charge of the duties of his office. The Deputy Comptroller shall also take said oath of office and give a similar bond in the sum of 150,000. The Comptroller or Deputy Comptroller shall not, either directly or in- directly, be interested in any association doing a banking business under this act. Sec. 2. And be itfurtherenactea, that the romptroller of Finance, with the approval of the Secretary of the Treasury, shall de- vise a seal, with a suitable inscription for his office, a description of which, with the certificate of approval by the Secretary of the Treasury, shall be filed in the office of the Secretary of State with an impression thereof, which shall thereupon become the seal of office of the Comptroller of Finance, and the same may be renewed when necessary. Every document exe- cuted by the Comptroller, in pursuance of any authority conferred on him by law, and sealed with his seal of office, shall be re- ceived In evidence in all places and courts whatsoever; and all copies of papers in the office of the Comptroller, certified by him to be correct copies of the originals in his of- fice, shall in all cases be evidence equally and in like manner as the originals. An. impression of such seal directly on the paper shall be as valid as if made on wax or wafer. Sec. 3. And be it further enacted, that there shall be assigned to the Comptroller of Finance, by the Secretary of the Treasury, suitable rooms in the treasury building for conducting the business of the Bureau of Finance, in which shall be safe and secure fireproof and burglar-proof vaults, in which it shall be the duty of the Comptroller to deposit and safely keep all plates not aec- essarily in the possession of engravers or printers, and other valuable things belong- ing to his department; and the Comp- troller shall, from time to time, fur- nish the necessary furniture, sta- tionery, fuel, lights and other proper con- veniences for the transaction of the said business. Sec. 4. And be it further enacted, that the Comptroller of Finance, under the direction of the Secretary of the Treasury, is hereby authorized and directed to issue a circulat- ing medium in the name of the United States of America to the amount of $20, in addition to gold and silver coin, per capita, of tin* population of the census of 1890, *Mt*4a0fe4MietNeiiwppHMMt Upon ascer- taing each following census, the issue shall be increased to 120 per capita, in order to furnish suitable notes tor circulation, the Comptroller of Finance is hereby authorized and required, under the direction of the Secretary of the Treasury, to cause plates and dies to be engraved, in the best manner to guard against counterfeiting and fraud- ulent alterations, and to have printed there- from on paper or similar material best adapted therefor, and numbered the quantity of circulating notes, of the denom- inations of $1, $2, $5, $10, $20, $50, $100 and $500, as may be required to supply the issue herein called for. The number of each denomination issued shall be such that the needs of the people shall be best subserved thereby. The notes of each denomination shall be consecutively numbered from No. 1 up; that a duplicate of each denomination and from each suc- cessive plate used shall be perforated with the word "duplicate," and carefully pre- served for use in the identification of the originals, and for the detection of counter- feits by comparison therewith. Said notes shall express on their face that they are issued by the Government of the United States of America as the circulating medium of the people of the United States. They shall have the written or engraved signa- tures of the Secretary of the Treasury and of the Comptroller of Finance, and the im- print of the seal of the treasury, and shall bear such other statements and devices as the Secretary of the Treasury shall direct, and shall contain a statement that this note must be surrendered to the Comptroller of Finance in exchange for a new note of sim- ilar denomination during the year (stating the year for retiring the same.) Said notes, with gold and silver coin of the United Slates, shall con- stitute the legal money of the people of the United States, and shall be receiveti at par in all transactions between the United States and its inhabitants, and between the inhabitants of the United States. The monetary use of gold and silver coin of the United States under existing or future laws is not hereby interfered with, and said notes, gold and silver coin shall be exchangeable at their par value in such manner as shall best subserve the interests of the people. Sec. 5. And be it further enacted, that it shall be the duty of the Comptroller of Fi- nance to receive worn-out and mutilated circulating notes issued hereuuder, and with the Secretary of the Treasury the Comptroller of Finance shall compare said notes with the duplicates thereof on file,and when satisfied that the same are the orig- inals issued under this act, they shall be destroyed by being burned to ashes in the presence of the Secretary of the Treasury and the Comptroller of Finance and such other person as the President shall desig- nate. A permanent book of record of the destruction of such notes with sufficient descriptions thoreof shall be kept by the Comptroller of Finance and published in the Bulletin of Finance. After said destruc- tions of said notes, new notes of the same denominations and number shall be issued to the owners of the destroyed notes, of which duplicates shall be kept as hereinbe- fore provided. Such new notes shall be marked second series or third series as the case may be. Sec. 6. And be it further enacted, that, in the year following each second census, be- ginning with the census of 1910, the entire issue of circulating notes shall be retired and destroyed as provided in secti&n 5 herein. And under the provisions of this act a new issue shall be made from new dies and plates and with new designs and shall be substituted for the retired notes. And during the year for retiring said notes, each banking institution doing business hereunder shall, during the months ot Jan- uary, February, March and April forward to the Comptroller of Finance 25 per cent, each month of s.iid notes in its possession, and in exchange therefor the Comptroller of Finance shall issue notes ot the said de- nomination. * During the remaining months of the year each of s*id banking institu- tions shall monthly forward all of the old issue of notes it may have or receive to the Comptroller ot Finance for destruction and exchange. During said remaining months of said year for retiring said old issue, any person or corporation iiiay forward notes of the old issue for destruction and ex- change to the Comptroller of Finance. Af- ter the expiration ot the said year for the re- tiring of said old issue of notes the said old issue shall cease to be lawful money of the United States, and shall only be received by the Comptroller of Finance for destruc- tion and exchange, and shall be so received until the outstanding old issue is entirely retired and destroyed. The dies and plates used in producing the old issue of notes shall be destroyed by fusing in fire in January ot each year of retiring, in the presence of the Secretary of the Treasury, the Comp- troller of Finance and some person ap- pointed by the President. A record of the destruction of said plates shall be kept in the office of the Comptroller of Finance. Sec. 7. And be it further enacted, that for the purpose of putting said notes in cir- culation the Comptroller of Fin ince shall be authorized to redeem all outstanding notes or currency of the United States and to receive legally issued bonds of > counties, incorporated cities of over 3000 inhabitants and public school districts, said bonds to be issued by the States, counties, eitie-i iind districts for ;i valuation not to exceed 5 per Ci-nt. of the avei;' . value of the real estate in said M te, county, city or district, for the, tive years pre- ceding the issuance of said bonds, deduct- ing from the said issue of bonds the p r value of any other outstanding bonds i>sin-d by said State, county, city or district; said bonds shall be a lieu on all real estate in said State, county, city or district, and shall bear interest at the rate of 1 per cent. per year, and shall not run to exceed twenty years. The interest shall be payable annually to the Comptroller of Finance at Washington, and an annual sinking fund shall be provided sufficient to liquidate sain* bonds at or be- fore maturity. The public issuance of such bonds, their delivery to the Comptroller of Finance and the receipt of the circulating notes therefor shall be deemed conclusive evidence of the leiral issuance and validity of said bonds, and thereafter no defense shall beset up to the payment of. principal and interest, or to the levying ana collect- Ing of taxes therefor. All objections or defense to the issue of said bonds must be made by the parties interested prior to the delivery thereof to the Comptroller of Fi- nance, otherwise they are forever waived and barrrd as a defense. If said State, county, city or district shall fail or neglect at any time to levy and col- lect a sufficient tax to meet the obligations of said bonds, there shall be immediately due and payable to the Comptroller of Fi- nance a tax on the real and personal prop- erty in said State, county, city or district, in default on its last assessment roll, suffi- cient to meet said payments and costs of collecting the same, and the same shall be collected by any person or persons ap- pointed therefor by the Comptroller of Fi- nance, who shall have power, where said tax is not paid within thirty days after it is levied, to collect the same by seizure and sale upon warrant issued by any judge exparteof any court of original jurisdiction, State or national, having jurisdiction of the prop- erty. The United States may become the purchaser of such property. Redemption may be made within one ye T after sale by paying the amount due on the sale and in- terest thereon at 10 per cent. Sec. 8. And be it further enacted, that associations for carrying on the business of banking may be formed by any number of persons, not less in any case than five, who shall enter into articles of association which shall specify in general terms the proposed name of tiu3 association, the object for whioh the association is formed, and 'the proposed capital stock; and may contain any other provisions not inconsistent with the provisions of this act, which the associa- tion may see tit to adopt for the regulation of the business of the association and the conduct of its affairs, which said articles shall he signed by the persons uniting to form the association, and a copy of them forwarded to the Comptroller of Finance, to he filed and preserved in his otlicv. Attached to said articles of association shall be a schedule of the real estate offered as security as herein provided, v hich schedule shall accurately describe said real estate and the improvements thereon, stat- ing in whom the title is vested in fee sim- ple, absolute free ot all incumbrances or liens, and giving the yearly assessed value thereof for each separate year for State and county purposes for the five precad- ing years, which schedule shall ba certified to as correct by the 6 proper keeper of the records of title of said oroperty. Upon receipt of said articles and schedule the Comptroller of Fin mice shall prwceed in whatever manner he deems best to verify the facts set out in said schedule; and when satisfied that the aver- age assessed value for said five years next preceding is at least equal to, and the actual value is at least double the proposed capi- tal stock of said bank, and that the schedule is otherwise correct as to its statements, he shall notify said persons of that fact and of the name approved by him for the associ- ation. Sec. 9. And be it further enacted, that the persons uniting to form such an associ- ation shall make a certificate of organiza- tion which shall specify: First The name assumed by the associ- ation. Second The place where its operations of discount and deposit are to be carried on, designating the State, Territory or district, and also the particular county and city, town or village. Third Its capital stock and the number of shares into which it shall be divided. Fourth The names, citizenship and places of residence of the shareholders, and the number of shares held by each. Fifth An accurate copy of the schedule of real est te attached to the articles of asso- ciation provided for in section 8. Sixth A declaration that said certificate is made to euable such persons to avail themselves of the advantages of this act, and that said real estate is for security as required in this act. The said certificate shall be duly signed and acknowledged by each of said persons in the manner re- quired by the law of the place for acknowl- edging conveyances of real estate to entitle them to be recorded. When duly certified therefor said certificate shall be recorded in the proper book of record of the county or district in which the real estate is situated ; thereafter no lien or claim shall attach to any of said real estate, except such as shall be wholly subordinate to the prior claim under said certificate against said real estate for the purposes of this act. When duly recorded the said certificate shall be transmitted to the Comptroller of Finance, who shall record and carefully preserve the same in his office. Copies of said cer- tificate duly certified by the Comptroller of Finance and authenticated by his seal of office shall be legal and sufficient evidence in all courts and places within the jurisdic- tion of the Government of the United States of the existence of said association, and of every other matter that could be proved by the production of the original certificate. Sec. 10. And be it further enacted, that no association shall be organized hereunder with a capital greater than one million dollars or with a less capital than one hun- dred thousand dollars. Such associations shall be so located as tc distribute the fundi thereof to the best advantage of the people, provided that in any place where the population does not exceed six thousand the Comptroller of Finance may, in his discretion, and with the approval of the Secretary of the Treasury, allow banks to be established with a capital of not less than fifty thousand dollars. Sec. 11. And be it further enacted, that whenever a certificate of organization has been received and filed by the Comptroller of Finance, and is found by him to fully comply with the requirements of this act, the Comptroller of Finance shall proceed to investigate in the manner deemed best the personal standing, financial condition and record of the persons seeking to form the association, also the object of the associa- tion, the location and value present and prospective of the real estate described in said certificate of organization, and any other facts that may aid him in determining the desirability of such an as- sociation and the probable safety of its business affairs and manage- ment. The Comptroller of Finance may use such special means as he deems best to safely ascertain the facts abore referred to. When it shall appear to the satisfaction of the Comptroller of Finance that the associa- tion is lawfully entitled to commence the business of banking with safety to the Gov- ernment and to the people, he shall issue to such association a certificate under his hand and official seal that such association has complied with all the provisions of this act required to be complied with, and that such association is authorized to commence the business of banking, designating the place of business, fully naming the directors and officers thereof for the first year and its cap- ital stock. The said certificate shall be published in such local newspaper for sixty days as the Comptroller of Finance shall designate. From the date of said certificate said association shall be deemed a body cor- porate to transact the business of banking hereunder, with the usual rights, powers and duties of banking corporations, and shall exist for the period of twenty years. An impress of its corporate seal shall be filed with the Comptroller of Finance and with the Secretary of the Treasury. Sec. 12. And be it further enacted, that thereafter upon demand of the said as- sociation, the Comptroller of Finance shall issue to said association a warrant on the treasury of the United States, for circulating notes of the Govern- ment to the amount of the capital stock of said banking association, which warrant upon presentment, duly indorsed, shall be paid out of the treasury in the notes issued hereunder. Sec. 13. And be it further enacted, that the affairs of all associations for banking purposes formed hereunder shall be man- aged by its board of directors, which may be iu legal session on any Monday from 10 a.m. where a quorum is present, and on any other day where, after notice, a quorum may be present, or to which & regular session may be adjourned, a quorum being present. Every director shall be a citizen of the United States during his whole term of service, and at least three-fourths of the directors shall have resided in the State or Territory or district in which such as- sociation is located one year next preced- ing their election or appointment as direct- ors, and shall be residents thereof during their term of office. Each director shall own in his own right at least ten sh ires of the capital stock of the ssociation. Each director, when elected or appointed, shall take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the atfairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this act, and that he is the bona fide owner in his own right of ten shares of the capital stock of the as- sociation, standing in his own name on the books of the association, and that the same is not hypothecated or in any way pledged as security for any loan, debt or obligation, which oath, subscribed by him and duly certified as required by law, shall be imme- diately transmitted to the Comptroller of Finance, and by him filed and preserved in his office. Sec. 14. And be it further enacted, that the directors of any association first ap- pointed shall hold office until their succes- sors shall be elected and qualified. All elections shall be held on the second Tues- day of January of each year, and the direct- ors as elected shall hold their places until their successors are elected and qualified. Any vacancy occurring by reason of a di- rector ceasing to own the required amount of stock, or from any other cause, shall be filled by appointment by the board. If from any cause an election shall not be held at the time designated, it may be held on any subsequent day by publishing thirty days' notice t&ereof in a local daily paper. Sec. 15. And be it further enacted, that in all meetings of the stock- holders each share of stock shall be entitled to one vote on all questions. Shareholders may vote by proxies, duly au- thorized in writing. None but sharehold- ers can use or hold a proxy. Sec. 16. And be it further enacted, that the shares of stock may be transferred on the books of the association in such man- ner as may be prescribed in the bylaws of the association. No transter shall be made of stock where the holder is indebted to the as&ociatiou in any manner, but the associa- tion has a lien on all of its stock for such indebtedness. Every person becoming a shareholder by transfer or otherwise shall, in proportion to his shares, succeed to all the rights and liabilities of the prior holder of such shares, and no change shall be made iu the articles of association by which the rights, remedies and securities of the exist- ing creditors of the association shall be im- paired. The shareholders of each associa- tion formed under the provisions of this act, nnd of each existing bank or banking association that may accept the provisions of this act, shall be held individually re- sponsible, equally and ratably, and not one for the other, for all contracts, debts and engagements of such associations to the extent of the amount of their stock therein at par thereof, in addition to the amount in- vested in such shares. Sec. 17. Ana be it further enacted, that the capital stock of any association formed hereunder may be increased or decreased within the limits fixed for the capital stock by this act by a two-thirds vote of its share- holders at any annual meeting in January. The increase or decrease of capital steck shall be made by complying with the re- quirements of this act as to the formation of such associations in the first instance, and by complying with such additional re- quirements as the Comptroller of Finance may deem best to secure the interests of all parties concerned; provided, that in the de- crease of the capital stock the association so decreasing its capital stock shall sur- render to the Comptroller of Finance cir- culating notes to the amount of the de- crease. In such cases the Comptroller of Finance may in his discretion release from the effect of this act a pro rata of the real estate described in the certificate of organ- ization. But this shall only be done in cases where the Comptroller of Finance shall find the association to be solvent. The maximum or minimum of such Increase or decrease shall be determined by the Comp- troller of Finance. Any association organ- ized hereunder may close up its business and dissolve its organization by a vote of its shareholders had at the annual meeting in January. In such cases the association must first set- tle all of its outstanding obligations and re- turn to the Comptroller of Finance circulat- ing notes to the amount of its authorized capital stock. The Comptroller of Finance, upon receipt of a statement of the foregoing facts duly authenticated by the directors of said association under oath, shall fully in- vestigate the matters pertaining thereto.and upon being satisfied that all obligations of 8 said association are fully satisfied and dis- charged, shall cause said statement to be published for at least sixty days in a local newspaper, ;md shall also cause a notice thereof to be inserted in the United States Bulletin of Finance for the same period. If any objections to the dissolution is filed with the Comptroller of Finance before the expiration of said sixty days he shall deter- mine and adjust any matters therein ob- jected to; when so adjusted, or if no objec- tions are filed with him, he shall issue a certificate dissolving said association and releasing the real estate described in the certificate of organization from any further claim or demand thereon. Said certificate of dissolution shall be by him duly signed, sealed and acknowledged so as to entitle the same to record in the office where the certificate of organization was recorded. The Comptroller of Finance shall duly re- cord said certificate of dissolution in his of- fice,and thereafter shall transmit the same to said association upon the same being duly recorded in the office where the certificate of organization was recorded. The associ- ation shall thereby be completely dissolved. Sec. 18. And be it further enacted, that it at any time the value of the real estate described in the certificate of organization shall depreciate in value, to be decided by the Comptroller of Finance, he may require any portion of the circulating notes of the association's capital stock to be surrendered to the Comptroller of Finance, or he may require further real estate security as in the original formation of the association. Should the Comptroller of Finance at any time deem the affairs of said association un- safe from any cause, he may appoint a special agent or agents under his hand and seal of office, who shall have power to in- spect all the affairs of said association and to close up its affairs to the best possible advantage to all parties interested. To this end he shall have power to bring or defend any suit in the name of the association and to sell at public or private sale any or all of the real estate described in the certificate of organization, and to execute proper convey- ances thereof, and use the proceeds to close up the affairs of the association. He shall also have power to collect from the stockholders the amount for which they are responsible under this act and to use the same to close up the accounts. He shall give such bonds for faithful perform- ance of his duties hereunder as the Comp- troller of Finance may require. His cer- tificate of appointment shall be duly ac- knowledged and recorded as the other cer- tificates are required to be. The Govern- ment shall be a preferred creditor in all such cases as are provided for in this sec* tion. Sec. 19. And be it further enacted, that the directors may semi-annually declare dividends from the net profits of- the asso- ciation, but such association, before it shall declare a dividend, shall carry at least 10 per cent, of its net profits to a reserve fund until said reserve fund shall equal the cap- ital stock of said association. Sec. 20. And be it further enacted, that it shall be lawful for any association hereun- der to purchase, hold and convey real estate as follows: First Such as shall be necessary for its immediate accommodation in the transaction of its business. Second- Such as shall be mortgaged to it in good faith by way of security for debts previously contracted or for loans made thereon. Third Such as shall be conveyed to it in satisfaction of debts previously incurred in the course of its dealings. Fourth Such as it shall purchase at sales under judgments, decrees or mortgages held by the association, or shall purchase to secure debts due to said association. Such association shall not purchase or hold real estate for any other purpose than as herein specified; provided, that all such real estate acquired other than for the purpose of the business of the association shall be sold within five years after it is obtained by the association. Sec. 21. And be it further enacted, that each association may charge a rate of interest not to exceed 4 per cent, per year. Each as- sociation shall keep on hand in cash an amount equal to at least 25 per cent, of the amount of its deposits. When this reserve amount shall fall below said percentage, no more dividends or loans shall be made until the amounts called in shall restore said per- centage. Sec. 22. And be it further enacted, that every association hereunder shall make to the Comptroller of Finance a report, accord- ing to the form which may be prescribed by him, verified by the oath or affirmation of the president or cashier of such association, which report shall, among other things, ex- hibit in detail, and under appropriate heads, the resources and liabilities of the association, and the last assessment Valuation of its real estate, before the com- mencement of business on the morning of the first Monday of the months of January, April, July and October of each year, and shall transmit the same to the Comptroller of Finance within five days thereafter, and any bank failing to transmit such report shall be subject to a penalty of $100 for each day after said five days that said re- port is delayed beyond that time. The Comptroller shall cause abstracts of said reports to be published in the United States Bulletin of Finance, and the separate report of each association shall be published by 9 the association in a local daily newspaper for at least one week. Said association shall forward, with each quarterly report, one-fourth of one per cent, of its capital stock as interest thereon; and in case of default in the payment thereof by any asso- ciation, said interest may be collected in the manner provided for the collection of United States duties of other corporations. In addition to the quarterly reports required herein every association shall, on the first Tuesday of each month, make to the Comp^ troller of Finance a statement, under oath of the president or cashier, showing the condi- tion of the associ.ition making such state- ment in respect to the average amount of loans and discounts, specie and circulating notes on hand belonging to the association, clearing-house certificates, deposits and such other matters as the Comptroller of Finance imy require. Sec. 33. And be it further enacted, that no association shall m tke loans or dis- counts on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and stock so purchased or acquired shall be sold within six months from the time of its pur- chase. But no such purchase or feale shall relieve the former owner thereof trom his pro rata of responsibility for all debts in- curred by the association prior to sale and transfer to a new purchaser in good faith. Sec. 24. And be it further enacted, that no association, or any member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be withdrawn, either in the form of div- idends or otherwise, any portion of its capital stock or reserve fund. And if any losses shall at any time have been sustained by any such association equal to or exceed- ing its undivided profits then on hand in cash, no dividend shall be made; aud 110 dividend shall ever be made by any associa- tion, while it shall continue its banking operations, to an amount greater than its not profits then on hand, deduuctintr there- from its losses and bad debts, and 10 per cnnt. for the reserve fund. And all debts due any association, on which the interest is past due and ^unpaid for a period of six months, unless the same shall be well se- cured, and shall be in process of collection, shall be considered bad debts within the meaning of this act. Sec. 25. And be it further enacted, that the president and cashier of every such as- sociation shall cause to be kept at all times a full and correct list of the names and resi- dences of all the shareholders in the asso- ciation, and the number of shares held by each, in the office where its business is transacted; and such list shall be subject to public inspection during business hours of each day in which business may be legally transacted. A copy of said list shall be sent with each quarterly report to the Comptroller of Finance. Sec. 26. And be it further enacted, that the directors of any bank incorporated under any national or State law may, upon the authorization of the owners of two- thirds of the capital stock in writing, duly signed and acknowledged, avail themselves of the provisions of this act, and become a national association under their corporate name by complying with the provisions of this act, the said directors being by said vote authorized to execute all papers relat- ing thereto. Any matters not herein pro- vided fr in such cases shall be adjusted by the Comptroller of Finance in accordance with the spirit and intention of this act. Sec. 27. And be it further enacted, that all associations under this act, when desig- nated for that purpose by the Secretary of the Treasury, shall be depositaries of pub- lic money, except receipts from customs, under such regulations as may be prescribed by the Secretary ; and they may also be employed as financial agents of the Govern- ment; and they shall perform all such rea- sonable duties, as depositaries of public moneys and financial agents of the Govern- ment,* as may be required of them; and the Secretary of the Treasury shall require of the association thus designated satisfactory security in real estate for the safe-keeping and prompt payment of public funds de- posited with them, and for the faithful per- formance of their duties as financial agents of the Government. Sec. 28. And be it further enacted, that all transfers of any of the assets or any part thereof of any association doing business hereunder, made after the commission of an act of insolvency, or in contemplation thereof, with a view to prevent the applica- tion of it as assets in the manner pre- scribed in this act, or with a view to the preference of ne creditor to another, shall be null and void. Sec. 29. And be it further enacted, that any director, officer or employ*'; of any as- sociation organized hereunder, who shall knowingly violate, or permit any of such persons to violate the provisions of this act, shall be removed forthwith from his posi- tion by the proper authority of the associa- tion, or by the order of the Comptroller of Fi- nance. And any director, officer or emoloy6 of such association who shall so transact the business of such association, or any part of it, as to intentionally defraud the associa- tion or any one else, or with the intention to deceive or mislead any officer of the asso- ciation, or any agent appointed to examine the affairs of any such association, shall be 1O deemed guilty of a misdemeanor and upon conviction thereof shall be punished by im- prisonment for not more than ten years. Sec. 30. And be it further enacted, that all suits and proceedings arising out of the provisions of this act, in which the United States or its atrents or officers shall he parties, shall be conducted by the dis- trict attorneys of the several districts, under the direction and supervision of the Solic- itor of the Treasury. And that all suits or actions arising under the provisions of this act may be had in any circuit, district or Territorial court of the United States held within the district in which such association may be established, or in any State, county or municipal court, iu the jurisdiction of which said association is established which has jurisdiction in similar cases. Sec. 31. And be it further enacted, that if any person shall falsely make, forge or counterfeit, or cause or procure to be made, forged or counterfeited, or willingly aids or assists in forging or counterfeiting any note in imitation of or purporting to be In imitation of the circulating notes issued under the provisions of this act, or shall pass, utter or publish, or attempt to p.iss, utter or publish any false, forged or coun- terfeited note purporting to be issued under the provisions of this act, knowing the same to be falsely made, forged or counterfeited, or shall falsely alter or cause or procure to be falsely altered, or willingly aids or as- sists in falsely altering any such circulat- ing notes issued under the provisions of this act, or shall pass, utter or publish, or shall attempt to pass, utter or publish as true any falsely altered or spurious circu- lating notes issued, or purporting to have been issued under the provisions of this act, knowing the same to be falsely altered or spurious, every such person shall be deemed and adjudged guilty of a felony, and being thereof convicted, shall be sen- tenced to be imprisoned and kept at hard la- bor for a period of not less than five years nor more than twenty years, and fined in a sum not exceeding 11000. Sec. 32. And be it further enacted, that if any person shall make or engrave, or cause or procure to be made or engraved, or shall have in his custody or possession any plate, die or block after the similitude of any plate, die or blocK, from which any circulating notes, issued as aforesaid, shall have been prepared or printed, with intenj, |o use such plate. die or block, or cause of* Suffer the same to be used in forging or counterfeiting any of the votes issued as aforesaid, or shall have in Irs custody or possession any blank notes engraved and printed after the similitude of any notes issued as aforesaid, with intent to use such blanks, or cause or suffer the same to be used in forging or counterfeit- ing any of the notes issued as aforesaid, or shall have in his custody or possession any paper Adapted to the making of such notes, and similar to the paper upon which any such notes shall have been issued, with in- tent to use such paoer, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, every such person, being thereof convicted by due course of law, shall be sentenced to be im- prisoned and kept at hard labor for a term not less than five nor more than twenty years, and fined in a sum not exceeding $1000. Sec. 33. And be it further enacted, that the Comptroller of Finance shall cause to be prepared each month concise inform ition showing the amount of circulating notes is- sued during the preceding month, and the amount as near as may be of circulating notes, gold and silver coin, in each State, Territory, district and in the principal cities of the United States, and also the amount in the various vaults or treasuries of the U nitcid States; also the amount ex- pended by the Government in each State, Territory or district. It shall also contain the name of each bank, the amount of its capital stock, its reserve fund nd its losses for the preceding month, and such other information as shall be deemed of sufficient value to the financial interest of the people to be published. Such inform ition shall be published monthly by the Department of Printing, in pamphlet form, of convenient size for permanent binding in book form. One copy of each issue shall be sent monthly to each of the following parties: To each association doing business hereunder, to the President and each member of his Cab- inet, to each member of Congress and to such other officers of the Government as the Comptroller of Finance may di- rect; also to the Governor of each State, Territory or district, and to each public library, university or college applying therefor. Any person may have a copy forwarded to his address for one year by first forwarding to the Comp- troller of Finance the sum of one dol- lar. All subscriptions shall end with the December number of each year Subscrip- tions made during the year shall be at the rate of ten cents per copy for the remaining months of the year. Sec: 34. And be it further enacted, that as the circulating medium shall accumulate in the treasury of the Government from revenue or otherwise, it shall be returned to circulation among the people in addition to the ways hereinbefore specified, by pay- ing the current expenses of the Govern- ment; by the purchase of suitable grounds and the erection thereon of suitable build- ings for postoffices and other uses of the 11 Government; by the construction of such other woms as shall be deemed by Congress for the best interests of the public. The expenditures shall be made annually, in each State, Territory or district, as nearly as may be, in proportion to the number of its inhabitants, provided that States al- ready supplied with public buildings hall not receive additional expenditures until the other States, Territories or districts shall have had their equal proportions. All public work shall be done by days' labor, at the rate of $1.50 per day for eight hours' work for common labor. A less rate shal.l be paid where the laborer is not able to perform a reasonable day's work. The expenditures hereunder shall be as directed from time t<> time by Congress. Sec. 35. And be it further enacted, that all notes issued hereuuder and all money received by the Comptroller of Finance hereunder shall be deposited in the treasury of the United States. And the Comptroller of Finance shall keep an itemized account of the sources from which received, with the dates thereof. Sec. tfft. And be it further enacted, that all improvements on property described in the certificate of organization shall be kept insured by the association to the full amount of its assessed value, payable to the Comptroller of Finance, and all insurance on such property, in whatever name in- sured, shall, in case of loss, be p ;id by the insurance company to .the Comptroller of Finance, to be by him disposed of, with the consent of the Secretary of the Treasury, as they may deem best in the interest of the various parties concerned. Sec. 37. And be it further enacted, that it shall be unlawful for any officer acting under the provisions of this act to counter- sign or deliver to any association, or to any other compiny or pers n, uny circulating notes contemplated by this act, except as herein provided, and in accordance with the true intent and meaning of this art. And any officer who shall violate, the provisions of this secMion shall be deemed guilty of a high misdemeanor, and on conviction there- of shall be punished by a tine not exceed- ing double the amount so countersigned and delivered, and imprisonment for not U-->s than one year and for not exceeding fifteen Sec. 38. And be it further enacted, that if the directors of any association shall knowingly violate, or knowingly permit any of the officers, agents or servants of the as- sociation to violate any of the provisions of this act, all the rights, privileges and fran- chises of the association derived from this act shall be thereby forfeited. Such viola- tions shall be first determined and adjudged by a proper circuit, district or Territorial court of the United States, in a suit brought for that tmrpose in the name of the Comp- troller of" Finance, which decree shall ad- judge the association dissolved. There- upon the affairs of the association shall be closed up by the Comptroller of Finance,and in case of such violation, every director who participated in or assented to the same shall be held liable in his personal and individual capacity for all damages which the associa- tion, its shareholders, or any other person, shall have sustained in consequence of such violation. Such directors shall thereafter be disqualified for the office of director in any association formed hereunder. And any president, director, cashier, teller, clerk or agent of any association, who shall embez- zle, abstract or wilfully misapply any of the moneys, funds or credits of the association, or shall, without authority from the direct- ors, issue or put forth any certificate of deposit, dr;iw any order or bill of exchange, make any acceptance, assign any note, bond or draft, bill of exchange, mortgage, judg- ment or decree, or shall make any false en- try in any book, report or statement of the association, with intent, in either case to injure or defraud the association, or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent ap- pointed to examine the affairs of any such association, shall be deemed guilty of a mis- demeanor and upon conviction thereof shall be punished by imprisonment not less than one and not more than ten years. Sec. 39. And be it further enacted, that the Comptroller of Finance, with the ap- probation of the Secretary of the Treasury, as often as shall be deemed necessary or proper, shall appoint a suitable person or persons to make an examination of the af- fairs of every banking association formed hereuuder, which person or persons shall not be a director or other officer or employe in any association whose affairs he shall be appointed to examine, and who shall have power to make a thorough examination into all the affairs of the association, and,, in do- ing so, to examine any of the officers and agents thereof on oath, and shall make H lull, detailed report ol the condition of the association to the Comptroller. And the nssoriiiti n shall not be subject to any other yisitorial powers than such as are author- ized by this act, except such as are vested in the several courts of law and chancery, and every person appointed to make such'ex nn- inations shall receive for his services at the rate of $5 for each day employed by him in such examination, and #2 for each twenty- five miles he shall necessarily travel in the performance of his duty. Sec. 40. And be it further enacted, that persons holding stock as executors, guardians, administrators or trustees shall not be personally subject to any liabilities as stockholders, but the estates and funds in their hands shall be liable in like manner and to the same ex- tent as the testator, intestate, ward or per- son interested in said trust funds would be if they were respectively living and compe- tent to act and hold the stock in their own hands. Sec. 41. And be it further enacted, that hereafter no associations for the purpose of banking shall be formed except under the provisions of this act, and all banking in- stitutions now formed under the provisions of prior acts of Congress shall be allowed to continue under such acts until their proper term of existence has expired. Sec. 42. And be it further enacted, that the present Comptroller of Cunency shall hereafter be known as the Comptroller of Finance under this act, and under such name shall, with the bureau now estab- lished, perform all duties required under the various acts ot Congress relating to cur- rency or a circulating medium. Sec. 43. And be it further en acted, that all acts or parts of an act in conflict with the provisions of this act are hereby repealed, and Congress may at any time amend* alter or repeal this act This Act should be based on a Constitutional Amendment to assure stability and confidence, substantially as follows : ARTICLE XVI. SECTION 1. A national currency circulating medium shall be issued to the amount of twenty dollars per capita, as shown by the census of 1890, and by each succeeding census, for the proper redemption of which when required, the resources, the property and the faith of the nation are pledged : for which redemp- tion, Congress, by a two-thirds vote of each House, may provide for the collection of Government revenues and taxes in gold or silver coin. SEC. 2, Said currency, with gold and silver j^yi^k the United States, or such notes as may be issued in lieu of gold or silver cbifyfexMclusively for the redemption thereof, shall constitute the only legal money of these United States, and shall be received at par in payment of all obligations within the jurisdiction of the United States. Said gold and silver coin and currency shall be exchangeable at par value. SECTION 3. Congress shall have power to enforce this Article by appropri- ate legislation, but shall have no power to increase or decrease said issue; pro- vided, that after the issue of 1890, Congress may, by a two-thirds vote of each House, reduce the rate of any further issue per capita Ironi time to time. A NATIONAL CURRENCY, SUPPLEMENTAL TO THE USE OF GOLD AND SILVER, v.- BASED ON A CONSTITUTIONAL AMENDMENT. No Inflation, No Contraction. REDEMPTION WHEN REQUIRED. BY R. M. WIDNEY, OF Los ANGELES, GAL. ISSTJE. ACCOMPANIED BY FULL TEXT OF PROPOSED LAW AND CONSTITUTIONAL AMENDMENT. Either our circulating medium must be increased sufficiently to meet the wants of our growing country, or the business of the country must be killed off until it is within the compass of our present circulation. January 15, 1891. INDEX PAGE Danger ! 5 Efforts to Relieve the Stringency 5 Relation of Money to Business 6 International Money Supply 7 Financial Wreckage 8 More Circulating Medium 8 United States System and Supply Outgrown 9 The Expansion of Business 9 The Banking Nation of the World 9 The Volume Required 10 Not Enough Gold and Silver 10 Financial Substitutes 11 Currency 11 A Constitutional Amendment Necessary 12 Proposed Constitutional Amendment 13 Preserve the National Bank System 14 Farmers' Alliance Scheme 15 Present Four Per Cent. Bond System 15 A National Bond 15 Fifty Years Two Per Cent. Bonds 16 Free Coinage of Silver 16 Foreign Silver 17 Killing our Prosperity 17 Proposed Legislation 17 Finances versus Politics 18 Storm Signals 18 Danger Ahead 19 Copy of Proposed Bill 21 PREFACE. The following pages are designed to furnish facts and sugges- tions to aid in the solution of the present financial emergency. A NATIONAL CURRENCY BASED ON A CONSTITUTIONAL AMENDMENT. No Inflation, no Contraction Redemption when Required. By R. M. WIDNET, of Los Angeles, CaL DANGER ! The total amount owing by (8,055) all the banking institutions of the United States to depositors in July. 1890, was $4,603,844,157. The total cash in all of these banks at the same date, was: Gold coin $99,811,011 Silver, nickels, foreign coin, etc 28,811,478 Paper money 349,694,405 Total $478,316,694 Ten cents on the dollar on hand to pay depositors on demand I If gold were the only legal tender, there would be on hand only about 2 cents on the dollar for depositors ! Or if gold and silver were combined, it would give less than .03 cents on the dollar ! By using gold, silver and coin certificates on the United States Treasury, there would be only about 5 cents on the dollar in cash for depositors. At the same date these banks had loaned out to the people, $3,893,951,799. There were then about $957,746,248 scattered in the hands of 62,000,000 people. This represents only about 25 cents on the dollar for the people to pay on their loans to the banks. But most of the outstanding money is in the hands of parties not debtors to banks. It may be safely estimated that the people could not pay the banks 10 cents on the dollar in cash ; neither could the banks pay over 10 cents on the dollar to depositors. EFFORTS TO RELIEVE THE STRINGENCY. The efforts of financial institutions in this respect were very much the same as the general of an army too few in numbers to fight a battle. By rapidly moving a part of his forces from one point to another he tries to maintain strength at one point by weakening some other. Last September, New York re6eived $5,993,000 from the interior, and the in- terior took $20,936,000 from New York. August showed also a large loss for that city, while November and December drew millions more to the interior as against vastly smaller sums drawn to New York, so that their reserve ran some $3,000,000 below the limit. Financial reports constantly contain such statements as these: "Vast sums of 6 money are moving from Eastern cities to the South and West." " Over $1,000,000 was shipped to the West to-day." "Some $500,000 was transferred to New Orleans to-day." " Over $10,000,000 were used to start new banks in the South this year. " ' ' The cotton crop of the South is over $400, 000, 000 per year. " " Dur- ing the last five years over 17,000 new enterprises have been started in the South, embracing every variety of manufactures." Some 32,800 miles of railroad were built in the United States during the past four years, at a cost of not less than $3,000,000,000, including rolling stock, etc The money spent in building towns, cities, farms, and in developing the resources of this nation last year is counted only by billions. New York City used some $300,000,000 for building in 1890. Some financiers complain of this, and would destroy the greater portion of all this work, thereby throwing out of employment hundreds of thousands of laborers. It is a strange comment on a financial scheme that, to prevent an increase in volume of money, we must destroy the prosperity of a nation and reduce to star- vation or crime the laboring classes. SUMMAKT. Banking Institutions. Due depositors $4,603,844,159 Cash with which to pay ten cents on the dollar 478,316,694 Loans 3,893,951 799 Cash in hands of the 62,000,000 people out of which to pay the loans t 957,746,248 or about 25 cents on the dollar. A partial collection of statistics shows that the volume of business of the United States for the last year was over 45,000,000,000 The money in circulation outside of United States Treasury was for the same year 1,436,062,942 of which over $400,000,000 was held out of circulation as bank reserves, leaving say $1,000,000,000, or 2J cents on the dollar with which to make exchanges. And it may be safely estimated that the business of the United States did not have a circulat- ing medium of 1 cent on the dollar for actual business. Gold and silver combined would not give i cent per dollar for business. A past, present and continuing stringency under such conditions is a necessity. And unless the circulating medium is increased to a sufficient volume to meet the demands of business, business must be killed off until it is within the compass of the volume of money. How strange that the opponents of more money should say: " The cause of the recent stringency in money is the fact that there was too much money. The stringency is now over unless Congress should issue more money." EELATION OF MONEY TO BUSINESS. Money is used as a means to carry on business, and varies in demand as busi- ness increases or decreases. There is a fixed relation between the two which, if disturbed, must cause trouble. As the business, population and area of our country increase the volume of money must increase. Enterprises cannot be conducted by paying laborers $2 worth of real estate or produce per day. There must be some accepted representative of value to use for exchange, and there must be enough of it. So long as each locality is doing its best to fill its own shortage by pulling money from some other place that needs it, and so long as banks are drawing it from customers, thereby crushing them, to save the bank, so long as each nation is borrowing and importing money from some other nation, it is useless to say either there is too much or an abundance of money. INTERNATIONAL MONEY SUPPLY AND DEMAND. In August last the principal gold and silver coin andlbullion was as follows: Bank of England \ $184,600,000 Bank of France 514,500,000 Deutsche Eeichsbank 119,000,000 Austro-Hungarian , 106,500,000 Amsterdam 51,500,000 Bank of Belgium 83,500,000 Bank of Spain 53,500,000 Total $1,113,100,000 Total in United States, September 1,153,191,404 $2,266,591,404 Each of the above nations is short of coin to-day. In October last Austro- Hungary wanted a loan of 20,000,000. Of this the London Economist, in October, said: "Where could any country, however good its credit, obtain 20,000,000 at the present time? On Friday last the entire stock of gold in the Bank of England was only 19,609,997. Everybody knows England is trying hard to get gold. The Bank of Germany had on October 17th 25,298,000, and wants more. The Bank of France had 51,725,000 francs, but is unwilling to part with it. The attempt to raise this sum to loan woidd give rise to the most serious monetary disturbance the world over." As the newer nations rise to higher civilization they draw gold from the supply of older nations; that is, money from the older nations goes into the new ones to develop them. Vast sums have recently gone to Egypt, Portugal, South America, and the South and West of the United States. These demands and outstanding ones aggregate over $4,400,000,000, more than double the volume of coin in all the leading nations. So closely pressed is each nation, that recently when Russia withdrew 17,- 000,000 from Baring Bros., it created a money panic that required the combined money of the Banks of England and Scotland to tide over, and this was only done by the Bank of England borrowing from the^Bank of France some $15,000,000, which is not yet repaid. And now France is putting a 36,000,000 loan on the market, which will draw nearly all the French gold out of London. Russia temporarily returned to England, at her request, the 17,000,000 previously withdrawn from Baring Bros. New York recently drew some $5,000,000 from England, and then the pinch cut further exportations short. Last month San Francisco tranferred 82,500,000 to help New York, and in less than three days the stringency was so severely felt in the former place that the retransfer of money began. The United States Treas- ury turned out over $200,000,000 to fill the void in the fall months. In addition to the above, the banks of New York City, Boston and Philadelphia 8 issued over $30, 000, 000 of panic certificates to supply the WANT, the SCAECITT of money, and to prevent solvent banks from failing. In the light of the foregoing, what shall we say of those financiers who have repeatedly and substantially asserted that "the cause of the recent stringency in money was the fact that there was too much money. The stringency is now over un- less Congress should issue more money"? FINANCIAL WEECKAGE. The financial result of the stringency in wreck and ruin is approximately as follows : Financial failures in the United States, 1890 $190,000,000 Shrinkage in stocks and bonds in New York 300,000,000 In other values it is estimated at not less than 10,000,000,000 Over 100,000 people have been thrown out of employment, and are to-day silently, patiently waiting for labor and bread. It is the ominous silence before the storm. Men will not starve in the midst of plenty. Self-preservation is the first law of nature, as well as of the Constitution of the United States. Here is fuel enough to make the funereal pyre of the nation, if the torch of Socialism is once fairly applied. True, this wealth is not destroyed. It has only changed hands. That is, "the poor are poorer, and the rich are richer." It would seem that the Government is run on the theory that its great work was to protect the money and not the people, as if man was made for the benefit of money, and not money for the benefit of man. The following demands for large loans are no ,v on the market of the world: Austro-Hungary $100,000,000 France 182,000,000 Mexico . . . . 40, 000,000 Argentine Eepublic 500,000,000 Other South American States 725,000,000 African Mines, Trust Companies, etc 350,000,000 $1,897,000,000 Other nations want fully as much more, to say nothing of local demands in each nation. MORE CIRCULATING MEDIUM. The world has outgrown its financial systems and money supply. Tiie demand from everyplace is voiced in one sentence: "We are short of money.'* Each nation is calling in its supply and bidding for more. In the last decade the whole world has waked up to growth, development, civilization, business and commerce as never before known in the history of the race. The total supply of gold and silver in the world, coined and uncoined, is about $8,497,011,244, or $5.70 per inhabitant. The average annual product is less than 15 cents per inhabitant per year. The circulating medium of our prosperous civilized nations is: for France, $42 per capita; England and Ireland, $19.49; 9 United States, $24. The circulating medium of England alone is about $30 per capita. France is safely and prosperously using 842 per capita, which sum can be taken as a not unsafe amount. UNITED STATES SYSTEM AND SUPPLY OUTGKOWN. The UNITED STATES has outgrown both its system and supply. Its present laws constitute only a patch-work. From August 4, 1790, to date all laws on this subject have been to meet special demands, such as the Revolutionary wants, special purchases of territory, current expenses, private banks and bank notes, the emergencies of the War of the Rebellion, redemption of the currency, and pay- ment of the public debt. Only the amended fragments of these laws now exist, and operate out of harmony with the wants of the people. The London Times says: ' The whole monetary system of the United States is in a muddle. This condition is due to piecemeal legislation." THE EXPANSION OF BUSINESS. The business area of the United States in less than a century has grown from a small area east of the Alleghanies to an area from the Atlantic to the Pacific; from, some 3,000,000 people to over 62, 000,000; from a few square miles of populated territory to over 3,400,000 square miles; from ox-carts and stage lines to railroads, steamships and telegraphs; from hand-power and tread-mills to all the compli- cated implements and machinery of the nineteenth century; from business con- fines to a few cities and towns not distant from each other to thousands of cities, towns and villages scattered over a continent. Deducting from the total volume the amount in the United States Treasury and in bank reserves, there is not over $15 per capita in circulation. Scattered as this is over such vast area, it cannot be rushed together at any one point to meet an emergency. When drawn to strengthen one point or enterprise, some other one is proportionally weakened. THE BANKING NATION OF THE WORLD. As other nations are insufficiently supplied with money for their home use we can expect no help from them. And why should we? Why should we be a money dependency on any nation? We have vast resources in gold, silver and other wealth. No nation is now able to furnish its own money for it's people and largely for other nations. There is to-day an opening for the United States to become the banker of the world, as well as for its own people. Why should we let slip this wonderful power among men and among nations? Our national wealth is estimated at 871,000,000,000, and we are still in our infancy. An issue 2 cents on the dollar in currency, secured for redemption by a constitutional amendment pledging the faith and resources of the nation, would give us an issue of about 81,400,000, or 822 per capita in addition to gold and silver, which would give us a total circulation of about 82,500,000,000. Our people are paying over 850,000,000 yearly as interest and profits on foreign capital. Why should we pay this sum to foreigners, when we can furnish our entire volume of money and pay interest to ourselves? Why are we to consider it a privilege to have foreign capital come in and occupy the place of our own money? Or if we have enough of our own (as some assert), why doe's nearly 81,500,000,000 of foreign money come in at our solicitation to buy up our best enterprises and 10 drain our profits abroad? The present invested foreign capital will in about fifteen years draw from us in interest about $1,500,000,000, still leaving us in debt the principal, $1,500,000,000. THE VOLUME REQUIRED. Any system adopted by Congress should be ample. Neither inflation nor contraction should remain as elements of disturbance. As our Supreme Court decisions now stand, there is no limit to the power of any Congress to inflate the currency or contract to any extent. From this power has come the dangers that have wrecked national paper money schemes of the past, and sooner or later will wreck those of the future. A consti- tutional amendment fixing the volume, per capita, and providing for an increase at each census, leaving vested in Congress by a two-third vote of each House the power to omit or decrease additional issue at each census, and pledging our national wealth and honor for redemption when required, would give us a stable currency as well as an elastic currency. Such an amendment is hereinafter suggested. The volume should be of such a character that our National Treasury could hold 25 per cent, of it as a reserve, that a similar reserve of 25 per cent, of the total bank deposits of the United States, as shown by statistics, should be provided for. After making a reasonable allowance for destruction and hoarding, there should be an ample allowance for the current business of the people. The aggregate bank deposits, not counting savings banks, as shown by official report, is about $2,516,179,807. A United States Treasury reserve of 25 per cent, of this would be $629,043,951, using a similar reserve for the National Banks, $629,043,951. These figures would fix the total volume at the aggregate of the deposits. This would be about $40 per capita, in gold, silver and currency. The French nation has a volume of $42 to $44 per capita, and are prosperous and safe in finances. The figures used by them should not be considered too great for us. Our present gold and silver coin is $1,100,712,432. Deducting this amount from the above suggested volume leaves $1,415,463,375 as the amount to be provided for in cur- rency and new coinage of gold and silver. The reported yield of our mines last year was: gold, $32,800,000 ; silver, $46,- 750,000 ; total, $79,550,000. Out of this there were used for industrial purposes, of gold, $16,697,000 ; silver, $8,767,000 ; total, $25,464,000 ; balance left for coinage would be $54,086,000 per year. This volume, if coined each year, would give about $20 per capita for the increase of population. This would leave about $1,400,000,- 000 to be provided for in currency, or say $22 per capita. NOT ENOUGH GOLD AND SILVER. The total amount of gold in the United States in coin is $631,801,6$9; uncoined is $63,063,981; total, $694,865,680, or $11 per capita. The annual product is $32,800,000, or about 50 cents per capita. The annual consumption of gold for the arts in the United States alone is about $16,697,000, balance for coining, 25 cents per capita. It is therefore the maximum of financial stupidity to assert that gold alone can do the financial work. SILVER. The total amount of silver in the United States in coin is about $458,134.067; uncoined, is $27,236,440; total, $485,370,497, or about $8 per capita. The annual product is $46,750,000, or 74 cents per capita. The annual consump- 11 tion of silverin the arts is $8,767,000; balance for coming, per capita, 60 cents. It is apparent, therefore, that silver cannot even approximately meet the demand. Gold and silver combined could only give about $19 per capita for a circulat- ing medium, with an annual increase of 85 cents per capita for both. With France using $44 per capita, and England $30, and the United States 824, and each demanding more, it is apparent that the two combined would only yield about three-fourths the volume now in use in the United States, and less than one-half of the amount now used in France with safety. Upon the issue of this money the Treasury could retire all outstanding paper money, except gold and silver certificates. There would be left a net increase of volume of about $800,000,000. Under Sections 7, 12 and 34 of the accompanying Bill, this volume would soon find its way into the business of the country. FINANCIAL SUBSTITUTES. The December report of the the Comptroller of Currency shows that the financial world has been forced for years past to transact about 92 per cent, of the volume of business in checks, Clearing House certificates and other evidences of value for want of money. Every promissory note, mortgage and credit is a method or instrument to help increase the volume of money. What is a United States legal tender note? It is, in money effect, the Clearing House certificate of the nation, backed by the wealth of the nation, good in any clearing house in the United States, instead of a certificate backed by a few banks and only good where they wish to accept it by courtesy. It is the check, signed by the people of the United States, backed by over $71,000,000,000 of the people's wealth, good at any counter of any bank, instead of a private individual's check only good at his own bank and in his own locality. It is the promissory note of the nation, secured by a constitutional mortgage on over 3,400,000,000 acres of land, with the improvements and personal property thereon, valued at $71,000,- 000,000, payable to bearer, and good to any creditor from any debtor, instead of the private note of a citizen secured by mortgage on a few acres and only good at a discount, or exchangeable for gold or silver, or present coin certificates, to any one who needs coin. It is a representative of value for exchange purposes, mutu- ally agreed upon by 62,000,000 people for their joint benefit. CURRENCY. Statistics show, therefore, that the use of gold and silver must be supplemented by paper. This has been done in all historic ages in the form of individual paper obligations, bank obligations and national obligations. The whole class of prom- issory notes, checks, bills of exchange, drafts, Clearing House certificates, bank notes, national bonds and currency notes are supplemental currency, representative of value for purposes of exchange. In times of prosperity and confidence business runs far beyond all hitherto furnished national supply of circulating mediums. What is the result ? Individuals try to supplement the demand and issue promissory notes, checks and other private obligations. The banks allow credits, notes, overdrafts, and, as a last resort, "panic certificates," all to supplement and augment the volume of circulating medium. As they are curtailed, the crash comes, and failures reduce to poverty and ruin those who are first called on to turn their personal circulating medium into the national medium. And this pro- 12 cess must continue until the business of the people is killed off and brought within the volume of the national legal tender. The great question before each nation, and especially our own, is to furnish a> volume of legal tender backed up by the wealth of the nation, to replace a large amount of the dangerous substitutes of personal and bank notes, checks, drafts, "panic " certificates, etc. Statistics show that over 92 per cent, of the volume of business the past year was forced to be transacted in these lowest and most dangerous forms of a circulat- ing medium. It is in them the wreck has occurred, and not in the currency. How could we have clearer proof of the insufficiency of the volume of money than by showing that the whole financial crash, every dollar of it, has occurred in those personal and bank substitutes for money ? How can we better demonstrate what cure should be than to substitute a national volume of circulating medium backed by the wealth of the nation, a legal tender, in place of the irresponsible individual and bank substitutes, with only the fleeting wealth of the bank or individual back of it ? PRIVATE BANK notes have failed along these lines for want of national back- ing. The present National Bank system is the best yet devised. But why should our nation issue to these banks a private note secured by bonds deposited with the Government as collateral security for redemption ? What is the use of the National Bank note fifth wheel ? Why should not the nation issue its own legal tender, backed by the resources of the nation for redemp- tion, and loan it direct to National Banks on the same bond or other equally safe collateral ? The circulating medium would then be uniform and of known value, the Gov- ernment always holding a reserve volume sufficient to meet the fluctuating volume demanded by trade in different localities at different seasons of the year. Sections 8, 9, 10, 11, 12 and 22 of the accompanying proposed law show in italics a complete and safe system to meet the actual wants of our nation. A CONSTITUTIONAL AMENDMENT NECESSAEY. No system of national finance can successfully meet the wants of business unless it is protected from all dangerous contingencies. The United States Supreme Court first decided, by five Justices to three, that Congress had no constitutional power to make money a legal tender. One of the five resigned, and Congress added one more to the number of the Court, and under the new arrangement, five Justices held, as a war power, it was constitutional, while the original four still held it unconstitutional. Three of those four Justices have died, and now eight out of the nine hold that Congress can, in peace or war, make anything, in any quantity, a legal tender. If the Administration changes, new Justices can hold as did the original, that Congress has no power to make paper money a legal tender. Until that time, Con- gress can cause inflation or contraction to a dangerous extent. Or, as France did, issue volumes of paper money on a gold basis, and then bisect or quarter the gold dollar so that one dollar in gold would redeem from two to four dollars of the paper issue. To make the paper money permanently useful, it must have from the first a fixed any the census of 1890, and by each succeed- ing census, for the proper redemption of which when required, the resources, the property and the faith of the nation are pledged ; for which redemption, Congress, by a two-thirds vote of each House, may provide for the collection of Government revenues and taxes in gold or silver coin. SECTION 2. Said currency, with gold and silver coin of the United States of present weight and fineness, or such notes as may be issued in lieu of gold or silver coin, held exclusively for the redemption thereof, shall constitute the only legal money of these United States, and shall be received at par in satisfaction of all obligations for the payment of money within the jurisdiction of the United States. Said gold and silver coin and currency shall be exchangeable at par value. SECTION 3. Congresss shall have power to enforce this Article by appropriate legislation, but shall have no power to increase or decrease said issue; provided, that after the issue of 1890, Congress may, by a two-thirds vote of each House, reduce the rate of any further issue per capita from time to time. Underlying a national system of finance, this would give us the best foundation ever yet adopted by any nation. The weight and fineness of our coin dollar could not be varied. The constitutionality of the medium never could be questioned. The volume is protected against inflation, contraction or repudiation, and provides for a fixed increase at each census to meet increased population, if required. It pledges the resources, " the property and the faith of the nation " for redemp- tion when required. This represents an issue of 2 cents on the dollar of our national wealth of some 3,400,000,000 acres, and personal property valued at $71,000,000,000. This is a national first mortgage to secure redemption. With such security the national notes would be considered gilt edged paper in any market in the world. They would be received in any nation more readily than Bank of England notes are to-day. No special call will exist for gold to pay national taxes or revenues. As gold, silver and currency are exchangeable at par as required, the situation would be about as at present. No one would call for gold or silver, but would take paper money or certificates for the coin, except in a few special cases. For this reason large sums of gold and silver would always lie in the United States Treasury, as at present, ready for any exchange required by business. This allows the Governmant to buy gold and pilver at market rates for age. e profit between purchase price and coinage value would be the profit of whole people. 14: PRESERVE THE NATIONAL BANK SYSTEM. A bank system in the United States is a commercial necessity. Every indi- vidual cannot erect burglar and fire-proof vaults to protect his money. Neither could he employ a set of clerks to keep his accounts and financial exchanges. The banks to-day use the smallest floor space on which the business could be transacted, and also have their working force reduced to the lowest number. The work could not be done by the Government with any less floor space or with any less number of persons. Nothing could be gained by destroying the present system, with all of its organized and trained forces, and replacing it with any Government scheme for commercial banking or loaning. The scope and flexibility of the present system could be vastly improved by some such arrangement as the following: Allow States, counties and cities of say 5,000 population or over, where they need money for public improvements, to issue 2 per cent, bonds for twenty to thirty years to the amount of 5 per cent, of the assessed value of the real estate. Allow the United States to buy these bonds, prohibiting any contest as to their validity after receipt of the money therefor. Let the Treasurer sell these bonds to any National Bank wishing to purchase them, and allow them or any United States bonds to be used as a deposit security with the United States Treasury on which to draw money when additional sums are required by any bank. The large reserve always held by the United States Treasury would be the fund from which this would be drawn, and to which this would be returned when not needed. This would give a perfect elastic currency to meet all expansions or contractions of season trade. Real estate could also be safely used as a reserve, as shown under the head of Farmers' Alliance Scheme hereafter. The economic of this plan are that States, counties and cities wanting to bor- row money and pay interest could borrow of the people who have the national money to loan, and banks could buy such bonds to use in their system. Our system of national finances should be so arranged that renewed supplies of money seeking loans in the hands of one class of people could be obtained by that other class requiring the use of money. This can best be done by our Government, which is over 62,000,000 people, issuing a full volume of gold, silver and currency, which is the property of all the people, to be used by them as a representative basis of values for exchange. A large reserve held idle in its vaults by the Government is for the benefit of the people, to be sent at one time (like a reserve force of an army) to the support of this place and then to other places. This reserve system will meet all demands for an elastic currency. The people, through the Government issuing and holding this medium of ex- change for their own use and benefit, share its profits and losses for the community as a whole. The only remaining point is to provide a proper means by which the people may obtain the use of this money as needed. This must be done by banking principles, either applied by the Government or by banks. If the Government attempts this work, it will require as much floor space as the banks now use, and as many and as able employees as are now engaged by all the banks. 15 That a profit may arise, the banks are now run on the most economical basis possible. FARMERS' ALLIANCE SCHEME. This scheme has some sound points in it. Land can be safely used as a secur- ity in the National Bank system as well as bonds. Allowing the title to land at a valuation of, say, its average assessed value for the preceding five years and not to exceed one-half of its cash value to be pledged to the Government under the form of a National Bank incorporation, would give relief to the farming communities. It would substitute a National Bank for a Sub-Treasury ; a set of bank officers to manage the loans for a set of Sub-Treasury agents; a responsibility to the Gov- ernment for large aggregate sums under the bank laws instead of the inspection of thousands of small changing loans. The supervision of the Bank Examiners under present laws as to the solvency of the bank would be all that was required, while the bank officers would supervise all detail business and loans to individuals. Section 8 of the proposed Bill covers the foregoing points. Section 22 provides that for the first $100,000 drawn as above, the interest to the nation shall be 1 per cent. The rate increases on larger sums as follows: 2 per cent., 3 per cent., 4 per cent., 5 per cent., 6 per cent!, 7 per cent., 8 per cent., 10 per cent. The object of this is to prevent reckless drawing and using at low rates. Tho lower rates will develop the legitimate industries of the country. The higher rates will check the wild, rash enterprises of speculation, and furnish means to carry on business with less profit or loss until adjustments occasion regular business routine. This is the same principle applied the world over in finances. The Bank of England raised its rate of discount. So did other European financial institutions. The same thing was done in New York recently. It is the natural law on the sub- ject for checking speculation without killing off legitimate business, and is here used. This plan is adopted in the recent German law establishing a system of more liberal and modern financiering. PRESENT FOUR PER CENT. BOND SYSTEM. The present bond system, as applied to the use of banks, is a financial ab- surdity. For a bank to secure circulating notes of, say, $90,000, its stockholders must take $125,000 cash now in circulation and buy $100,000 in United States bonds, and then depositing them, borrow of the United States $90,000 to use in its busi- ness. If the bond element is dropped out, the bank could have used $90,000 of its $125,000 for the same purpose and have $35,000 to start a respectable country bank with. As an original war scheme, selling bonds by the United States to get money was a necessity. Then allowing them to be used as a basis, in the hands of the owners, to increase the circulating medium was wisdom. But for non-holders to use cash on hand to buy them up at a premium to, get back less circulating me- dium than they cost, for the avowed purpose of increasing the circulation, is, to say the least, passing strange. A NATIONAL BOND. If at any time, by reason of war, or national purchase of territory, or vast pub- lic improvement, the nation needed money, it could issue its bonds as in times 16 past, and sell them for money to meet the demand. Such bonds would work in under the proposed plan with perfect adjustability. These bonds again could become, in case of emergency, a basis for a national bank issue, as at present, of bank notes not a legal tender. FIFTY-YEAR TWO PEE CENT. BONDS. How would this practically work out ? The owner of 4 or 4 per cent, bonds would not exchange them for 2 per cent, bonds at par. To sell the 2 per cent, bonds and leave the money idle in the Treasury until the 4 per cent, bonds matured, would be to pay double interest. To buy up the 4 per cent, bonds at their premium or interest until due, is just as great a loss. If sold to banks as a basis of note issue, the results are even worse. To illustrate: the "United States issues, say, $100,000 in fifty-year 2 per cent, bonds. You wishing to open a National Bank, must take 8100,000 cash circulating medium and buy the $100,000 bonds. Next you deposit these bonds with the United States and get back your 8100,000 cash for a bank capital, and for fifty years the people, through the Gov- ernment, pay you 2 per cent, per year on the bonds for doing a banking business on your own original $100,000. That is, at the end of fifty years the United States has paid you 8100,000 interest /or what? Or if you annually use the interest paid you on your bonds to buy new bonds, so as to make it compound, you will own your original capital, 8100,000 + 8100,000 interest -f about 870,895 bonds bought with interest on interest. Total, 8170,895 profit presented to you for doing business on your own money. On the present banking capital of about 8700,000,000 now in the United States, the banks would hold at the end of fifty years 8700,000,000 capital + 81,196,- 265,000 paid to the banks for doing business on their own capital. As the voters are the payers and the banks the payees in the above scheme, there would probably be objections raised. The bonds do not increase money, but are used to buy money already issued from the people, and in fact first contract the circulating medium, and then, as paid out by the United States, only restore it to its former volume, which was too small, and which was f utilely attempted to be increased by a bond issue. If deposited with the United States Treasurer and notes issued to 90 per cent., or even par, there is only restored the amount paid for them. Or if a new issue is made as at present of National Bank notes, not a legal tender, backed for redemption by the United States, why not abandon the inter- mediate subterfuge and let the United States issue its legal tender on its own backing at once in place of the bonds ? The other system has a strong appearance of an intention to adopt a method whereby the United States shall under a cloak of disguise pay unearned money to a class of persons. FEEE COINAGE OF SILVEE is open to much the same criticism. Last year the silver product of the United States was worth in commerce 846,000,000, but if coined it was worth 864,000,000, a profit of 818,000,000. The free coinage of silver. would seem to make a present of 818,000,000 per year to the owners of mines. If the whole output of silver were bought by the people (the United States) at its commercial value and stored, and certificates issued for its purchase, the profit or loss would be for the benefit of the whole people. 17 FOREIGN SILVER. The purchase of foreign silver cannot increase our circulating medium. The money or certificates we issue are changed into coin and sent abroad to pay for the silver. This is really increasing foreign circulating medium at the cost of the United States. KILLING OUE PROSPERITY. "Why do not those who have for years declaimed against too much money sug- gest a relief measure for the situation as shown by the past twenty years. Every time our country becomes prosperous, and laborers are employed all over the nation, and our industries are active, and men contentedly at work, we reach an advance prosperity beyond our circulating medium. Then commences a finan- cial rigor, resulting in the death of thousands of prosperous industries, and throw- ing out of employment tens of thousands of laborers. Then arises a cry from would-be financiers that the business of the country is overdone. It cannot be overdone so long as our laboring classes are employed, and clothed and fed thereby. Extensive articles are published to show the building of railroads, city business blocks, etc., etc., is overdoing the business of the country. What would such writers want ? Did not all that work furnish labor, food, clothing to hundreds of thousands ? What would such persons have done without that employment ? The remedy is not to kill off the business but to sustain and increase it. The point at which business begins to break down is when the employers cannot collect payment for material and produce ; when the owners of property cannot get money simply because the money is too scarce to be had, not enougli to go around. The remedy is for the nation to periodically increase the circulation to keep pace with the prosperity of the country, and not kill the prosperity to await some slow process of growth of circulating medium. The owners of property cannot pay day labor in portions of property. But if the owner of property can borrow money on it he can daily pay. The insufficiency of currency to represent small values prevents the employ- ment of laborers. What there is of the money accumulates most in cities. Hence, to the cities go vast crowds of laborers to find jobs of work. When there is money in the rural districts, the laborers willingly go there. A large volume of circulat- ing medium would therefore supply rural districts with money, and call back again to country life from overcrowded cities. A PROPOSED BILL. The accompanying bill is suggested as a comprehensive system to cover our whole finances permanently. The wisdom of Congress will, of course, add improve- ments. The Bill is drawn so as to utilize the elements found by long usage to have been best in the systems of the United States, England, Scotland, France and Germany, at the same time providing against the dangers that damaged the finances of past schemes. There are also new elements introduced to meet peculiar demands and con- ditions existing iu this country. The words in italic show wherein the Bill differs from the present law of the United States, taking the Act of June 3, 1864, as sub- stantially embracing the present system. 18 FINANCES versus POLITICS. The matter is now before Congress, and has the attention of the country. Will Congress content itself with some more legislative patchwork, to temporarily tide over the present, soon to be followed by another financial rigor ? If a complete, full, comprehensive system, based on safe constitutional restrictions, executed by a statesmanlike law, is proposed in Congress by either political party, will the other dare oppose it ? If neither party is competent to handle the matter, or will not, then the people will receive no campaign pledges on the subject from them. In that case what will be the vantage to the Farmers' Alliance, or a third party ? The people believe that Government, and politics and parties are means to benefit the people and their property. Do not the people now need ample legislation to put the money system in order so as to stop the present widespread ruin, and to give employment to the idle multitudes asking for work, and to build up and develop the vast industries and resources of the nation ? This financial question is the great question of the hour. All past attempts at solution have been on the theory of gold alone, or an effort to keep the supply of money as short as possible. This scheme has worked disastrously, ftarfully so, and has to be supplemented by the use of personal notes, checks, drafts, "panic certificates," etc., all non-legal tender, and dangerous substitutes for a national legal tender note backed by the wealth of 62,000,000 people, having over $71,000,000,000 of wealth. Legislative financial relief puts money indirectly in the hands of every voter, and revives the dying industries and development of the nation. Will any financial legislation that benefits a class of citizens or a part'cular section of the nation be accepted by the masses as satisfactory ? STOKM SIGNALS. A history of the financial storm would occupy too much space. For those who care to trace its growth we herewith attach a cuirent daily list of "newspaper head-lines " from August to December last. They give a most concise idea of the situation: " Wall Street wants more money." " The bottom fell out." " Still no bot- tom." " Another day of surprises on Wall Street." " No cause for a'arm, says a prominent N. Y. banker." "The Treasury not inclined to help." "Banks in difficulty." " Jay Gould says the worst is over." " Some of the strongest banks unable to settle." "Saved from ruin; the Rothschilds and Bank of England come to the rescue." "The Secretary pours out nearly $70,000,000 to relieve the situa- tion." "N. Y. Banks issue Clearing House Certificates to relieve the financial strain. " " Boston Clearing House issues Certificates; amount not limited. " " Phila- delphia Clearing House issues Certificates to relieve the stringency; amount not limited." " The Treasury turns loose $163, 000, 000 in October to relieve the strain." " Prominent N. Y. Bankers say the strain is over and plenty of money." "To- day the streets were full of rumors that more Clearing House Certificates would be issued." "$900,000 more Clearing House Certificates were issued." "The usual announcement was made that the banks had no immediate use for the certifi- cates; that the banks simply took them out to help the moral sentiment." "N. Y. Banks lose money, and prices go to the bad." "N. Y. Banks take out $250,000 19 more Clearing House Certificates." "The Banks are $2,429,650 below the reserve limit." " The West and the South are calling for more funds." " Money loaned on Wall Street at 200 per cent, over legal rates." " Secretary Windom talks on the situation." " Boston Clearing House issues more Certificates." " Gold ordered from London." "N. Y. Bankers say the worst is over, and that after to-morrow the man who will not be satisfied with the situation is very unreasonable." " The Secretary buys $5,000,0004 percent." "Three N. Y. Banks to-day took out $1,000,000 Clearing House Certificates." "Total issue, $15,000,000." "The financial stringency." "The cure to be found in wise legislation." "Bonded periods for imports may be extended. " "Coal mines shut down, and thousands of men out of employment." " The financial pinch." "Paris, Berlin and Amsterdam should come to the rescue and send gold to New l r ork." " Good New Y r ork authority says the panic is over." "More Clearing House Certificates taken out for the relief of the market." "Congress to come to the relief of the money market." "President Harrison will send a message to Congress on Monday urging the issue of more money." "Uneasiness in New Y r ork circles." " Up the spout. Steady increase of business failures." "More hopeful." "No doubt a steady improvement in finances." " The financial cyclone continues to interrupt business." " Windom's conference with New York bankers." "Public confidence restored by the prompt action of the Administration." ''Bankers recover from their fright." "No cause for uneasiness." " Wide sto-k fluctuations. " "Firms forced to suspend;" "Several more bank failures." "The financial strain keeps up." "Germany calls more gold from London." "The Bank of England loses more gold." "Over $200,- 000,000 have been recently paid out by the Treasury to relieve the market, and the strangest fact is, scarcely a trace of its effect is left." " Secretary Windom says the strange feature is that the stringency is not confined to New York, but exists all over the country." "The shrinkage in stocks and bonds in N. Y. Stock Exchange since last June is over $300,000,000. " December 24, 1890. London, Stat. "The French funding loan for about 36,000,000 is to come out next month. Their balances will be called in from Lon- don by the French banks." " Holland will call also for a large amount of gold." "Germany and Kussia will probably call home large sums of gold." "Portugal and Austro-Hungary are seeking a large supply of gold for Government use." " South America, Egypt and Africa are using unusually large quantities of gold." DANGER AHEAD ! The Czar orders that the killing of Jews in Russia shall cease for three years for financial reasons. London, January 14. The Times' correspondent says: " TJie Russian Minister of Finance, representing that it was inexpedient to quarrel with the Jews because such a course would offend Jewish bankers, the Czar ordered the application of the anti- litic laws to be suspended for three years." In the Baring Bros, trouble, Lord Salisbury refused to allow the Bank of igland to furnish aid. Thereupon the President of the Bank said to him: My Lord, I am instructed to tell you, in. case you refuse, that unless the Government comes to the rescue, there is hardly a bank in the United Kingdom that can be relied upon to meet the demand of its creditors TWENTY-FOUR HOURS AFTER THE DISASTER 20 WE APPREHEND." Lord Salisbury jumped from his chair as if shot, and ordered the relief. The Bank of England is indebted over $100,000,000 to-day borrowed money for the panic. The above are only a few of many samples. If our legislators neglect the signs of the times and neglect action, a fearful financial penalty will be paid for it. In the next panic and financial crash the nations will not be able to extend aid to each other. The elements of national panic are too widespread, and each one will reserve its funds for self-preservation. GOLD STANDARD OF VALUE. There can be only one standard or unit of value, from which other values, by comparison, will be computed for business. Governments can use anything as such standard copper, lead, or grain but it is best to use that which is most generally accepted, and which fluctuates least. This has been found by ages of experience to be gold. While gold should be the standard unit of value, it cannot possibly furnish the needed volume of circulating medium for the nations. The circulating medium must be largely representative of the gold standard. Checks, drafts, certificates, legal tenders, etc., are representative of the standard value, while copper, nickel, and silver are partly representative and partly intrinsic in value. The difference between the commerical value of copper, nickel and silver and the gold standard represents the faith and ability of the nation to pay the differ- ence. While the legal tender represents the faith and ability of the nation to pay the full standard value, checks, drafts, etc., only represent the faith and ability of the drawer to pay the standard value. Great confusion and apparent differences exists in the debates, literature, and resolutions of people, owing to the ambiguous use of the words representing these ideas. The recent resolutions at Faneuil Hall, and the speeches there made, embrace, unfortunately, this error. Quite a stress was placed upon the honest gold dollar. That the laboring man should be paid in gold dollars, etc. Yet, strange to say, none of the laborers are paid in honest gold dollars. They are all paid in paper money, representative of a gold standard. All the banks in this Eastern country pay in paper representative money, and not in honest gold dollars. All the banks in the United States have only about two cents on the dollar in gold to pay depos- itors. But they say you can always get gold for the paper dollar. Theoretically you can, practically you cannot, for there are not as many gold dollars with the gov- ernment and banks combined as there are paper dollars in circulation. Therefore the honest dollar is any representative dollar of the gold standard or unit of value. The whole apparent controversy on the financial question of the United States may safely be asserted to harmonize on this proposition. One gold standard or unit of value, with copper, nickel, silver, and paper issued by the United States rep- resentative of the gold standard, with the faith and ability of the nation pledged to pay the difference for the common good of the people when required, and a sufficient volume of it to fully meet the wants of the people. The coinage of silver on the above basis would probably meet the entire approval of the nation, the government buying the silver at its market value, pay- ing therefor in legal tenders, and holding it as an asset. Of course, the only true circulating medium is the paper legal tender representative of the gold standard, with the faith and wealth of the nation back of it. Cannot our Eastern financiers hasten the return of financial prosperity by bringing their resolutions to clearly recognize the differences above indicated? BOSTON, 1891. 21 The parti in italics show where this Bill differs from present Act of June 3, 1864. A BILL TO PROVIDE A NATIONAL CIRCULATING MEDIUM, AND TO PROVIDE FOR THE CIRCULATION THEREOF. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled: That there shall be established in the Treasury De- partment a separate bureau which shall be charged with the execution of this and all other laws that may be passed by Congress respecting the issue and circulation of a national circulating medium. The chief officer of said bureau shall be denomi- nated the Comptroller of Finance, and shall be under the general direction of the Secretary of the Treasury. He shall be appointed by the President of the United States, with the approval of the Secretary of the Treasury, by and with the consent of Congress, and shall hold his office for the term of ten years unless sooner removed by the President with the consent of Congress. He shall receive an annual salary of e'ujht thousand dollars; he shall have a competent deputy appointed by the Secretary, whose salary shall be two thousand five hundred dol- lars per year, who shall possess the power and perform the duties of the Comp- troller during a vacancy in said office or during the absence or inability of the Comptroller. The Comptroller shall employ from time to time the necessary clerks to discharge such duties as he shall direct. Such clerks shall be classified by the Comptroller, subject to the direction of the Secretary of the Treasury, which clerks shall be classified in the manner now prescribed by law. Within fifteen days after notice of his appointment he shall take and subscribe the oath of office prescribed by the Constitution and the laws of the United States, and shall give to the United States a bond in the penal sum of one hundred thousand dollars, with not less than four responsible sureties, to be approved by the Secretary of the Treas- ury, conditional for the faithful discharge of the duties of his office. The Deputy Comptroller shall also take said oath of office, and give a similar bond in the sum of fifty thousand dollars. The Comptroller or Deputy Comptroller shall not, either directly or indirectly, be interested in any association doing a banking business under this act. SEC. 2. And be it further enacted : That the Comptroller of Finance, with the approval of the Secretary of the Treasury, shall devise a seal, witli suitable inscriptions, for his office, a descrip- tion of which, with the certificate of approval by the Secretary of the Treasury, shall be filed in the office of the Secretary of State, with an impression thereof, which shall thereupon become the seal of office of the Comptroller of Finance, and the same may be renewed when necessary. Every document executed by the Comptroller, in pursuance of any authority conferred on him by law, and sealed with his seal of office, shall be received in evidence in all places and courts what- soever; and all copies of papers in the office of the Comptroller, certified by him 22 to be correct copies of the originals in his office, shall in all cases be evidence equally and in like manner as the originals. An impression of such seal directly on the paper shall be as valid as if made on wax or wafer. SEC. 3. And be it further enacted: That there shall be assigned to the Comptroller of Finance, by the Secretary of the Treasury, suitable rooms in the Treasury Building for conducting the business of the Bureau of Finance, in which shall be safe and secure fire-proof and burglar- , proof vaults in which it shall be the duty of the Comptroller to deposit and safely keep all plates not necessarily in the possession of engravers and printers, and other valuable things belonging to his department; and the Comptroller shall from time to time furnish the necessary furniture, stationery, fuel, light and other proper conveniences for the transaction of said business. SEC. 4. And be it further enacted: That the Comptroller of Finance, under the direction of the Secretary of the Treasury, is hereby authorized and directed to issue a circulating medium in the name of the United States of America to the amount of $20, in addition to gold and silver coin, per capita of the population of the census of 1890. Upon ascer- taining each following census the issues shall be increased to $20 per capita. In order to furnish suitable notes for circulation the Comptroller of Finance is- hereby authorized and required, under the direction of the Secretary of the Treasury, to cause plates and dies to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and to have printed therefrom, on paper or similar material best adapted therefor, and numbered, the quantity of circulating notes, of the denominations of one dollar, two dollars, five dollars, ten dollars, twenty dollars, fifty dollars, one hundred dollars and five hundred dollars, as may be required to supply the issue herein called for* The number of each, denomination in use shall be such that the needs of the people shall be best subserved thereby. The notes of each denomination shall be consecutively numbered from No. 1 up. That a dupli- cate of each denomination and from each successive plate used shall be perforated with the word "duplicate," and carefully preserved for use in the identification of the originals, and for the detection of counterfeits, by comparison therewith. Said notes shall express on their face that they are issued by the Government of the United States of America as the circulating medium of the people of the United States. They shall have the written or engraved signatures of the Secretary of the Treasury, and of the Comptroller of Finance, and the imprint of the seal of the Treasury, and shall bear such other statements and devices as the Secretary of the Treasury shall direct, and shall contain a statement that ' ' This note must be surrendered to the Comp- " trotter of Finance in exchange for a new note of similar denomination during the year " (stating the year for retiring the same). Said notes, and gold and silver coin of the United States, shall be received at par, inpayment of all obligations within the jurisdiction of the United States for the payment of money. The monetary use of gold and silver coin of the United States under existing laws is not hereby interfered with, and said notes, gold and silver coin shall be exchange- able at their par value, in such manner as shall best subserve the interests of the people. SEC. 5. And be it further enacted : That it shall be the duty of the Comptroller of Finance to receive worn out and mutilated circulating notes issued hereunder, and with the Secretary of the Treasury the Comptroller of Finance shall compare said notes with the duplicates thereof on file, and when satisfied that the same are the originals issued under this act, they shall be destroyed by being burned to ashes in the presence of the Secretary of the Treasury and the Comptroller of Finance and such other person as the President shall designate. A permanent book of record of the destruction of such notes, with sufficient descriptions thereof, shall be kept by the Comptroller of Finance and pub- lished in the Bulletin of Finance. After said destructions of said notes, new notes of the same denominations and number shall be issued to the owners of the destroyed notes, of which duplicates shall be kept as hereinbefore provided. Such new notes shall be marked second series or third series as the case may be. SEC. 6. And be it further enacted : That in the year following each second census beginning with the census of 1910, the entire issue of circulating notes shall be retired and destroyed as provided in section 5 herein. And under the provisions of this act a new issue shall be made from new dies and plates and with new designs, and shall be substituted for the retired notes, and during the year for retiring said notes each banking institution doing business hereunder, shall during the months of January, February, March and April forward to the Comptroller of Finance 25 per cent, each month of said notes in its possession, and in exchange therefor the Comptroller of Finance shall issue notes of the same denomination. During the remaining months of the year each of said banking insti- tutions shall monthly forward all of the old issue of notes it may have or receive to the Comp- troller of Finance for destruction and exchange. During said remaining months of said year for retiring said old issue any person or corporation may forward notes of the old issue for destruction and exchange to the Comptroller of Finance. After the expiration of the said year for the retiring said old issue of notes, the said old issue shall cease to be lawful money of the United Stales, and shall only be received by the Comptroller of Finance for desti-uction and exchange, nml tiJuill be so received until the outstanding old issue is entirely retired and destroyed. The dies and plates used in producing the old issue of notes shall be destroyed by fusing in fire in January of each year retiring, in the presence of the Secretary of the Treasury, the Comptroller of Finance, and some person appointed by the President. A record of the destruction of said plates shall be kept in the office of the Comptroller of Finance. SEC. 7. And be it further enacted : That for the purpose of putting said notes in circulation the Comptroller of Finance shall be authorized to redeem all outstanding notes or currency of the United States, and to buy legally issued bonds of the states, counties, incorporated cities of over 3,000 inhabitants, and public school districts, said bonds to be issued by said states, counties, cities and districts, for a valua- tion not to exceed five per cent, of the average assessed value of the real estate in said state, county, city or district, for the five years preceding the issuance of said bonds, deducting from the said issue of bonds the par value of any other outstanding bonds issued by said state, county ', city or district. Said bonds shall be a lien on all real estate in said state, county, city or district, nnl shall bear interest at the rate of two per cent, per year, and shall not run to exceed twenty years. The interest shall be payable annually to the Comptroller of Finance at Washington, and a sinking fund shall be provided in each case sufficient to liquidate said bonds at or before maturity. The pul>!i<: issuance of such bonds, their delivery to the Comptroller of Finance, and the receipt of the circulating notes therefor shall be deemed conclusive evidence of the legal issu- ance and validity of said bonds, and thereafter no defense shall be set up to the payment of principal or interest, or to the levying and collecting of taxes therefor. All objections or defense to the issue of said bonds must be made by the parties interested prior to the delivery thereof to the Comptroller of Finance, otherwise they are forever waived and barred as a defense. Said bonds may be sold by the Comptroller, and such bonds or any United States bonds may be depos- it'.-'l '/( par as reserve security by banks in the same manner as provided for real estate herein. Jf said state, county, city or district shall fail or neglect at any time to levy and collect a sufficient tax to meet the obligations of said bonds, there shall be immediately due and payable to the Comptroller of Finance a tax on the real and personal property in said state, county, city or district in default on its last assessment roll sufficient to meet said payments and costs of col- lecting the same; and the same shall be collected- by any person or persons appointed therefor by 24 the Comptroller of Finance, who shall have power where said tax is not paid within thirty days after it is levied to collect the same by seizure and sale upon warrant issued by any judge ex parte of any court of original jurisdiction, state or national, having jurisdiction of the property. The United States may become the purchaser of such property. Redemption may be made within one year after sale by paying the amount due on the sale and interest thereon at ten per cent. SEC. 8. And be it further enacted: That associations for carrying on the business of banking may be formed by any number of persons, not less in any case than five, who shall enter into articles of association, which shall specify in general terms the proposed name of the asso- ciation, the object for which the association is formed, and the proposed capital stock; and may contain any other provisions not inconsistent with the provisions of this act, which the association may see fit to adopt for the regulation of the business of the association and the conduct of its affairs, which said articles shall be signed by the persons uniting to form the association, and a copy of them forwarded to the Comptroller of Finance, to be filed and preserved in his office. Attached to said articles of association shall be a schedule of the bonds or real estate offered and known as " the reserve security " as herein provided for, which schedule shall accu- rately describe said bonds, and real estate and the improvements thereon, stating in whom the title is vested in fee simple absolute, free of all incumbrances or liens, and giving the yearly assessed value thereof for each separate year for stale and county purposes for the Jive preceding years, which schedule shall be certified to as correct by the proper keeper of the records of title of said property. Upon receipt of said articles and schedule, the Comptroller of Finance shall proceed in whatever manner he deems best to verify the facts set out in said schedule; and when satisfied that the average assessed value for said five years next preceding is not in excess of half of the actual value of said real estate, and that the schedule is otherwise correct as to its statements, he shall notify said persons of that fact and of the name approved by him for the association. SEC. 9. And be it further enacted: That the persons uniting to form such an association shall make a certificate of organization, which shall specify: First. The name assumed by the association. Second. The place where its operations of discount and deposit are to be carried on, designating the state, territory or district, and also the particular county and city, town or village. Third. Its capital stock, and the number of shares into which it shall be divided. Fourth. The names and places of residence of the shareholders, and the number of shares held by each. Fifth. An accurate copy of the schedule of bonds or real estate attached to the articles of association provided for in section 8. Sixth. A declaration that said certificate is made to enable such persons to avail themselves of the advantages of this act, and that said real estate is for security as required in this act. The said certificate shall be duly signed and acknowledged by each of said per- sons, in the manner required by the law of the place for acknowledging convey- veyances of real estate, to entitle them to be recorded. When duly certified therefor said certificate shall be recorded in the proper book of record of the county or district in which the real estate is situated ; thereafter no lien or claim shall attach to any of said real estate, except such as shall be wholly subordinate to the prior claim under said certificate against said real estate for the purposes of this act. When duly recorded the said certificate shall be transmitted to the Comptroller of Finance, who shall record and carefully preserve the same in his office. Copies of said certificate, duly certified by the Comptroller of Finance and authenticated by his seal of office, shall be legal and sufficient evidence in all courts and places within the jurisdiction of the Govern- ment of the United States of the existence of said association and of every other matter that could be proved by the production of the original certificate. SEC. 10. And be it further enacted : That no association shall be organized hereunder with a "reserve security" greater than one million dollars, or with a less " reserve security " than tucenty-Jive thousand dollars, nor with a capital stock of less than fifty thousand dollars. SEC. 11. And be it further enacted: That whenever a certificate of organization has been received and filed by the Comptroller of Finance, and is found by him to fully comply with the require- ments of this act, the Comptroller of Finance shall proceed to investigate in the manner deemed best the personal standing, financial condition and record of the persons seeking to form the association, also the object of the association, the loca- tion and value, present and prospective, of the real estate described in said certi- ficate of organization, and any other facts that may aid him in determining the desirability of such an association and the probable safety of its business affairs and management. The Comptroller of Finance may use such special means as he deems best to safely ascertain the facts above referred to. When it shall appear to the satisfaction of the Comptroller of Finance that the association is lawfully entitled to commence the business of banking with safety to the government and to the people, he shall issue to such association a certificate under his hand and official seal that such association has complied with all the provisions of this act required to be complied with, and that such association is authorized to commence the business of banking, designating the place of business, fully naming the directors and officers thereof for the first year and its capital stock. The said cer- tificate shall be published in such local newspaper for sixty days, as the Comp- troller of Finance shall designate. From the date of said certificate said associa- tion shall be deemed a body corporate to transact the business of banking hereunder, with the usual rights, powers and duties of banking corporations, and shall exist for the period of twenty years. An impress of its corporate seal shall be filed with the Comptroller of Finance and with the Secretary of the Treasury. SEC. 12. And be it further enacted: That thereafter, upon the demand of the said association, the Comptroller of Finance shall issue to said association a warrant on the -Treasury of the United States, for circulating notes of tin Government to the amount of the said assessed value of said real estate, or the par value of said bonds deposited by said bank, or for any part thereof, as demanded from time to time, which warrants, upon presentment duly endorsed, shall be paid out of the Treasury in the notes issued hereunder. Said sum or any part thereof may, on the first of any quarter of the year, be returned to the Treasury. SEC. 13. And bo it further enacted: That the affairs of all associations for banking purposes formed hereunder shall be managed by its board of directors, which may be in legal session on any Monday 26 from 10 A. M. wherein a quorum is present, and on any other day where, after notice, a quorum may be present, or to which a regular session may be adjourned, a quorum being present. Every director shall be a citizen of the United States during his whole term of service; and at least three-fourths of the directors shall have resided in the state, or territory or district in which such association is located one year next preced- ing their election or appointment as directors, and shall be residents thereof during their term of office. Each director shall own in his own right at least ten shares of the capital stock of the association. Each director, when elected or appointed, shall take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this act, and ; that he is the bona fide owner in his own right of ten shares of the capital stock of! the association, standing in his own name on the books of the association, and that the same is not hypothecated or in any way pledged as security for any loan, debt or obligation ; which oath subscribed by him and duly certified, as required by law, shall be immediately transmitted to the Comptroller of Finance and by him filed and preserved in his office. SEC. 14. And be it further enacted : That the directors of any association first appointed shall hold office until their successors shall be elected and qualified. All elections shall be held on the second Tuesday of January of each year, and the directors as elected shall hold their , places until their successors are elected and qualified. Any vacancy occurring by reason of a director ceasing to own the required amount of stock, or from any other cause, shall be filled by appointment by the board. If from any cause an election shall not be held at the time designated, it may be held on any subsequent day by publishing thirty days' notice thereof in a local daily paper. SEC. 15. And be it further enacted : That in all meetings of the stockholders each share of stock shall be entitled to one vote on all questions. Shareholders may vote by proxies, duly authorized in writing. None but shareholders can use or hold a proxy. SEC. 16. And be it further enacted: That the shares of stock may be transferred on the books of the association in such manner as may be prescribed in the by-laws of the association. No transfer shall be made of stock where the holder is indebted to the association in any man- ner; but the association has a lien on all of its stock for such indebtedness. Every person becoming a shareholder by transfer, or otherwise, shall, in proportion toi his shares, succeed to all the rights and liabilities of the prior holder of such shares, and no change shall be made in the articles of association by which the rights, remedies and securities of the existing creditors of the association shall be impaired. The shareholders of each association formed under the provisions of this act, and of each existing bank or banking association that may accept the pro-| visions of this act, shall be held individually responsible, equally and ratably, and, not one for the other, for all contracts, debts and engagements of such associations to the extent of the amount of their stock therein, at par thereof, in addition to the amount invested in such shares. SEC. 17. And be it further enacted: That the capital stock or the reserve security of any association formed here- 27 i under may be increased or decreased within the limits fixed for the capital stock i or the reserve security by this act by a two-thirds vote of its shareholders at any ! annual meeting in January. The increase or decrease of capital stock or the reserve security shall be made by complying with the requirements of this act as I to the formation of such associations in the first instance, and by complying with such additional requirements as the Comptroller of Finance may deem best to secure the interests of all parties concerned, provided that in the decrease of the reserve security the association so decreasing its reserve security shall surrender to the Comp- troller of Finance circulating notes received thereon to the amount of the decrease. In such cases the Comptroller of Finance may, in his discretion, release from the effect of this act a pro rata of the bo i ids or real estate described in the certificate of organization, but this shall only be done in cases where the Comptroller of Finance shall find the association to be solvent. The maximum or minimum of such increase or decrease shall be determined by (he Comptroller of Finance. Any association organized hereunder may close up its business and dissolve its organi/ation by a vote of its stockholders had at the annual meeting in January. In such cases the association must first settle all of its outstanding obligations and return to the Comptroller of Finance the circulating notes received on its reserve security. The Comptroller of Finance, upon receipt of a statement of the forego- ing facts duly authenticated by the directors of said association under oath, shall fully investigate the matters pertaining thereto; and upon being satisfied that all obligations of said assoc'ation are fully satisfied and discharged, shall cause said statement to be published for at least sixty days in a local newspaper, and shall also cause a notice thereof to be inserted in the United States Bulletin of Finance for the same period. If any objections to the dissolution are filed with the Comp- troller of Finance before the expiration of said sixty days, he shall determine and adjust any matters therein objected to; when so adjusted, or if no objections are filed with him, he shall issue a certificate dissolving said association and releasing the bonds or real estate described in the certificate of organization from any further claim or demand thereon. Said certificate of dissolution shall be by him duly signed, sealed and acknowledged so as to entitle the same to record in the office where the certificate of organization was recorded. The Comptroller of Finance shall duly record said certificate of dissolution in his office, and tlrereafter shall transmit the same to said association upon the same being duly recorded in the office where the certificate of organization was recorded. The association will thereby be completely dissolved. SEC. 18. And be it further enacted : That if at any time the value of the real estate described in the certificate of organization shall deprecidte in value, to be decided by the Comptroller of Finance, he may require any portion of the circulating notes of the association's reserve security to be surrendered to the Comptroller of Finance, "ay require further real estate security as in the original formation of the association. Should the Comptroller of Finance at any time deem the affairs of said association unsafe from any cause, he may appoint a special agent or agents under his hand and seal of office, who shall have power to inspect all the affairs of said association, and to close up its affairs to the best possible advantage to all parties interested. To this end he shall have power to bring or defend any suit in the name of the association, and to sell at public or private sale any or all of the real estate described in the certificate of organization, and to execute proper conveyances thereof, and use the proceeds to close up the affairs of the association. He shall also have power to collect from the stockholders the amount for which they are responsible under this act, and to use the same to close up the accounts. He shall give such 28 bonds for faithful performance of his duties hereunder as the Comptroller of Finance may require. His certificate of appointment shall be duly acknowledged and recorded as the other certificates are required to be. The Government shall' ' be a preferred creditor in all such cases as are provided for in this section. SEC. 19. And be it further enacted: That the directors may semi-annually declare dividends from the net profits the association, but such association before it shall declare a dividend shall at least ten per cent, of its net profits to a reserve fund until said reserve fund sh equal the capital stock of said association. SEC. 20. And be it further enacted: That it shall be lawful for any association hereunder to purchase, hold and convey real estate as follows: First. Such as shall be necessary for its immediate accommodation in the transaction of its business and for its reserve security. Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted or for loans made thereon. Third. Such as shall be conveyed to it in satisfaction of debts previ incurred in the course of its dealings. Fourth. Such as it shall purchase at sales under judgments, decrees, or m< gages held by the association, or shall purchase to secure debts due to said associa- tion. Such association shall not purchase or hold real estate for any other purpost than as herein specified. Provided that all such real estate acquired other than for the purpose of the business of the association shall be sold within five years aftei it is obtained by the association. SEC. 21. And be it further enacted : That each association may charge such rates of interest as may be allowed b; local laws wAre the association is situated. Each association shall keep on ban in cash an amount equal to at least twenty-five per cent, of the amount of : deposits, when the reserve amount shall fall below said percentage. No mor< dividends or loans shall be made until the amounts called in shall restore the said percentage. SEC. 22. And be it further enacted : That every association hereunder shall make to the Comptroller of Finance a report, according to the form which may be prescribed by him, verified by the oatli or affirmation of the president or cashier of such association, which report shall) among other things, exhibit in detail, and under appropriate heads, the resource and liabilities of the association, and the last assessment valuation of its real esto before the commencement of business on the morning of the first Monday of tt months of January, April, July and October of each year, and shall transmit tl same to the Comptroller of Finance within five days thereafter. And any bank fail- ing to transmit such report shall be subject to a penalty of one thousand dollai for each day after said five days that said report is delayed beyond that time. ' Comptroller shall cause abstracts of said reports to be published in the Vni States Bulletin of Finance, and the separate report of each association shall be pufc lished by the association in a local daily newspaper for at least one week. 29 ion shall forward, icith each quarterly report, one-fourth of one per cent, of the cash used -serve security, during the preceding quarter, as interest thereon, on sums not to exceed 0, and one-half of one per cent, on the excess over $100,000 and less than $200,000, and irths ofoneper cent, on the excess over $200,000 and less than $300,000, and one per cent, tcess of $300,000 and less than $400,000 ; thereafter the rate shall increase one per cent, nal on each additional $100,000 used; and in case of default in the payment ', by any association, said interest may be collected in the manner provided collection of United States duties of other corporations. In addition to the ;ly reports required herein, every association shall, on the first Tuesday of onth, make to the Comptroller of Finance a statement under oath of the ynt, or the cashier, showing the condition of the association making such ent, in respect to the average amount of loans and discounts, specie and ting notes on hand belonging to the association, Clearing House certificates, ;s, and such other matters as the Comptroller of Finance may require. . 23. And be it further enacted: ,t no association shall make loans or discount on the security of the shares wn capital stock, nor be the purchaser or holder of any such shares unless ecurity or purchase shall be necessary to prevent loss upon a debt previously ted in good faith ; and stock so purchased or acquired shall be sold within nths from the time of its purchase. But no such purchase or sale shall the former owner thereof from his pro rata of responsibility for all debts d 1 y the association prior to sale and transfer to a new purchaser in good 24. And be it further enacted: t no association, or any member thereof, shall, during the time it shall e its banking operations, withdraw, or permit to be withdrawn, either in m of dividends or otherwise, any portion of its capital or reserve fund. any losses shall at any time have been sustained by any such association > or exceeding its undivided profits then on hand in cash, no dividend shall e; and no dividend shall ever be made by any association, while it shall e its banking operations, to an amount greater than its net profits then on educting therefrom its losses and bad debts and ten per cent, for the fund. And all debts due any association, on which the interest is past due 3aid for a period of six months, unless the same shall be well secured and in process of collection, shall be considered bad debts within the meaning act. 25. And be it further enacted : 5 the president and cashier of every such association shall cause to be kept mes a full and correct list of the names and residences of all the shareholders ssociation, and the number of shares held by each, in the office where its s is transacted ; and such list shall be subject to public inspection during hours of each day in which business may be legally transacted. A copy ist shall be sent with each quarterly report to the Comptroller of Finance. 26. And be it further enacted : the directors of any Ixink incorporated under any national or slate laic may, upon the iion of the owners of two-thirds of the capital stock, in writing, dnly signed and dyed, avail thfinvidves of the provisions of this act and become a national association under their corporate name ly complying with the provisions of this act. The sale. directors being by said vote authorized to execute all papers relating thereto. Any matters not herein provided for in such cases shall be adjusted by the Comptroller of Finance in accordance with the spirit and intention of this act. SEC. 27. And be it further enacted : That all associations under this act, when designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money, except receipts from customs, under such regulations as may be prescribed by the Secretary; and they may also be employed as financial agents of the Government ; and they shall perform all such reasonable duties, as depositaries of public moneys and financial agents of the Government, as may be required of them. And the Secretary of the Treasury shall require of the association thus designated, satisfactory security in real estate for the safe keeping and prompt payment of public funds deposited with them, and for the faithful performance of their duties as financial agents of the Government. SEC. 28. And be it further enacted: That all transfers of the assets or any part thereof, of any association doing business hereunder, made after the commission of an act of insolvency, or in con- templation thereof, with a view to prevent the application of it as assets in the manner prescribed in this act, or with a view to the preference of one creditor to another, shall be utterly null and void. SEC. 29. And be it further enacted : TChat any director, officer or employee, of any association organized hereunder, who shall knowingly violate, or permit any of such persons to violate the provis- ions of this act, shall be removed forthwith from his position, by the proper authority of the association, or by the order of the Comptroller of Finance. And any director, officer or employee of such association who shall so transact the busi- ness of such association, or any part of it, as to intentionally defraud the association or any one else, or with the intention to deceive or mislead any officer of the asso- ciation, or any agent appointed to examine the affairs of any such association, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by imprisonment for not more than ten years. SEC. 30. And be it further enacted : That all suits and proceedings arising out of the provisions of this act, in which the United States or its agents or officers shall be parties, shall be conducted by the district attorneys of the several districts, under the direction and supervision of the Solicitor of the Treasury. And that all suits or actions arising under the provisions of this act, may be had in any circuit, district or territorial court of the United States held within the district in which the association may be established, or in any state, county or municipal court in the jurisdiction of which said associ- ation is established, which has jurisdiction in similar cases. SEC. 31. And be it further enacted: That if any person shall falsely make, forge or counterfeit, or cause or procure to be made, forged or counterfeited, or willingly aids or assists in forging or coun- terfeiting any note in imitation of or purporting to be in imitation of the circulating notes issued under the provisions of this act, or shall pass, utter or publish, or at- 31 tempt to pass, utter or publish any false, forged or counterfeited note purporting to be issued under the provisions of this act, knowing the same to be falsely made, forged or counterfeited, or shall falsely alter, or cause or procure to be falsely al- tered, or willingly aids or assists in falsely altering any such circulating notes issued under the provisions of this act, or shall pass, utter or publish, or shall attempt to pass, utter or publish as true, any falsely altered or spurious circulating notes issued, or purporting to have been issued under the provisions of this act, knowing the same to be falsely altered, or spurious, every such person shall be deemed and adjudged guilty of a felony, and being thereof convicted shall be sen- tenced to be imprisoned and kept at hard labor for a period of not ]ess than five years nor more than twenty years, and fined in a sum not exceeding one thousand dollars. SEC. 32. And be it further enacted: That if any person shall make or engrave, or cause or procure to be made or engraved, or shall have in his custody or possession any plate, die or block after the similitude of any plate, die or block from which any circulating notes issued as aforesaid shall have been prepared or printed, with intent to use such plate, die or block, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or possession any blank note or notes engraved aud printed after the similitude of any notes issued as afore- said with intent to use such blanks, or cause or suffer the same to be used in forg- ing or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or possession any paper adapted to the making of such notes, and similar to the paper upon which any such notes shall have been issued, with intent to use such paper, or cause, or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, every such person, being thereof convicted by due course of law, shall be sentenced to be imprisoned and kept at hard labor fbr a term not less than five or more than twenty years, And fined in a sum not ding one thousand dollars. SEC. 33. And be it further enacted : 'Lhat the Comptroller of Finance shall cause to be prepared each month concise information showing the amount of circulating notes issued .during the preceding month, and the amount of circulating notes, gold and silver coin, in each state, territory, district, and in the principal cities of the United States, and also the amount in the various vaults or Treasuries of the United States. Also the amounts expended by the Government in each state, territory or dis- trict. It shall also contain the name of each bank, the amount of its capital stock, its reserve fund, and its losses for the preceding month, and such other information as shall be deemed of sufficient value to the financial interest of the people to be published. Such information shall be published monthly by the Department. of Printing in pamphlet form, of convenient size for per- manent binding in book form. One copy of each issue shall be sent monthly to each of the following parties : To each association doing business hereunder, to the President and each member of his Cabinet, to each member of Congress, and to such other officers of the Government as the Comptroller of Finance may direct. Also to the Governor of each state, territory or dis- trict, and to each public library, university or college applying therefor. Any person may have a copy forwarded to his address for one year by first forwarding to the Comptroller of Finance the sum of -one dollar. All subscriptions shall end with the December number of each year. Subscriptions made during the year shall be at the rate of ten cents per copy for the remaining months of the year. 32 it from SEC. 34. And be it further enacted : That as the circulating medium shall accumulate in the Treasury of the Government fi revenue or otherwise, it shall be returned to circulation among the people in addition to the ways hereinbefore specified, by paying the current expenses of the Government; by the purchase of suitable grounds and the erection thereon of suitable buildings for post offices and other uses of the Government; by the construction of such other works as shall be deemed by Congress for best interests of the public. The expenditures shall be made annually, in each state, territory district as nearly as may be, in proportion to the number of its inhabitants, provided that states already supplied with public buildings shall not receive additional expenditures until the other states, territories or districts shall have had their equal proportions. All public work shall be done by day's labor, at the rate of one dollar and fifty cents per day for eight hours work for common labor. A less rate shall be paid where the laborer is not able to perform a reasonable day's work. The expenditures hereunder shall be as directed from time to time by Congress. SEC. 35. And be it further enacted : That all notes issued hereunder and all money received by the Comptroller of Finance hereunder shall be deposited in the Treasury of the United States. And the Comptroller of Finance shall keep an itemized account of the sources from which received, wifh the dates thereof. SEC. 36. And be it further enacted : That all improvements on property described in the certificate of organization shall be kept insured by the association to the full amount of its assessed value, payable to the Comptroller of Finance, and all insurance on such property, in whatever name insured, shall, in case of loss, be paid by the insurance company to the Comptroller of Finance, to be by him disposed of, with the consent of the Secretary of the Treasury, as they may deem best in the interest of the various parlies concerned. SEC. 37. And be it further enacted : That it shall be unlawful for any officer acting under the provisions of this act to countersign or deliver to any association, or to any other company or person, any circulating notes contemplated by this act, except as herein provided, and in accordance with the true intent and meaning of this act. And any officer who shall violate the provisions of this section shall be deemed guilty of a high mis- demeanor, and on conviction thereof shall be punished by a fine not exceeding double the amount so countersigned and delivered, and imprisoned for not less than one year and for not exceeding fifteen years. SEC. 38. And be it further enacted : That if the directors of any association shall knowingly violate orlmowingly permit any of the officers, agents or servants of the association to violate any of the provisions of this act, all the rights, privileges and franchises of the association derived from this act shall be thereby forfeited. Such violation shall be first determined and adjudged by a proper circuit, district, or territorial court of the United States, in a suit brought for that purpose in the name of the Comptroller of Finance, which decree shall adjudge the association dissolved. Thereupon the affairs of the association shall be closed up by the Comptroller of Finance, and in case of such violation, every director who participated in or assented to the same shall be held liable in his personal and individual capacity for all damages which the association, its shareholders, or any other person shall have sustained in conse- quence of such violation. Such directors shall thereafter be disqualified for the office of director in any association formed hereunder ; and any president, direc- 33 tor, cashier, teller, clerk or agent of any association who shall embezzle, abstract or willfully misapply any of the moneys, funds or credits of the association, or shall, without authority from the directors, issue or put forth any certificate of deposit, draw any order or bill of exchange, make any acceptance, assign any note, bond or draft, bill of exchange, mortgage, judgment or decree, or shall make any false entry in any book, report or statement of the association, with intent in either case to injure or defraud the association; or any other company, body poli- tic or corporate, or any individual person, or to deceive any officer of the associa- tion, or any agent appointed to examine the affairs of any such association, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by imprisonment not less than one and not more than ten years. SEC. 39. And be it further enacted : That the Comptroller of Finance, with the approbation of the Secretary of the Treasury, as often as shall be deemed necessary or proper, shall appoint a suit- able person or persons to make an examination of the affairs of every banking asso- ciation formed hereunder, which person or persons shall not be a director or other officer or employee in any association whose affairs he shall be appointed to exam- ine, and who shall have power to make a thorough examination into all the affairs of the association, and, in doing so, to examine any of the officers and agents thereof on oath, and shall make a full detailed report of the condition of the asso- ciation to the Comptroller. And the association shall not be subject to any other visitorial powers than such as are authorized by this act, except such as are vested in the several courts of law and chancery. And every person appointed to make such examination shall receive for his services at the rate of five dollars for each day employed by him in such examination, and two dollars for each twenty-five miles he shall necessarily travel in the performance of his duty. SEC. 40. And be it further enacted : That persons "holding stock as executors, guardians, administrators or trustees shall not be personally subject to any liabilities as stockholders, but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward, or person interested in said trust funds would be if they were respectively living and competent to act and hold the stock in their own names. SEC. 41. And be it further enacted: Tlmt hereafter no associations for the purpose of banking shall be formed except under the provisions of this act, and all banking institutions now formed under the provisions of prior acts of Congress shall be allowed to continue under such acts until their proper term of existence has expired. SEC. 42. And be it further enacted : That the present Comptroller of Currency shall hereafter be known as the Comptroller of Finance, under this act, and under such name, shall with the bureau now established, perform al duties required under the various acts of Congress relating to currency or a circulating medium. SEC. 43. And be it further enacted : That all acts or parts of an act in conflict with the provisions of this act are hereby repealed, and Congress may at any time amend, alter or repeal this act. [X8737] INCREASED VOLUME OF MONEY. AN ADDRESS The California Bankers' Association, AT LOS ANGELES. BY R. M. WIDNEY, LL. D., PRESIDENT OF TIIK University Bank of Los Angeles, California, MARCH i3th, 1891. In support of the following' resolution introduced by the speaker, and which received the unanimous vote of the convention, Resolved, That this convention respectfully request Congress at its next session to devise a uniform money system for the people of the United States, with the gold dollar as the standard or unit of value ; using gold, silver and cur- rency for a circulating medium, in a sufficient volume to fully meet and keep pace with the growing wants of the business of the country ; founding the issue of cur- rency upon the wealth ot the whole nation ; making gold, silver and currency a legal tender, and exchangeable at par on demand, and fixing by a constitutional amendment the legality of such a circulating medium, and preventing the dangers of inflation, contraction, repudiation, or change in the standard of value. The most critical period in the history of the present political par- ties that has arisen since the war will occur in the next session of Congress, and on this question of increased volume of money. Either our circulating medium must be increased sufficiently to meet the wants of our growing country, or the business of the country must be killed off until it is within the compass of our present circulation. INCREASE OF CIRCULATING MEDIUM. Judge Widney addressed the Convention as follows: Mr. President and Gentlemen of the Comvention : In addressing you on the subject of this resolution I wish to say in beginning that the statistics presented in my address are gathered from official reports and public sources. You are at liberty to draw your own conclusions from them. BANKING. Banking is a science based on natural laws. There is very little chance in it Carried on pursuant to these laws it succeeds: If these laws are violated to that extent, loss and failure occur. It is as much one of the d partments of civilized society as law, medicine or statesmanship. It is under obligations to society to keep this department of the social fabric in good working order. It i s not a robber of society, nor a machine to transfer the property of the many to the few. It should so handle money as to eniich humanity, as well as the bankers. In fact the law is that bankers flourish best when the whole community or nation is most prosperous . Banking should be a great power to builld up the industries of the people, in establishing manufactories, planting vineyards and orchards, cultivating and improving farms, building cities and railroads and establishing commerce for the nation. Banks should be a place where the unused money of the people can be safely kept and under safe rules of business, loaned to those who want it for legitimate safe use. Among these should be classified as of first importance, time loans to develop the industries and productive enterprises of a community. No system of call loans or thirty or ninety day loans can develop the re- sources of a country. Who can plant a farm, vineyard, orchard or start a manu- facturing enterprise, or build a railroad on a call loan or on ninety day paper? Such loans can only be used in stock or speculation and to a limited ex- tent in established retail business. Speculative enterprise should rarely receive loans from depositors' money. By such I mean all cases where property is bought on a margin or on part payment, to sell on a rise of the market. Persons thus dealing should be confined to the use of their own money. As society delegates this financial power to bankers, and pays them for using it, they in return should scientifically, historically and systematically study the 4 VOLUME OF CURRENCY. subject and solve the money problems of society so as to upbuild the interests of society and protect its property. Would not society cry out against its doctors and lawyers, and statesmen if they failed to solve the problem of their department? Can we not here find the real ground for popular complaint against banks? STORMS. Financial storms periodically sweep over not. only our own country, but over the nations of the earth. They seem to come locally about every ten years, and internationally and generally about every thirty years. In recent decades, as the world increases the rapidity of its growth and development, the storms in- crease in intensity and frequency. The wreck of the last financial storm in the United States was frightful. The failures were over $190,000,000 The shrinkage in New York stocks and bonds was over .... 300,000,000 Shrinkage of values in the United States over ro,ooo,ooo,< Because the banks wanted more money they forced in loans to an amount of over 100,000, The United States Treasury paid out over 2Oo,ooo,< The banks then issued panic certificates to the amount of. ... 3o,ooo,( And the United States Treasury deposited with banks to help the situation 30,047,1: Goldwas'also shipped from England and California to help the situation in the east. Yet on top of all this one of the National Bank Examiners told me -\ in the early part of last December, while in an eastern city, " That they did not dare to examine the Banks as they could not show the required reserve. " In the face of this condition of affairs eastern bankers and financiers opposed any effort to increase the circulating medium of the nation. Our eastern banking brethren treat with supercillious, and caustic airs politeness, our western efforts at banking and our views on finances. But I tal pleasure in congratulating you bankers of the Pacific coast, for so managii your finances and forecasting coming events that it has not to be said of y( that the government had to come to the rescue to prevent a general, suspensic of the banks under your care. Your banks furnished millions of money to helj your eastern brethren through the crisis. There eastern banks were all solvent. Their assets were greater than iheii liabilities, but they did not have circulating medium enough for themselves ai for the legitimate industries of their localities, There ivas not enough money to go around by hundreds of millions. While the people had the money the banks were hard up, and when the banks got it, then the people were hard up. And now that the banks have it failures are constantly occurring in long established firms for want of more money. The cause of this insufficient supply of money is VOLUME OF CURRENCY. 5 GROWTH OF CIVILIZATION. The world has been progressing in civilization, in commerce, industries and in business with wonderful rapidity during the past century and especially during the past fifty years. Russia has broken its lethargy, and is restless with energy. Asia has thrown off its isolation and its population half awakened from a dream of a thousand years is stretching forth its hands. India is contending for its ancient glory. Africa is showing to the world its rich fertile soil, its rivers, its gold and dia- monds, and treasures for commerce and agriculture. All South America is organizing for civilized growth and work with its wealth of soil and mines to tempt the industry of man. The islands of the sea from the almost continent of Australia to the little islands are becoming active struggling centers for th^ir part of commerce. The busi- ness area of the United States in less than a century has spread from the small territory east of the Alleghanies, to an empire extending across, a continent from some 3,000,000 to 6 ,000,000 people now scattered over 3,400,000 square miles and overflowing with business, energy and push, eager to develop e resources of their continent and prepare it for the habitation of the coming hundreds of million. The whole earth is rapidly bting prepared for the com- fortable occupation of man. The world is constantly outgrowing its appliances for civilization. The circula- ting medium of exchange is no exception to the rule. All hitherto adopted forms of money have been outgrown in kind and in volume. The skins of wild animals at an early age were the money of exchange. This jvas outgrown and they stored the skins, cutting off the ears and passing them as a more conveninent form of money, the owner being entitled at any time to call for the corresponding pelts. This was the first bank of deposit. At a later Rge stamped pieces of leather were the evidences of value, gold and silver not being enough in volume. The Chinese have used paper money for thousands bf years past. Drafts, certificates of deposits, promisory notes and orders for money were used by the ancients to increase the volume of the medium of exchange. Because we do not know what others have done, we frequently believe that what we are doing or propose to do is a novelty in the world . In this process of evolution the financiers of the present day may learn two things. First that money is a compact representative form of values, without re- gard to what the money is made of for the purpose of exchange. Second, That the world periodically outgrows both the kind and volume of its money. THE WORLD'S DEMAND FOR MONEY. As a result of this outgrbwth there must be periodical contractions of values from a scarcity of money. That is, business must be killed off until it is reduced to correspond with the volume of money, unless the volume of money is i creased to take care of the business. The volume is constantly expanding but not as rapidly as the growth of the world requires. VOLUME OF CURRENCY. The demand is far in excess of the supply, as shown by the following calls for loans. Austro-Hungary f 100,000,000. France, 182,000,000. Mexico, 40,000,000. Argentine Republic 500,000,000. Other South American States 725,000,000. African mines. Trust Companys, Etc 350,000,000. $1,897,000,000. Other nations want as much more. The debt of the nations of the earth was, in 1889, over $28,000,000,000. The volume of business in the United States alone last year is computed at some $130,000,000,000, while the business of exchange of the whole world was many times that amount. You see from this the work put upon money to make exchange. The value of gold and silver in the United States is about $1,153,194,404. Of this $128,622,489 are locked up in bank reserves. The sum of $652,905,727 are reserved in the United States treasury; another $100,000,000 is locked up as state, county and city taxes, leaving the small sum of $272,666,188 in coin to do the work of the nations' business of $130,000,000,000 . If gold alone were used> there would be only about $200,000.000 in circulation. This would be only $3.50 per capita, and could not possibly move the business ot the nation. Add to this gold and silver the paper money in circulation outside of the treasury and bank reserves, and there are only about $900,000,000. This sum fell so far short of being able to do the work that the December, 1890, report of the Comptroller of Currency shows that checks, drafts, certificates, and such evidences of money, to the amount of over 92 per cent of the business, were used in 1890, aggregat- ing the enormous sum of $18,000,000,000, in banks alone, to supplement the use of our legal money. Book credits and notes were several times this amount . This eighteen billions was the worst form of inflation . Back of it was only personal and corporate responsibility, and only a deciminal of a cent on the dol- lar in lawful money to meet them. People lost confidence in this vast volume of checks, drafts, etc., and then the panic came. People did not lose confidence in the legal tenders of the nation. This was accepted on sight, and a demand existed for millions more. Confi- dence was not lost in the lands, and cities, and industries of the people. It does seem to me that financiers who talk against government paper money should, in view of these facts, forever hold their peace. If tnere had been in circulation millions more of United States paper money the panic would never have been heard of. A GLUT OF $20,000,000 ! Another evidence of the insufficiency of the money supply is the condition Oj the New York banks at this date, March, 1891. They claim to have a glut of money a surplus of $20,000,000 over the required legal reserve. This is the result of calling in loans from the channels of trade. It is not money returned voluntarily by the ubers of money. It can all be absorbed in a day by the places from which it was called in. VOLUME OF CURRENCY. I But the most startling fact disclosed by this boasted glut, is that there is not enough money in all these banks over the legal reserve, to even start one rail- road company. The best railroad enterprise with gilt edge security would absorb this boasted $20,000,000, in building its first few miles of track. On December igth, 1890, the secretary called a report from all national banks in the United States. They average less that 2 per cent above the legal reserve. Which leaves in the whole national banking system of the United States only about $50,000,000 for use. Of this sum $30,000,000, is United States Treasury money deposited in banks to help them make the December showing, and to relieve the financial change. No wonder the business of the nation is paralyzed. It becomes apparent from these results obtained from official reports, that the banks in the United States dare not loan any money on time loans to develop or maintain the industries and business of the people. CALL LOANS Can only be used on short speculation. What business man in the United States can start a manufacturing industry, build a railroad, plant out an orchard, or raise a crop on a call loan? The $50,000,000 surplus in the United States or the $20, 000,000 surplus glut in the New York banks, is only so because the banks dare not loan it except on call, and no legitimate industry can use it on call. A loan for 30, 60 or 90 days is but a trifle better than a call loan. It can only be used by mer- chants and traders to tide over while collections are being made, or for stock speculation. The industries and productions and large enterprises of the people can only be met by time loans, and not by short loans. The alarming fact is that if the money was retuf ned to the United States Treas- ury that belongs there by law, and if from the banks also was returned the tax money that legally belongs in the public vaults, there would not be enough cash in the banks to meet the required reserve. They would not have a dollar to loan even on call, but would have to force in millions more of money from already cramped enterprises. Nothing but the cool level headed sense of the American today prevents a run on the banks in the United States. If it gets started what will b the results in view of these facts ? In the trouble of the Baring Bros. Lord Salisbury refused to give the govern- ment consent to allow the Bank of England to furnish aid. Thereupon the Governor (President; of the bank said to him, "My Lord, I am instructed to tell you, in case you refuse, that unless the government comes to the rescue, there is hardly a bank in the united kingdom thai can be relied upon to meet the demand of its creditors twenty-four hours after the disaster we apprehend'' Lord Salisbury jumped from his chair as if shot and at once consented to the relief. The banks of the Uuited States are in a condition bearing too strong an anal- ogy to the above incident. Not only today but for a long time past they have been powerless to carry the time business of the nation, and with only call or 60 day loans to offer it became a mockery to those wanting to use money. No wonder the people say kill off the banks, of what use are they. And too true, of what use are they except to keep matters from being worse. Yet they are not to blame. They have not the money with which to carry the business. It is not in the country. The remedy is not to destroy the banks, 8 VOLUME OP CURRENCY. but for the nation to furnish enough money to cany on the business of the grow ing country. CALLING IN MONEY. Because Russia wanted her money she called $80,000,000 from the Bank of England; and she needing more money called in and borrowed over $7oo,ooo,ooo. The banks in the United States needing more money called in hundreds of millions of dollars, issued $30,000,000 panic certificates, and borrowed of the United States and of each other millions more. THE CRASH. Because this money was called in from the channels of use and trade people could not make payments in money. The result was a crash of unheard of extent. The failures reported Shrinkage in stock, New York Estimated shrinkage of values in the United States in other property $190,000,000 300,000,000 10,000,000,000 In addition to this the business enterprises of the United States are to a large extent crippled or closed down. Over 160,000 are out of employment in New York city alone. THE SITUATION at present as to the 8055 banking institutions in the United States, national, state, private and savings is as follows: Due depositors $4,603,844,157 Total cash in all the banks at same date; Gold coin 99,811,011 Silver, nickle, etc., y.S,8i 1,478 Paper momey 349,694,405 Total, . Ten cents on the dollar on hand to pay depositors ! $478,316,694 In gold only about 2 cents, or in gold and silver about 3 cents on the dollar. At this same time the banks had loaned out to the people $3,893,957,799. Among 62,000,000 people scattered over 3,400,000 square miles of the United States were only $957,746,248 with which to pay this loan Only about 25 cents on the dollar. Most of this money was in the hands of those who do not owe the banks, and is held by the owners to run their current expenses. Probably not 10 cents on the dollar available to pay banks. Yet the wealth of the people is some $71,000,000,000 in property. THE DEMAND. Some idea of the demand for money may be had from the fact that over $10,- 000,000 were used in 1890 to start new banks in the South; as much more in the VOLUME OF CURRENCY. 9 West. The cotton crop was valued at 1400,000,000. Over 17,000 new enterprises started in the South last year, embracing every variety of industry . Over 32,800 miles of railroad were built the last four years, at a cost of $3,000,000,000. New New York city used 1300,000,000 in new buildings, while the West used money by the millions for its new enterprises, many of which are shut down for want money. This wonderful growth and energy is not to be condemned. It is the preparing of this continent for homes, and for the support of the generations. All of these aids for civilization are to uplift humanity to its high and peerless destiny. It furnishes labor, food and clothing for the poor ; it furnishes use for raw material, and results in industry, home and happiness for millions. The principal non-productive use of money in the United States is stock and other speculations growing out of call loans. Were this stock speculation con- stitutionally destroyed, as California destroyed it, and its operators forced to em- bark in some legitimate calling, it would be a lasting benefit to the country. TO PAY LABOR. He who carries on any farm, orchard, dairy, manufacturing, or any other pro- ductive enterprise, must have a circulating medium with which to do it. The owner of an enterprise cannot pay laborers daily in portions of an interest in the products. He can borrow money on his property, and in this way produce, and sell, and repay the principal and be free of debt. But he must have money and time. ; VOLUMB REQUIRED. This question cannot be accurately determined, but we are not therefore to leave it wholly undetermined. Approximation is all that can be attained. Generally the volume should be such 'that the United States treasury could hold a safe reserve of say twenty-five per cent of the volume issued. So, also, that the banks could hold a twenty-five per cent reserve of deposits, and also that tax money could go into its legal vaults. An estimate might be added for hoarding and loss by accident. In addition to the above reserves there should be a full volume in circulation among the people for the business of the nation- A volume such that time loans could be abundantly supplied. More specific figures would be suggested by the following statistics : State and National banks have deposits 12,516,179,807. Take this as the volume of issue and we have, say : Twenty-five per cent for United States treasury 629,044,951. " Bank reserves 629,044,951. For tax money 114,072,288. Total reserve $1,372,162,190. Taking this sum from the proposed volume there would -be left $1,144,017,617. If the above reserves were deducted from the present volume of $2,082,568,942 it would leave only $710,406,734. The increase for active circulation under the 10 OF CURRENCY. proposed volume is $433,610,883. In other words, the country would hold the last amount named to protect business, instead of the present paltry $50,000,000. From this volume the business requiring time loans could be safely supplied. This is not an experimental volume. It would represent about forty dollars per capita for our population, while France uses from forty-two to forty-four dol- lars per capita. We could safely use a larger volume than France does. NOT ENOUGH GOLD AND SILVER. The gold in the United States represents only .$694,869,680 or $11 per capita. The annual increase is about 25 cents per capita. The total amount of silver is about $485,370,497 or $8 per capita. The annual increase is about 74 cents per individual. Gold and silver would therefor give only $19 per capita and about 85 cents per capita annual increase. The total volume of gold and silver in the world is only about $5.75 per capita of the world's population. THE SILVER QUESTION. Free coinage of silver therefor cannot accomplish the desired results. The annual increase of our population is such that the coinage of our entire national silver product would only give $20 per capita for our increase. It will in no man- ner relieve the standing need. The great objection to free coinage is that our annual product is worth in the market $46,000,000. When coined it represents $64,000,000 or $18,000,000 profit added by the Government agreeing to pay that difference on demand. This makes a present of $18,000,000 annually to the producers of silver. This is too great a local benefit to a class of persons for this to be adopted as a law, and it is wholly inadequate to meet the demand. 50 YEAR 2 PER CENT. BONDS. This is simply a scheme to aid banks at the expense of the people, and seems to have had its origin and backing in the secret councils of those who wish to monopolize the money system of the United States. Look at it ! Its advocates say, issue these bonds and sell them, and redeem the 4 per cent bonds, and let the national banks buy the 2 per cent bonds as a basis of circulation. How will it work ? Will the owner of 4 per cent bonds exchange even for 2 per cent bonds ? Certainly not. Then if you sell the 2 per cent bonds at par and pay a premium on the 4 per cent bonds you will have to pay all the 4 per cent ones will earn up to maturity. We will then be paying 6 per cent instead of 4 per cent as now, and that does not increase our circulating medium a dollar. The people are simply saddled with more interest. The sale of 2 per cent bonds to banks as a basis of circulation is a robbery of the people. To illustrate: The United States issues say $100,000 in 2 per cent bonds^ you wishing to open a bank take $100,000 cash, now in circulation, and pass it over to the United States for the $100,000 in bonds. Next, you hand back your bonds, as a deposit, to the United States and get back your $100,000 cash for a bank capital, and for fifty years the tax payers through the government pay you 2 per cent per year> VOLUME OF CURRENCY. 11 $100,000 interest on the bonds for doing a banking business on your original $100,000. If you use the semi-annual interest to buy more bonds, so as to make it compound, you will at the maturity of the bonds have your original $100,000 plus $100,000 interest plus about $70,895 bonds bought with interest on interest, making a total profit of $170,895 for doing business on your own money. But during this fifty years your original $100,000 will be loaned out to the same tax payers who are paying 2 per cent inrerest on the bonds to you. This loaned out capital will bring in ruling rates which by the scarcity of money will be high. This with the profits arising from the periodical wrecking of the people ought to satisfy the owners of money. It will, however, engender the thought among the masses that the banks should be killed off. Our present banking capital is some $700,000,000. At the end of fifty years operating under this bond scheme the banks would own their capital stock $700,000,000 plus $1,196,265,000 interest on bonds, plus over $3,000,000,000 interest on the capital stock for fifty years. That is the banks will own all the money in the United States and have the people in debt to them nearly $3,000,000,000. You perceive at once that this scheme will not increase our circulating medium. CLEARING HOUSE PLAN. Another plan is embodied in a proposed national clearing house system to be incorporated under an Act of Congress, by which a confederation of banks can put up approved collateral with the clearing house and receive clearing house notes, to be legal tender, the combined clearing house being responsible for redemption in case the individual bank fails to redeem. This system is put forth by a prominent eastern banker who asserts that we need no more money. Yet this whole scheme is to increase the circulating medium, but giving the banks a monopoly of issuing and controlling it. Its weak point is in placing back of our currency no greater responsibility than the banks and their property. It also gives the banks the right to obtain money without interest and loan it on interest. Better let the government issue the money with the resources and wealth of the whole people of the United States, valued at $7 1,000,000,000, back of it tor re- demption. If the property of a combination of banks back of a money issue is good, then the wealth of the nation back of the issue is better. As a nation we want no money for the people which is only backed by the responsibility of a small part of the people having absolute control of it for selfish ends. The circulating medium should be issued by authority of the whole population imd should be backed by the entire wealth ot the nation, and should be con- trolled for the common benefit of all. The 2 per cent bond system the free coinage system the national bank increased issue and sub-treasury plans fail because they are in the interest of localities and minorities. If temporarily successful they would soon be destroyed by the majority as unjust. Justice and equity to all must be at the foundation of any system adopted by our nation. A NATIONAL SYSTEM should be based upon a constitutional amendment prescribing what shall constitute our circulating medium, fixing its volume, establishing one standard of value and 12 VOLUME OP CURRENCY. vesting in Congress authority to issue such money, making it a legal tender and backing it with the wealth, power and resources of the nation, making it ex- changeable for gold at par at any time. An amendment worded about as follows would cover the ground : CONSTITUTIONAL AMENDNENT. ARTICLE XVI. SECTION i. A National Currency Circulating Medium shall be issued to the amount of twenty dollars percapita, as shown by the census of 1890 and by each succeeding census, for the proper redemption of which when required, the resources, the property and the faith of the nation are pledged; for which redemption, Congress, by a two-thirdsvote of each House, may provide for the collection of Government revenues and taxes, in gold or silver coin. SEC. 2. Said currency, with gold and silver coin of the United States of present weight and fineness, the gold dollar being the standard or unit of values, and such notes as may be issued in lieu of gold or silver coin and bullion, held ex- clusively for the redemption thereof, shall constitute the only legal money of these United States, and shall be received at par in satisfaction of all obligations for the payment of money within the jurisdiction of the United States. Said gold and silver coin and currency shall be exchangeable at par value. Sec. 3. Congress shall have power to enforce this Article by appropriate legis- lation, but shall have no power to increase or decrease said issue ; provided that after the issue of 1900, Congress may, by a two-thirds vote of each House, reduce the rate of any further issue per capita from time to time. This amendment, underlying our national system of finances would give us the best foundation and safeguards ever yet adopted by any nation. The volume is protected against inflation, contraction or repudiation. It represents about two cents on the dollar of our national wealth of some 3,400,000 square miles of land and national wealth of $71,000,000,000. This is in legal effect a first mortgage given by the nation to secure redemption. With such security the national currency would be considered gilt edge paper in any market in the world. It would be received with greater confidence than Bank of England notes The gold dollar is today the standard by which all values in the United States are rated or measured, and as an abstract standard of values, this amend- ment removes from controversy or doubt that disturbing element by fixing the gold dollar as the standard of measure. It at the same time does full justice to silver, by making it and paper money a legal tender, with gold at the par value. In this way the whole people make the difference, if any, between the market value and the coined value, and when exchanged for gold, repay the difference. This amendment would protect the currency against the dangers of the John law, or Argentine Republic scheme, and from the dangers that beset the Conti" nental money. It is a greater safeguard than is thrown around the Bank of England notes. No nation can place back of its issues such security as this would give to American money. England cannot place back of an issue the resources of Canada, Australia, India or her African possessions, for at any time they might leave England and set up for themselves, leaving only the little island to redeem the currency issued. France and Germany are to small. Russia is too insecure in her form of government. But the United States with its vast area, its peaceful and stable form of government, and its citizens, each an owner in the currency, is in position to issue a currency that would be received at once by any nation as a medium of exchange a representative of gold at par. VOLUME OP CURRENCY. 3 Such a legal tender note is, in money effect, the clearing house certificate of the nation, backed by the national wealth, good in any clearing house in the United States, instead of a certificate backed by any number of banks, and only good where they wish to accept it by courtesy. It is a check signed by authority of the people of the United States, backed by over $7 1,000,000,000 of the people's wealth, good at any counter of any bank, instead of an individual's check, only good at his own bank and in his own locality. It is the promissory note of the nation, secured by a constitutional mortgage on over 2,500,000,000 acres of land and the cities, railroads and civilization thereon, payable to bearer and good from any debtor to any creditor, instead of the private note of a citizen, secured by a mortgage on a few acres of land, and only good at a discount to those who wish to buy it. It is a representative of value for exchange purposes, mutually agreed upon by 62,000,000 of people for their joint benefit, backed by their con- stitutional bond to secure redemption when required, on which bond the people pay no interest. Such a currency circulating medium possesses all the elements of safety offered in all other proposed systems combined, and many others that cannot be intro- duced into any other system. Confidence would never be lost in this medium, for the amendment would prevent Congress or politicians or political parties from disturbing the foundations, as at present AN ACT OF CONGRESS to put this in operation would be substantially as the present law of June 3, 1864. The department, of the controller of currency, the bureau of printing and en- graving would remain the same. The system adopted should be complete in itself, it should be as broad as the United States in its effects, it should be planned to extend through the centuries- While by one department it gathered in the money annually by taxation and revenues, it should annually return the money to the people equitably in all parts of the nation, seeking to collect taxes and revenues from the rich, and largely returning it, through the laboring classes, to circulation. This would be a system, whereas it is now chaos. PRESERVE THE NATIONAL BANK SYSTEM. A bank system in the United States is a commercial necessity. Every individ- ual cannot erect burglar and fire-proof vaults to protect his money. Neither could he employ a set of clerks to keep his accounts and financial exchanges. The banks to-day use the smallest floor space on which the business could be transacted, and also have their working force reduced to the lowest number. The work could not be done by the government with any less floor space, or with any less number of persons than are at present employed. Nothing could be gained by destroying the present system, with all its organ- ized and trained forces, and replacing it with any government scheme for com" mercial banking or loaning. The scope and flexibility of the present system could be vastly improved by some arrangement, as the following : Allow states, counties and cities, of say five thousand population or over* where they need monev for public improvements, to issue 2 per _cent bonds for twenty or thirty years to the amount of 5 per cent of the assessed value of the real estate, Allow the United States to buy these bonds, prohibiting any contest 14 VOLUME OF CURRENCY. a s to their validity after receipt of the money therefor. Let the Treasurer sell these bonds to any national bank wishing to purchase them, and allow them or any United States bonds to be used as a deposit security with the United States Treasury on which to draw money when additional sums are required by the bank. The large reserve always held by the United States Treasury would be the fund from which this would be drawn, and to which this would be returned when not needed. This would give a perfect elastic currency to meet all contrac- ions and expansions of season trade. Real estate could also be safely used as a r eserve, as shown under the head of Farmers' Alliance Scheme hereafter. The economies of this plan are that states, counties and cities wanting to bor- row money and pay interest could borrow of the people who have the national money to loan, and banks could buy such bonds to use in their system. Our system of national finances should be so arranged that the renewed sup - plies of money seeking loans in the hands of one class of people could be ob- tained by that other class requiring the use of money. This can best be done by our government, which is over 62,000,000 of people, issuing a full volume of gold* silver and currency, which is the property of all the people, to be used by them as a representative basis of values for exchange. A large reserve held idle in its vaults by the government is for the benefit of the people, lo be sent at one time (like a reserve force of an army) to the support of this place, and then to other places. This reserve system will meet all demands for an elastic currency. The people, through the government issuing and holding this medium of ex- change for their own use and benefit, share its profits and losses for the commun- ity as a whole. The only remaining point is to provide a proper means by which the people may obtain the use of this money as needed. This must 'be done by banking principles, either by the government or by banks. If the government attempts this work it will require as much floor space as th banks now use, and as many and as able employees as are now engaged by all the banks. That a profit may arise, the banks are now run on the most economical basis possible, and the government could not therefore improve on the present bank system. FARMERS' ALLIANCE SCHEME. This scheme has some sound points in it. Land can be safely used as a secur- ity in the national bank system as well as bonds. Allowing the title to land at a valuation of, say, its averaged assessed value for the preceeding five years, and not to exceed one-half of its cash value, to be pledged to the government under the form of a national bank incorporation, would give relief to the farming com munities. It would substitute a national bank for a sub-treasury ; a set of bank officers elected by the farmers for their banks to manage the loans for a set of sub-treas- ury agents ; a responsibility to the government for large aggregate sums under the bank laws, instead of the inspection of thousands of small changing loans. The supervision of the Bank Examiners under present laws as to the solvency of the bank would be all that was required, while the bank officers would supervise pll detail business and loans to individuals. Provide also for the first $100,000 drawn as above, the interest to the nation VOLUME OF CURRENCY. 15 snan De 2 per cent. The rate increasing on larger sums as follows : 3 per cent. 4 per cent, 5 per cent, 6 per cent, 7 per cent, 8 per cent, 9 per cent, 10 per cent, on each additional $100,000. The object of this is to prevent reckless drawing and using at low rates. The lower rates will develope the legitimate industries of the country. The higher rates will check the wild, rash enterprises of speculation, and furnish means to carry on business with less profit or loss until adjustments occassion regular business routine. This is the same principle applied the world over in finances. The Bank o England raised its rate of discount. So did other European financial institutions; The same thing was done in New York recently. It is the natural law on the subject for checking. speculation without killing off legitimate business. This plan is adopted in the recent German law establishing a system of more liberal and modern financiering. The London Times says: "The whole monetary system of the United States is in a muddle. This condition is due to piece-meal legislation." The shattered fragments of our laws from 1790 to this date should be repealed by a uniform system competent to handle our finances. The national banks should be retained, but should be unfettered, so that they could do the most good. POLITICAL FORECAST. Next to personal rights, no question affects the voter more sensitively than the rights of property. One of the most important of these is the increase in the volume of money. The political party that offers a safe increase in currency to relieve the wants of the people, and carry on the business of the nation will be offering a premium for every vote. An increase of $20. per capita for 62,000,000 population is an increase of over fioo per voter. The laboring classes and those borrowing money, with this as a leading issue, would vote in overwhelming majorities for such a measure in utter disregard of present party lines . It certainly will be made an issue, unless one of the dominant parties shall pass such a law at the next Congress. If the Democrats propose such legislation and the Republicans resist it, the next campaign and Congress will be overwhelmingly Democratic. Should the Republicans propose the law and the other party oppose it, the results will be in favor of the Republican party. But if the present parties in Congress show the people how "not to do it" by wasting the time in discussing insufficient, sham and subterfuge plans, to deceive the people, they will find the voters not in the least shaken in their firm purpose. The most critical period in the history of present political parties that has arisen since the war will occur in the next session of Congress, and on this ques- tion of the increased volume of money, The system of money adopted by Congress must be just to all the people of the United States. The power and authority for the money has its origin in the people, and must be so planned as to be with them a co-oporating power for the common good. The homes and property of the masses today are in jeopardy by reason of the insufficient supply of money. The industries of the nation are seriously crip- pled, the further development of our productive areas are brought largely to a 16 VOLUME OP CURRENCY. standstill, the laboring classes by the hundreds of thousands are out of employ- ment because employers can not get the money with which to pay for daily labor. We have a nation of 62,000,000 people, an area of 3,400,000 square miles of the richest land in the world, a national wealth of $71,000,000,000. An annual volume of business of $130,000,000,000. An intensely active, energetic people; government annual expenses of over $1,000,000,000, and only $2,082,- 568,924 as a circulating medium with which to conduct all this business. This is 3 cents on the dollar for over national wealth, and \% cents on the dollar for our volume of business. But if you deduct from the present volume, the bank, the United States Treasury, state and city tax reserves, there will be left for active business work, i cent on the dollar of our national wealth ; y* cent on the dollar for our volume of business. If you still further confine the money to gold and silver it gives for active work about ^ cent on our national wealth, and about y& cent per dollar for our volume of business. It lies in the power of Congress to make this the banking nation of the world. But to do this our volume of money must be so increased that we have ample reserves at the proper places, and a free volume of money for our use and to spare in loans to other nations. Today we are tributary financially to foreign nations. Over $50,000,000 per year is paid out as interest and profit to foreigners for the use of their money, of which over $1,500,000,000 is in use in the United States. Our own money is not enough so long as we are compelled to get this foreign aid. The financiers of other nations are calling in all the gold they can get. France, Germany, Russia, Austria-Hungary, England, the South American nations and others are striving each to increase its volume of gold reserves. England is critically suffering in the contest and our own financiers forecast a heavy drain on our gold to meet the balance of trade this year. It is in view of v such facts as I have cited in this address that Secretary Windom said in his last speech of an increase in our money these warning words, "Could such a medium be secured, the grave commercial disaster which threatens our future might be averted, had it not been for the peculiar conditions which enabled the United States Treasury to disburse over $75,000,000 in two and a half months last fall the stringency would have resulted in wide-spread financial ruin." Senator Sherman said in his recent speech, "I believe a majority of the Senate desire, first, to provide an increase of money to meet the increasing wants of our rapidly growing country and population, and to supply the reduction in our circulation caused by the retiring of national bank notes." Senator Sherman said recently in a letter to me on this subject, "I will do all in my power to secure the very best possible financial legislation by Congress." CONSTITUTIONAL DANGER. One of the greatest dangers in our present law is the doubt as to the consti- tutional power of Congress to make paper money a le^al tender. The United States Supreme Court first decided by five Justices to three that Congress had no power to make paper money a legal tender, Chief Justice Chase rendering the opinion. One of the five resigned, Congress increased the number of Justices from eight to nine; the two vacancies were filled by men who joining the opinion of the minority held that as a war measure Congress had power to make paper money a legal tender. VOLMME OP CURRENCY. 17 This decision stood five Justices to four. Three more of the four have died, and their places have been filled by those who believe in this power, and in its latest decision our United States Supreme Court holds by eight to one that Congress can make any thing, in any quantity, a legal tender. In other words, the doors are thrown wide open to inflation of the worst form. Even now, are proposed measures that have no limit to currency issue. A future administration and Supreme Court could over rule the above decision and hold that the whole currency issued was unconstitutional and void, and was not even a claim against the nation. Three dangers are at the very root of our financial laws, ruinous inflation, con- stitutional repudiation and a threatened change of the gold dollar as the measure of values. A safe monetary system is one of the essential elements of the prosperity of this nation. It must stand before the people of this and other nations, founded upon, and guarded by constitutional power, protecting it from the dangers of inflation, contraction, repudiation, or change of the standard of values, and pledging the faith, and resources of the nation as the power and will of the nation to exchange gold, silver and currency at par on demand. With such a circulating medium sufficient in volume to meet the present and growing wants of the nation, wisely administered by act of Congress, for the benefit of the people, we would enter upon a period of prosperity, development and safety never heretofore attained, one in which financial storms would seldom occur and which could be safely handled from the great reserve that should lie idle in the United States Treasury to meet local demands, here at one time, there at another. This legislation is possible and probable. Congress and the people are discussing and investigating and seeking for the best method. Notwithstanding all that is said to the contrary, honesty in the minds of our Congressmen on this subject is the uppermost thought. But they look to the bankers and financiers for facts and suggestions and knowledge. If they shall receive it, they will act upon it. With these facts and views before me I present the resolution on this subject as expressive of the views of the Bankers of this Convention on the subject. As such it will meet with a warm and welcome reception from our legislators ii. Congress, and will be carefully considered by them in molding the financial law of the nation. AS GOOD AS GOLD! A National Currency ISSUED BY AUTHORITY OF THE PEOPLE; BACKED BY THE WEALTH OF THE NATION; BASED ON A CONSTITUTIONAL AMENDMENT. AND CIRCULATED FOR THE BENEFIT OF THE PEOPLE; UNDER A NATIONAL MONEY SYSTEM IN AMPLE VOLUME FOR THE BUSINESS OF OUR GROWING CIVILIZATION. AN ADDRESS BEFORE THE COMMERCIAL CONGRESS AT KANSAS CITY, APRIL 16, 1891, BY R. M. WIDNEY, LL. D. PRESIDENT OF THE UNIVERSITY BANK OF LOS ANGELES, CALIFORNIA LOS ANGELES: TIMKS-MIRROR PKINTINQ AND BINDING HOUSE. 1891. Either our circulating medium must be increased suf- ficiently to meet the 'wants of our growing country, or the business of the country must be killed off until it is ivithin the compass of our present circulation* The following resolution received the unanimous vote of the California Bankers' Association at Los Angeles, March 13, 1891 : Resolved, That this convention respectfully request Congress at its next session to devise a uniform money system for the people of the United States, with the gold dollar as the standard or unit of value; using gold, silver and cur- rency for a circulating medium, in a sufficient volume to fully meet and keep pace with the growing wants of the business of the country ; founding the issue of cur- rency upon the wealth of the whole nation ; making gold, silver and currency a legal tender, and exchangeable at par on demand, and fixing by a constitutional amendment the legality of such a circulating medium, and preventing the dangers of inflation, contraction, repudiation, or change in the standard of value. The most critical period in the history of the present political parties that has arisen since the ivar will occur in the next session of Congress, and on this question of in- creased volume of money. AS GOOD AS GOLD. Judge R. M. "\VIDXEY, President of the University Bank, delegate from Xios Angeles, Cal., addressed the Commercial Congress, at Kansas City, March 16, 1891 as follows: Mr. President and Gentlemen of this Congress. The owners of money naturally do not want the volume increased. While it is limited they can control the rate of interest, and the value of all labor and products, and can dictate the price of all property. A CORNER ON MONEY. A corner on railroad rates is dangerous, so is a corner on wheat, or corn, or cotton, sugar, wool, or on any of the staple products. But of all dangers a corner on money is the worst. A oorner on money is a corner on all other corners combined, and can control the social and political, as well as the producing, labor and property interests of the nation. The Rothschilds recently attempted a money corner on Russia to control its internal policy against the Jews. Russia in retaliation is attempting a corner on gold, and it spreads dismay and panic among the nations. It is claimed that by two or three men combining in New York they can lock up enough money to close all the banks in that city. The volume of money and the national system for its circulation should be such that no corner on money can ever be possible. A POLITICAL FORECAST. The most critical period in the history of present political parties that has arisen since the war will occur in the next session of Congress, and on this question of the increased volume of money. Next to personal rights, no question affects the voter more sensitively than the rights of property, and of these an increase in the volume of money is most important. The political party that offers a safe increase in currency to relieve the wants of the people, and to cany on the business of the nation will be offering a premium for every vote. An increase of $20 per capita on a population of 62,000,000, is a bid of about $100 per vote. The laboring classes and those borrowing money constitute about nine- tenths of the voters, and with this as a leading issue they would vote in over- whelming majorities for such a measure in utter disregard of present party lines. It will certainly be made an issue, unless one of the dominant parties shall pass such a law at the next session of Congress. If the Democrats propose such legislation and the Republicans resist, it, the next campaign and Congress will be overwhelmingly Democratic^ should the Republicans propose the law and the other party oppose it, the results will be in favor of the Republican party. But if the present parties show the people "how not to do it," by wasting the time in discussing insufficient, sham and subterfuge plans, to deceive the people, they will certainly pay the penalty of utter political defeat. The homes and property of the masses, today, are in jeapardy by reason of an insufficient volume of money. Nine million homes mortgaged at a high rate of interest, annually eating up the home; means nine million solid votes for more money In addition to this the industries of the nation are seriously crippled;, the further developments of our productive areas are brought largely to a. stand still; the laboring classes are out of employment by the hundreds of thousands because employers can not get the money with which to pay for daily labor. THE STRINGENCY OF MONEY that prevails over the United States, and recently bordered on a panic,, extends to England, Germany, France, Russia, and in fact to all the Europ- ean nations, and to South America. For want of money long established mercantile, manufacturing, commercial and financial institutions, noted for decades of careful, safe business management, went down like grain, before the reaper. They went down for want of money. There was not enough money to go around by hundreds of millions of dollars. When the people had it the banks were hard up, and when the banks had it the people were short. THE CRASH CAME FOR WANT OF MORE MONEY. The failures of 1890 were $ 190,000,000 Shrinkage of New York stocks and bonds 600,000,000 Shrinkage of values in United States 10,000,000,000 The banks called in over 100,000,000 The United States Treasury paid out over 200,000,000 Tho banks issued panic certificates \ 30,000,000 The U. S. Treasury deposited with banks to help tide over 30,047.118 Total $11,150,047,118 Millions were shipped from England and California to fill up the want of more money. After all this effort to overcome the stringency a national bank examiner told me last December that they did not dare to examine the banks, as they could not show the required reserve. They were sol- vent in assets, but could not command ready money. A few hundred more millions of legal tender paper money in circulation would have- avoided the crash. THE FINANCIAL SITUATION 'Of the 8,050 banking institutions in the United States, State, National, private and savings, was last December, as shown by the official reports, -as follows: Due depositors $4,603,844,157 Cash in these banks to meet above deposits: Gold coin $ 99,811,011 Silver 28,811,478 Paper money 349,694,405 $478,316,694 That is, the banks had ten cents on the dollar to pay depositors. In gold they had only about two per cent; in gold and silver less than three per cent. At the same time the banks had loaned out $3,893,957,799 among 62,000,000 people scattered over an area of 3,400,000 square miles of terri- tory. There were at the same date $957,746,248 in the hands of the people with which to pay the banks. In fact, after deducting state, city, county and other public funds, there was not 10 cents on the dollar in the hands of the borrowers to make payment with. Yet the wealth of the people was over $71,000,000,000. The people were solvent in property twenty-fold, but could not command available cash. It was not in the country, as shown by the above figures. The volume of money in the country could not sustain the volume of business, and over $11,000,000,000, one-seventh of the entire nation's wealth, was killed off in the short space of a few months for want of a few hundred millions more of money. THE STRINGENCY IS MORE APPARENT from other statistics. The volume of business in the United States last year was ove- $130,000,000,000. After deducting from the total volume of money in the United States, reserves of banks, and United States Treas- ury, and State, county, city tax money, and other public funds, there would not be left in circulation to exceed $700,000,000, or about one-half of a cent on the dollar of the volume of business with which to do the work. If gold and silver alone were used it would only be about one-eighth of a cent. If all the silver mined in the United States were added it would give less than one-quarter of a cent on the dollar of the volume of busin The volume of actual money fell so far short of being able to do the work that the commercial world was forced to use 92 to 9 per cent in checks, drafts, certificates, and such evidence of money (as shown by the Comptroller's report for December, 1890.) This represented some $123,- 000,000,000 of such paper used for business. This was the worst form of inflation. Back of it was only the shifting and personal responsibility of individuals, firms and corporations, and a fraction of a cent on the dollar. People lost confidence in this vast volume of checks, drafts and paper evi- dence of money. The money was not in existence in volume enough to sustain it. The same relation exists between the volume of money in the^ country and the credit used, as between a bank reserve and its deposits. The volume of the money must increase as the credit increases. The people are paying in interest and profit to foreigners over $50,000,000 per year, for the use of their money, to increase our volume, to do our business. If the people through the government issue their own circulating medium, they will pay this $50,000,000 annual interest to themselves. Why should we be in financial bondage to foreigners and work for them when we can make our own money, and use it for the same purpose, and save this an- nual $50,000,000? We are now paying this tribute to foreign capitalists, because we have not enough of our own. Why should we pay this interest to others, when as a nation we have the resources to issue our own volume of money. A GLUT or $20,000,000! Another evidence of the insufficiency of the monev supply is the condi- tion of the New York banks in March, 1891. They claim to have a glut of money a surplus of $20,000,000 over the required legal reserve. This is the result of calling in loans from the channels of trade. It is not money returned voluntarily by the users of money. It can all be absorbed in a day by the places from which it was called in. But the most startling fact disclosed by this boasted glut, is that there is not enough money in all these banks over the legal reserve, to even start one railroad company. The best railroad enterprise with gilt edge security would absorb this boasted $20,000,000, in building its first few miles of track. On December 19th, 1890, the secretary called a report from all national banks in the United States. They average less than 2 per cent above a 25 per cent reserve. Which leaves in the whole national banking system of the United States only about $50,000,000 for use. Of this sum 130,000- 000, is United States Treasury money deposited in the banks to help them make the December showing and to relieve the finaocial danger. On April llth this surplus has fallen to $5,600,000. No wonder the business of the nation is paralyzed. It becomes apparent from these results obtained from official reports, that the banks in the United States dare not loan any money on time loans to develop or maintain the industries and business of the people. THE FINANCIAL VACUUM thus briefly pictured to you, called a money stringency, means only one thing. An insufficient supply of money. Of this Secretary Windom said in his last address in New York: " had it not been for the peculiar condi- tions which enabled the United States Treasury to disburse over $75,000,- 000 in two and one-half months, last fall, the stringency would have re- sulted in wide-spread financial ruin." The market was not just then cry- ing for more of that 95 per cent of checks, drafts, panic certificates, or other evidences of money. It wanted the money and had to have either the money or " the wide spread financial ruin.'' THE DEMAND. You have seen the negative side of the question, the want of money. Now take the other half of the picture and look at the affirmative demand for money. Over $10,000,000 were used in 1890 to start new banks in the South alone as much more in the West. The cotton crop was valued at $400,000,000. Over 17,000 new enterprises started in the South last year, embracing every variety of industry. Over 32.800 miles of railroad were built the last four years, at a cost of $3,000,000,000, New York city used $300,000,000 in new buildings, while the West used money by the millions for its new enterprises, many of which are shut down for want of money. This wonderful growth and energy is not to be condemned. It is the preparing of this continent for homes, and for the support of the genera- tions. All of these aids for civilization are to uplift humanity to its high and peerless 'destiny. It furnishes labor, food and clothing for the poor; it furnishes use for raw material, and results in industry, home and happiness for millions. GROWTH OF CIVILIZATION. The world has been progessing in civilization, in commerce, industries and in business with wonderful rapidity during the past century and especially during the past fifty years. Russia has broken its lethargy, and is restless with energy. Asia has thrown off its isolation and its population half awakened from a dream of a thousand years is stretching forth its hands. India is contending for its ancient glory. Afiica is showing to the world its rich fertile soil, its rivers, its gold and diamonds, and treasures for commerce and agriculture,' All South America is organizing for civilized growth and work with its wealth of soil and mines to tempt the industry of man. The islands of the sea from the almost continent of Australia to the little islands are becoming active struggling centers for their part of com- merce. The business area of the United States in less than a century has spread from the small territory east of the Alleghanies, to an empire ex- tending across a continent from some 3,000,000 to 62,000,000 people now scattered over 3,400,000 square miles and overflowing with business, en- ergy and push, eager to develop the resources of their continent, and pre- pare it for the habitation of the coming hundreds of millions. The whole earth is rapidly being prepared for the comfortable occupation of man. The world is constantly outgrowing its appliances for civilization. The circulating medium of exchange is no exception to the rule All hitherto adopted forms of money ha^e been outgrown in kind and in volume. The skins of wild animals at an early age were the money of exchange. This was outgrown and they stored the skins, cutting off the ears and passing them as a more convenient form of money, the owner being en- titled at any time to call for the corresponding pelts. This was the first bank of deposit. At a later age stamped pieces of leather were the evi- dences of value, gold and silver not being enough in volume. The Chinese have used paper money for thousands of years past. 8 Drafts, certificates of deposit, promissory notes and orders for mom ivere used by the ancients to increase the volume of the medium of ex- change. INTERNATIONAL DEMAND. The following demands for large loans are now on the market of the world: Aurtro- Hungary $100,000,000 France 182,000,000 Mexico 40,000,000 Argentine Republic 500,000,000 Other South American States 725,000,000 African Mines, Trust Companies, etc 350,000,600 $1,897,000,000 Other nations want fully as much more, to say nothing of local demands in each nation. In the Baring Bros, trouble, Lord Salisbury refused to allow the Bank of England to furnish aid. Thereupon the President of the Bank said to him : "My Lord, I am instructed to tell you, in case you refuse, that un- less the Government comes to the rescue, there is hardly a bank in the United Kingdom that can be relied upon to meet the demand of its cred- itors TWENTY-FOUR HOURS AFTER THE DISASTER WE APPREHEND. The relief was quickly ordered. It is evident from the facts already cited that there is an insufficient supply in the United States and that other nations have all they can do to take care of themselves. This condition of things drives our bank to a system of CALL LOANS, or 30 to 90 day paper. They dare not, of course, make time loans. As a result the growth and development of our Southern and Western country is largely at a standstill. Who of you can take a call loan or a 30 or 90 day loan and plant an orchard, develop a farm, build a railroad, open a mine, or establish any industry. ou well know that all these must have time loans and such loans can never be had in a stringent money market. An abundant volume of money would result in time loans all over the West and South. It would give employment to the idle hundreds of ousands who today in the East, West and South, are anxious to work. This unused labor is a dead loss to the nation. An idle day is gone orever, it can never be used to plant a single hill of corn. The laborer is poorer by every idle day. In the United States we are daily destroying the labor of over three hundred t ousand men, worth say $1.50 per day, equal $450,000 daily or aggregat- ing $135,000,000 per year of 300 days. This labor spent in the South and W^est developing their marvelous resources would feed and cloth a Ji ngry million. Tais idle labor would in one year levee the Mississippi from St. Paul to the Gulf. It would construct the Henepin Canal the next year, and would in a few years complete the Galveston harbor, construct a Ship Canal across the isthmus and another from the Missouri near Chicago to the lakes as well as complete other great national works. Yet this is all lost annually for want of money to pay daily labor. It would seem that our government was run on the theory that it must protect the money even if it should starve citizens. Letters to this convention from prominent Eastern financiers protest against any charge in this blundering financial chaos. And urge that we do should do nothing. The East has dictated the finances of this nation to the present. The job is not a credit to their ability and it is time we tried a change. The London Times says, "The whole monetary system of the United States is in a muddle. This condition is due to piecemeal legislation." The case grows worse in the hands of these financial doctors and they now say let the patient alone and he will either die or get well in timp, and they don't know which. Under such circumstances ii .uay be well to try another mode of treat- ment. THE VOLUME REQUIRED should be ample in view of the facts. It cannot be accurately deter- mined, but we should not therefore leave it without any solution. Ap- proximation is all that can be attained. Generally the volume should e such that the United States treasury could hold a safe reserve of say 25 per cent of the volume issued. So, also, that the banks could hold a 25 per cent reserve of deposits, and also the tax money could go into its legal vaults. An estimate might be added for hoarding and loss by accident. In addition to the above reserves there should be a full volume in circulation among the people for the business of the nation. A volume such that time loans could be abundantly supplied. More specific figures would be suggested by the following statistics: State and National banks have deposits $2,516,179,807 Take this as the volume of issue and we have, say: Twenty- five per cent for United States treasury 629,044,951 " " " Bank reserves 629,044,951 For tax money 114,072,288 Total reserve $1,372,162,190 Taking this sum from the proposed volume there would be left $1,144,017,617, for active use. If the above reserves were deducted from the present volume of $2,082,- 568,942 it would leave only $710,406,734 for daily use. The increase for active circulation under the proposed volume is $433,61u,883. In other words, the country would hold the last amount named to protect business, instead of the present paltry $50,000,000. From this volume the business requiring time loans could be safely supplied. 10 This is not an experimental volume. It would represent about $40 per capita for our population, while France uses from $42 to $44 per capita. We could safely use a larger volume than France does. This would give a volume of about $40 per capita, of which about $20 would be gold and silver, and $20 in paper money. NOT ENOUGH GOLD AND SILVER. The total gold and silver coin and bullion in the comercial world is : Gold -. $3,984,256,589 or $3.22 per capita. Silver 4,512,754,655 or 3.65 per capita. Total $8,497,011,244 or $6.87 per capita. The annual product of the world averaged for eight years is: Gold $108,276,258 or .08 per capita. Silver 121,389,242 or .09 per capita. Total $229,665,500 or .17 per capita. The business of the world cannot be run on such a small circulating medium. The nation finds the metallic supply wholly insufficient and supple- ments its use by $2,178,642,376 of unsecured paper money in order to con- duct the world's business. The gold in the United States represents only $694,869,680, or $11 per capita. The annual increase is about 25 cents per capita. The total amount of silver is about $485,370,497, or $8 per capita. The annual increase is about 74 cents per individual. Gold and silver would therefore give only $19 per capita and about 85 cents per capita annual increase. The total volume of gold and silver in the world is only about $5.75 per capita of the world's population. There is no alternative but to issue paper money to supplement gold and silver. WHAT IS THE REMEDY? Several have been proposed, but they are inadequate, local and partisan. FREE COINAGE or SILVER cannot accomplish the desired results. Theannuai increase of our population is such that the coinage of our entire national silver product would only give the per capita for our increase. It will in no manner relieve the standing need. The great objection to free coinage is that our annual product is worth in the market $46,000,000. When coined it represents $64,000,000, or $18,- 000,000 profit added by the Government agreeing to pay tjaat difference 01 demand. This makes a present of $18,000,000 annually to the producers, of silver. The people are now buying all of this silver at about 97 cents per ounce^ Why should they pass an Act of Congress raising the price against them selves to $1.29. 11 Some in this convention urge that free coinage will cause this difference 1 to disappear. So it will by permanently adding the difference to the present cost. Free coinage will cause it to disappear, by transferring it from the benefit of the buyer (the people) to the benefit of the seller (the silver owner). That is the free coinage act of congress is worth about 32 cents on each ounce, and silver is worth the other 97 cents. The silver belongs to the silver men, and the Act of Congress belongs to the people, and the silver men ask the people to donate to them the Act of Congress, worth 32 cents per ounce of silver, and then let the people pay them for the whole thing. Why do the people of the United States want to advance the price of silver on themselves ? Let the people buy and store for their use all the silver they want, or that is profitable to them to buy. FREE COINAGE IS NOT IN ISSUE before the people. The silver owners do not ask free coinage and possibly do not want it. Free coinage means that the silver be coined into dollars, and delivered to the owner. The silver owners set forth their demand in their silver-bill of last Congress. This bill provides that the owners of silver may deposit their bullion in any mint, and may take either the coined silver or paper money therefor, the paper money exchangeable on demand for gold and a full legal tender for all debts. The silver bullion is not made a legal tender, only the paper money is- sued therfor. The bill does not even require the silver bullion to be held to redeem the paper money issued. It is simply stored in the United States vault as an asset. The people are responsible to pay in gold the paper money issued and would have to sell silver in the market of the world for whatever it would bring. If we are going to issue paper money, which we should do, let us issue it direct from the people, based on the wealth of the nation. This silver deal will cost the people $18,000,000 extra annually, which, with 5 per cent interest, would amount in fifty years to some $10,993,695,- 800. That is the people would be paying that sum to the money power for the privilege of issuing paper money via the silver route. You people who are using money and paying for it read again the above elucidation, and then take a firm stand for a sufficient volume of safe paper money. You should refuse to support any bill extending the use of silver unless the same bill secures you a full volume of paper money. Unless you do you will never get any relief beyond the limited amount of silver. You may then have to fight a combined gold and silver monopoly. Nothing but a constitutional amendment will save you. That our government should buy our silver product and hold it as a reserve for such time as may be advisable, would seem to be good as far as it goes, but it can not meet the demand for a full circulating medium. Another remedy suggested is the 12 50 YEAK 2 PEE CENT. BONDS. This is simply a scheme to aid banks at the expense of the people, and .seems to have had its origin and backing in the secret councils of those who wish to monopolize the money system of the United States. Look at it! Its advocates say, issue these bonds and sell them, and re- deem the 4 per cent bonds, and let the national banks buy the 2 per cent bonds as a basis of circulation. How will it work? Will the owner of 4 per cent bonds exchange even for 2 per cent bonds? Certainly not. Then if you sell the 2 per cent bonds at par and pay a premium on the 4 per cent bonds you will have to pay all the 4 per cent ones will earn up to maturity. We will then be paying 6 per cent instead of 4 per cent as now, and that does not increase our circulating medium a dollar. The people are simply saddled with more interest. The sale of 2 per cent bonds to banks as a basis of circulation is a rob- bery of the people. To illustrate : The United States issues say $100,000, in 2 per cent bonds, you wishing to open a bank take $100,000 cash, now in circulation, and pass it over to the United States for the $100,000 in bonds. Next, you hand back your bonds, as a deposit, to the United States, and get back your $100,000 cash for a bank capital, and for fifty years the tax payers through the government pay you 2 per cent per year, $100,000 interest on the bonds for doing a banking business on your orig- inal $100,000. If you use the semi-annual interest to buy more bonds, so as to make it compound, you will at the maturity of the bonds have your original $100,000 plus $100,000 interest, plus about $70,895 bonds bought with interest on interest, making a total profit of $170,895 for doing busi- ness on your own money. But during this fifty years your original $100,- 000 will be loaned out to the same tax payers who are paying 2 per cent interest on the bonds to you. This loaned out capital will bring in ruling rates which by the scarcity of money will be high. This with the profits arising from the periodical wrecking of the people ought to satisfy the owners of money. It will, however, engender the thought among the masses that the banks should be killed off. Our present banking capital is some $700,000,000. At the end of fifty years operating under this bond scheme the banks would own their capital stock $700,000,000 plus $1,196,- 265,000 interest on bonds, plus over $3,000,000,000 interest on the capital stock for fifty years. That is the banks will own all the money in the United States and have the people in debt to them nearly $3,000,000,000 You perceive at once that this scheme will not increase our circulating medium. This, hower, is not as costly to the people as the proposed silver bill, which in fifty years costs over $10,000,000,000 extra. Another proposed scheme to place the money power in the hands of a few as a monopoly is the CLEARING-HOUSE PLAN. It is embodied in a proposed national clearing-house system to be in- corporated under an Act of Congress, by which a confederation of banks can put up approved collateral with the clearing-house and receive clear- 13 ing-bouse notes, to be legal tender, tbe combined clearing-bouse being responsible for redemption in case tbe individual bank fails to redeem. Tbis system is put fortb by a prominent eastern banker wbo asserts tbat we need no more money.* Yet tbis wbole scbeme is to increase tbe circu- lating medium, but giving tbe banks a monopoly of issuing and controlling it. Its weak point is in placing back of our currency no greater responsi- bility tban tbe banks and tbeir property. It also gives tbe banks tbe right to obtain money witbout interest and loan it on interest. Better let tbe government issue tbe money witb tbe resources and wealtb of tbe wbole people of tbe United States, valued at $71,000,000,000 back of it for redemption. If tbe property of a combination of banks back of a, money issue is good, tben tbe wealtb of tbe nation back of tbe issue is better. As a nation we want no money for tbe people wbicb is only backed by the responsibity of a small part of tbe people baving absolute control of it for selfish ends. FARMEhS' ALLIANCE SCHEME. This scheme has some sound points in it. Land can be safely used as a security in the national bank system as well as bonds. Allowing the title to land at a valuation of, say, its averaged assessed value for the preceding five years, and not to exceed one-half of its cash value, to be pledged to the government under the form of a national bank incorporation, would give relief to the farming communities. It would substitute a national bank for a sub-treasury ; a set of bank officers elected by the farmers for their banks to manage the loans for a set of sub-treasury agents; a responsibility to the government for large aggregate sums under the bank laws, instead of the inspection of thous- ands of small changing loans. The supervisions of the Bank Examiners under present laws as to the solvency of the bank would be all that was re- quired, while the bank officers would supervise all detail business and loans to individuals. The great objection to the sub-treasury scheme is that it is local and partisan, and only helps one class instead of all classes. The circulating medium should be issued by authority of the whole population and should be backed by the entire v.vnlth of the nation, and should be controlled for the common benefit of all. The 2 per cent bond system the free coinage system the national bank clearing house issue and sub-treasury plans fail because they are in the interest of localities and minorities. If temporarily successful they would soon be destroyed by the majority as unjust. Justice and equity to all must be at the founda- tion of any system adopted by our nation. At present the United States Treasury throws its reserve power to sup- port Eastern banks. It is very probable that the West would be denied any such relief in an emergency. Over $30,000,000 of United States money is in banks without interest and largely without security. The re- cent panic demonstrated both in the United States and in England that at 14 times the power of the nation must come to the financial relief of the peo- ple. This then should be put in a legislative system on safe business principles within the reach of all parts of the country for the common .good. SUGGESTED- LEGISLATION. In preparing the scheme which is submitted for your consideration I have retained the safeguards existing in the money systems of the United I States, England, France and Germany, and have added such measures as will give a uniform, practicable, elastic system, free from inflation, con- traction, repudiation or a change of the abstract standand of value. A system based on the authority of the people, backed by the wealth of the people, and administered for the benefit of the whole population. Using all of our gold and silver, and supplementing their use by a legal tender of $20 to $25 per capita, which represents 2 cents on the dollar of our national wealth. A CONSTITUTIONAL AMENDMENT is placed at the foundation of the proposed system. One of the greatest dangers in our present law is the doubt as to the constitutional power of Congress to make paper money a legal tender. The United States Supreme Court first decided by five Justices to three that Congress had no power to make paper money a legal tender, Chief Justice Chase rendering the opinion, fa VX/O>X, . \ One of the five resigned. Congress increased the number of Justic from eight to nine; the two vacancies were filled by men who joining the opinion of the minority held that as a war measure^ Congress had power to make paper money a legal tender, j Q \/\/<&Jtl& jJjjr *~* (hiKU This decision stood five Justices to four. Three mojeoFthe four have died, and their places have been filled by those who believe in this power, and in its latest decision our United States Supreme Court holds by eight to one that Congress can make anything, in any quantity, a legal tender. In other words, the doors are thrown wide open to inflation of the worst form. Even now, are proposed measures that have no limit to currency issue. A future administration and Supreme Court could overrule the above decision and hold that the whole currency issued was unconstitu- tional and void, and was not even a claim, against the nation. Such a de- cision would leave a gold and silver money in absolute control. And where would the people find relief. Three dangers are at the very root of our financial laws, ruinous infla- tion, constitutional repudiation and a threatened change of the gold dollar as a measure of values. A safe monetary system is one of the essential elements of the prosperity of this nation. It must stand before the people of this and other nations, founded upon, and guarded by constitutional power, protecting it from the dangers of inflation, contraction, repudiation, or change of the standard of values, and pledging the faith, and resources of the nation as 15 the power and will of the nation to exchange gold, silver and currency at par on demand. An amendment worded about as follows would cover the ground : PR JPOSED CONSTITUTIONAL A.MENDNENT. ARTICLE XVI. SECTION 1. A national currency circulating medium shall be issued to the amount of twenty dollars per capita, as shown by the census of 1890 and by each succeeding census, for the proper redemption of which when required, the resources, the property and the faith of the nation are pledged; for which redemption, Congress, by a two-thirds vote of each House, may provide for the collection of Government revenues and taxes, in gold or silver coin. SEC. 2. Said currency, with gold and silver coin of the United States of present weight and fineness, the gold dollar being the standard or unit of values, and such notes as may be issued in lieu of gold or silver coin and bullion, held exclusively for the redemption thereof, shall constitute the only legal money of these United States, and shall be received at par in satisfaction of all obligations for the payment of money within the jurisdiction of the United States. Said gold and silver coin and currency shall be exchangeable at par value. SEC. 3. Congress shall have power to enforce this Article by appropri- ate legislation, but shall have no power to increase or decrease said issue; provided that after the issue of 1900, Congress may, by a two-third vote of each House, reduce the rate of any further issue per capita from time to time. This amendent, underlying our national system of finances would give us the best foundation and safeguards ever yet adopted by any nation. The volume is protected against inflation, contraction or repudiation. It represents about two cents on the dollar of our national wealth of some 3,400,000 square miles of land and national wealth of $71,000,000,000. This is in legal effect a first mortgage given by the nation to secure redemp- tion. With such security the national currency would be considered gilt- edge paper in any market in the world. It would be received with greater confidence than Bank of England notes. The gold dollar is today the standard by which all values in the United States are rated or measured, and as an abstract standard of values, this amendment removes from controversy or doubt that disturbing element by fixing the gold dollar as the standard of measure. It at the same time does full justice to silver, by making it and paper money a legal tender, with gold at the par value. In this way the whole people make the difference, if any, between the market value and the coined value, and when exchanged for gold, repay the difference. The double standard is not really required. The use of two metals, the government standing re- sponsible for any difference in value in all that can be obtained. The Government buying the silver and coining or holding it makes the differ- ence between the market value and the money value ; and repays that difference when it gives gold for the silver. This is the same thing that 16 occurs when a paper dollar is issued. The United Sates makes a gold dc ar net at time of issue, and when the paper dollar is taken back by the United States it returns the gold dollar. As a commercial or scientific: fact nothing other than the above has ever been done, and as that is a plain law of nature nothing else can ever be done. You may cover that simple idea under volumes of words, sophistries or legislative enactments and that simple little law of nature will always appear at the settlement and adjust the difference and no one can prevent it. This amendment would protect the currency against the dangers of the John law, or Argentine Republic scheme, and from the dangers that beset the Continental money. It is a greater safeguard than is thrown around the Bank of England notes. No nation can place back of its issues such security as this would give to American money. England cannot place back of an issue the resources of Canada, Australia, India or her African possessions, for at any time they Height leave England and set up for themselves, leaving only the little island to redeem the currency issued. France and Germany are to small. Russia is too insecure in her form of government. But the United States with its vast area, its peaceful and stable form of government, and its citizens, each an owner in the currency, is in position to issue a currency that would be received at once by any nation as a medium of exchange a representative of gold at par, and AS GOOD AS GOLD. Such a legal tender note is, in money effect, the clearing-house certifi- cate of the nation, backed by the national wealth, good in any clearing house in the United States, instead of a certificate backed by any number of banks, and only good where they wish to accept it by courtesy. It is a check signed by authority of the people of the United States, backed by over $71,000,000,000 of the people's wealth, good at any counter of any bank, instead of an individual's check, only good at his own bank and in his own locality. It is the promissory note of the nation, secured by a constitutional mortgage on over 2,500,000,000 acres of land and the cities, railroads and civilization thereon, payable to bearer and good from any debtor to any creditor, instead of the private note of a citizen, secured by a mortgage on a few acres of land, and only good at a discount to those who wish to buy it. It is a representative of value for exchange purposes, mutually agreed upon by 62,000,000 of people for their joint benefit, backed by their constitutional bond to secure redemption when required, on which bond the people pay no interest. Such a currency circulating medium possesses all the elements of safety offered in all other proposed systems combined, and many others that cannot be introduced into any other system, and is as good as gold. Confidence would never be lost in this medium, for the amendment would prevent Congress or politicians or political parties from disturbing the foundations, as at present. 17 AND SILVER BASIS. An issuance of paper money based on gold and silver, dollar for dollar, gives no increase in volume. Every dollar of paper issued locks up a dollar of coin for redemption. Again, an issue of say two billions paper money, based on one billion coin reserve represents the other billion of the paper money secured only by the wealth of the nation. The true plan is, put all the gold, silver, real estate, cities, railroads, improvements, personal property, etc., of the value of S71,000,000,000 solid back of the issue of say $2,500,000,000, holding the coin for such occassional use thereof as may be required. The whole wealth of the nation back of an issue is better than any part of the wealth. The coin basis of any issue is a plan in the interest of the owners of the coin, and gives no increase in volume. AN ACT OF CONGRESS ' to put in operation this plan would be substantially as the present law of June 3, 1864. The department of the controller of currency, the buieauof printing and engraving would remain the same. The system adopted should be complete in itself, it should be as broad as the United States in its effects, it should be planned to extend through the centuries. While by one depatment it gathered in the money annually by taxation and revenues, it should annually return the money to the people equitably in all parts of the nation, seeking to collect taxes and revenues from the rich, and largely returning it, through the laboring classes, to circulation. This would be a system whereas it is now cnuos. THE BILL. It is a principle in law that legislative enactments should use as much of existing laws and machinery as possible in order to produce new results. For the reason that we are familiar with what has been in use and know how to use it. Operating under this rule I have taken existing laws as shown by the Act of June 3, 1864 as the frame work of a new or complete system of finances of the United States and have added to it such sections and parts of a section as will produce a comprehensive uniform system easily under- stood and easily operated by those familiar with existing laws. The system embraces the use of all of our American out-put of gold and silver and a supplemental volume of paper money sufficient in quantity to safely do the business of the nation. The abstract gold standard of value now in operation is retained. Silver is to be bought by the United States at its market value and use either by coining or held as bullion and paper money issued for it. Any difference between the value of a silver dollar and a gold dollar to- be paid on demand by the United States by receiving silver dollars at par for gold as is now done. 18 The paper money to be issued by authority of all the people, backed by the wealth of all the people, and circulated for the benefit of the people. All present forms of paper money to be taken up by the new issue, uniform in appearance, thus getting rid of the seven or eight different kinds of paper money in circulation. / A brief comment on each section of the bill better shows what can and what can not be done under is provisions. SECTION, 1. This is the same as the present law of June 3, 1864. It provides for the office and appointment of a comptroller of finances, who is the same as our present comptroller of currency. SEC. 2. Is the same as the present law. It provides for making the seal of office and for certified copies of documents in the office. SEC. 3. Is the unchanged present law and provides for office room, vaults, safes, engraving and other conveniences for the transaction of the business of the department. SEC. 4. This in addition to the present law provides for the issue of $20 exchange to the Comptroller of Finance. After the expiration of the said year for the retiring said old issue of notes, the said old issue shall r 26 currency of the United States, and to buy and legally issued bonds of the states, counties, and incorporated cities of over 5,000 inhabitants, as he deems proper, said bonds to be issued by said states, counties and cities, for a valuation not to exceed five per cent of the average assessed value of the real estate in said state, county, or city, for the five years preceding the issuance of said bonds, deducting from the the said issue of bonds the par value of any other outstanding bonds issued by said state, county or city. Said bonds shall be a lien on all real estate in said state, county or city, and shall bear interest at the rate of two per cent per year, and shall not run to exceed twenty years. The interest shall be payable annually to the Comptroller of Finance at Washington, and a sinking fund shall be provided in each case sufficient to liquidate said bonds at or before maturity. The public issuance of such bonds, their delivery to the Comptroller of Finance, and the receipt of the circulating notes therefor shall be deemed conclusive evidence of the legal issuance and validity of said bonds, and thereafter no defense shall be set up to the payment of principal or interest, or to the levying and collecting of taxes therefor. All objections or defense to the issue of said bonds must be made by the parties interested prior to the delivery thereof to the Comptroller of Finance, otherwise they are forever waived and barred as a defense. Said bonds may be sold by the Comptroller, and such bonds or any United States bonds may be deposited at par as reserve security by banks in the same manner as provided for real estate herein. If said state, county, or city shall fail or neglect at any time to levy and collect a sufficient tax to meet the obligations of said bonds, there shall be immediately due and payable to the Comptroller of Finance a tax on the real and personal property in said state, county, or city in default on its last assessment roll sufficient to meet said pay- ments and costs of collecting the same; and the same shall be collected by any person or persons appointed therefor by the Comptroller of Finance, who shall have power where said tax is not paid within thirty days after it is levied to collect the same by seizure and sale upon war- rant issued by any judge ex parte of any court of original jurisdiction, State or national having jurisdiction of the property. The United States may become the purchaser of such property. Redemption may be made within one year after sale by paying the amount due on the sale, costs and interest thereon at ten per cent. Provided that no bonds shall be purchased hereunder. except such as by state laws are made subject to the terms of this act.] SEC. 8. And be it further 'en acted: That associations for carrying on the business of banking may be formed by any number of persons, not less in any case than five, who shall enter into articles of association, which shall specify in general terms the proposed name of the association, the object for which the association is formed, and the proposed capital stock; and may contain any other provisions not inconsistent with the provisions of this act, which the association may see fit to adopt for the regulation of the business of the association and the conduct of its affairs, which said articles shall be . signed by the persons uniting to form the association, and a copy of them forwarded to the Comptroller of Finance, to be filed and preserved in his ; office. Attached to said articles of association shall be a schedule [of the bonds or real estate offered and known as "the reserve security" as herein provided for, which schedule shall accurately describe said bonds, and real estate and the improvements thereon, stating in whom the title is. 27 vested in fee simple absolute, free of all incumbrances or liens, and giving the yearly assessed value of said real estate for each separate year for state and county purposes for the five preceding years, which schedule shall be certified to as correct by the proper keeper of the records of title of said property. Upon receipt of said articles and schedule, the Comptroller of Finance shall proceed in whatever manner he deems best to verify the facts set out in said schedule; and when satisfied that the average assessed value for said five years next preceding is not in excess of half of the actual value of said real estate,] and that the schedule is otherwise correct as to its statements, he shall notify said persons of that fact of the name approved by him for the association. SEC. 9. And be it further enacted: That the persons uniting to form such an association shall make a certificate of organization, which shall specify: First. The name assumed by the association. Second. The place where its operations of discount and deposit are to be carried on, designating the state, territory or district, and also the particular county and city, town or village. Third. Its capital stock, and the number of shares into which it shall be divided. Fourth. The names and places of residence of the shareholders, and the number of shares held by each. Fifth. An accurate copy of the schedule of [bonds or real estate attached] to the articles of association provided for in section 8. Si.,- fit. A declaration that said certificate is made to enable such persons to avail themselves of the advantages of this act, and that said [real estate is for security as required in this act.] The said certificate shall be duly signed and acknowledged by each of said persons, in the manner required by the law of the place for acknowledging conveyances of real estate, to entitle them to be recorded. [When duly certified therefor said certificate shall be recorded in the properbook of record of the county or district in which the real estate is situated; thereafter no lien or claim shall attach to any of said real estate, except such as shall be wholly subordinate to the prior claim under said certificate against said real estate for the purposes of this act.] When duly recorded the said certificate shall be transmitted to the Comptroller of Finance, who shall record. and carefully preserve the same in his office. Copies of said certificate, duly certified by the Comptroller of Finance and authenticated by his seal of office, shall be legal and sufficient evidence in all courts and places within the jurisdiction of the Government of the United States of the existence of said association and of every other mat- ter that could be proved by the production of the original certificate. SEC. 10. And be it further enacted: [That no association shall be organized hereunder with a "reserve security " greater than one million dollars, or with a less "reserve security" than twenty-five thousand dollars, nor with a capital stock of less than fifty thousand dollars.] SEC. 11. And be it further enacted: That whenever a certificate of organization has been received and filed 28 by the Comptroller of Finance, and is found by him to fully comply with the requirements of this act, the Comptroller of Finance shall proceed to investigate in the manner deemed best, the personal standing, financial condition and record of the persons seeking to form the association, [also the object of the association, the location and value, present and pros- pective, of the real estate described in said certificate of organization, and any other facts that may aid him in determining the desirability of such an association and the probable safety of its business affairs and manage" ment. The Comptroller of Finance may use such special means as he deems best to safely ascertain the facts above refered to. When it shall appear to the satisfaction of the Comptroller of Finance that the association is lawfully entitled to commence the business of banking with safety to the government and to the people, he shall issue to such association a certificate under his hand and official seal that such association has com- plied with all the provisions of this act required to be complied with, and that such association is authorized to commence the business of banking, designating the place of business, fully naming the directors and officers thereof for the first year and its capital stock. The said certificate shall be published in such local newspaper for sixty days, as the Comptroller of Finance shall designate, From the date of said certificate said asso- ciation shall fee deemed a body corporate to transact the business of banking hereunder, with the usual rights, powers and duties of banking corporations, and shall exist for the period of twenty years. An impress of its corporate seal shall be filed with the Comptroller of Finance and with the Secretary of the Treasury. SEC. 12. And be it further enacted: [That thereafter, upon the demand of said association, the Comptroller of Finance shall issue to said association a warrant on the Treasury of the United States, for circulating notes of the Government to the amount of the said average assessed value of real estate, or the par value of said bonds deposited by said bank, or for any part thereof, as demanded from time to time, which warrants, upon presentment duly endorsed, shall be paid out of the Treasury in the notes issued hereunder. Said sum or any part thereof may, on the first of any quarter of the year, be returned to the Treasury.] SEC. 13. And be it further enacted : That the affairs of all associations for banking purposes formed here- under shall be managed by its board of directors, which may be in legal session on any Monday from 10 A. M. wherein a quorum is present, and on any other day. where, after notice, a quorum may be present, or to which a regular session may be adjourned, a quorum being present. Every director shall be a citizen of the United States during his whole term of service; and at least three-fourths of the directors shall have re- sided in the state or territory or district in which such association is located one year next preceding their election or appointment as directors, and shall be residents thereof during their term of office. Each director shall own in his own right at least ten shares of the capital stock of the association. Each director, when elected or appointed, shall take an oath 29 that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this act, and that he is the bona fide owner in his own right of ten shares of the capital stock of the association, standing in his own name on the books of the association, and that the same is not hypothecated or in any way pledged as security for any loan, debt or obligation; which oath subscribed by him and duly certified, as required by law, shall be immediately trans, mitted to the Comptroller of Finance and by him tiled and preserved in his office. SEC. 14 And be it f urth'er enacted : That the directors of any association first appointed shall hold office until their successors shall be elected and qualified. All elections shall be held on the second [Tuesday of January of each year,] and the directors as elected shall hold their places until their successors are elected and qualified. Any vacancy occuring by reason of a director ceasing to own the required amount of stock, or from any other cause, shall be filled by appointment by the board. If from any cause an election shall not be held at the time designated, it may he held on any subsequent day by publishing thirty days' notice thereof in a local daily paper. SEC. 15. And be it further enacted: That in all meetings of the stockholders each share of stock shall be entitled to one vote on all questions. Shareholders may vote by proxies duly authorized in writing. None but shareholders can use or hold a a proxy, SEC. 16. And be it further enacted: That the shares of stock may be transferred on the books of the associa- tion in such manner as may be prescribed in the by-laws of the association. No transfer shall be made of stock where the holder is indebted to the association in any manner; but the association has a lien on all of its stock for such indebtedness. Every perspn becoming a shareholder by transfer, or otherwise, shall, in proportion to his shares, succeed to all the rights and liabilities of the prior holder of such shares, and no change shall be made in the articles of association by which the rights, remedies and securities of the existing creditors of the association shall be impaired. The shareholders of each association formed under the provisions of this act, and of each exisiting bank or banking association that may accept the provisions of this act, shall be held individually responsible, equally and ratably, and not one for the other, for all contracts, debts and engagements of such associations to the extent of the amount of their stock therein, at par thereof, in addition to the amount invested in such shares. SEC. 17. And be it further enacted: That the capital stock or the reserve security of any association formed hereunder may be increased or decreased within the limits fixed for the capital stock or [the reserve security] by this act by a two-thirds vote of its shareholders at any annual meeting in January. The increase or der 30 crease of capital stock or the [reserve security] shall be made by complying with the requirements of this act as to the formation of such associations in the first instance, and by complying with such additional requirements as the Comptroller of Finance may deem best to secure the interests of all parties concerned, provided [that in the decrease of the reserve security the association so decreasing its reserve security shall surrender to the Comptroller of Finance circulating notes received thereon to the amount of the decrease. In such cases the Comptroller of Finance may, in his discretion, release from the effect of this act a pro rata of the bonds or real estate described in the certificate of organization, but this shall only be done in cases where the Comptroller of Finance shall find the asso- ciation to be solvent. The maximum or minimum of such increase or decrease shall be determined by the Comptroller of Finance.] Any association organized hereunder may close up its business and dis- solve its organization by a vote of its stockholders had at the annual meeting' in January. In such cases the association must first settle all of its outstanding obligations and return to the Comptroller of Finance the circulating notes received on its reserve security. The Comptroller of Finance, upon receipt of a statement of the foregoing facts duly authen- ticated by the directors of said association under oath, shall fully inves- tigate the matters pertaining thereto; and upon being satisfied that all obligations of said association are fully satisfied and discharged, shall cause said statement to be published for at least sixty days in a local newspaper, and shall also cause a notice thereof to be inserted in the [United States Bulletin of Finance] for the same period. If any objections to the dissolution are filed with the Comptroller of Finance before the expiration of said sixty days, he shall determine and adjust any matters therein objected to; when so adjusted, or if no objections are filed with him, he shall issue a certificate dissolving said association and releasing the bonds or real estate described in the certificate of organization from any further claim or demand thereon. Said certificate of dissolution shall be by him duly signed, sealed and acknowledged so as to entitle the same to record in the office where the certificate of organization was recorded. The Comptroller of Finance shall duly record said certificate of dissolution in his office, and thereafter shall transmit the same to said association upon the same being duly recorded in the office where the certificate of organization was recorded. The association will thereby be completely dissolved. SEC. 18. And be it further enacted: [That if at any time the value of the real estate described in the certifi- cate of organization shall depreciate in value, to be decided by the Comp- troller of Finance, he may require any portion of the circulating notes of the association's reserve security to be surrendered to the Comptroller of Finance, or he may require further real estate security as in the original formation of the association.] Should the Comptroller of Finance at any time deem the affair of said association unsafe from any cause, he may appoint a special agent or agents under his hand and seal of office, who shall have power to inspect all affairs of said association and to close up its affairs to the best possible advantage to all parties interested. To this end 31 lie shall have power to bring or defend any suit in the name of the association, and to sell at public or private sale any or all of the real estate described in the certificate of organization, and to execute proper conveyances thereof, and use the proceeds to close up the affairs of the association. He shall also have power to collect from the stockholders the amount for which they are responsible under this act, and to use the same to close up the accounts. He shall give such bonds for faithful performance of his duties hereunder as the Comptroller of Finance may require. His certifi- cate of appointment shall be duly acknowledged and recorded as the other certificates are required to be. The Government shall be a preferred creditor in all such cases as are provided for in this section. SEC. 19. And be it further enacted: That the directors may semi-annually declare dividends from the net profits of the association, but such association before it shall declare a dividend shall carry at least ten per cent of its net profits to a reserve fund until said reserve fund shall equal the capital stock of said association. SEC. 20. And be it further enacted: That it shall be lawful for any association hereunder to purchase, hold and convey real estate as follows: First. Such as shall be necessary for its immediate accommodation in the transaction of its business and [for its reserve security.] Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted or [for loans made thereon.] Third. Such as shall be conveyed to it in satisfaction of debts pre- viously incurred in the course of its dealings. Fourth. Such as it shall purchase at sales under judgments, decrees, or mortgages held by the association, or shall purchase to secure debts due to said association Such association shall not purchase or hold real estate for any other purpose than as herein specified. Provided that all such real estate ac- quired other than for the purpose of the business of the association shall be sold within five years after it is obtained by the association SEC. 21. And be it further enacted: That each association may charge such rates of interest as may be allowed by local laws where the association is situated. Each association shall keep on hand in cash an amount equal to at least twenty-five per cent of the amount of its deposits, when the reserve amount shall fall below said percentage. No more dividends or loans shall be made until the amounts called in shall restore the said percentage. SEC. 22. And be it further enacted: That every association hereunder shall make to -the Comptroller of Finance a report, according to the form which may be prescribed by him, verified by the oath or affirmation of the president or cashier of such as- sociation, which report shall, among other things, exhibit in detail, and under appropriate heads, the resources and liabilities of the association, and | the last assessment valuation of its real estate,] bef ore the com- 32 mencement of business on the morning of the first Monday of the months of January, April, July and October of each year, and shall transmit the same to the Comptroller of Finance within five days thereafter. And any bank failing to transmit such report shall be subject to a penalty of one thousand dollars for each day after said five days that said report is delayed beyond that time. The Comptroller shall cause abstracts of said reports to be published in the United States Bulletin of Finance, and the separate re- port of each association shall be published by the association in a local daily newspaper for at least one week. [Said association shall forward, with each quarterly report, one-half (J) of one per cent, of the cash used on its reserve security, during the preceding quarter, as interest thereon, on sums not to exceed $100,000, and three-fourths of one per cent, per quarter on sums in excess of $100,000 and less than $200,000; thereafter the rate shall increase one-fourth of one per cent, per quarter additional on each additional $100,000 used or on any part thereof;] and in case of default in the payment thereof, by any association, said interest may be collected in the manner provided for the collection of United States duties of other corporations. In addition to the quarterly reports required herein, every association shall, on the first Tuesday of each month, make to the Comp- troller of Finance a statement under oath of the president, or the cashier, showing the condition of the association making such statement, in respect to the average amount loans and discounts, specie and circulating notes on hand belonging to the association, Clearing House certificates., deposits, and such other matters as the Comptroller of Finance may, require. SEC. 23. And be it further enacted: That no association shall make loans or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and stock so purchased or acquired shall be sold within six months from the time of its purchase- But no such purchase or sale shall relieve the former owner thereof from his pro rata of responsibility for all debts incurred by the association prior to sale and transfer to a new purchaser in good faith. SEC. 24. And be it further enacted: That no association, or any member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be with- drawn, either in the form of dividends or otherwise, any portion of its capital or reserve fund. And if any losses shall at any time have been sustained by any such association, equal to or exceeding its undivided profits then on hand in cash, no dividend shall be made; and no dividend shall ever be made by any association, while it shall continue its banking operations, to an amount greater than its net profits then on hand, de- ducting therefrom its losses and bad debts and ten per cent for the reserve fund. And all debts due any association, on which the interest is past due and unpaid for a period of six months, unless the same shall be well secured and shall be in process of collection, shall be considered bad debts within the meaning of this act. SEC. 25. And be it further enacted : That the president and cashier of every such association shall cause to be kept at all times a full and correct list of the names and residences of all the shareholders in the association, and the number of shares held by each, in the office where its business is transacted ; and such list shall be subject to public inspection during business hours of each day in which business may be legally transacted. A copy of said list shall be sent with each quarterly report to the Comptroller of Finance. SEC. 26. And be it further enacted : [That the directors of any bank incorporated under any national or state law may, upon the authorization of the owners of two-thirds the cap- ital stock, in writing, duly signed and acknowledged, avail themselves of the provisions of this act and become a national association under their corporate name by complying with the provisions of this act.] The said directors being by said vote authorized to execute all papers relating thereto. Any matters not herein provided for in such cases shall be ad- justed by the Comptroller of Finance in accordance with the spirit and intention of this act. SEC. 27. And be it further enacted: That all associations under this act, when designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money, except receipts from customs, under such regulations as may be prescribed by the Secretary; and they may also be employed as financial agents of the Government; and they shall perform all such reasonable duties, as depositaries of public moneys and financial agents of the Government, as may be required of them. And the Secretary of the Treasury shall re- quire of the association thus designated, satisfactory security for the safe keeping and prompt payment of public funds deposited with them, and for the faithful performance of their duties as financial agents of the Government. SEC. 28. And be it further enacted : That all transfers of the assets or any part thereof, of any association doing business hereunder, made after the commission of an act of insol- vency, or in comtemplation thereof, with a view to prevent the application of it as assets in the manner prescribed in this act, or with a view to the preference of one creditor to another, shall be utterly null and void. SEC. 29. And be it further enacted : That any director, officer or employee, of any association organized hereunder, who shall knowingly violate, or permit any of such persons to violate the provisions of this act, shall be removed forthwith from his position, by the proper authority of the association, or by order of the Comptroller of Finance. And any director, officer or employee of such association who shall so transact the business of such association, or any part of it, as to intentionally defraud the association or any one else, or with the intention to deceive or mislead any officer of the association, or any agent appointed to examine the affairs of such association, shall be 34 deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by imprisonment for nor more than ten years. SEC. 30. And be it further inacted: That all suits and proceedings arising out of the provisions of this act, in which the United States or its agents or officers shall be parties, shall be conducted by the district attorneys of the several districts, under the direction and supervision of the Solicitor of the Treasury, And that all suits or actions arising under the provisions of this act, may be had in any circuit, district or territorial court of the United States held within the district in which the association may be established, or in any state, county or municipal court in the jurisdiction of which said association is established, which has jurisdiction in similar cases. SEC . 31. And be it further enacted : That if any person shall falsely make, forge or counterfeit, or cause or procure to be made, forged or counterfeited, or willing aids or assists in forging or counterfeiting any note in imitation of, or purporting to be in imitation of the circulating notes issued under the provisions of this act, or shall pass, utter or publish, or attempt to pass, utter or publish, any false, forged or counterfeited note purporting to be issued under the pro- visions of this act, knowing the same to be falsely made, forged or counter- feited, or shall falsely alter, or cause or procure to be falsely altered, or willingly aids or assists in falsely altering any such circulating notes issued under the provisions of this act, or shall pass, utter or publish, or attempt to pass utter or publish as true, any falsely altered or spurious circulating notes issued, or purporting to have been issued under the pro- visions of this act, knowing the same to be falsely altered or spurious, every such person shall be deemed and adjudged guilty of a felony, and being thereof convicted shall be sentenced to be imprisoned and kept at hard labor for a period of not less than five years nor more than' twenty years, and fined in a sum not exceeding one thousand dollars. SEC. 32. And be it further enacted: That if any person shall make or engrave, or cause or procure to be made or engraved, or shall have in his custody or possession any plate, die or block after the similitude of any plate, die or block from which any circu- lating notes issued as aforesaid shall have been prepared or printed, with intent to use such plate, die or block, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or possession any blank note or notes engraved and printed after the similitude of any notes issued as aforesaid with intent to use such blanks, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or possession any paper adapted to the making of such notes, and similar to the paper upon which any such notes shall have been issued, with intent to use such paper, or cause, or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, every such person, being thereof convicted by due course of law, shall be sentenced to 35 be imprisoned and kept at hard labor for a term not less than five or more than twenty years, and fined in a sum not exceeding one thousand dollars. SEC. 33. And be it further enacted: [That the Comptroller of Finance shall cause to be prepared each month concise information showing the amount of circulating notes issued during the preceding month, and the approximate amount of circulating notes, gold and silver coin, in each state, territory, district, and in the prin- cipal cities of the United States, and also the amount in the various vaults or Treasuries of the United States. Also the amounts expended by the Government in each state, territory or district. It shall also contain the name of each bank, the amount of its capital stock, its reserve fund, and its lossfts for the preceding month, and such other information as shall be deemed of sufficient value to the financial interest of the people to be published. Such information shall be published monthly by the Depart- ment of Printing in pamphlet form, of convenient size for permanent binding in book form. One copy of each issue shall be sent monthly to each of the following parties: To each association doing business here- under, to the President and each member of his Cabinet, to each member of Congress, and to such other officers of the Government as the Comp- troller of Finance may direct. Also to the Governor of each state, terri- tory or district, and to each public library, university or college applying therefor. Any person may have a copy forwarded to his address for one year by first forwarding to the Comptroller of Finance the sum of one dollar. All subscriptions shall end with the December number of each year. Subscriptions made during the year shall be at the rate of ten cents per copy for the remaining months of the year. ] SEC. 34. And be it further enacted: [That as the circulating medium shall accumulate in the Treasury of the Government from revenue or otherwise, it shall be returned to circulation among the people in addition to the ways hereinbefore specified, by pay- ing the current expenses of the Government; by the purchase of suitable grounds and the erection thereon of suitable buildings for post offices and other uses of the Government; by the construction of such other works as shall be deemed by Congress for the best interests of the public. The expenditures shall be made annually, in each state, territory or district as nearly as may be, in proportion to the number of its inhabitants, provided that states already supplied with public buildings shall not receive addi- tional expenditures until the other states, territories or districts shall have had their equal proportions. All public work shall be done by day's labor, at the rate of one dollar and fifty cents per day for eight hours work for common labor. A less rate shall be paid where the laborer is not able to perform a reasonable day's work. The expenditures hereunder shall be as directed from time to time by Congress.] SEC. 35. And be it further enacted: That all notes issued hereunder and all moneys received by the Comp- troller of Finance hereunder shall be deposited in the Treasury of the United States. And the Comptroller of Finance shall keep an itemized account of the sources from which received, with the dates thereof. SEC. 36. And be it farther enacted: [That all improvements on property described in the certificate of organization shall be kept insured by the association to the full amount of its assessed value, payable to the Comptroller of Finance, and all insur- ances on such property, in whatever name insured, shall, in case of loss, 36 be paid by the insurance company to the Comptroller of Finance, to be by hi_a disposed of, with the consent of the Secretary of the Treasury, as they may deem best in the interest of the various parties concerned.] SEC. 37. And be it further enacted: That it shall be unlawful for any officer acting under the provisions of this act to countersign or deliver to any association, or to any other com- pany or person, any circulating notes contemplated by this act, except as herein provided, and in accordance with the true intent and meaning of this act. And any officer who shall violate the provisions of this section shall be deemed guilty of a high misdemeanor, and on conviction thereof shall be punished by a fine not exceeding double the amount so counter- signed and delivered, and imprisoned for not less than one year and for not exceeding fifteen years. SEC. 38. And be it further enacted: That if the directors of any association shall knowingly violate, or knowingly permit any of the officers, agents or servants of the association to violate any of the provisions of this act, all the rights, privileges and franchises of the association derived from this act shall be thereby for- feited. Such violation shall be first determined and adjudged by a proper circuit, district, or territorial court of the United States, in a suit brought for that purpose in the name of the Comptroller of Finance, which decree shall adjudge the association dissolved. Thereupon the affairs of the association shall be closed up by the Comptroller of Finance, and in case of such violation, every director who participated in or assented to the same shall be held liable in his personal and individual capacity for all damages which the association, its shareholders, or any other person shall have sustained in consequence of such violation. Such directors shall thereafter be disqualified for the office of director in any association formed her eunder ; and any president, director, cashier, teller, clerk or agent of any association who shall embezzle, abstract or wilfully misapply any of the moneys, funds or credits of the association, or shall, without authority from the directors, issue or put forth any certificate of deposit, draw any order or bill of exchange, make any acceptance, assign any note bond or draft, bill of exchange, mortgage, judgment or decree, or shall make any false entry in any book, report or statement of the association, with intent in either case to injure or defraud the association, or anv other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent apointed to examine the affairs of any such association, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by imprisonment not less than one and not more than ten years. SEC. 39. And be it further enacted: That the Comptroller of Finance, with the approbation of the Secretary of the Treasury, as often as shall be deemed necessary or proper, shall appoint a suitable person or persons to make an examination of the affairs of very banking association formed hereunder, which person or peions 37 shall not be a director or other officer or employee in any association whose affairs he shall be appointed to examine, and who shall have power to make a thorough examination into all the affairs of the association, and, in doing so, to examine any of the officers and agents thereof on oath, and shall make a full detailed report of the condition of the association to the Comptroller. And the association shall not be subject to any other visitorial powers than such as are authorized by this act, except such as are vested in the several courts of law and chancery. And every person appointed to make such examination shall receive for his services at the rate of five dollars for each day employed by him in such examination, and two dollars for each twenty-five miles he shall necessarily travel in the performance of his duty. SEC. 40. And be it further enacted: That persons holding stock as executors, guardians, administrators or trustees shall not be personally subject to any liabilities as stockholders, but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward, or person interested in said trust funds would be if they were respectively living and competent to act and hold the stock in their own names. SEC. 41. And be it further enacted: [That hereafter no national associations for the purpose of banking shall be formed except under the provisions of this act, and all banking in- stitutions now under the provisions of prior acts of Congress shall be allowed to continue under such acts until their proper term of existence has expired.] SEC. 42. And be it further enacted: [That the present Comptroller of Currency shall hereafter be known as tho Comptroller of Finance, under this act, and under such name, shall with the bureau now established, perform all duties required under tho various acts of Congress relating to currency or a circulating medium ] SEC. 43. And be it further enacted: That all acts or parts of an act in conflict with the provisions of this act are hereby repealed, and Congress may at any time amend, alter or repeal this act. 39 INDEX A Corner on Money 3 A Political Forecast 3 The Stringency of Money 4 The Crash for Want of Money 4 The Financial Situation.. ., 5 Stringency More Apparent 5 A Glut of $20,000,000 6 The Financial Vacuum 6 The Demand 7 Growth of Civilization 7 International Demand 8 Call Loans 8 Volume Required 9 Not Enough Gold and Silver 10 What is the Remedy 10 Not Free Coinage 10 Free Coinage not an Issue 11 Fifty Year 2 per cent Bonds 12 Clearing House Plan 12 Farmers' Aliance Scheme 13 Suggested Legislature 14 A Constitutional Amendment Needed 14 Proposed Amendment 15 As GOOD AS GOLD 16 Gold and Silver Basis 17 An Act of Congress 17 Proposed Legislation 17 Copy of Proposed Bill 23 40 Los ANGELES, JUNE, 1891. The actual volume of money in the United States is : Gold $694,869,680 Silver 485,370,397 Legal tender paper renewed 420,272,225 $1,600,512,402 Senator Stewart says in the June Forum, "The addition to our circu- lating medium up to the present time which free coinage would have caused could not have exceeded fifteen million dollars;" and "The most serious objection to metallic money is the want of a sufficient supply." Free coinage is only a drop in the bucket, and can never replace the necessity of a vast volume of paper money, which is now over $420,000,000 unsecured. The only sufficient and safe system is to place all of the above gold and silver, and all other real and personal property in the United States (pledged by a constitutional amendment) back to an issue of say $2,500,- 000,000, interchangeable legal tender money, issued under a uniform system for the benefit of all, and free from the monopoly of any set of men or corporations. The need of the hour is courageous statesmen who will give the United States the best money system possible, free from all rings, large or small. A PROPOSED NATIONAL MONEY SYSTEM EMBRACING GOLD, SILVER, AND A CURRENCY AS GOOD AS GOLD. BASED ON THE WHOLE WEALTH OF THE NATION, ISSUED BY AUTHOR- ITY OF THE PEOPLE, AND ADMINISTERED FOR THE COMMON GOOD. BEING AN ISSUE OF ABOUT TWO CENTS ON THE DOLLAR OF OUR NATION,Al WEALTH. SECURED BY A CONSTITUTIONAL AMENDMENT. NO INFLATION, NO CONTRACTION, NO REPUDIATION, NO DEBASEMENT OF COINS, NO DEMONETIZATION of GOLD, SILVER or CURRENCY. ELASTICITY AND VOLUME TO MEET ALL LEGITIMATE DEMANDS. EM- BRACING THE BEST FEATURES OF THE UNITED STATES, ENGLISH, GERMAN AND FRENCH FINANCES. PROVIDING A SOUND SYSTEM OP BANK- ING UNDER NATIONAL LAWS. WITH FULL TEXT OF A PROPOSED CONSTITUTIONAL AMENDMENT AND BILL FOR CONGRESS. FROM AN ADDRESS DELIVERED IN SAN FRANCISCO, OCTOBER 16, 1891, By R. M. WIDNEY, LL. D., President Of the University Bank of Los Angeles, California. FOR COPIES OF THIS PAMPHPET ADDRESS THE UNIVERSITY BANK, Los ANGELES. THE LATE SENATOR PLUMB CHANGED HIS FINANCIAL VIEWS. "PACIFIC LAND IMPROVEMENT COMPANY, Los ANGELES, Cal., May i, 1891. "JUDGE R. M. WIDNEY : "Dear Sir Herewith I beg to hand you the letter that I spoke to you about, which I re- ceived from Senator Plumb, in answer to one sent him by me in reference to your proposed bill for a National circulating medium. " Very respectfully yours, " A. P. MAGINNIS." * " UNITED STATES SENATE, WASHINGTON, D. C., March 21, 1891. "A. P. MAGINNIS, Esq., Los Angeles, Cal.: '"My Dear Sir I am in due receipt of your favor of the 3rd., covering pamphlet in rela- tion to the measure proposed by Judge Widney with reference to a National circulating me- dium. No suggestion, however valuable, which involves a complete overturning of existing systems, will ever be adopted. The American people are conservative. The men whom they send here to represent them haye widely different views, and if any progress at all is made it will be by slow degrees. Some day I shall look over the plan proposed, with a view to a more definite consideration of its merits. But there is one part of it which can never under any cir- cumstances meet my views, and that is a maintenance of a gold standard. No amount of paper money based upon gold redemption can ever have any final result except one of disaster. The greater the issue of paper money the greater the trouble which will finally ensue. It will be an anomalous condition of things indeed if, just as England is seriously thinking of coming to bi-metalism, the United States should take a back track in the direction of mono-metalism. "Truly yours, "PRESTON B. PLUMB." PLUMB'S PREDICTION, 1892 REMARKABLE LETTER WRITTEN BY THE SEN- ATOR, JUST BEFORE HIS DEATH. LEAVENWORTH, Kan., January 17. The Times today publishes a letter written by the late Senator Plumb, just before his death, to that paper. In it he said that he was glad the Times was continuing to discuss financial questions. "There is abundance of evidence," he wrote, "that this question is coming to the .front in a National way. In fact, the feeling is very strong to shift the issue from tariff to currency. Something will happen one of these days which will open the eyes of a good many people. Before this Congress is over, m my judgment, you will find a large majority of Re- publicans, perhaps all, voting for a much more comprehensive measure in the direction of en- larging the currency than was ever yet proposed."^ the Associated Press. STEREOTYPED AND PRINTED BY THE TIMES-MIRROR PRINTING AND BINDING HOUSE LOS ANGELES PREFACE. This financial question has the attention of the Nation. Congress is the Nation's jury. The people are arguing theories and suggesting remedies, collecting statistics and drawing conclusions. The xrase is being argued by farmers, mechanics, tradesmen, laborers, bankers, professors, statesmen, money lenders, money users; by men interested in selfish schemes of finances, and by philanthropists. All classes are show- ing how they are affected and what would be the remedy for them. Never before, and probably never again, will this question be so exhaustively analyzed and understood as in the present controversy. This will be the occasion for Congress to give the Nation a system of finances more perfect than any nation has ever yet had ; one that will in safety and abundantly meet the wants of the people, in justice and equity to all, for centuries to come. In the following pages we briefly discuss most of the leading financial fallacies; and also show the financial statistics of the world, of the leading nations, and of the United States; showing that there is not enough money in existence to run the business of the world. Showing also that in the United States the demand is increasing and the supply decreasing, and that either our circulating medium must be increased sufficiently to meet the wants of our growing country, or the business of the country must be killed off until it is within the compass of our present circulation. A proposed remedy is suggested, in the form of a constitutional amend- ment and act of Congress, with full text of each and comments thereon. iv PREFACE It embraces the soundest principles of the systems of the United States^ England, France and Germany. Your careful attention is called to this matter, and you are earnestly re- quested to give your aid to produce the best possible results in Congres- sional legislation. The correspondence with the late Senator Plumb, formerly on Senate Committee on Currency, printed on a preceding page, is a forcible illustra- tion of the soundness of the principles advocated in the following pages. He approached the subject with positive antagonistic views, emphatic- ally expressed ; yet, after a careful study of the measures proposed, he iti his prophecy recognizes the soundness of the principles of financial neces- sity and reform set out in this pamphlet. The minds of many are so preoccupied with historic financial danger of the past, that they at first impulse are hostile to any proposed measure. The object of the writer has been to so prepare this system that any student will see that it is based on the soundest and most thoroughly tested financial principles of the centuries. CONTENTS. CHAPTER I. WHAT Is MONEY? 9 FIAT MONEY 10 PURCHASING POWER OF MONEY 10 WILDCAT MONEY 10 STATE BANK NOTES NATIONAL BANK NOTES n UNITED STATES NOTES 12 COMMERCIAL VALUE OF COIN 12 GRESHAM'S LAW 13 THE REPRESENTATIVE POWER OF MONEY 14 THE USE OF MONEY 14 LOST LABOR 15 CHAPTER II. MONEY SUPPLY 16 IN THE UNITED STATES 16 COIN PER CAPITA IN Six NATIONS 17 DEBT PER CAPITA 18 NATIONAL LOANS ASKED FOR 18 FLOW OF COIN 18 OPPOSING FORCES 19 CHAPTER III. THE VOLUME REQUIRED 20 WANT OF MONEY 20 BANK STATEMENTS 1890 21 VOLUME OF BUSINESS 21 CALL LOANS . .. 22 VOLUME OF MONEY NEEDED FOR UNITED STATES 23 A CORNER ON MONEY 23 FOUR ALTERNATIVES 24 INTIMIDATING THE NATION 24 DEMONETIZATION OF PAPER 24 vi CONTENTS CHAPTER IV. REMEDIES 26 FREE COINAGE 26 CHECK AND BANK-CREDIT 27 50 y. 2 % BONDS 28 CLEARING-HOUSE PLAN 29 LAND LOANS 29 A NATIONAL BANK OF ISSUE 30 GOLD AND SILVER BASIS 30 SUGGESTED LEGISLATION 31 A CONSTITUTIONAL AMENDMENT 31 COPY OF CONSTITUTIONAL AMENDMENT 32 COMMENTS 32 As GOOD AS GOLD . 33, GENERAL MONEY PLAN OF BILL 34 CHAPTER V. PROPOSED ACT OF CONGRESS 36- COPY OF BILL 39. NEW SECTIONS (ISSUE) 40 " " (RETIRING) 41 " " (CANCELLATION) 41 " " (BANKS) . 44 BULLETIN OF FINANCE 54 RECIRCULATION OF MONEY 54 INSURANCE 56 NON-TAXATION OF CURRENCY 58- POLITICAL DANGER. If the Alliances, or Third Party, should drop all other issues, for the present, and adopt a National platform limited to one plank, embracing an ample and sound money system, they would sweep the next campaign. The political party that offers a safe increase in currency to relieve the wants of the people, and to carry on the business of the Nation, will be offering a premium for every vote. An increase of $20 per capita, on a population of 62,000,000, is a bid of about |ioo per vote. The laboring classes and those borrowing money constitute about nine- tenths of the voters, and with this as a leading issue they would vote in- overwhelming majorities for such a- measure in utter disregard of present party lines. It will certainly be made an issue, unless one of the dominant parties shall pass such a law at the next session of Congress. But if the present parties show the people " how not to do it " by wasting the time in discussing insufficient, sham and subterfuge plans to deceive the people, they will certainly pay the penalty of utter political defeat, if the third party goes before the people with only the money question as an issue. The most critical period in the history of present political parties that has arisen since the war will occur in the 1891-2 session of Congress, and on this question of'the increased volume of money. FROM SENATOR SHERMAN. "MANSFIELD, O., June 22, 1891. "HON. R. M. WIDNEY: "My Dear Sir Your interesting letter of the i3th inst. has been care fully read in connection with your address before the Commercial Congress at Kansas City. Like you, I have been a student of all these financial questions, and I agree with you that the free coinage of silver will not give the slightest relief to either the real or fancied difficulties of the time. I agree that the currency question should be dealt with entirely by the United States and not by the states, and that some general system must be de- vised to supersede the National banks : which, though excellent in many respects, must surrender their circulating notes when the Government bonds are paid. I also agree that only gold and silver can be made the ultimate standard of value ; but that for convenience of circulation, credit money in some form must exist to an amount necessary for the business of the country ; that it must be promptly redeemable in gold and silver, and that it should rest alone upon the authority of the Government. As to a constitutional amendment, while it is the best way to accomplish a thor- ough change in our financial system, I do not think that it is practicable under the terms of the Constitution, which require the consent of two- thirds of both houses of Congress and three-fourths of the states. A change in the Constitution can only be brought about by some great convulsion or war. Whether Congress can, under its limited authority, devise any Na- tional system of currency, is a question of doubt. Certain it is that it can- not do it now, while the wild ideas of issuing an almost unlimited amount of paper money, and loaning it to the people at 2 per cent, prevails. "All that I can say now is that I will give the subject, whenever it comes before the Senate, the most careful consideration, and express my gratifi- cation that the financial question has attracted the attention of gentlemen so well able to discuss it as yourself. Very truly yours,. "JOHN SHERMAN." CHAPTER I. vVHAT IS MONEY? FIAT MONEY PURCHASING POWER OF MONEY WILDCAT MONEY- STATE BANK NOTES NATIONAL BANK NOTES UNITED STATES NOTES COMMERCIAL VALUE OF COIN GRESHAM'S LAW THE REP- RESENTATIVE POWER OF MONEY THE USE OF MONEY LOST LABOR. Many definitions of money have been given. But all either include something that properly should be excluded, or exclude something that should be included. What is that peculiar function or power that alone constitutes an article money, and which when wanting leaves the article not money? When everything not essential is removed, what is left ? I recall no definition wherein the words used include all that should be included and exclude all that should be excluded. I submit that the es- sential element of money is its power to extinguish a debt at the will of the debtor, without the consent of the creditor, at a fixed unit of value. To illustrate: Jones owes Brown |ioo. He tenders him a gold bar, nine-tenths fine, of the value of $100. Brown refuses it. Jones tenders him two, or fifty such bars. Brown refuses them, the debt is not extin- guished. Jones, having read the literature of the coin men that money is gold or silver discs stamped of certain weight and fineness, procures dies and stamps and reduces his bullion to discs of standard weight and fine- ness, embellished with the usual designs of ten- and twenty-dollar pieces. He tenders these in payment of the debt. They are refused, the debt is not extinguished. The fiat of the Nation is not on his discs of standard weight and fineness. They are not money. Jones now tenders him $50 in greenbacks, $25 in silver certificates and $25 in United States gold coin. Brown still refuses to accept the mixture, demanding all in United States gold coin. Jones deposits the above tender in Court or in any bank for Brown, and the debt is extinguished at the will of the debtor and without the consent of the creditor. Why? Because the fiat of the Nation says that it is a legal tender in satisfaction of all debts, public and private. To illustrate again : while in the United States Jones tenders to Brown English sovereigns, or gold francs, or gold marks, to the value of $100. Brown refuses to receive them, and the debt cannot be extinguished by them without his consent. These coins are not money in the United States ; but they are money in England, France or Germany respectively. Why? The fiat of those nations make them money, a legal tender in satisfaction of debts in their jurisdiction. But the fiat back of the sovereigns, francs and marks does not extend to the United States ; hence they are not money in the United States only bullion or an article of merchandise. So also NATIONAL CURRENCY only the fiat of the Nation, and the fiat of the Nation is thus held as col- lateral security for the National bank promissory note. Instead of putting \hefiat back of a bond, and the bond back of a bank note, put this fiat back of the note direct and leave the middle-man bond and bank out as useless surplusages. Yet many presidents of National banks publicly express their contempt for fiat money: not knowing enough of their own banking system to realize that every dollar of their bank note circulation vsfiat and is secured by the fiat of the United States. GREENBACKS. Now take up with feelings of respect a modest-looking greenback, reads : It $5 THE UNITED STATES will pay the bearer FIVE DOLLARS. % Washington, D. C. $5 W. S. ROSECRANS, Registrar. I. N. HUSTON, Treasurer of the U. S. Turning it over you read on the back the Nation's fiat: " This note is a legal tender at its face value Jor all debts, public and private, except duties on imports and interest on the public debt. ' ' This scornfully-spoken-of fiat alone makes the innocent piece of paper money u as good as gold." This is the fiat back of which are 2,500,000,000 acres of land, with all the cities, villages, banks, farms, railroads, manu- factories and improvements thereon, including all the gold and silver and enlightenment, inventive genius, push, energy, and fighting capacity of 62,000,000 people. Enough oj this fiat money to run the business of the Nation, on a system free from the strangling grasp of foreign or domestic rings, syndicates or clearing houses, is what the people want. And now that the American people have started in on this job, they will not let up until it is as thoroughly finished as the revolutionary or Mexican war or the Mafia. He is dull of ear indeed who does not hear the battle cry of financial freedom from every farm, village, city and workshop in the land. Posterity pleads, with silent fear and outstretched hands, that this generation shall not allow the fetters of financial slavery to be forged in its day and riveted upon their hands in infancy, dooming them to the tenancy of Ireland or the slavery of English workshops, with compensation that prolongs the pangs of starvation in the stinging pain of winter's cold. COMMERCIAL VALUE OF COIN. Much confusion has arisen, in the speeches and writings of financiers, from not distinguishing between the commercial value of the article used NATIONAL CURRENCY 13 for money, and the real money value. As shown, the money value is only the fiat of the Nation. It may be impressed on gold, silver, copper, paper, or any other material. The material will differ in its commercial value, and the commercial value will increase or decrease as the commercial de- mand for the article varies or as the volume of the article increases or de- creases. In 1834 the supply of gold was in excess of silver, and the silver in a dollar advanced to $1.03. In 1878 the supply of silver exceeded that of gold, and the gold in a dollar advanced to #1.37: or it might be said that the value of silver fell commercially to 73 cents in the silver dollar. The com- mercial value of the paper dollar is nothing. Yet the fiat money value of the gold, silver or paper dollar remained the same. Why? Because the United States, having placed its fiat on the three, is practically bound to make good the difference between the highest one and the two lower ones. That is, the United States receives a gold dollar in value when it first pays out a paper dollar, and when the paper dollar is received it returns for it the value of the gold dollar. The same occurs when gold or silver is issued as money. The Government is responsible for the difference be- tween their commercial values. Legislation never did and never will keep the commercial value of gold> silver, copper, or iron together, on any ratio. Legislation can only agree that the Nation shall pay the difference. It is this agreement alone of the Nation to pay the difference that keeps over $400,000,000 silver certificates on a par with gold. It is equally potent to keep currency on a par with gold. The published statistics issued by the department in 1891 show that the ratio between gold and silver has varied for over 200 years from 14.14 to 22.09. These variations existed under free-coinage laws as noticeably as at other times. The laws of the United States fixed the ratios at 16 to i : yet, as a matter of fact, at no time in the history of the Nation was the commercial ratio 16 to i ; it was always above or below it. (See Senator Jones's speech of January, 1891, pp. 15 to 16.) Therefore, to have a money of fixed value, the article used should have no commercial value : for the variation of the commercial value disturbs the money value. If the commercial value of gold goes up in Europe, as it recently did, gold money will leave this Nation by the hundreds of millions. If the commercial value of silver goes up in Europe, silver money will go there, as in 1834. GRESHAM'S LAW. The above shows the true law, which is imperfectly stated by Gresham. He says : " Bad money will expell good." This is not the law. The law above shown, and which he attempts to state, is this: The article used f of money, having the highest commercial value in any market, will seek thai market. This rule, when analyzed, is the common commercial rule that any article seeks the highest market. The danger in fixing our money fiat on gold or silver is the danger of the commercial article carrying our money fiats out of the country on its commercial wings, leaving us short of money : ? 4 NATIONAL CURRENCY as witness the year 1891, when $80,000,000 gold, on account of its commeiv rial value, left us for Europe. It was not bad money driving good money out : it was the commercial value of gold advancing beyond its money value, and seeking the best market. Subsequently gold returned by the millions, while silver was being issued by the millions per month: showing that silver did not drive gold out. THE REPRESENTATIVE POWER OF MONEY. We said that the essential element of money is its power to extinguish debt, at the will of the debtor without the consent of the creditor, at a fixed unit of value. Money therefore is a unit of value for all property, labor or damages. It is the unit representative of a day's labor, or of mental service, or land, or goods. Its unit is multiplied or subdivided so as to represent multiples or subdivisions of property or labor. It is a legal evi- dence of units of value of labor or property : readily exchanged for these things, to those who want this convenient evidence for the purpose of exchanging it again for other things they want to possess. The representative element of money is the fact that it represents the will or final mandate of society on the unit and standard of value and in extinguishing debts at the choice of the debtor. As a result of this, money represents, or is evidence of, the value of all things that human beings place a value upon ; and is therefore accepted as the common medium of exchange by society. Gold and silver coin and bullion have a high commercial value in a small bulk and convenient form, and for that reason are accepted generally as a common medium of exchange. The less the fiat of a nation is worth, the more reliance is placed on the commercial value of the article used ; hence uncivilized nations, having no^atf, use gold and silver or some other merchandise for purposes of exchange. THE USE OF MONEY. The most important use of money is to represent subdivided or small values. No person in society wants a very large amount of any one thing at any one time ; yet all want small quantities of many things at a time. Money, representing a fixed unit of values, can be conveniently cared for and kept without loss, and can be paid out for small quantities of com- modities as needed. It makes it possible for men of property to employ day labor and pay for it in money. There are today over 1,000,000 idle laborers in the United States, and men with property enough to employ them. But the laborers cannot be paid in property. With enough money in circulation these million idle laborers would earn say $1.50 per day, or $1,500,000 per day, or $450,000,000 per 300 days. This sum would be spent by them for food and clothes and comforts of life and homes. This would almost relieve every case of destitution in our whole land ; would give additional market for all farm and manufactured products, and would soon pay off th-e debts of the people. NATIONAL CURRENCY 15 LOST LABOR. The loss of this labor is irreparable. An idle day is gone forever. It can never be recalled, or utilized. The laborers have a loss as real as if their daily wages of |i,5oo,ooo were burned up at the end of each day. One of the greatest uses of money is to save this labor. To save this labor is to increase the products of the Nation, and also increase the amount consumed. Instead of scanty consumption of neces- saries, the laborer will have means for a better supply of food and clothing. The amount of labor lost, as above shown, would in two years levee the Mississippi, build the proposed Hennepin Canal, complete the Galveston Harbor and build the Nicaragua Canal. It would annually complete current public works, develop the now dor- mant private industries of the people, and out of the earnings establish happy homes for all thrifty laborers. Yet all this labor is daily and annu- ally destroyed, to the entire loss of humanity. RESOLUTIONS BY Los ANGELES CHAMBER OF COMMERCE. SENATOR SHERMAN'S LETTER. [From the Lot Angeles Times, December 12, 1891.] At A meeting of the Chamber of Commerce last evening Judge R. M. Widney cflered the following resolutions, which received the unanimous vote of the California Bankers Association at Los Angeles, March 13, 1891, and it was unamimously endorsed by a vote of the Chamber : Resolved- '\ ii..' lliis Convention respectfully request Congress at its next ses.si n t<> -liform money system for the people of the United States, \\- i ; liar as a standard or unit of value, using gold, sil- ver ami curi r t circulating medium, in a sufficient volume to fully meet ; . ith the growing wants of the business of the country ; found ii". P currency upon the wealth of the whole Nation ; making gold, silvtM and currency a legal tender and exchangeable at par on de- mand, and fixing by a Constitutional amendment the legality of such a cir- culating medium, and preventing the dangers of inflation, contraction, repudiation or change in the standard of value. CHAPTER II. MONEY SUPPLY. THE WORLD'S MONEY SUPPLY IN THE UNITED STATES COIN PER CAPITA IN Six NATIONS DEBT PER CAPITA NATIONAL LOANS ASKED FOR FLOW OF COIN OPPOSING FORCES. The world's coin and bullion is : Gold $3,984,256,589 per capita $3 22 Silver 4,512,754,655. ..." " 3.65 Total $8,497,011,244 ' $6.87 The annual averaged product for eight years, 1881 to 1888, is: Gold $108,376,258 per capita $.08 Silver 121.389,242 " " .09 Total $229,665,500...." " $.17 The world's consumption of gold and silver annually in the arts, as nearly as can be had, is : Gold $64,000,000 per capita $ 05 Silver 21,660,000 " " ,02 Total $85,660,000 " " $.07 Leaving the small sum of $144,005,506, or 10 cents per capita, to be added annually to the world's working coin capital. The business of the world cannot be run on this short supply. The nations therefore have supplemented the use of gold and silver money by the issue of some $2,178,642,376 of unsecured paper money, or pure fiat money, in order to conduct the world's business. IN THE UNITED STATES The facts are : Gold $694,869,680 per capita $11.00 Silver 485,370,497 " " S.oo Total $1,180,240,177...." " $19.00 The annual product in the United States is : Gold 132,976,000 per capita $ .53 Silver 64,768,730...." u 1.03 Total $97,735,730...." " $1-56- NATIONAL CURRENCY j 7 Of this there is used for industrial purposes: Gold $16,697,000. Silver 8,767,000. Total 125,464,000. This leaves for annual coinage purposes, both of gold and silver, $72,271,730, or per capita $1.10. The increase of population is about 2,000,000 per year, so that the annual output of gold and silver would only yield about $36 per capita for the annual increase of population. It could not possibly, therefore, increase the present $19 per capita, for the other 64,000,000 people. The latter can only be done by a currency issue. The following conclusions are safely deduced from the foregoing facts: The per capita of money in the world is $6.87. The annual increase is about 10 cents per capita. The per capita in the United States is $19, and the increase $1.10. Therefore the United States has about three times its legitimate propor- tion of the world's gold and silver. The conclusion is that as the world rises to higher civilization and com- merce, coin money will flow from us into those nations, equalizing the distribution of gold and silver, and constantly draining us of those com- modities, and lessening our volume of money. Notwithstanding the fact that the United States has $19 in coin, it has been compelled to issue an additional $420,372,225 in paper money, a per capita of $6.72. In gold and silver coin European nations have as follows : England $ 650,000,000 per capita $18.00 France Germany 1, 600 .000, COO. 6 ' j GOO OOO ... Russia 250,000 ooo . Italy 2OO OOO OOO United States i i So 240 177 Average. . All other nations 2,971,771,067 ' " It will be seen at once that the six nations above named have vastly more then their per capita of gold and silver. The other nations, having only $2 per capita, will steadily drain those six nations until more of an equilibrium is reached. Here is one of the causes of the great money stringency in them. And there is no permanent or possible relief on the coin basis. India alone in recent years has absorbed over $1,000,000,000 in gold from the above six nations. Rand-McNally's Banker's Magazine for August, 1891, says: '.'With the exception of England, perhaps, every country in Europe is practically insolvent." The debt of the nations of the world is about $25,636,075,840 above their sinking fund. 18 NATIONAL CURRENCY The debt per capita of the leading nations is : France $116.25 England 87.79 Russia 30.79 Austria-Hungary r . 76.84 Italy 84.00 United States 14.63 From this it will be seen that the demand for money in those foreign nations is greater than in the United States, so far as the public debt is concerned. Money will there command a higher price, and will flow from us to them. Foreign nations are, or recently were, asking loans as follows : Austria-Hungary $100,000,000 France (taken) 182,000.000 Mexico 40,000,000 Argentine Republic 500,000,000 Other South American states 725,000,000 African Mines and Trust Companies 350,000,000 Total $1,897,000,000 Other foreign nations want fully aS much more. It will be seen from the above that foreign nations are in the market bidding for our coin money. They must have it at any price to meet their obligations, and will draw from us. We are also bidding for their coin. As at an auction, it is going to the highest bidder. Each is financially fighting the others to get coin from them to save itself. The commercial value of gold and silver coin causes them 10 constantly flow to the place of highest market value. Since writing the above my attention has been directed to a recent July circular of Henry Clews & Co. He says : " On all legitimate grounds, exports of gold should now certainly end; but natural causes for the ebb and flow of the precious metal between this country and Europe are by force thrust on one side by the new plan adopted by Paris, London and Germany to treat it merely as so much merchandise in connection with their dealings with this country: hence their purchase at full asking price, in the same way as cotton, wheat or any other commodity. It is impossible, therefore, to judge how much or how little will hereafter be forced out of the country." We can safely predict that the outflow of gold will continue so long as its commercial value is greater in the foreign market. Several times has the United States reduced the quantity of metal in coins to keep them from going abroad on account of a higher foreign commercial value. As a scientific fact, the money article of a nation, for home use, should be devoid of any commercial value. Its Jiat value would cause it to remain at home, keeping a steady volume for trade. It is evident, from a general view of the facts, that no nation is in a position to give permanent financial relief to any other. The only remedy NATIONAL CURRENCY 19 is for each nation, by reason of its sovereign power, to provide its own sufficient volume of money. This power is vested in each nation ; and why should any nation leave this power unused as to its own relief and whiningly beg other nations to loan it money ? Why pay to use foreign money and let our own power to issue money lie dormant? We pay annually over $60,000,000 (nearly the annual money yield of our mines) for the use of some $ 1,500,000,000 of foreign money ; whereas, we as a people have the power to issue this money for our own use, and iree of cost, as a nation. A bankers' magazine, published in the United States by a foreigner, whose editor wrote me, "This editor is in direct communication with lead- ing bankers in England to prevent the debasement of coin (free coinage) and a paper money based on land (Widney's currency)," says in a recent issue : "The English own the United States in a far more real sense than ever George III did or could. They own the railways, the mines, the manufactories. What do they not own? " The heaviest opposition to a sufficient and complete money system in the United States will come from English banks and financial institutions and their cooperators in the United States. England has a very soft snap in loaning her money at a high rate of interest and buying up the best properties in the United States. She will fight hard to keep us where we must use her money and pay her for it. IT is anticipated that the leading type foundries of the United States will be in the hands of a British syndicate by the middle of February. The articles of incorporation of the syndicate have been drawn up under the laws of New Jersey. Los Angeles Times, Jan. 31. CHAPTER ITI. THE VOLUME REQUIRED. THE VOLUME REQUIRED WANT OF MONEY BANK STATEMENTS, 1890 VOLUME OF BUSINESS CALL LOANS VOLUME OF MONEY NEEDED FOR UNITED STATES A CORNER ON MONEY FOUR ALTERNATIVES INTIMIDATING THE NATION DEMONETIZATION OF PAPER. This general picture of the world's supply and demand for money, clearly shows that the nations having more than their per capita of coin will continue to lose more of it : and that the nations most in debt per capita must draw from those least in debt per capita. Both of these laws are operating against the United States, and will con- tinue to deplete us of our coin money. Another law is operating with great force : our Nation is rapidly increas- ing in population, in commerce, in production, and the building-up of civilization on an area of 3,400,000 square miles oi land. To do this re- quires a vast volume of money. The financial cinch can be expressed in a few words. Our demands for and use of money is rapidly increasing, and our supply decreasing'. Here is the storm center. This is the threatening danger. And we can have no permanent safety from financial storms while these conditions continue. Either our circulating medium must be increased sufficiently to meet the w~nk of our growing country, or the business of the country must be killed off until it is within the compass of our present circulation. What are the historic facts? Legitimate industries, representing sufficient property value, as security for loans or credit, have to shut down, for want of money. The following Associated Press dispatches are a sample of the con- dition of the country : " CHICAGO, August 20. The American Wheel company, said to be the largest manufacturers in the world of wheels for vehicles, is insolvent. The total assets are $4,105,000, and the liabilities $1,800,000. Stringency of the money market and inability to secure the extension of obligations caused the collapse ; twenty-five hundred employes are made idle." "LOUISVILLE (Ky.), August 27. The Bremaker Paper company as- signed today. The assignor says that the liabilities are about $250,000, and the assets about $750,000. Financial stringency caused inability to meet maturing notes." The above are samples of vast numbers appearing in the daily news. Laborers by the million desiring work are idle, while employers with abundant property resources want their labor but cannot get it, for want of money. NATIONAL CURRENCY at Debtors' having property of much greater value than their debts cannot pay their debts, for want of money. The unused labor of the last five years absolutely lost, destroyed, annihilated would have paid off every farm debt in the United States, as well as the whole debt of the Nation, states and counties. Yet all this was lost, for want of money. A few combinations of men have been able to corner the limited volume Of money, thereby depreciating the price of property, enabling creditors to confiscate the property of the debtor. For want of money : The failures in 1890 were $ 190,000,000 Shrinkage in stocks and bonds in New York. . . 600,000,000 Shrinkage in values in the United States 10,000,000,000 Banks called in over 100,000,000 The United States Treasury paid out over 200,000,000 Banks issued panic certificates 30,000,000 United States Treasury deposited in banks. . . 30,047,118 Total $11,150,047,116 This equals nearly one-sixth of the whole wealth of the Nation. The July, 1891, Treasury statement shows that if it, and all of its branches, were left bare, only $51,552,064 could be added to the circulation of the country. The Treasurer "has abandoned the idea of redeeming $40,000,000 or more of the United States bonds, if it can possibly be avoided, for the reason that it will reduce to a most inconvenient point the working balance in the sub-treasuries." State, city and county funds are drawn out of their legal vaults and deposited in banks, all over the country, to help stem the tide of disasters occuring for want of money. The Treasury report for December, 1890, shows the following facts : The 8050 banking institutions in the United States National, state, private and savings show : Due depositors $4,603,844,157 Cash in these banks : Gold coin $ 99,811,011 Silver 28,811,478 Paper money 349.694,405 Total $478,316,894 At the same time these banks have loaned out to the people $3,893,- 957.799- Here was an aggregate credit business of $8,497,8oi,956,done on a money basis of $478,316,694, or 5 cents on the dollar ; or 10 cents on the dollar to meet the liabilities. The volume of business in the United States the same year was over $170,000,000,000. The volume of money in the United States was $1,600,- 000,000, or i cent on the dollar for business. But the actual money for 22 NATIONAL CURRENCY business was not over $500,000,000, or one-third of a cent on the dollar of the volume for business. The actual money in a country holds the same relation to the business volume that the cash in banks holds to the deposits. When the cash reserve runs too low there is great danger. The cash on which the business of the United States has been done became too small ; the result was financial disasters of a magnitude and number never before known in the history of the Nation. This condition of finances drives our banks to the system of CALL LOANS or thirty- or ninety- day paper. It would be unsafe to make time loans > as any sudden demand or stringency might occur, forcing the bank to call its money in. Who can take a call loan or a thirty- or ninety-day loan and plant an orchard or develop a farm, build a railroad, open a mine, or establish any industry ? As a result, a vast per cent of all industries all over the Nation are at a standstill for want of money on time loans. The December, 1890, report to the Comptroller from all of the National banks shows less than 2 per cent above a 25 per cent reserve. This leaves only $50,000,000, in all the banks, to do business with. Of this, the same report shows that over $30,000,000, is United States Treasury money. This leaves practically only about $20,000,000 for active use. This whole sum would not suffice to safely start a single railroad enterprise. During the year 1891 the banks have been strengthening their reserves by calling in money from the channels of trade. The banks of England, France and Germany have drawn in over $80,000,000. The banks of the United States are rapidly drawing in millions more. There is not enough to go around; and the stronger, in self protection, are drawing it away from the others. These facts are not overcome by the other fact that a few score of men or corporations have all they need, or even a small amount to spare. The question is, Have they enough to spare to meet the want of the whole popu- lation and business of the country? If so, why do they not put it in circu- lation ? The volume of money should be ample to meet and overcome all the foregoing demands. They are legitimate objects to be cured by an increased volume. Generally the volume should be such that the United States Treasury could hold a working reserve of say 25 per cent of the National circulation. So also the banks could hold a 25 per cent reserve of deposits. So also the state, city and county money could rest in the public vaults for that purpose. Hoarding and loss by accidents could be estimated and provided for. In addition to the above reserves, there should be ample working volume in circulation among the people, sufficient for all legitimate demands, time loans as well as call loans. NATIONAL CURRENCY 93 More accurate figures would be suggested by the following statistics : State and National Banks have deposits (December, 1890), $2,516, 179,80^ Take this as the volume of the issue and we have say : 25 per cent for United States Treasury $629,044, 951 25 per cent for bank reserves 629,044,951 State, county and city money 196,483,232 Total reserve $1,454.573,232 Deducting the reserve from the proposed volume of $2,516,179,807, leaves $1,061,606,673 for active use. If the above reserves were taken from our present volume of $1,600- 512,402, it would legally leave only $145,939,268 for use. There is, however, an encroachment on public funds and the United States Treasury to prevent a widespread financial calamity ; about $400,000,000 being thus used, giving the 62,500,000 people of the United States a working money volume of say $550,000,000, or about $8.80 per capita. The suggested issue would first put all reserve and public money where they legally belong, and also increase our active working^ volume $511,606,- 673 over what it now is. A CORNER ON MONEY. The owners of money naturally do not want the volume increased. While it is limited they can control the rate of interest and the Value of all labor and products, and can dictate the price of all property. A corner on railroad rates is dangerous : so is a corner on wheat, or corn, or sugar, wool, or any of the staple products. But of all dangers a corner on money is the worst. A corner *on money is a corner on all the other corners combined, and can control the social and political as well as the producing, labor and property interests of the Nation. Producers, pressed to pay cost of living and of production, must sell in the wholesale market. A corner in money enables only a few to purchase, and they fix the lowest price and pay out the least amount of money to the producer. The producer is compelled to buy at retail all of his various articles of consumption, directly or indirectly, from the capitalist, who, now having a corner on the products, charges the former producer the highest price for consumption. Pharaoh of old bought up all the grain crop of Egypt during the seven years of plenty at a low price, and cornered the grain crop. Then, during the seven years of famine, advanced the price and sold the cornered grain to his subjects, until at the end of the first year he had all of their money. During the second year he took in all of their flocks and herds for bread. The third year he bought all of their lands and all of the people. He now had, from the original corner on money, cornered his whole nation. So he leased them the lands for one-fifth of the crop forever. Then the nation, to use a common phrase, " busted uj>." The tenantry and laborers of England and Ireland are practically today sold into bondage to the money Pharaohs of England. ^ NATIONAL CURRENCY On "Black Friday " a few men in New York cornered the money fc and only for Government aid would have wrecked whole industries. Government aid in December, 1890, alone prevented a nation's calamity under similar circumstances. And now, with over $80,000,000 coin exported and the United States Treasury practically depleted and the financial reserves on a strain, what will save from the recurrence of a " Black Friday"? Secretary Windom said, in his last address, at the New York banquet : "Had it not been for the peculiar conditions which enabled the United States Treasury to disburse over $75,000,000 in two and one-half months last fall, the stringency would have resulted in widespread financial ruin." It is asserted that a few men in New York control enough money on call to precipitate a panic, or close most of the banks, at any time. Money owners will fight : First To make money scarcer, by retiring National notes. Second To keep the finances as they now are, saying matters are good enough. ThirdWill try to shape legislation so as to place the money issue under their control at some concealed point. Fourth Will use every strategy to delay legislation from year to year, in the mean time reaping rich harvests from forced failures. It was published in the newspapers at the time, that when the Adminis- tration was arranging to put out the United States bonds, in the war crisis, the money power, in a contest, said to Secretary Chase : "Unless you do this as we demand, we will throw our influence in favor of the Con- federacy, float their bonds, and break the United States in two." Their dictation was acceded to at onqp, to the Nation's loss by the millions. "When the Geneva award had been made and the United States had $15,000,000 to its credit in the vaults of the Bank of England, Boutwell, then Secretary of the Treasury, wanted to bring the gold over to this country ; but, according to his own statement, the bank notified him that if any attempt were made to bring that gold over bodily, in specie, the whole power and influence of the Bank of England would be arrayed against the proceeding." And Boutwell was compelled to obey the orders of the Bank of England. While we are' now at peace, we should so establish our finances that our Nation cannot be cornered in time of danger. DEMONETIZATION OF PAPER. The free-coinage advocates have very forcibly shown, that some influence demonetized silver in 1873, by legislative shrewdness, in full view of, and by act of, Congress. The scheme was of further reach. It contemplated demonetization of paper money, in this way : allowing the United States bonds to expire, and thus retiring the National bank note circulation of some $300,000,000, and then preventing the Nation issuing legal tender. This would reduce our total volume to about $600,000,000 gold coin. NATIONAL CURRENCY 25 The scheme seems to have been far advanced, when the free-coinage men discovered the situation and succeeded in increasing our volume by about $370,000,000 silver certificates. The fight of the contractionists was thorough, but they went down before an honest Congress, as soon as Congress understood the situation. The great issue now is, Shall paper money be demonetized by non- action or in an open fight? It will readily be seen, as a conclusion from the facts stated in the three preceding chapters, that it is the volume of money that regulates prices and business : and not the material out of which the money is made, nor the commercial value of the article used to receive and carry the Nation's fiat. The great struggle by each nation and community is to get and keep a sufficient volume. On this depends the price and stability of all other things, except as affected specially by supply and demand. It is of small concern to keep gold and silver at a steady commercial price. The worry is to keep all the other millions of articles at a steady price. Are the free-coinage advocates willing to demonetize paper? After the public censure they have given the gold men, relating to the demonetization of silver for selfish purposes, will they advocate the demonetization of a larger sum of paper money ? Recent utterances of some of the silver advocates would indicate such to be the tendency. The most critical period in the history of the present political parties that has arisen since the war will occur in this session of Congress % and on this question of increased volume of money. CHAPTER IV. REMEDIES. FREE COINAGE CHECK AND BANK -CREDIT PLAN 507. 2% BONDS CLEARING-HOUSE PLAN LAND LOANS SUB-TREASURY A NA- TIONAL BANK OF ISSUE GOLD AND SILVER BASIS SUGGESTED- LEGISLATION A CONSTITUTIONAL AMENDMENT COMMENTS. As heretofore shown, there is not enough gold and silver in the world to supply a sufficient volume of money for the world. As a nation we have three times our pro-rata, while other nations have a debt per capita many times greater than ours. They must have coin ta pay interest and principal. Hence both of these causes operate to send our coin abroad. This fluctuating commercial value of gold and silver will disturb our volume. The output of mines is hopelessly insufficient to meet the demand. The only remedy is to issue a sufficient volume ot paper money by authority of the Nation, guarding it against inflation, contraction, or repu- diation. Numerous measures have been suggested by which an increased vol- ume of money may be had. If any class of persons or corporations can have the law formed so as. to give them the control of the volume, or of its circulation, they will spare no effort to accomplish that object. Many of the remedies proposed, either intentionally or otherwise, con- tain very objectionable features : by which classes or corporations will reap rich harvests, at the cost of the public, and no general relief be given to the Nation at large. Among these we call attention to the following : FREE COINAGE. Free coinage of silver cannot give the required volume. The advocates allege that no foreign silver will come into our mints under free coinage. The act of July 14, 1890, requires the purchase of our own silver product. Senator Stewart, of Nevada, says in the June Forum: "The addition to our circulating medium up to the present time which free coinage would have caused would not have exceeded fifteen million dollars"; and, "The most serious objection to metallic money is the want of a sufficient supply.'* Most of the advocates of free coinage concur in the same facts. The only thing left to contend for is, Shall the people, as at present, buy the silver for money use at 97 cents per ounce ; or shall they, by free coinage, raise the price against themselves to $1.29 per ounce ? Additional price paid for silver will not materially increase its volume. NATIONAL CURRENCY 2? The great objection to free coinage is that our annual product available for coinage in the market is worth 146,000,000, but when coined is worth $64,000,000 ; a profit of $ 18,000,000 added by the mint. The real contest is, Shall the people have the advantage of this $18,000,000, or shall they pass an act and donate it to the silver owners ? Congress very wisely framed a law buying all the silver crop at its market value for money use, and made for the people the profit that arises by reason of their using it as money. The saving in fifty years at five per cent interest would amount to the enormous sum of $10,993,695,800. The advocates urge that free coinage will cause this difference to disap- pear. So it will : by transferring it from the buyer (the people) to the benefit of the seller (the silver owner). That is, a free-coinage act of Congress is worth 32 cents per ounce, and silver is worth the other 97 cents. The silver belongs to the silver men, and the act of Congress belongs to the people. The silver owners ask the people to donate them an act of Congress worth 32 cents per ounce of silver, and let the people pay them for the whole thing. As well should the American Bank-note Paper Company, which pro- duces all the bank-note paper, under patents, be allowed to have paper free-pressed (i. e. free-coined) with Government money plates, under an act of Congress, and own all of the money thus issued. It is not that way. The United States buys the paper at its commercial value, and imprints it into money, as it now does silver and as it should do with gold. Why should the people advance the price of silver on themselves, or give gold and silver the monopoly of money use, and demonetize paper > There is certainly nothing more of value in the silver question than what the people now have ; and under no circumstances can it give the volume required for the business of the country. CHECK AND BANK-CREDIT PLAN. Some financiers propose that checks and bank credit are the proper remedy ; and cite the fact that about 95 per cent of the business of iSga was done by checks and bank credits. Well, was it not a most calamitous year on credits? It demonstrates that 95 per cent of credit is too near the danger line for safe business. Five per cent of cash was not enough to go around on pay day. Hence there was over $10,000,000,000 loss in one year, in shrinkage of value, and it called in the full finaritfel money power of the United States to prevent general ruin. Back of this credit was only the shifting and personal responsibility of individual firms and corporations, and a fraction of a cent on the dollar on the volume of business for final liquidation. The volume of money was not sufficient to sustain the volume of credit. The same relation exists between the volume of money and credit, as ex- ists between a bank reserve and deposits. If checks and bank credit are the remedy, why were they not applied to stop the panic in 1890? Why was the United States Treasury called on for more money ? 2S NATIONAL CURRENCY This whole plan is only a scheme by which banks issue a form of circu- lating medium, paying no interest therefor, and charging full current inter- est rates for its use. Thisscheme embraces all the evils of the John Law, French Assignats, Cedulas, Continental money, and old state bank systems combined. It also embodies the worst and most dangerous forms of contraction, repudiation and inflation, of both money and speculation, that ever floated out of chaotic financeering. In .a word, it is the most complete wildcat money and money system ever turned loose on a community. The background of this scheme is to give banks absolute despotism over the money interests of the Nation a complete corner on money. FIFTY-YEAR TWO-PER-CENT BONDS. This is simply a scheme to aid banks at the expense of the people, and seems to have its origin and backing in the secret councils of those who wish to monopolize the money system of the United States. Look at it. Its advocates say : " Issue these bonds and sell them, and redeem the 4-per-cent bonds, and let the National banks buy the 2-per-cent bonds as a basis of circulation. " How will. it work ? Will the owner of 4- per-cent bonds exchange even for 2-per-cent bonds ? Certainly not. Then if you sell the 2-per-cent bonds at par and pay a premium on the 4-per-cent bonds, you will have to pay all the 4-per-cent ones will earn up to maturity. We will then be paying 6 per cent instead of 4 per cent as now, and that does not increase our circulating medium a dollar. The people are simply saddled with more interest. The sale of 2-per-cent bonds to banks as a basis of circulation is a rob- bery of the people. To illustrate : The United States issues say $100,000 in 2-per-cent bonds ; you, wishing to open a bank, take $100,000 cash, now in circulation, and pass it over to the United States for the $100,000 in bonds. Next you hand back your bonds as a deposit, and get back your $100,000 cash for a bank capital, and for fifty years the tax payers, through the Government, pay you 2 per cent per year, $100,000 interest on the bonds^ for doing a banking business on your original $100,000. If you use the semi-annual interest to buy more bonds, so as to make it compound, you will at the maturity of the bonds have your original $100,000, plus $100,000 interest, plus about $70,895 bonds bought with interest on interest ; making a total profit of $170,895 for doing business on your own money. But dur- ing this fifty years your original $100,000 will be loaned out to the same tax payers who are paying 2-per-cent interest on the bonds to you. This loaned- out capital will bring in ruling rates ; which, by the scarcity of money, will be high. This, with the profits arising from the periodical wrecking of business, ought to satisfy the owners of money. It will, however, engender the thought among the masses that the banks should be killed off. Our present banking capital is some $700,000,000, At the end of fifty years, operating under this bond scheme, the banks will own their bank stock of $700,000,- ooo, plus $1,196,265,000 interest on bonds, plus $3,000,000,000 interest on the capital stock for fifty years. That is, the banks wiil own all the money in NATIONAL CURRENCY 29 the United States, and have the people in debt to them nearly $3,000,000,000. The scheme gives to the holders of the bonds a monopoly of the National bank system, as none but the owners of bonds can start a bank. You perceive at once that this scheme will not'increase our circulating medium. This, however, is not as costly to the people as the proposed silver bill, which in fifty years costs over $10,000,000,000 extra. Another plan to place the money power in the hands of a few is the CLEARING-HOUSE PLAN. It is embodied in a proposed National clearing-house system, to be incorporated under an act of Congress, by which a confederation of banks can put up approved collateral with the clearing house and receive clearing- house notes, to be legal tender ; the combined clearing house being re- sponsible for redemption in case the individual bank fails to redeem. This system is put forth by a prominent Eastern banker, who asserts; " We need no more money." Yet this whole scheme is to increase the circulating medium, but giving the banks a monopoly of issuing and controlling it. Its weak point is in placing back of our currency no greater responsibility than the banks and their property. It also gives the banks the right to obtain money without interest and loan it on interest. It is a corner on money under a thin disguise. Better let the Government issue the money, with the resources and wealth of the whole people of the United States, valued at $71,000,000,000, back of it for redemption. If the property of a combination of banks back of a money issue is good, then the wealth of a nation back of the issue is better. As a nation we want no money for the people which is only backed by the responsibility of a small part of the people, having absolute control of it for selfish ends. LAND LOANS. This scheme has some sound points in it. Land can be safely used as a security in a National bank system, as well as bonds. Allowing the title to land at a valuation of, say, its average assessed value for the preceding five years, and not to exceed one-half its cash value, to be pledged to the Government under the form of a National bank incorporation, would give relief to the farming communities. It would substitute a National bank for a Sub-Treasury ; a set of bank officers elected by the farmers for their banks to manage the loans for a set of Sub-Treasury agents ; a responsibility to the Government for large aggregate sums under the bank laws, instead of the inspection of thou- sands of small changing loans. The supervision of the Bank Examiners under the present laws as to the solvency of the bank would be all that was required, while the bank officers would supervise all detail business and loans to individuals. (See Sec. 8 to 12 of proposed Article.) The objection to the Sub-Treasury scheme is that it is local and parti- san, and only helps one class instead of all classes. There is also no limit to the issue, and it is open to the worst form of inflation. It does not 3 o NATIONAL CURRENCY increase our volume of money. It is a plan to loan money. The issue is secondary. The circulating medium should be issued by the authority of the whole population, and should be backed by the entire wealth of the Nation : and should be controlled for the common benefit of all, and limited constitu- tionally to a safe amount. The 2-per-cent bond system the free-coinage system the National bank, clearing-house issue, and Sub-Treasury plans fail because they are in the interest of localities and minorities. If tempo- rarily successful they will soon be destroyed by the majority as unjust. Justice and equity to all must be at the foundation of any system adopted by our Nation. At present the United States Treasury throws its reserve power to sup- port the Eastern banks. It is very probable that the West would be denied any such relief in an emergency. Over $30, 000,000 of United States money is in banks without interest, and largely without security. The recent panic demonstrated, both in the United States and England, that at times the power of the Nation must come to the financial relief of the people. This, then, should be put in a legislative system, on safe principles, within the reach of all parts of the country, for the common good. A NATIONAL BANK OF ISSUE Composed by all other banks taking stock in it, to issue notes under an act of Congress making them legal tender. This is the clearing-house plan in another form, elaborated somewhat to take in more banks and popularize it in banking circles. It, like the other, must have an act of Congress to give to its issue of notes a legal tender. As another form under which to corner the money, and bank system, it would be a success. It is the same middle-man business. If the Nation can issue legal tender notes through such a round-about way, it can issue them direct on the wealth of the whole people, including all the banks as assets. If it is safe to let a limited number of banks handle the issue of money, it can be made safe for all others to help handle the issue on common terms. There is no merit in it. It admits the authority of the Nation as the only source of issue, but asks the monopoly of the exclusive handling thereof. GOLD AND SILVER BASIS. An issue of paper money based on gold and silver, dollar for dollar, gives no increase in volume. Every dollar of paper money issued locks up a dollar of coin for redemp- tion, as our present silver-certificate plan. This scheme is solely in the in- terest of the coin owners, and is designed to keep the volume as small as possible. It is a direct effort to contract the money volume to narrower limits than at present, by demonetizing our unsecured paper issue. The second step in this plan is to issue, say, three dollars of paper for one in coin held for redemption. The financial effect of this is, that when one-third of the issue is redeemed, then there is not a dollar of coin to back the other two-thirds ; which are then really backed by the wealth of the Nation alone. NATIONAL CURRENCY 31 The volume of money under this plan is regulated by the output of the mines. The gold and silver mines are owned principally by a limited num- ber of wealthy people. It is asserted that citizens of England own most of the leading gold and silver mines in the United States. The owners of these mines can at any time stop the output or ship it abroad, and thus limit and contract our money supply. This scheme could be very cleverly worked to aid in cornering the money of the country. Gold and silver are not the basis of money. They are only a part of the merchandise of the Nation. It is the whole wealth, power, and good faith of the Nation that gives money its value. Gold and silver represent about one-seventieth of the Nation's wealth. Our total wealth is $1,000,- 000,000 in coin and $70,000,000,000 in other property. If the first is good back of our paper money alone, it is better when the other is added. The true plan is, place all of our gold, silver, real estate, improvements and National wealth, of some $71,000,000,000, back of our money issue direct, and for the benefit of the people. The greatest danger in the full solution of the money question is that the gold and silver men will combine to demonetize currency in favor of gold and silver. No one supposes that silver coin will ever be used as money to any great extent. What the silver men want is paper money, backed by the wealth of the Nation, issued to them for their silver at a par with gold. They do not want their silver coined and delivered to them for circulation. They know it will not circu- late on account of its bulk. They want paper money for it, at an advance on its market value. SUGGESTED LEGISLATION. In preparing the proposed amendment to the Constitution and bill for Congress, I have retained the safeguards in the money systems of the United States, England, France and Germany, and have added such meas- ures as will give a uniform, practicable, elastic system, free from inflation of currency or speculation, free from contraction, repudiation, or a change of a standard of value ; using all of our gold and silver, and supplement- ing their use by a safe volume of paper money, representing about two cents on the dollar of our National wealth ; so issued and circulated that no class or section has any advantages over the others. . A CONSTITUTIONAL AMENDMENT Should be placed at the foundation of any proposed system. The greatest danger in our present system is the doubt of the Consti- tutional power of Congress to make paper a legal tender. The United States Supreme Court decided, by five justices to three, that Congress had ho power to make paper money a legal tender, Chief Justice Chase ren- dering the opinion. [Hepburn vs. Griswold, 8 Wall. 603-639 ] One of the five resigned; Congress increased the number of judges from eight to nine ; the two vacancies were filled by men who, joining the opinion of the minority, held that as a war measure Congress had power to make paper money a legal tender. [Knox vs. Lee, 12 Wall. 457-480.] This decision stood, five justices to four. Three more of the four died, and their places have been filled by those who believe in this power ; and 32 NATIONAL in its latest decision the Court holds that Congress has unlimited power ta issue paper money a legal tender in any desired volume. Here is the danger of the John Law, Argentine Republic, and Conti- nental money schemes : inflation without limit. Even now are proposed measures that have no limit to the currency issue. A future administration, appointing judges who took a different' view of the law, could at any time overrule the decisions and hold that Congress had no such power, and tint the whole currency issue was unconstitutional and void, and not even a claim against the Nation. Here is one of the dangers of contraction or repudiation. Such a decision would leave gold and silver money in abso- lute control, and debtors would be at the mercy of creditors. The danger of inflation,jcontraction, repudiation, or change in the stand- ard of values, must be constitutionally removed from our system. A safe, stable money system is one of the essential elements of pros- perity for this Nation. The system must stand before the people of this and other nations, founded upon and guarded by constitutional power ; protecting it from these dangers and pledging the faith and wealth of the Nation back of the issue as the will of the Nation to exchange gold, silver and currency at par when required in business. An amendment worded about as follows would cover the ground: PROPOSED CONSTITUTIONAL AMENDMENT. ARTICLE XVI. SECTION i. A National currency circulating medium shall be issued to the amount of twenty dollars per capita, as shov/n by the census of 1890, and by each succeeding census, for the proper redemption of which, when required, the resources, the faith and the property of the Nation are pledged ; for which redemption, Congress, by a two- thirds vote of each- house, may provide for the collection of Government revenues and taxes in gold and silver coin. SEC. 2. Said currency, with gold and silver coin of these United States, of present weight and fineness, the gold dollar being the standard or unit ot values, and such currency as may be issued in lieu of gold and silyer coin, or bullion held exclusively for exchange for currency, shall constitute the only legal money of these United States ; and shall be received at par in satisfaction of all obligations for the payment of money within the jurisdic- tion of these United States. Said gold and silver coin and currency shall be exchangeable at par value. SEC. 3. Congress shall have power to enforce this article by appropriate legislation, but shall not have power to increase or decrease said issue ; provided, that after the issue of 1900, Congress may, by a two-thirds vote of each House, reduce the additional issue per capita at any census. COMMENTS. This amendment, underlying our National system of finances, would give us the best foundation and safeguards ever yet adopted by any nation. Section i makes the money constitutional. No congress, and no court, can ever cast a cloud upon it. By fixing the volume per capita, it guards against the dangers of the John Law, Argentine Republic, or other systems, that have wrecked the finances, of nations using paper money, by inflation. NATIONAL CURRENCY 33 It also provides that the volume at each census can be increased to the standard per capita. This prevents contraction from increase of popula- tion. It also pledges the faith of the Nation to use the wealth of the Nation for redemption when needed. This prevents repudiation. No fixed time is required for redemption. To redeem means to reissue to meet further money wants. The volume of $20 per capita, in addition to gold and silver, is suggested. This, with our present $19 per capita in coin, would give us a volume of about $39 per capita. France uses about $50 per capita, and is not larger in area than Texas ; her cities closely connected by lines of transit, so that money can be quickly sent to the relief of any point. If our volume were $50 per capita it would be a safe volume. This amount would, however, be fixed by the best judgment of Congress. It might safely be left to a two-thirds vote of each House to control the issue between $20 and $30 per capita. A few words added in Section i would accomplish this object. Section 2 makes the money a legal tender. It keeps the coin at present weight and fineness: thus preventing the coinage from being debased by extra alloy or by reducing the quantity of pure metal in the coins, as was several times done in France and England and once in the United States. It also allows gold and silver to go into the United States Treasury and an issue of currency to go out for commercial use ; the coin to be held exclusively for exchange for currency, as the Bank of England does. This section also fixes the gold dollar as the abstract standard of value; it at the same time does full justice to silver, by making it a legal tender equally with gold. The gold dollar is today the standard by which all values in the United States are rated or measured; and as an abstract standard of values, this amendment removes from controversy or doubt that disturbing element by fixing the gold dollar as the standard or unit of measure. The double standard is not, and really never was, required. The use of the two metals on equal terms as money, the Government being responsible for any difference in the commercial values of the metals, is all that can be accomplished by law. When a gold, silver or paper dollar is issued, the people make the difference in the commercial value, if any, and when exchanged return the difference. . Neither gold, silver or paper can ever be demonetized under this amendment. Section 3 permits Congress to control the increase of volume within the fixed constitutional limit, to meet the increase of population after 1900. This will protect against too much money, and is safely lodged in a two- thirds vote of each House. AS GOOD AS GOLD. No nation can place back of its issue such security as this amendment would give to American money. England cannot back an issue with the resources of Canada, Australia, India, or her African posessions: for at 34 NATIONAL CURRENCY any time they might leave England and set up for themselves, leaving only the little island responsible for the currency issued. France or Germany is too small. Russia is too insecure. But the United States, with its vast area, its peaceful and stable form of government, its citizens each an owner in the currency, is in a position to issue a cur- rency that would be received by any nation as a medium of exchange, a representative of gold at par. Such a legal-tender note is, in money effect, the clearing-house certificate of the Nation, backed by the National wealth, good in any clearing house in the United States ; instead of a certificate backed by any number of banks, and only good where they wish to accept it by common consent. Such a note has the legal effect of a check signed by the authority of the United States, backed by over $71,000,000,000 of the people's wealth, good at any counter of any bank; instead of an individual's check, good only where he is known, or at his own bank. It is the promissory note of the Nation, secured by a constitutional mortgage on over 2,500,000,000 acres of land, with the cities, railroads and improvements and civilization thereon, payable to bearer and good from any debtor to any creditor ; in- stead of the private note of a corporation or citizen, good only in porpor- tion to his ability to pay it, and discounted when he wants to use it. It is the representative of all values or damages, for exchange purposes, mutually agreed upon by 62,000,000 people for their joint and mutual bene- fit; backed by a constitutional bond to secure redemption when required, on which bond the people pay no interest. Such a currency circulating medium possesses all the elements of safety offered in all the other proposed systems combined, and many others that cannot be introduced into any other system, and is as good as gold. The general plan proposed is this: A total volume of money of $2,500,000,000; of which there is: Coin in the United States $i, 180, 240,077 Issue legal-tender paper i, 319, 7 59,923 Total $:2,5OO,OOO,OOO As the coin or bullion comes into the United States Treasury, issue more legal-tender paper therefor. So if all the coin should come into the Treasury there would be $2,500,000,000 legal-tender paper in circulation, and $1,180,240,077 coin in the Treasury to exchange at any time in taking up the paper legal-tender. As a matter of fact, the coin would never be all at once either in or out of the Treasury; but would flow in and out as trade required it. If the paper money were deemed a public use and made exempt from all taxation, and coin were subject to taxation at its commercial or commodity value, it would result in a full supply of coin always in the Treasury to avoid taxation. This would be the cheapest way to always preserve a full coin reserve. This non-taxation of currency would result in a porportion- ately lower rate of interest, and would fully compensate the owners and users of money, as well as the tax payers on other property. Money NATIONAL CURRENCY 35 generally eludes taxation and the public get no return benefit ; under the above plan a benefit occurs to the public of great value. But someone will say, "What will prevent gold or silver going above par?" Nothing. These metals, as to their commercial value, always have and always will fluctuate according to market demand. The banks of England, France, Germany and Russia have, during May, June and July, 1891, been buying gold and paying a premium on it. Paper money will bring a premium at times for special purposes ; so will any other article. Under the system proposed these laws will operate as they always have in the past : but the increase of paper money will lessen the demand for coin and have an effect in steadying its commercial value. Rhodes' Banking Journal for August, 1891, says : " The most striking feature of the report of the Bureau of Statistics is the large excess of gold exportation for the fiscal year ; being, as it is, the largest excess of gold exportation in any one year within the history of the country. The excess of the gold export amounted to $68,117,110. This indicates that the annual gold product of the United States, and about thirty-eight millions more from the accumulated stock on hand, went abroad." CHAPTER V. PROPOSED ACT OF CONGRESS. COPY OF BILL ISSUE RETIRING CANCELLATION BANKS BULLETIN OF FINANCES RECIRCULATION OF MONEY INSURANCE NON-TAX- ATION OF CURRENCY. It is a rule in law that legislative enactments, to produce new results, should use as much of existing laws and methods as possible; for the reason that we are familiar with what has been in use, and know how to use it. Operating under this rule, I have taken existing laws, as shown in the act of June 3, 1864, as the framework of a new or complete system of finance for the United States ; and have added to it such sections and parts f sections as will, with the proposed amendment, produce a comprehen- sive, uniform system; easily understood and easily operated by those familiar with existing laws, and embracing the principles set out in the foregoing pages. I have added the best and safest features from the English, French and German finances, and have carefully excluded, by the proposed con- stitutional amendment, the financial danger of the John Law, French Assignates, Argentine Republic, Continental Currency, Alabama or Mis- sissippi schemes or systems. The system can use all of our American output of gold and silver, and a supplemental volume of paper money sufficient in quantity to safely do the business of the Nation. The paper money to be used by authority of the people, backed by the wealth of the people, and circulated for the benefit of the people. All present forms of paper money to be taken up by the new issue, uniform in appearance, thus getting rid of seven or eight different kinds of paper money now in circulation. That the reader may see exactly how the system will appear when form- ulated into law, I have appended a proposed bill in full, with explanatory comments under each section. My system is based on the following analysis : I. Issue. II. Circulation. Under the head of Issue I provide, constitutionally, for ; I. Unquestioned authority. (The people of the United States.) NATIONAL CURRENCY 37 ?. Absolute safety from : Inflation. Contraction. Change of the standard of value. Repudiation. 3. Sufficient volume : Say $20 to 130 per capita, in addition to gold and silver. 4. Elasticity of volume : An increase at each census. (See Amendment, p. 32.) Under the head of Circulation I provide, by act of Congress, for circu- lation through : 1. Government channels. 2. Commercial channels. Under Government channels : (a) Take up all other forms of paper money. (3) Meeting usual current Government expenses. (c] Carrying out a proper National system of public improvements of harbors, rivers, and public buildings, in each locality where the United States has permanent post offices or other permanent work ; building a navy and coast defenses (the Congressional Committee report that about $500,000,000 will be used in this work); supplying money for the benefit of all the people, by means of certain 2-per- cent bonds issued by states, counties and classed cities, and pur- chased by the United States. Circulation through commercial channels embraces : (a) A banking system, under National inspection, to protect as well as may be the people who do business with banks ; the system so organized that the banks can place certain state, county, and city bonds and real estate with the United States Treasury (under care- fully guarded safety conditions), on which they can obtain loans or rediscounts with which to meet fluctuating demands of trade. () The banking system is so arranged that farmers or others owning lands can obtain loans thereon under the safeguards of a banking system. {c) Inflation of business is provided against, by increasing the rate of interest paid to the Government by banks on each additional sum of $50,000. This increasing rate of interest can be made to reach a point where it becomes unprofitable to use money, forcing a cur- tailment of business instead of an actual destruction of established enterprises. This is the method adopted by banks, and is now adopted in the German system of finances. NATIONAL CURRENCY Under the foregoing analysis it will be seen that the financial plans sug- gested by other writers are mainly directed to some subdivision of the department of circulation, and only incidentally refer to issue. Hon. Mr. Harter's plan only refers to a partial method of issue and circulation. The Sub-Treasury plan refers principally to circulation, based on non- perishable farm products. The land-loan plan refers to circulation based on lands alone. Hon. Mr. Norwood's plan is limited almost entirely to circulation by means of states. They are all open to the dangers of inflation, contraction, repudiation and change of the gold standard of value, and leave the department of issue in as unsafe and chaotic a condition as it now is. Now that Congress has directed attention to the subject, it should devise a system complete in the department of issue and circulation, with the gold dollar as the standard or unit of value ; using gold, silver and currency for a circulating medium, in a sufficient volume to fully meet and keep pace with the growing wants of the business of the country ; founding the issue of currency upon the wealth of the whole Nation, making gold, silver and currency a legal ten- der and exchangeable at par on demand ; and fixing by a constitutional amendment the legality of such a circulating medium, and preventing the dangers of inflation, contraction and repudiation, or change in the standard of value. It is wholly unnecessary that our National money system should be so framed as to be open to any of the dangers of the John Law, French As- signat, Argentine Republic, Alabama, Mississippi, old state bank or of any other system that has failed. At the same time, it is not difficult to embrace in our system all of the beneficial principles that have stood the working test of time. The scheme formulated by me in a proposed constitutional amendment and act of Congress is the result of a careful study of the financial schemes referred to, and carefully provides against their dangers. It embraces the best features of the systems of the United States, Eng- land, France and Germany. If it were adopted, with such improvements as might be suggested, it would give us a money system that would require very little adjusting in the future, and that would satisfy the demands of our civilization and busi- ness. But it will not give a special benefit or monopoly to any class ; all will share its benefits equally. See pages 39 et seq. for copy of proposed bill and comments thereon. PROPOSED BILL. The parts in italics show where this Bill differs from present act of June 3, 1864. The part not in italics is the present law. A BILL TO PROVIDE A NATIONAL CIRCULATING MEDIUM, AND TO PROVIDE FOR THE CIRCULATION THEREOF. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled: ^SECTION i. That there shall be established in the Treasury Department a separate Bureau, which shall be charged with the execution of this and all other laws that may be passed by Congress respecting the issue and circula- tion of a National circulating medium. The chief officer of said Bureau shall be denominated the Comptroller of Finance, and shall be under the gen- eral direction of the Secretary of the Treasury. He shall be appointed by the President of the United States, with the approval of the Secretary of the Treasury, by and with the consent of Congress, and shall hold his office for the term of ten years unless sooner removed by the President with the consent of Congress. He shall receive an annual salary of eight thousand dollars ; he shall have a competent deputy appointed by the Secretary, whose salary shall be four thousand dollars per year, who shall possess the power and perform the duties of the Comptroller during a vacancy in said office or during the absence or inability of the Comptroller. The Comptroller shall employ, from time to time, the necessary clerks to dis- charge such duties as he shall direct. Such clerks shall be classified by the Comptroller, subject to the direction of the Secretary of the Treasury, which clerks shall be classified in the manner now prescribed by law. Within fifteen days after notice of his appointment he shall take and subscribe the oath of office prescribed by the Constitution and the laws of the United States, and shall give to the United States a bond in the penal sum of one hundred thousand dollars, with not less than four responsible sureties, to be approved by the Secretary of the Treasury, conditional for the faithful discharge of the duties of his office. The Deputy Comptroller shall also take oath of office, and give a similar bond in the sum of fifty thousand dollars. The Comptroller or Deputy Comptroller shall not, either directly or indirectly, be interested in any association doing a banking business un- der this act. *This section is the present law; unchanged except as to the Comptroll- er's salary, which is changed from $5,000 to $8,000, and the Deputy's, which is raised to 4,000. Many think that the salaries should be much greater so as to secure the entire attention of able men. These sums are only sug- gestive. 40 NATIONAL CURRENCY SEC. 2. And be it further enacted : That the Comptroller of Finance, with the approval of the Secretary of the Treasury, shall devise a seal, with suitable inscriptions, for his office, a description of which, with the certificate of approval by the Secretary of the Treasury, shall be filed in the office of the Secretary of State, with an impression thereof, which shall thereupon become the seal of office of the Comptroller of Finance, and the same may be renewed when necessary. Every document executed by the Comptroller, in pursuance of any author- ity confirmed on him by law, and sealed with his seal of office, shall be re- ceived in evidence in all places and courts whatsoever ; and all copies of papers in the office of the Comptroller, certified by him to be correct copies of the originals in his office, shall in all cases be evidence equally and in like manner as the originals. An impression of such seal directly on the paper shall be as valid as if made on wax or wafer. SEC. 3. And be it further enacted : That there shall be assigned to the Comptroller of Finance, by the Sec- retary of the Treasury, suitable rooms in the Treasury Building for con- ducting the business of the Bureau of Finance, in which shall be safe and secure fire-proof and burglar-proof vaults in which it shall be the duty of the Comptroller to deposit and safely keep all plates not necessarily in the possession of engravers and printers, and other valuable things belong- ing to his department ; and the Comptroller shall from time to time furnish the necessary furniture, stationery, fuel, light and other proper conveni- ences for the transaction of said business. SEC. 4. And be it further enacted : That the Comptroller of Finance, under the direction of the Secretary of the Treasury, is hereby authorized and directed to issue currency notes in the name of the United States of America to the amount of $20 per cap- ita of the population of the census of 1890, in addition to gold and silver coin. Upon ascertaining each following census the issue shall be increased to said $20 per capita. In addition thereto he shall issue similar currency notes in lieu of gold or silver coin of the United States, or bullion deposited or held exclusively for exchange for currency notes as may be provided by law. In order to furnish suitable notes for circulation the Comptroller of Finance is hereby authorized and required, under the direction of the Secretary of the Treasury, to cause plates and dies to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and to have printed there- from, on paper or similar material best adapted therefor, and numbered, the quantity of currency notes, of the denominations of one dollar, two dollars, five dollars, ten dollars, twenty dollars, fifty dollars, one hundred dollars and five hundred dollars, as may be required to supply the issue herein called for. The number of each denomination in use shall be such that the needs of the people shall be best subserved thereby. The notes of each de- nomination shall be consecutively numbered. That a duplicate of each de- nomination and from each successive plate used shall be perforated with the word "duplicate" and carefully preserved for use in the identification of the originals, and for the detection of counterfeits, by comparison therewith. Said notes shall express on their face that they are issued by the Government NATIONAL CURRENCY 41 -of the United States of America as the circulating medium of the people -of ihe United States. They shall have the written or engraved signatures of the Secretary of the Treasury, and of the Comptroller of Finance, and the imprint of the seal of the Treasury, and shall bear such other statements and devices as the Secretary of the Treasury shall direct, and shall contain a statement that " This note must be 'surrendered to the Comptroller of Finance in exchange for a new note of similar denomination during the year" (stat- ing the year for retiring the same}. Said notes, and gold and silver coin of ihe United States, shall be received at par, in satisfaction of all obligations within the jurisdiction of the United States for the payment of money. Said gold and silver coin and currency shall be exchangeable at the face value thereof* SEC. 5. And be it further enacted : That it shall be the duty of the Comptroller of Finance to receive worn- out and mutilated circulating notes issued hereunder, and with the Secre- tary of the Treasury the Comptroller of Finance shall compare said notes with the duplicates thereof on file, and when satisfied that the same are the originals issued under this act, they shall be destroyed by being burned to ashes in the presence of the Secretary of the Treasury and the Comptroller of Finance and such other person as the President shall designate.. A per- manent book of record of the destruction of such notes, with sufficient descriptions thereof, shall be kept by the Comptroller of Finance and pub- lished in the Bulletin of Finance. Aiter said destructions of said notes, new notes of the same denominations and number shall be issued to the owners of the destroyed notes, of which duplicates shall be kept as herein- before provided. Such new notes shall be marked second series or third series as the case may be. *This provides for the issue of $20 or any other fixed sum per capita on the census of 1890, and for an additional issue at every census so as to bring the issue up to the requirements of increased population and business. It also provides that additional currency can be issued dollar for dollar for gold or silver bullion held for exchange of any currency notes. The paper is much more desirable for business use, while the coin will be held therefor in the United States Treasury to exchange for any of the currency issued. The total volume of coin and bullion in the country is about $1,180,239,- 077. The additional currency would be about $1,319,760,923. Total $2,- 500,000,000. When the coin is in the Treasury a proportionate amount of currency "would be additionally in circulation. This issue would represent about 2 cents on the dollar of our National wealth of some 3,400,000 square miles of the richest land in the world, which, with the wealth thereon represents about $71,000,000,000. Based on the proposed constitutional amendment, this would give us the safest, soundest system of finances any nation ever had and would make us the banking nation of the world. We now pay annually over $60,000,000 interest and profits to foreign capital for the use of money. This nearly represents the output of our gold and silver mines. By issuing our own full volume of money we save this $60,000,000 for the benefit of our own people. In case of a war or other emergency the United States could issue its bonds and borrow of the people out of the volume in their hands instead of "being forced to seek foreign money. 42 NATIONAL CURRENCY SEC. 6. And be it further enacted : That in the year following each second census ', beginning with the census of 1910, the entire issue of circulating notes shall be retired and destroyed as provided in Section 5 herein. And under the provisions of this act a new is- sue shall be made, from new dies and plates and with new designs, and shall be substituted for the retired notes; and during the year for retiring said notes each banking institution, doing business hereunder shall, during the months of January, February, March and April, for ward to the Comptroller of Finance at least 25 per cent each month of said notes in its possession* and in exchange therefor the Comptroller of Finance shall issue the new notes of the same denomination. During the remaining months of the year each of said banking institutions shall monthly forward all of the o!d issue of notes it may have or receive to the Comptroller of Finance for destruction and exchange. During said remaining months of said year for retiring said old issue, any person or corporation may forward notes of the old issue for destruction and exchange to the Comptroller of Finance. After the ex- piration of the said year for the retiring said old issue of notes, the said old issue shall cease to be lawful money of the United States, and shall only be received by the Comptroller of Finance for destruction and e.\ change, and shall be so received until the outstanding old issue is entirely retired and de- stroyed. The dies and plates used in producing the old issue of notes shall be destroyed by fusing in fire in January of each year of retiring, in the presence of the Secretary of the Treasury, the Comptroller of Finance, and some person appointed by the President. A record of the destruction of said plates shall be kept in the office of the Comptroller of Finance.* SEC. 7. And be it further enacted : That for the purpose of putting said notes in circulation the Comptroller of Finance shall be authorized to retire all outstanding notes or currency of the United States, and to buy such legally issued bonds of the states, counties, and incorporated cities of over 5000 inhabitants, as he deems proper. Said bonds to be issued by said states, counties and cities, for a valuation not to exceed five per cent of the average assessed value of the real estate in said state, county, or city, for the five years preceding the issuance of said bonds, deducting from the said issue of bonds the par value of any other outstand- ing bonds issued by said state, county or city. Said bonds shall be a lien on all personal and real estate in said state, county or city, except public prop- erty, and shall bear interest at the rate of two per cent per year, and shall not run to exceed twenty years. The interest shall be payable annually to the Comptroller of Finance at Washington, and a sinking fund shall be provided in each case sufficient to liquidate said bonds at or before maturity. The public issuance of such bonds, their delivery to the Comptroller of Finance, and the receipt of the circulating notes therefor, shall be deemed conclusive evidence of the legal issuance and validity of said bonds, and thereafter no * Section 6 contains new matter providing for a surrender and can- cellation, every twenty years, of the whole issue, and replacing the same by a new issue from new plates and new designs. Counterfeiting appli- ances will thus be rendered useless, and their issue rendered worthless. The currency notes lost or destroyed can be replaced, thus keeping up the volume. NATIONAL CURRENCY 43 defense shall be set up to the payment of principal or interest, or to the levy- ing and collecting of taxes therefor. All objections or defense to the issue of said bonds must be made by the parties interested prior to the delivery thereof to*the Comptroller of Finance, otherwise they are forever waived and barred as a defense. Said bonds may be sold by the Comptroller, and such bonds or any United States bonds may be deposited at par by banks, with the Treasurer as reserve security, on which said banks may obtain the use of money as hereinafter provided. If said state, county, or city shall fail or neglect at any time to levy and collect a sufficient tax to meet the obligations of said bonds, there, shall be immediately due and payable to the Comptroller of Finance a tax on the real and personal property in said state, county, or city in default, on its last as- sessment roll, sufficient to meet said payments and costs of collecting the same ; and the same s hall be collected by any person or persons appointed therefor by the Comptroller of Finance, who shall have power, where said tax is not paid within thirty days after it is levied, to collect the same by seiz- ure and sale upon warrant issued by any judge ex parte of any court of or- iginal jurisdiction, state or National, having jurisdiction of the property. The United States may become the purchaser of such property. Redemption may be made within one year after sale, by paying the amount due on the sale, costs and interest thereon at ten per cent. Provided that no bonds shall be purchased hereunder except such as by state laws are made subject to the terms of this act* *This section is entirely new. After the Government* has prepared for issue the $1,319,760,923 currency, what will be done with it? It cannot be given away. This section provides a method of putting a part of it in cir- culation for the benefit of the people. There would be taken up all forms of unsecured paper money of the United States about 1534,088,802 ; leaving $785,672,121 to be put into cir- culation. The debts of states, cities and counties of the United States is about $834,847,679. Of this about $750,000,000 is outstanding bonds maturing annually through a period of years. Under this section these states, cities and counties can issue certain 2-per-cent bonds, which can be purchased with the issued money of the United States. These bonds can only be fssued for say 5 or 10 per cent of the averaged assessed value of the property for the preceding five years, deducting outstanding bonds. Under this provision some $200,000,000 bonds of states, cities and counties would be absorbed the first year, still leaving $585,672,121 to be put in circulation under Sec- tions 8 and 34. This purchase of bonds in the discretion of the Comptroller from states, counties and cities is equivalent to a direct 2-per-cent loan to the people on all their real and personal property, including the perishable property as well as the non-perishable property. It is much farther reaching in its popular benefits than any Sub-Treasury scheme, and does not require an army of agents to run it. It saves to the people about 4 per cent per year on all interest-bearing bonds ; and will eventually reach a loan of some $700,000,000 to the people, and will save them annually about 528,000,000. Power is given the United States to collect principal and interest in case of default, but no default would occur. Bonds may be classified as to- security as follows : United States Bonds, State Bonds, County Bonds, City Bonds. These by the laws are a lien on all property until paid, and are 44 NATIONAL CURRENCY SEC. 8. And be it further enacted : That associations for carrying on the business of banking may be formed by any number of persons, not less in any case than five, who shall enter into articles of association, which shall specify in general terms the^proposed name of the association, the object for which the association is formed, and the proposed capital stock ; and may contain any other provisions not inconsistent with the provisions of this act, which the association may see fit to adopt for the regulation of the business of the association and the conduct of its affairs, which said articles shall be signed by the persons uniting to form the association, and a copy of them forwarded to the Comptroller of Finance, to be filed and preserved in his office. Attached lo said articles of association shall be a schedule of the bonds or real estate offered and known as " the reserve security " as herein provided for, which schedule shall accurately describe said bonds, and real estate and the improve- ments thereon, stating in whom the title is vested in fee simple absolute, free of all incumbrances or liens, and giving the yearly assessed value of said real estate for each separate year for state and county purposes for the five preceding years, which schedule shall be certified to as correct by the proper keeper of the records of title of said property. Upon receipt of said articles and schedule, the Comptroller of Finance shall proceed in whatever manner he deems best to verify the facts set out in said schedule; and when satisfied that the average assessed value for said five years next preceding is not in excess of half of the actual value of said real estate, and that the schedule is otherwise correct as to its statement, he shall notify said persons of that fact of the name approved by him for the association. f paid by taxation under this section. When once sold their validity can never be questioned. They would be readily purchased by banks and financiers everywhere, on account of their safety. Below them range the bonds of the railroads and of other private cor- porations. The United States bonds will soon go out of existence, and the National bank note issue will cease. This section provides that state, county and city (of over 5000 or 10,000 population) bonds may be purchased by the United States, and resold to banks, ; to be used, as United States bonds have been, as a collateral security on which banks can draw money to meet expanding and contracting de- mands of trade. No stringency or panic of the money market could ever occur, as the United States would be legally back of all banks ; as it was illegally back of Eastern banks in the panic of 1890. This system will largely equalize money all over the United States, and give a low uniform rate of interest of 3 to 4 per cent; and will forever pre- vent a corner on money. This system will meet with the most bitter opposition from owners ot money, foreign or domestic, who desire to keep the volume of money under their control. It will meet with the support of all users of money, and of the laboring classes. Shall the users of money become the slaves of the owners of money? Shall the owners of money absolutely dictate and control the volume of money? Shall the money be issued by the authority of all the people, backed by the wealth of all the people, and then be turned over to a few to use as an engine of oppression against the masses who issued it? f Under this section National banks can be formed. Under the old law, only the United States bonds could be used to start a National bank. As NATIONAL CURRENCY 45 SEC. 9. And be it further enacted : That the person's uniting to form such an association shall make a cer- tificate of organization, which shall specify : First The name assumed by the association. Second The place where its operations of discount and deposit are to be carried on, designating the state, territory or district, and also the par- ticular county and city, town or village. Third Its capital stock, and the number of shares into which it shall be divided. Fourth The names and places of residence of the shareholders, and the number of shares held by each. Fifth An accurate copy or the schedule of bonds or real estate attached: to the articles of association provided for in section 8. Sixth A declaration that said certificate is made to enable such per- sons to avail themselves of the advantages of this act, and that said bonds and real estate are for security as required in this act. The said certificate shall be duly signed and acknowledged by each of said persons, in the manner required by the law of the place for acknowl- edging conveyances of real estate, to entitle them to be recorded. When duly certified therefor said certificate shall be recorded in the proper book of record of the county or district in which the real estate is situated: there- after no lien or claim shall attach to any of said real estate, except such as these bonds had been largely sold to foreign capitalists, no new National banks could be formed unless such new banks paid for these bonds what- ever premium was asked. It was a cold-blooded corner on United States bonds. The premium was run so high that people could not afford to buy them for banking, and this gave a corner on National banks. This section 8 prevents all corners on the banking system of the people. Banks can use certain bonds of states, counties, and cities. Real estate, on a safely guarded system, can be used, and the title be placed in the United States the same as the bonds, and used to the extent of the aver- aged assessed value of the property for the preceding five years. Under this, banks could utilize their bank buildings. It would encourage every bank to become the owner of its own building, and to erect substantial structures. As it now is most banks are tenants, not daring to invest funds in a building for its business. This would add to the stability of the banking business, and give greater security to the people. Under this and sections 9-10-11-12, the owners of lands may use them in banking, the same as bonds, as collateral security. This will enable farmers or other land owners to incorporate a National bank, using their land as a basis for security to the Government. This is better than the Sub -Treasury plan ; for under this system the farmers can elect their own officers and handle their own money affairs, through the banking system. A bank being incorporated for twenty years, could during that time handle the affairs of a farming community : without the constant work of new loans, under the Sub -Treasury plan. When the money was not needed, at any particular season or year, it can be returned to the United States Treasury, stopping interest. When again required for use, it is obtained from the Treasury. Individuals conducting large enterprises in the West and South, or in other places, can utilize their real estate, under these banking privileges, to get the use of money for twenty years : thus enabling them to safely carry to success long-time plans and industries. 46 NATIONAL CURRENCY shall be wholly subordinate to the prior claim under said certificate against said real estate for the purposes of this act. When duly recorded the said certificate shall be transmitted to the Comptroller of Finance, who shall re- cord and carefully preserve the same in his office. Copies of said certifi- cate, duly certified by the Comptroller of Finance and authenticated by his seal of office, shall be legal and sufficient evidence in all courts and places within the jurisdiction of the Government of the United States of the exist- ence of said association and of every other matter that could be proved by the production of the original certificate.* SEC. 10. And be it further enacted : That no association shall be organized hereunder with a " reserve secur- ity " greater than one million dollars, or with a less " reserve security " than twenty-Jive thousand dollars, nor with a capital stock of less than fifty thou- sand dollars.^ SEC. ii. And be it further enacted : That whenever a certificate of organization has been received and filed by the Comptroller of Finance, and is found by him to fully comply with the requirements of this act, the Comptroller of Finance shall proceed to investigate, in the manner deemed best, the personal standing, financial condition and record of the persons seeking to form the association, also the object of the association, the location and value, present and prospect- ive, of the real estate described in said certificate of organization, and any other facts that may aid him in determining the desirability cf such an asso- ciation and the probable safety of its business affairs and management. The Comptroller of Finance may use such special means as he deems best to safely ascertain the facts above referred to. When it shall appear to the satisfaction of the Comptroller of Finance that the association is lawfully entitled to commence the business of banking with safety to the Government and to the people, he shall issue to such association a certificate under his hand and official seal that such association has complied with all the provi- sions of this act required to be complied with, and that such association is authorized to commence the business of banking, designating the place of business, fully naming the directors and officers thereof for the first year and its capital stock and character and amount of reserve security. The said cer- tificate shall be published in such local newspapers, for sixty days, as the Comptroller of Finance shall designate. From the date of said certificate said association shall be deemed a body corporate to transact the business of banking hereunder, with the usual rights, powers and duties of banking *SEC. 9. This section provides for forming banks and placing bonds, of states, counties and cities, and real estate, with the United States Treas- ury as a reserve security on which to draw money when required. fSEC. 10. There are some six thousand banks that would probably come under this system. Their reserve security would probably aggregate $400,000,000. But of course this would never be drawn on at once, as all localities would not require it at the same time. Probably not to exceed $100, 000,000 would ever be in actual use at any one time. With such a re- serve power back of our banking system, a panic or stringency would be impossible. NATIONAL CURRENCY 47 corporations, and shall exist for the period of twenty years. An impress of its corporate seal shall be filed with the Comptroller of Finance and with the Secretary of the Treasury. SEC. 12. And be it further enacted : That thereafter, upon the demand of said association, the Comptroller of Finance shall issue to said association a warrant on the Treasury of the United States, for circulating notes of the Government to the amount of the said average assessed value of real estate, or the par value of said bonds de- posited by said bank, or for any part thereof, as demanded from time to time, which warrants, upon presentment duly endorsed, shall be paid out of the Treasury in the notes issued hereunder. Said sum or any part thereof, may, on the first of any quarter of the year, be returned to the Treasury* SEC. 13. And be it further enacted : That the affairs of all associations for banking purposes formed here- under shall be managed by its board of directors, which may be in legal session on any Monday from 10 A. M. wherein a quorum is present, and on any other day where, after notice, a quorum may be present, or to which a regular session may be adjourned, a quorum being present. Every director shall be a citizen of the United States during his whole term of service ; and at least three-fourths of the directors shall have re- sided in the state or territory or district in which such association is located one year next preceding their election or appointment as directors, and shall be residents thereof during their term of office. Each director shall own in his own right at least ten shares of the capital stock of the association. Each director, when elected or appointed, shall take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this act, and that he is the bona fide owner in his own right of ten shares of the capital stock of the association, standing in his own name on the books of the association, and that the same is not hypothecated or in any way pledged as security for any loan, debt or obligation; which oath subscribed by him and duly certified, as required by law, shall be immediately transmitted to the Comptroller of Finance and by him filed and preserved in his office. SEC. 14. And be it further enacted: That the directors of any association first appointed shall hold office until their successors shall be elected and qualified. All elections shall be held on the second Tuesday of January of each year, and the directors as elected shall hold their places until their successors are elected and quali- *SEC. 12. Under this section, money can be drawn from the Treasury reserve to meet the demands of expanded trade at any season of the year, and used as long as needed and then returned; in all cases paying one- quarter's interest at least. No system can more perfectly or automatically meet the expanding and contracting demands of trade. This gives full and perfect elasticity to the currency supply. The unsecured money will be lying idle in the United States Treasury, at no cost to anyone, ready to go at any moment when needed to any part of the United States to meet a financial demand. 48 NATIONAL CURRENCY fied. Any vacancy occuring by reason of a director ceasing to own the required amount of stock, or from any other cause, shall he filled by appointment by the board. If from any cause an election shall not be held at the time designated, it may be held on any subsequent day by publishing thirty days' notice thereof in a local daily paper. SEC. 15. And be it further enacted : That in all meetings of the stockholders each share of stock shall be entitled to one vote on all questions. Shareholders may vote by proxies > duly authorized in writing. None but shareholders can use or hold a proxy. SEC. 16. And be it further enacted : That the shares of stock may be transferred on the books of the associa- tion in such manner as may be prescribed in the by-laws of the association. No transfer shall be made of stock where the holder is indebted to the as- sociation in any manner ; but the association has a lien on all of its stock for such indebtedness. Every person becoming a shareholder by transfer, or otherwise, shall, in .proportion to his shares, succeed to all the rights and liabilities of the prior holder of such shares, and no change shall be made in the articles of association by which the rights, remedies and se- curities of the existing creditors of the association shall be impaired. The shareholders of each association formed under the provisions of this act, and of each exisiting bank or banking association that may accept the provisions of this act, shall be held individually responsible, equally and ratably, and not one for the other, for all contracts, debts and engagements of such associations to the extent of the amount of their stock therein, at par thereof, in addition to the amount invested in such shares. SEC. 17. And be it further enacted : That the capital stock or the reserve security of any association formed hereunder may be increased or decreased within the limits fixed for the capital stock or the reserve security by this act by a two-thirds vote of its shareholders at any annual meeting in January. The increase or decrease of capital stock or the reserve security shall be made by complying with the requirements of this act as to the formation of such associations in the first instance, and by complying with such additional requirements as the Comptroller of Finance may deem best to secure the interests of all parties concerned, provided that in the decrease of the reserve security, the associ- ation so decreasing its reserve security, shall surrender to the Comptroller of Finance circulating notes received thereon to the amount of the decrease. In such cases the Comptroller of Finance may, in his discretion, release from the effect of this act a pro rata of the bonds or real estate described in the certificate of organization, but this shall only be done in cases where the Comptroller of Finance shall fond the association to be solvent. The maxi- mum or minimum of such increase or decrease shall be determined by the Comptroller of Finance. Any association organized hereunder may close up its business and dis- solve its organization by a vote of its stockholders had at the annual meet- ing in January. In such cases the association must first settle all of its outstanding obligations and return to the Comptroller of Finance the circu- lating notes received on its reserve security. The Comptroller of Finance, NATIONAL CURRENCY 49 upon receipt of a statement of the foregoing facts duly authenticated by the directors of said association under oath, shall fully investigate the matters pertaining thereto ; and upon being satisfied that all obligations of said association are fully satisfied and discharged, shall cause said state- ment to be published for at least sixty days in a local newspaper, and shall also cause a notice thereof to be inserted in the United States Bulletin of Finance for the same period. If any objections to the dissolution are filed with the Comptroller of Finance before the expiration of said sixty days, he shall determine and adjust any matters therein objected to ; when so adjusted, or if no objections are filed with him, he shall issue a certificate dissolving said association and releasing the bonds or real estate described in the certificate of organization from any further claim or demand thereon. Said certificate of dissolution shall be by him duly signed and acknowledged so as to entitle the same to record in the office where the certificate of organization was recorded. The Comptroller of Finance shall duly record said certificate of dissolution in his office, and thereafter shall transmit the same to said association upon the same being duly recorded in the office where the certificate of organization was recorded. The association will thereby be completely dissolved.* SEC. 18. And be it further enacted : That if at any time the value of the real estate described in the certificate of organization shall depreciate in value, to be decided by the Comptroller of Finance, he may require any portion of the circulating notes of the associa- tion's reserve security to be surrendered to the Comptroller of Finance, or he may require further real estate security as in the original formation of the association. Should the Comptroller of Finance at any time deem the affairs of said association unsafe from any cause, he may appoint a special agent or agents under his hand and seal of office, who shall have power to inspect all affairs of said association and to close up its affairs to the best possible advantage to all parties interested. To this end he shall have power to bring or defend any suit in the name of the association, and to sell at public or private sale any or all of the real estate described in the certificate of organization, and to execute proper conveyances thereof, and use the proceeds to close up the affairs of the association. He shall also have power to collect from the stockholders the amount for which they are responsible under this act, and to use the same to close up the accounts. He shall give such bonds for faithful performance of his duties hereunder as the Comptroller of Finance may require. His certificate of appointment shall be duly acknowledged and recorded as the other certifi- cates are required to be. The Government shall be a preferred creditor in all such cases as are provided for in this section.t *This section provides that any portion of a reserve security may at any time, at the option of a bank, be released from the claim of the United States by surrendering a pro rata of any money obtained thereon. This enables such property at any time to be used for other purposes. The section also provides for the increase ot reserve security when re- quired. fThis section protects the United States against any depreciation in real estate held by it as reserve security. It possesses the beneficial elements of a call loan when securities depreciate. 50 NATIONAL CURRENCY SEC. 19. And be it further enacted : That the directors may semi-annually declare dividends from the net profits of the association, but such association before it shall declare a divi- dend shall carry at least ten per cent of its net profits to a reserve fund until said reserve fund shall equal the capital stock of said association. SEC. 20. And be it further enacted : That it shall be lawful for any association hereunder to purchase, hold and convey real estate as follows : First Such as shall be necessary for its immediate accommodation in the transaction of its business and for its reserve security. Second Such as shall be mortgaged to it in good faith by way of secur- ity for debts previously contracted or for loans made thereon. Third Such as shall be conveyed to it in satisfaction of debts pre- viously incurred in the course of its dealings. Fourth Such as it shall purchase at sales under judgments, decrees, or mortgages held by the association, or shall purchase to secure debts due to said association. Such association shall not purchase or hold real estate for any other purpose than as herein specified. Provided, that all such real estate ac- quired other than for the purpose of the business of the association shall be sold within five years after it is obtained by the association. SEC. 21. And be it further enacted : That each association may charge such rates of interest as may be allowed by local laws where the association is situated. Each association shall keep on hand in cash an amount equal to at least twenty-five per cent of the amount of its deposits, when the reserve amount shall fall below said percentage. No more dividends or loans shall be made until the amounts called in shall restore the said percentage. SEC. 22. And be it further enacted: That every association hereunder shall make to the Comptroller of Finance a report, according to the form which may be prescribed by him, verified by the oath or affirmation of the president or cashier of such as- sociation, which report shall, among other things, exhibit in detail, and under appropriate heads, the resources and liabilities of the association, and the last assessment valuation of its real estate before the commence- ment of business on the morning of the first Monday of the months of January, April, July and October of each year, and shall transmit the same to the Comptroller of Finance within five days thereafter. And any bank failing to transmit such report shall be subject to a penalty of one thousand dollars for each day after said five days that said report is delayed beyond that time. The Comptroller shall cause abstracts of said reports to be published in the United States Bulletin of Finance, and the separate report of each association shall be published by the association in a local daily newspaper for at least one week. Said association shall forward, with each quarterly report, one-half (}4) of one per cent of the cash used on its reserve security, during the preceding quarter, as interest thereon, on sums not to exceed $50, ooOt and three-fourths of one per cent per quarter on sums in excess of $50,000 and less than $ioo t ooo; thereafter the rate shall increase one per NATIONAL CURRENCY 51 cent per quarter additional on each additional $50,000 used or on any part thereof: and in case of default in the payment thereof, by any association, said interest may be collected in the manner provided for the collection of United States duties of other corporations. In addition to the quarterly re- ports required herein, every association shall, on the first Tuesday of each month, make to the Comptroller of Finance a statement under oath of the president, or the cashier, showing the condition of the association making such statement, in respect to the average amount loans and discounts, specie and circulating notes on hand belonging to the association, clearing- house certificates, deposits, and such other matters as the Comptroller of Finance may require.* SEC. 23. And be it further enacted: That no association shall make loans or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith ; and stock so purchased or acquired shall be sold within six months from the time of its purchase. But no such purchase or sale shall relieve the former owner thereof from his pro rata of responsibility for all debts incurred by the association prior to sale and transfer to a new purchaser in good faith. SEC. 24. And be it further enacted : That no association, or any member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital or reserve fund. And if any losses shall at any time have been sustained by any such association, equal to or exceeding its undivided profits then on hand in cash, no dividend shall be made; and no dividend shall ever be made by any association, while it shall continue its banking operations, to an amount greater than its net profits then on hand, deducting therefrom its losses and bad debts and ten per cent for the reserve fund. And all debts due any association, on which the interest is past due and unpaid for a period of six months, unless the same shall be well secured and shall be in process of collection, shall be considered bad debts within the meaning of this act. *One great objection to any increase of the volume of money alleged is that it leads to the inflation of business. Banks usually check this by advancing the rate of interest to such a point that there is no profit in the speculation. The Bank of Germany is required to pay to the government 5 per cent interest on all paper money issued beyond a certain fixed sum. This Section 22 is drawn to prevent the inflation of business. While banks can draw on their reserve with the Government, each bank must pay an increasingly higher rate of interest on each $50,000 drawn. This will run the interest up, on each succeeding $50,000, to a rate where it will be unprofitable to use it. The result will be, not that business will be killed off and people lose all of their property, but that they will retrench as speedily as possible. The want of this principle in our finances caused a loss and shrinkage in values of over $10,000,000,000 in 1890. And then, to stop a nation's panic and calamity, the United States Treasury came to the relief of banks. The above provides a method for all such emergencies. 5 2 NATIONAL CURRENCY SEC. 25. And be it further enacted : That the president and cashier of every such association shall cause to be kept at all times a full and correct list of the names and residences of all the shareholders in the association, and the number of shares held by each, in the office where its business is transacted ; and such list shall be subject to public inspection during business hours of each day in which business may be legally transacted. A copy of said list shall be sent with each quarterly report to the Comptroller of Finance. SEC. 26. And be it further enacted : That the directors of any bank incorporated under any National or state law may, upon the authorization of the owners of two-thirds the capital stock, in writing, duly signed and acknowledged, avail themselves of the provisions of this act and become a National association under their corporate name by complying with the provisions oj this act; the said directors being by said vote authorized to execute all papers relating thereto. Any matters not herein provided for in such cases shall be adjusted by the Comptroller of Finance in accordance with the spirit and intention of this act.* SEC. 27. And be it further enacted : That all associations under this act, when designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money, ex- cept receipts from customs, under such regulations as may be prescribed by the Secretary ; and they may also be employed as financial agents of the Government ; and they shall pepform all such reasonable duties, as de- positaries of public moneys and financial agents of the Government, as may be required of them. And the Secretary of the Treasury shall require of the association thus designated, satisfactory security for the safe keeping and prompt payment of public funds deposited with them, and for the faith- ful performance of their duties as financial agents of the Government. SEC. 28. And be it further enacted : That all transfers of the assets or any part thereof, of any association doing business hereunder, made after the commission of an act of insolv- ency, or in contemplation thereof, with a view to prevent the application of it as assets in the manner prescribed in this act, or with a view, to the preference of one creditor to another, shall be utterly null and void. SEC. 29. And be it further enacted : That any director, officer or employ^, of any association organized hereunder, who shall knowingly violate, or permit any of such persons to violate the provisions of this act, shall be removed forthwith from his posi- tion, by the proper authority of the association, or by order of the Comp- troller of Finance. And any director, officer or employ^ of such associa- tion who shall so transact the business of such association, or any part of it, as to intentionally defraud the association or any one else, or with the intention to deceive or mislead any officer of the association, or any agent appointed to examine the affairs of such association, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punished by im- prisonment for not more than ten years. * This section provides a way whereby state banks or private banks caa re-incorporate under the National system. NATIONAL CURRENCY 53 SBC. 30. And be it further enacted : That all suits and proceedings arising out of the provisions of this act, in which the United States or its agents or officers shall be parties, shall be conducted by the district attorneys of the several districts, under the direc- tion and supervision of the Solicitor of the Treasury. And that all suits or actions arising under the provisions of this act, may be had in any circuit, district or territorial court of the United States held within the district in which the association may be established, or in any state, county or mu- nicipal court in the jurisdiction of which said association is established, which has jurisdiction in similar cases. SEC. 31. And be it further enacted : That if any person shall falsely make, forge or counterfeit, or cause or procure to be made, forged or counterfeited, or willingly aids or assists in forging or counterfeiting any note in imitation of, or purporting to be in imitation of the circulating notes issued under the provision of this act, or shall pass, utter or publish, or attempt to pass, utter or publish, any false, forged or counterfeited note purporting to be issued under the pro- visions of this act, knowing the same to be falsely made, forged or counter- feited, or shall falsely alter, or cause or procure to be falsely altered, or willingly aids or assists in falsely altering any such circulating notes issued under the provisions of this act, or shall pass, utter or publish, or attempt to pass utter or publish as true, any falsely altered or spurious circulating notes issued, or purporting to have been issued under the provisions of this act, knowing the same to be falsely altered or spurious, every such person shall be deemed and adjudged guilty of a felony, and being thereof convicted shall be sentenced to be imprisoned and kept at hard labor for a period of not less than five years nor more than twenty years, and fined in a sum not exceeding one thousand dollars. SEC. 32. And be it further enacted : That if any person shall make or engrave, or cause or procure to be made or engraved, or shall have in his custody or possession any plate, die or block after the similitude of any plate, die or block from which any cir- culating notes issued as aforesaid shall have been prepared or printed, with intent to use such plate, die or block, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or. possession any blank note or notes engraved and printed after the similitude of any notes issued as aforesaid with intent to use such blanks, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, or shall have in his custody or possession any paper adapted to the making of such notes, and similar to the paper upon which any such notes shall have been issued, with intent to use such paper, or cause or suffer the same to be used in forging or counterfeiting any of the notes issued as aforesaid, every such person, being thereof convicted by due course of law, shall be sentenced to be imprisoned and kept at hard labor for a term not less than five or more than twenty years, and fined in a sum not exceeding one thousand doUacs. 54 NATIONAL CURRENCY SEC. 33. And be it further enacted: That the Comptroller of Finance shall cause to be prepared each month concise information showing the amount of circulating notes issued during the preceding month, and the approximate amount df circulating notes, gold and silver coin, in each state, territory, district, and in the principal cities of the United Stales, and also the amotmt in the various vaults or Treasuries of the United States. Also the amounts expended by the Government in each state, territory or district. It shall also contain the name of each bank, the amount of its capital stock, its reserve fund, and its losses for the preceding month, and such other information as shall be deemed of sufficient value to the financial interest of the people to be published. Such information shall be published monthly by the Department of Printing in pamphlet form, of convenient size for permanent binding in book form. One copy of each issue shall be sent monthly to each of the following parties : To each association doing business heretmder, to the President and each member of his Cabinet, to each member of Congress, and to such other officers of the Government as the Comptroller of Finance may direct. Also to the Governor of each state, territory or district, and to each public library, itniversity or college applying therefor. Any person may have a copy forwarded to his address for one year by first forwarding to the Comptroller of Finance the sum of one dollar* SEC. 34. And be it further enacted: That as the currency notes shall accumulate in the Treasury of the Government from revenue or otherwise, they shall be returned to circulation among the people, in addition to the ways hereinbefore specified, by paying the current expenses of the Government; by the purchase of suitable grounds and the erection of suitable buildings for post offices and other uses of the Government ; by the construction of such other works as shall be deemed by Congress for the best interests of the public. The expenditures shall be made annually, in each state, territory or district as nearly as may be in proportion to the number of Us inhabitants ; provided, that stales already supplied with public buildings shall not receive additional expenditures until the other states, territories or districts shall have had their equal proportions. All public work shall be done by day^s labor, at the rale of one dollar and fifty cents per day for eight hours work for common labor. A less rate shall be paid where the laborer is not able to perform a reasonable day's work. The expenditures hereunder shall be as directed from time to time by Congress. ,f *This is a new and very important section. It provides for the monthly publication of a "Bulletin of Finance," containing information showing the monthly issue of currency ; showing as nearly as may be the volume of gold, silver and currency in each state or territory ; also showing the ex- penditures of the Government in each , also showing the essential facts relating to the condition of each bank. It also provides for the proper distribution of these Bulletins. The object of this is to complete the efficiency of the money system of the United States, and furnish to the people correct knowledge on current finances. It furnishes the foundation knowledge on which to properly execute Section 34. ^Section 34 is of very great importance. It is declarative of a policy. Our Nation t^day has no organized method for redistributing the money that . NATIONAL CURRENCY 55 SEC. 35. And be it further enacted : That all notes issued hereunder and all moneys received by the Comp- troller of Finance hereunder shall be deposited in the Treasury of the United States. And the Comptroller of Finance shall keep an itemized account of the sources from which received, with the dates thereof. accumulates in the United States Treasury from revenue and taxes. At times vast sums are stored, to the detriment of business : and the cry is raised, " What shall we do with the surplus ? " This section provides that, in addition to the ways provided in Section 7, this money shall be spent for the usual expenses of the Government ; and that the Government shall purchase suitable grounds and erect thereon suitable buildings for post offices and other public uses, and that the ex- penditure shall be made annually in each state or territory in proportion to its population. Under this system, National public improvements, such as on the Mississippi River or Nicaragua Canal, or for irrigation, may be carried out. As our laws now are, it is very difficult to get any Government buildings erected except in certain political localities. The money is drawn from the people in every part of the country, and should be reexpended proportion- ately among them, as it came from them. It is not a charity for the Government to spend money in a community. That is where it should be spent. Every city and village should have a respectable and commodious post-office building, erected and owned by the Government. This section further provides that this public work shall be done by day's labor, at say $1.50 per day for common labor. The object is this : first-class laborers always command higher wages from private capital, and the next grade of labor is left unemployed. It is in this class that the suffering mostly occurs. If the people of the United States in public work give employment to this class of people, they will be aiding citizens who should receive the care of the stronger. Such laborers cannot, for various reasons, perform as much work per day as the best laborers. Public buildings would cost just as much, or even more, by employing this class than by employing the best class : but the object of any government should not be to get the cheapest results in a specific case, it should be for the general good. This class of laborers must Irve. If labor is not furnished, they must beg or steal. In either of these cases the public must bear the expense. It is far better to keep up the tone of respectability among our people, by furnishing employment and paying what the work is worth. Thus, instead of the laboring class feeling that an ever-widening gap existed between them and the form of government, they would feel it to be their friend and would be interested in maintaining its existence. Educated, and with high aspirations, our people should receive better wages and a preference in employment. If we wish to maintain our standard of civilization, we must pay for it and help our educated laborers to a higher plane of life. They should not be forced into competition with laborers emerging from a low civilization, in foreign nations. And here, in protection of our own laborers, would it not be well for our Government to close its doors to the inflooding of foreign labor? Why should we pay foreigners for labor and let our own citizens go idle? It is a noted fact that where colonies of foreigners get control of local labor, the American laborer finds it too hot for him to remain. We should be generous, but we should not be so generous that we give our employment to strangers and drive our own sons and daughters of America into idleness, shame and want. If our legislative halls are dominated by such a foreign sentiment, it is time that they should be 5* NATIONAL CURRENCY , SEC. 36. And be it further enacted : That all improvements on property described in the certificate of organ- ization shall be kept insured by the association to the full amount of its assessed value, payable to the Comptroller of Finance ; and all insurances on such property , in whatever name insured, shall, in case of loss, be paid by the insurance company to the Comptroller of Finance, to be by him disposed of, with the consent of the Secretary of the Treasury, as they may deem best in the interest of the various parties concerned* SEC. 37. And be it further enacted : That it shall be unlawful for any officer acting under the provisions of this act to countersign or deliver to any association, or to any other com- pany or person, any circulating notes contemplated by this act, except as herein provided, and in accordance with the true intent and meaning of this act. And any officer who shall violate the provisions of this section shall be deemed guilty of a high misdemeanor, and on conviction thereof shall be punished by a fine not exceeding double the amount so counter- signed and delivered, and imprisoned for not less than one year and for not exceeding fifteen years. SEC. 38. And be it further enacted : That if the directors of any association shall knowingly violate, or knowingly permit any of the officers, agents or servants of the association to violate any of the provisions of this act, all the rights, privileges and franchises of the association derived from this act shall be thereby forfeited. Such violation shall be first determined and adjudged by a proper circuit, district, or territorial court of the United States, in a suit brought for that cleared of the un-American element, and men representing the American idea sent to make our laws. The redistribution of wealth is one of the fundamental problems of the human race, to be solved by each nation. The Israelites attempted it by Years of Jubilee, when debtors were discharged and heirs were restored to the real property of their ancestors. Every human being is entitled to live, and self-preservation is an inaliena- ble right, lying at the foundation of every government. The non-property-owners own their ability to labor, and out of it are entitled to obtain the necessaries of the civilization in which they live, to-wit : food, clothing, shelter, education. The best interests of property-owners require that there should be no degraded, ignorant classes. If they are not allowed to live by their labor, they are entitled to live by robbery or begging. Prosecution to prevent this eventually results in anarchy, as shown by history of past nations. It therefore becomes the duty of a government, by a wise system of taxation, to collect money from the owners of property, and use in in em- ploying the labor of non-property-owners to produce benefits for the com- mon good. By pursuing such a policy as this, our citizens would come to regard our Government as a common benefactor ; and as a matter of individual protection would stand solid against foreign or domestic danger. It is with this view before me that Section 34 is proposed for the par- tial redistribution of wealth. *Section 36 provides for the insurance of buildings or property used in the proposed banking system. NATIONAL CURRENCY 57 purpose in the name of the Comptroller of Finance, which decree shall adjudge the association dissolved. Thereupon the affairs of the associa- tion shall be closed up by the Comptroller of Finance ; and in case of such violation, every director who participated in or assented to the same shall be held liable in his personal and individual capacity for all damages which the association, its shareholders, or any other person shall have sustained in consequence of such violation. Such directors shall thereafter be dis- qualified for the office of director in any association formed hereunder ; and any president, director, cashier, teller, clerk or agent of any associa- tion who shall embezzle, abstract or wilfully misapply any of the moneys, funds or credits of the association, or shall, without authority from the directors, issue or put forth any certificate of deposit, draw any order or bill of exchange, make any acceptance, assign any note, bond or draft, bill of exchange, mortgage, judgment or decree, or shall make any false entry in any book, report or statement of the association, with intent in either case to injure or defraud the association, or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent appointed to examine the affairs of any such association, shall be deemed guilty of a misdemeanor, and upon con- viction thereof shall be punished by imprisonment not less than one and not more than ten years. SEC. 39. And be it further enacted : That the Comptroller of Finance, with the approbation of the Secretary of the Treasury, as often as it shall be deemed necessary or proper, shall appoint a suitable person or persons to make an examination of the affairs of every banking association formed hereunder ; which person or persons shall not be a director or other officer or employ^ in any association whose affairs he shall be appointed to examine, and who shall have power to make a thorough examination into all the affairs of the association, and, in doing so, to examine any of the officers and agents thereof on oath, and shall make a full detailed report of the condition of the association to the Comptroller. And the association shall not be subject to any other visit- orial powers than such as are authorized by this act, except such as are vested in the several courts of law and chancery. And every person appointed to make such examination shall receive for his services at the rate of five dollars for each day employed by him in such examination, and two dollars for each twenty-five miles he shall necessarily travel in the per- formance of his duty. SEC. 40. And be it further enacted : That persons holding stock as executors, guardians, administrators or trustees shall not be personally subject to any liabilities as stockholders, but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward, or person interested in said trust funds would be if they were respectively living and competent t act and hold the stock in their own names. NATIONAL CURRENCY SEC. 41. And be it further enacted : That hereafter no National associations for the purpose of banking shall be formed except wider the provisions of this act, and all banking institti- tions now under the provisions of prior acts of Congress shall be allowed to continue under such acts until their proper term of existence has expired* SEC. 42. And be it further enacted : That the present Comptroller of Currency shall hereafter be known as the Comptroller of Finance, under this act, and under such name shall, with the Bureau now established, perform all duties required under the various acts of Congress relating to currency or a circulating medium. SEC. 43. And be it further enacted : That all acts or parts of an act in conflict with the provisions of this act are hereby repealed, and Congress may at any time amend, alter or repeal this act. * Under Section 41, banks can be formed under this law. State or pri- vate banks can be formed as usual under state laws, but of course cannot get the benefit of this act. NEW SECTION. The currency issued under the provisions of this act shall be deemed a public use, and shall not be subject to taxation in the hands of citizens of the United States ; but gold or silver coin or bullion shall be subject to taxation at its market or commercial bullion value '.f fTfeis section I have not formally made a part of the proposed law, but submit it for consideration. Its direct object is to drive gold and silver into the United States Treas- ury to avoid taxation, causing currency to be issued therefor (see Sec- tion 6), thereby keeping an unusually large supply of those metals in the Treasury for any required demand. Usually money escapes taxation, and practically the public gets no re- turn benefit. Under this section gold and silver will be deposited in the United States Treasury, and currency taken out therefor. In this way, while the currency is not taxed, a public benefit will arise from its exemption. In return, money will loan for a proportionately lower rate of interest. This will again give a proportionately lower price, on all ajrticles consumed, to the consumer, and in these respects directly compen- sate all paying taxes on other property. In conclusion, let me say that the people should demand only such a money system as will do justice and equity to all the people and all classes. While you complain of being overreached, you must not in return over- reach or do injustice to others. I would impress upon you that all schemes for a National system of finances, that are based on the idea of giving a class of persons or banks power to issue or control the issue of money, are dangerous, and sooner or later will be abused. Demand a constitutional amendment, and a law that issues the money by authority of the people, backed by the pledged wealth of the whole Nation, and circulated for the benefit of all, with no special privilege for any class, and in volume sufficient to fully transact the business of our growing country. Press and Other Comments. " We advise our readers to look out for this pamphlet. "The views on the currency question are novel, the reasoning taking, and the disregard for many old iinancial doctrines is refreshing 1 in these davs of hackneyed reiteration of stock argu- ment's on the currency question." RliodeJ Banking 'Journal, New Tork* " Judge Widney's revised treatise on the present, aspect of banking and currency in this iniitry, especially the country, especially the latter, is able, laborious and patriotic. A California clearing house should print and circulate this treatise f *^~ -f^.,*,,,.^ o* i-^o*- <.,!,;,. v. ,,r^ *.<>t^ *?,/ McNaJly's Bankers' Monthly, Chicago. "Judge Widney has just completed anew treatise on a 'National Money System.' It is the most concise, exhaustive and unanswerable argument on the money question yet produced. The Alliances all over the Nation should supply their members with copies, and learn all they can on this subject. If the Alliances would' drop all other issues and adopt a National platform, with no other plank or issue than "Widnsy's proposed constitutional amendment and act of Congress, they would carry the next presidential campaign by the largest majority ever known in historv." The Rural California n. " It is the clearest and most concise dissertation on the currency question we ever listened to." The Norman Advocate. " Your pamphlet, ' Good as Gold,' ' ;it good in Texas and throughout the South in educating our people on the true .situation.'' ra Trulv, HAKVEY TRACY, Editor Southern Mercury, Dallas, Texas. " Resolved That the La Crescenta. Farmers Alliance and Industrial Union do hereby most gratefully acknowledge the labors of R. M. Widney, LL.D , in the great cause of financial re- form. "J. IT. SHIELDS, President. "WILL S. FAWCETT, Secretary." "THE HISTORY COMPANY, SAN FRANCISCO, February 14, 1891. ' MY DEAR JUDGE: I took your pamphlet home with me last night and read it carefully. I was greatly pleased ;ind instructed. No one can read this work without being convinced that the principles therein set forth are in the main souhd and sensible. It ought to be the means of revolutionizing the question. With kind regards, etc., " H. H. BANCROFT." The Los Angeles Bar Association, on the report of the Committee, J. A. Anderson, Sam- uel Minor and S. O. Houghton, unanimously adopted the following resolutions: WHEREAS, under the decision of the Supreme Court of the United States (notably Hepburn vs. Griswold, S "Wall, 608, and Knox vs. Lee, 12 Wall, 457,) the power of Congress in relation to -legal-tender currency and in relation to standard of value seems to be almost absolute and unlimited ; and whereas, such a power vested in a legislative body will at all times be liable to abuse and may, under political and party excitement, lead to dangerous contraction and in- flation of currency and hurtful changes in the standard of values; therefore be it Resolved First, that the welfare of the people demands that the Constitution of the United States shall be so amended as to define wit i precision the power of Congress in relation to legal-tender currency and in relation to the standard of value. Resolved Second, that while we do not think it advisable to express an opinion as to the exact nature or wording of the needed amendment, yet we deem it well to call attention to the following proposed amendment in relation to the matter, prepared and proposed by our fellow- citizen, Judge R. M. Widney, to-wit: [See p. 32 for Amendment.] Resolved Third, that copies of these resolutions be sent to the members of Congress from California. Los ANGELES, December 12* 1891, ADDRESS By R. JVE. WIDNEY, LL.D., PRESIDENT OF THE UNIVERSITY BANK OF Los ANGELES, CAL., BEFORE THE AMERICAN BANKERS' ASSOCIATION, In SAN FRANCISCO, September 8, 1892. UBJECT: "VOLUME OF MONEY WHAT IS MONEY STATE BANK NOTES A PROPOSED PLAN." fr. President a)id Gentlemen of the. Does the volume of money have any influence whatever on the trade, commerce, usiness or prosperity of a nation or of a people ? Can there be too much money? Can there be too little money ? Can there be a olume of money used in the business of a people that would be neither too much nor oo little ? Each of these questions will at once be answered by a yes or a no. What evidence will establish the facts of too much, or too little, or the exact volume ? 'an nothing better be offered in evidence and in answer than the random guess of assing thoughts or fleeting opinions ? Are there no laws governing these subjects ? Baron Von Humboldt elaborately and logically demonstrated that there was no hance in the universe. That all things material and immaterial were governed by xed, unalterable, inexorable laws. In this all men of science now agree. There are therefore laws in finance, both as to the volume and the method of using loney, according to which the best results can be obtained, and violating which damage ml failure must inevitably result. These matters you already know, and I only refer to them as a starting point and ) refresh your memories on principles underlying this discussion. One more preliminary thought. At no time in the history of the race has this loney question so imperatively forced itself upon the people and demanded a careful onsideration and wise and just solution. IT MUST BE SOLVED. IT WILL FORCE A OLUTION. IT WILL NEVER AGAIN REST UNTIL IT IS SOLVED ON PRINCIPLES OF USTICE AND EQUITY, AND IN THE INTERESTS OF THE MASSES OF THE PEOPLE. The conflict is irrepressible, and the common intelligence will accept no solution lat does not work out the prosperity of the masses. VOLUME OF MONEY. The first question is, WHAT is THE VOLUME in the world, in the civilized nations, in le United States and in each State ? The following brief statistics compiled from ic most reliable financial reports are submitted for your consideration: COIN AND BULLION IN THE WORLD. old .......................... ...... $3,984,256,589 Per capita ........ $3-22 ilver ................................ 4,512,754,655 - ........ 3.65 Total .......................... $8,497,011,244 " " ........ $6.87 The annual average product for eight years, 1881 to 1888, was : old .......... 4 ...................... $108,376,258 Per capita ........ $0.08 ilver ................................. 121,389,242 " " ......... 09 Total ......... .............. $229,655,500 " " ........ $0.17 The annual consumption in the arts for the world is about : Gold $64,000,000 Per capita $0.05 Silver 21,660,000 " " .... .02 Total $85,660,000 " " $o . 07 This leaves in gold and silver only $144,005,506, or 10 cents per capita to be added annually to the world's working coin capital. The six leading nations have in gold and silver coin and bullion as follows England $650,000,000 Per capita $i 8 . oo France i ,600,000,000 Germany 645,000,000 Russia 250,000,000 Italy 200,000,000 United States 1,180,240,177 4300 14 oo 12.50 6.00 19.00 Total $4,525,240,177 Average $18.75 This leaves about $2 per capita for all other nations. The-above six nations have over $18 per capita of the world's gold and silver. All other nations only $2 per capita. As the other nations awaken to the civilization and business activity of the nineteenth and twentieth centuries, they must and will draw more and more coin from the six nations. This is now occurring. South America, India, China and Egypt are constantly absorbing more and more of the coin. India alone in recent years has taken over a billion. They are drawing it from the six nations that have so vastly more than their proportion. The annual addition of 10 cents per capita does not even keep pace with the increase of population. Financiers to whom the money interests of the nation are confided should weigh well the import of these international facts and act before it is too late. Can you 3top the operation of this law of the outflow of coin ? No. Then what will you do to re- place your home volume ? IN THE UNITED STATES WE HAVE THE FOLLOWING FACTS : Gold $694,869,680 Per capita $11.00 Silver 485,370,497 " " 8.00 Total $1,180,240,177 " " $19.00 The annual product in the United States is : Gold $32,976,000 " " Silver 64,768,730 " " Total $97.735^730 ....... $i . 56 Industrial purposes use : Gold $16,697,000 Silver , 8,767,000 Total $25,464,000 The amount remaining for coinage of both gold and silver is about $72,271,730, or per capita $1.10. As shown by these statistics, Europe is furnishing coin to the uncivilized nations that are springing up into commercial activity. As her millions of emigrants and speculators and business men go to these new countries, they take their personal money with them. They, before leaving their native land, sell all of their property, take it in coin and settle in their new homes. Can you or any one stop this outflow, this personal exportation of coin ? Europe, in turn, buys our gold buys it as she buys corn, wheat or cotton ; buys it and exports it to refill her depleting vaults. We are as helpless to stop this outflow as Europe is to stop the outflow from her. When New England is drawn down too closely on the coin supply., she will export a $20,000,000 in gold from San Francisco to protect it from " the dangers of an exposed sea-coast city" transfer it to Washington, get tired, and unload it in New York sub-treasury subject to "the dangers of a sea-coast city" where money was already proclaimed to be a glut on the market. Brave California saw the money go without even a financial tremor. Had $20,- 000,000 in gold gone from New York, at one shipload, would there- have been no unsteadiness of her financial nerves ? But what does all this demonstrate? Simply that the coin of the world is being redistributed among the people of the earth under the operation of a law that no combination can control. If there is enough money in the world, why do these nations draw it away from us ? If we have more than enough, why do we struggle to keep it ? The following table, compiled from the report of the Comptroller of Currency of October 31, 1891, throws a flood of light on the volume of money in the various States available for new business : ACTUAL WORKING CASH In the Banks of the United States Available for Commercial Use. On pages 154-5, Report of the Comptroller of Currency for 1891, Vol. I., are the National Bank statistics, showing the legal amount of cash reserve required by law, also showing the amount of cash held as a reserve. I subtract from the actual cash held the cash required by law, as shown in the first two columns of page 155: Total held $296,850,683 " required 216,899,737 Working cash in United States $79,950,946 or $1.23 per capita. In addition to the above, the banks held certain credits against each other, and a small amount of credit against the United States Treasury. But the credits of banks against each other do not increase the cash volume of the banks; for if the credits should be extinguished by cash payments, it would only shift the cash from one to another. Banks hold about $15,720,000 claims against the United States Treasury, as shown on page 155: but they owe to the United States Treasury about the same amount. Hence, when the whole credits and debits are extinguished, it will leave the cash as I have shown above. On page 241 of the same report is the cash status of all State Banks besides National. See middle column: Total cash and cash items $107,453,889 But cash items are not real money. Bankers all know that cash items are only first-class demand credits which, when paid, remove cash from some other place. Deduct cash items 51,668,218 Actual cash in State Banks $55,785,671 Page 241 shows the deposits in these State Banks to be 556,637,012 The lowest National Bank reserve allowed is 15 per cent, on deposits. Deduct this amount from the cash above 83,495,551 Deficit $28, 709,880 From this it will be seen that the State Banks, including Savings Banks, are over $28,000,- ooo below a 15 per cent, reserve, and have no real cash working capital. But, as a matter of fact, Savings Banks have not over I or 2 per cent, reserve, which would bring the State Banks of deposits up to a safe condition; but could not leave a working capital of over $10,000,000 cash, actual money. They alone are not limited to any reserve, and are postponing financial calamity by straining their draw on cash to its utmost limits. From these statistics it appears that National Banks have a working cash fund of $79,950,946 State Banks have a working cash fund of 10,000,000 Total $89,950,964 or about $1.40 per capita. In the hands of the people is an unknown amount in actual circulation. Whatever the sum is, it must be regarded as the people's pocket reserve for daily use. It is not available for commercial use. The following table computed from pages 1^5 and 234 of the Comptroller's Report for Per capita. $0 90 48 72 I 26 i 39 1 85 2 88 1 41 2 59 i 1891, Vol. i, shows the total volume of actual available working cash in the National Banks each State, and the same expressed per capita. The State Banks would add probably 10 per cent, to each item : State. Total working cash. Maine $597,825 New Hampshire 181,966 Vermont 249,089 Massachusetts 2,900, 776 Rhode Island 489, 123 Connecticut 1,412,367 New York 17,273,355 New Jersey 2,090, 125 Pennsylvania 13,949,243 Delaware 245,041 Maryland 2,274.615 District of Columbia 1,318,045 Virginia 1,008,421 West Virginia 425,448 North Carolina 361,231 South Carolina 143, 1 77 Georgia 675, 186 Florida 198,825 Alabama , 465,850 Mississippi 190,832 Louisiana 675,015 Texas 3,480,415 Arkansas 1 18,538 Kentucky 887,828 Tennessee 1,025,279 Ohio 5, 1 18,543 Indiana 3,791,328 Illinois 10,620,653 Michigan ,067,294 Wisconsin ,329,120 Iowa , 347,695 Minnesota ,55,7 2 3 Missouri 81 1, 1 18 Kansas ,435>9 62 Nebraska ,608,594 Colorado ,918.449 4 35 Nevada 2,055 4 6 California 2,146,310 I 43 Oregon 934,259 2 80 Arizona 35>934 59 North Dakota 224,355 I 16 South Dakota 271,297 79 Idaho 136,825 i 68 Montana 662,400 4 56 New Mexico 1 16,284 74 Indian Territory. 563,055 3 10 Oklahoma. 1,194,301 10 38 Utah 120,617 51 Washington 2 7,358 08 Wyoming I3?943 25 The foregoing statistics show conclusively the insufficient money supply and its unequal distribution in the States. Do they not portend further financial calamity if not relieved by appropriate legislation ? From these statistics furnished from the sworn statements of our National Banks it appears that the total money available for new business in the National Banks of the United States is only $79,950,946, or $1.23 per capita, while a liberal estimate for State Banks in addition would only increase it to $1.40 per capita. The distribution of this surplus is as low as 10, 12, 14, 21, 22, 30, and up to 60 cents per capita in the Southern States. In the Western States it runs from 8 to 76 cents. The middle West- ern States average about $1.50; the New England States about $1.75. Where is the great volume of four or five hundred millions that does not 10 43 58 i 38 1 71 2 72 5 ? 76 6 9 I IO 29 99 i 40 appear to be caught by the gatherer of statistics ? It is probably scattered in the pockets of our people, over the farming areas, in store tills, and in business offices of various kinds. But why not count it in the available working cash of the country ? The answer is yes and no. Yes, for it fills a place that if vacant would absorb from other sources. It is like the fills in grading a road-bed. A vast amount of material must be used to fill up the road to reach a uniform line. But such material cannot be removed and used some other place. It must permanently remain there, apparently useless except only to fill a hole. So this vast volume in the pockets and tills of the people must ever remain there as a pocket reserve. If any part is drawn out and placed in bank, it immediately returns to fill a hole. This sum, therefore, cannot ever be used in developing new industries or in opening up and sustaining new business. Its volume will increase as population increases, and any safe money system must count on this as a permanent fact. It must so fix the volume as to provide a working cash capital perpetually above the pocket reserve. The reserve money in the National Treasury, in banks and in the pockets of the people is and always must remain dead money. It is held to meet imaginary demands or runs. It is held to inspire confidence. Let me present you a picture, in figures, of the money situation in the United States, gold, silver and paper, July I, 1891. (See Treasury Report, p. cxl.) Total stock 82,195,224,075 Per capita..: $34.31 This is the delusive phlethora of money spoken of. Look again. This money is located as follows: U. S. Treasury $697,783,368 In circulation 1,497,440,707 Per capita 823.41 Purported amount $2,195,224,075 " '' $34.41 Of the money in the U. S. Treasury the following amounts are duplicates : That is, the gold and silver certificates represent gold and silver held for their redemption, and either they or the gold and silver should not be counted, for only one can be used as money. The case stands as follows : Gold certificates $151,486,429 Silver 314,715,185 Total duplicate $467,201,614 Taking the reported general stock and deducting the above, we have : Reported general stcck $2,195,224,075 Duplicate 467,201,614 Actual general stock $1,628,022,461 Per capita $25.04 Deducting this duplicate stock from the total amount in the U. S. Treasury, we have : Apparent stock, U. S. Treasury $697,783,368 Duplicate stock 467,201,614 Actual money in U. S. Treasury. . $230,581,754 But from this amount must be deducted certain sums specially held to redeem or cancel other paper money, as follows : To redeem greenbacks $100,000,000 This leaves the U. S. Treasury powerless to aid new business with money. Let us now examine the purported amount in circulation, and see what amount is tied up in reserves. October 31, 1891. National Bank reserves $216,899,737 State Bank reserves 83,495,551 Total reserves $300,394,288 Deduct from this general circulation 1,497,440,707 Per capita $23.04 300,394,288 " " 4.07 Total $1,197,046,419 " " $18.71 6 This volume must suffer another reduction before we reach the legitimate amount available for actual business with which to develop the new business of the country. The Treasury reports can find in the entire banking system of the United States only the following amounts of money out of the amount published as in circulation : July i, 1891. National Banks $3i345i>57 State and other Banks 165,634,081 Total $479,085,588 Deducting this from amount reported in circulation, we have $1,497,440,707 Per capita $23.41 479,085,558 7.50 Balance $1,018,355,119 Per capita $13.91 The whereabouts of this balance is unknown. It includes an unknown amount of lost or destroyed money, unrecorded exported money by travelers, etc., and the pocket and store reserves in the country. It is not available for any new business. The known amount, as shown in all of the Banks in the United States, is : $479,085,588 Per capita $7 . 50 Of this there is tied up in reserves 300,394,288 . " " 4.70 This leaves a working cash capital of. 178,691,300 " " 2.80 This is the most favorable possible result shown by the statistics for July I, 1891. The statistics for October 31, 1891, show only half of the last results, or $1.40 per capita, and is worked out from the detailed report of the Banks, and is more 'nearly cor- rect. From this it appears that the figures, upon which we must do our banking busi- ness, show from $1.40 to $2.80 per capita as the working cash capital for new or cur- rent business. The Treasury report of $34.31 per capita of general stock, or of $23.41 per capita in circulation, while true as a Treasury balance sheet, which alone it is, cannot be used as a basis for estimating the working money capital of this nation. With this vivid picture in our minds as to the actual volume of money in the business world, its dis- tribution and the amount available for active business and held as reserves, lost, de- stroyed, exported and tied up in pocket and till reserves, let us next examine the business activity which calls this money into use. The volume of business in the United States is vastly above $170,000,000,000 an- nually. Our total volume of money represents only six mills on the dollar for actual business. But if you take the actual volume of money available for business, it will represent such a small fraction of a cent that we cease to wonder at the impossibility of moving the volume of trade, and only wonder that business is not totally paralyzed. As bankers, you understand that the actual volume of money holds the same rela- tion to the volume of business that the cash reserve of a bank holds to its deposits. There can be no permanent prosperity until our volume of available money is in- creased. Increasing disasters are abundantly stored in the future on the present relation between the volume of money and business. You might as well try to run the railroad business of the United States with a few hundred cars. When you look over the commercial growth of the world, the clanger is more ap- parent. South America, India, Africa, Asia and other minor communities, which have been in a commercial sleep for ages, are suddenly awaking to activity and life. They have heretofore had about $2 per capita in money for business. Now they will draw immense volumes from the money stock of the more advanced nations. Nothing can stop it. India, in recent years, has absorbed over $1,000,000,000 of coin money, a volume which has not even filled the pocket and till reserves of that nation. China is absorbing hundreds of millions, and its presence among its vast population is hardly detected. The redistribution of the world's coin money has hardly commenced, and the nations having more than their per capita must surrender more and more until some- what of an equilibrium is reached. While this international disturbance is occurring there is a similar one occurring in the United States. The South and West are developing with phenomenal vigor and rapidity. They are absorbing vast amounts of material and money. They must draw on the money volume of the other States. The result of this will be to check up the industries of the New England States and transfer them, or the funds used in them, to other new locali- ties West and South. Various methods have been suggested to furnish a money supply. The one now attracting most attention is the old State Bank note system. The very name suggests to those who have had experience with it financial chills and fever. STATE BANK NOTES. The financial fallacy of State Bank notes need not be one of opinion. It can be too clearly and forcibly shown up by facts and figures. The general error is this : Each dollar of State Bank notes deposited in a bank creates a debt from the bank payable only in legal tender. In this way the legal tender debt of banks grows, but the volume of legal tender in the vaults of the banks does not increase. Business pros- pers on this increased volume of credit money, deposits increase; but when a panic comes and depositors call for legal tender, the supply is quickly used up and bank suspensions result. In the panic of 1838 the Treasury report shows the following statistics, of money in circulation: State Bank notes $149,185,800 Specie 27,031,476 Excess of State Bank notes $122,1 54,324 The specie was the only legal tender. The Government had on October I, 1836, $49,000,000 on deposit in thirty-six different State Banks. President Jackson ordered it withdrawn and stored in United States vaults. The demand for withdrawal of $49,000,000 legal tender from the banks when there was only $27,031,476 in circulation at once swamped the banks, leaving a run on the banks to redeem their notes of over $149,185,800. All banks in the United States suspended. Solvency or security back of a note was not what depositors wanted. They wanted a legal tender payment. Had the State Bank notes been greenbacks in 1838, the statement would have been : Legal tender United States notes $149,185,800 Specie 27,031,467 Total legal tender '. $176,217,267 The withdrawal of the United States deposits of $49,000,000 would have left in banks $127,217,267 legal tender to pay depositors. No suspensions could thus have occurred. This was the great crash and panic of 1838. PANIC OF 1857. The State Banks opened again and gradually expanded their note issue. The re- depositing of their notes as money in banks resulted in* the following condition in 1857: Deposits $i 20,764,757 Circulating notes 83,31 2,269 Total liability $204, 1 7.7,020 Special legal tender 12,970,493 Excess of liability $191,206,527 The loans and discounts were $320,252,890; deduct the liabilities and the solvency represented $129,046,363 over and above liabilities. Notwithstanding this showing, the Ohio Life and Trust Company failed for $7,000,000. But the New York banks began to hedge and called in $57,000,000 loans between August 22d and October i7th, resulting in a crisis of failures and a general panic. The banks of Philadelphia, of 8 the South and West, suspended September I3th. A run at once was made on tl New York banks to redeem their circulation, followed by a run on deposits, causing the suspension of fifty banks in two days. The suspension became general in tl whole country. So much for wild-cat State Banking, whether operated in the South, or West, or in New York, or New England. Had the State Bank issue been a legal tender, issued by the United States, no general failures could have occurred in 1857. The conditions of the banks would have been : Legal tender United States notes $83,41 2,269 Specie 12,970,493 Total $96,382,762 ] Deposits 1 20,764,757 j Loans and discounts 320,252,890 > P This is a better showing than our National Banks have made since their formation j and no panic would have occurred. Again, the State Banks started up using the Co-operative plan. In Ohio thirty-six banks pooled their financial ability; the same was largely done in other parts of the 1 country. PANIC OF 1861. In 1861 the war was in the country. The Government obtained a loan of $150,- 000,000 from sale of bonds from the banks of the country. It was drawn out by the Treasury for payment of war expenses, but it resulted in a general suspension of the banks. The financial statement of the country was : Specie in banks, about $100,000,000 State Bank notes 202,005,767 The Government draw of $100,000,000 in gold exhausted all the legal tender in the country, leaving nothing with which to redeem the State Bank notes. A collapse re- sulted. Had National legal-tender notes been used in place of the State Bank notes the result would be : Specie $100,000,000 U. S. legal tender 202,005,767 Total 302,005,767 The draw of $150,000.000 would not have in this case closed the banks of the Nation. As it was, the State Bank notes were not a legal tender, and were of no more money value than cords of wood or tons of wheat. PANIC OF 1890. In 1890 there were no State Bank notes in circulation, and all the money in the banks was backed by the authority and wealth of the Nation. AH money was National money, yet the enormous straining of 1890, and the heavy draw of gold, failed to cause a suspension of the banks. Suppose that the National Bank notes of $181,604,937 had in 1890 been State Bank notes, a run on the banks would have occurred, resulting in a general suspension. No run could occur on the note circulation, because the resources of the Nation were responsible to pay the issue. No system of State Bank circulation can have back of it more than a small part of the whole wealth of this Nation. The Canadian Bank issue has less than ten ($10) dollars assets back of each one of issue. Our greenbacks have over $200 in assets back of each dollar issued. No State Bank issue can become a legal tender ; it never can be used in a crisis to extinguish debts. It is then the greatest element of weakness and danger. The foregoing brief review of the finances of the United States show a series of efforts for over one-half a century, which, referring back to Colonial times, would include nearly two centuries, to give to society a money-circulating medium. It demonstrates beyond all question the great and constant effort of society to supply itself with money. It demonstrates that society is constantly outgrowing its supply, and has been periodically suffering from financial panic. In a few words it emonstrates that either our circulating medium must be increased to meet the "rowing wants of our growing country, or the business of the country must be periodically killed off until it is within the compass of our circulation. Society is constantly trying to supply this money demand. Will that which is not noney meet the wants ? No ; for if it will, then we do not need money. This brings us to consider the question : What is money? Unless we clearly know what money is, we can not successfully make it. Erro- eous ideas at this critical point result not in producing money, but an erroneous sub- titute for it, which when used in the commercial world sooner or later breaks down society's injury. I know of no definition of money that includes all that should be included, and xcludes all that should be excluded. I submit the following as a correct definition of loney : Money is that article in a Nation with which a debtor can extinguish his debt, without the consent of the creditor, at a fixed unit of value. In other words, a legal snder by the supreme law of the land. As a corollary of this, good money is that loney which will be accepted readily by each person in exchange at its face value, -very man wishes to know that any other person will receive the money at the same alue at which he received it. To illustrate. You owe a man one hundred ($100) dollars. You tender him a undred-dollar gold bar, standard fineness ; he refuses it. You offer him ten such ars ; he refuses. You cannot force it on him. The fiat of the Nation is not on the ars. You melt it into disks, stamped, and of the standard weight of twenty ($20) ollar gold pieces. You tender these ; he rejects them, and sends you to the peniten- iary for counterfeiting. The fiat of the Nation was a forgery. You tender him English sovereigns, gold francs, or marks with the fiat of a foreign nation on them; e refuses them. The debt is not extinguished, for the foreign fiat is null and void in lis land for want of jurisdiction, and they are not money ; only bullion. Now you snder him fifty ($50) dollars in greenbacks, twenty-five ($25) dollars in silver certifi- ates, and twenty-five ($25) dollars in gold coin. He still refuses, and wants all in United tates gold coin. You deposit the money in Court, or in the bank to his credit, and the debt is ttinguished at the will of the debtor, without the consent of the creditor. This is aused by the fiat of the Nation, formulated in the words, " This shall be a legal tender \ satisfaction of all debts, public and private, within the jurisdiction of the United tates." This fiat on the gold, the silver or the paper, makes the money. Nothing else oes or can make money. Some able men assert that the true test of money is the fire test. That is, if you ut it in the crucible and reduce it, a dollar will be left. Suppose the next time you go to pay a debt you put your one hundred (100) ollars in a crucible and fire up, and tender to the creditor the fused results. Have ou in the pot money or bullion ? Can you force the creditor to receive it ? No. The loney element is consumed. The fiat of the Nation has disappeared. The fire test f money is the same on gold money or paper money. It destroys the money power f the article. President Diaz may step into your bank and deposit one thousand Mexican dollars, nd ask for a certificate of deposit for one thousand United States dollars. You say no. Why not ? " says President Diaz, " that is a one thousand-dollar legal tender where I ame from." "Yes," you reply, "that maybe good money in your country, but it 3 not good money in this country." When a nation becomes powerless to enforce and make good its fiat the money lement of the article ceases, and there only remains an article of more or less com- mercial value. Money is an artificial product, and is not a natural product. No mine has ever een discovered out of which money was dug ready stamped with a nation's fiat. All ations in all ages have made different forms of money. Money has no intrinsic value, it only represents labor in some form. The gold in be mountains has no intrinsic value. It is claimed that it takes a dollar's worth of abor to produce a dollar (25.8 grs.) of gold, and therefore that the gold dollar has an ntrinsic value. The fact is, that it only represents a dollar's worth of work. How 10 about a greenback ? when printed and deposited in the United States Treasury it rep- resents no value. It is then the same as the gold in the mountain. But when some one gives the United States (the people) a dollar's worth of labor or material for a paper dollar, thereafter that paper dollar represents a dollar's worth of work as much as ever the gold dollar did or could. They both have the same representative value. And so long as the Nation retains its integrity and power they will each be good as declared by the fiat. Gold has no purchasing power. Nothing can be purchased except by the consent of the vendor. He may consent to sell for payment in iron, cotton, land, or ships. If is his option as a seller to sell for what he chooses. It is only when a debt is created that the debtor can extinguish it at his choice with legal-tender money. DELUSIVE SUBSTITUTES. Having ascertained what money is, and wherein its value consists, let us examine some of the delusive substitutes for money. The State Bank notes never were money. They were only ornamented promissory notes of a bank, back of which was the evasive wealth of a few persons, payable ol demand, if too many were not presented at once. Divested of ornament the faci reads : $5.00 THE BANK OF WOOSTER. $5.00 WILL PAY FIVE DOLLARS TO THE BEARER, ON DEMAND. . . Cashier. .... President. No fiat of the Nation ever made it legal-tender or money. It was a promissory note of the bank alone All efforts for half a century to give it money characteristics were failures and| delusions, and strewed the Nation with financial wrecks as hereinbefore shown. No State Bank note issue can ever overcome the natural laws of finances above setj out. Take now a National Bank note and its legal reading is : $5.00 THE FIRST NATIONAL BANK $5.00 of WILL PAY FIVE DOLLARS TO THE BEARER, ON DEMAND. ..Cashier. ..President. This also is the promissory note of the bank to pay money on demand. On the face of the note is printed .the words : "National Currency, secured by United States bonds, deposited with the Treasure) of the United States. W. S. ROSECRANS, r." " Registrar of the Treasury. The note is secured by a United States bond and the United States is security t( pay the bond. The bond is the unsecured promissory note of the United States tc pay money with interest, at a future date to bearer. 11 We here have an evolution process. The private bank note, corresponding to the d State Bank note, has added to it the endorsement of the Nation, and that endorse- icnt alone gives it value and the confidence of the people. The figure cut by the ational Bank is nothing but the fly on the wagon wheel. The National Bank may jcome insolvent, still the note passes on the national endorsement. If the national endorsement alone makes a worthless bank note as good as gold, hy not let the bank out entirely and have the Nation issue the money legal-tender Dte direct ? This brings us to consider the greenback : $5- $5- THE UNITED STATES WILL PAY TO THE BEARER FIVE DOLLARS. WASHINGTON, D. C. W. S. ROSECRANS, CHARLES FOSTER, Register. Secretary. On the back of this paper is the Nation's fiat : "This note is a legal tender at its ce value for all debts, public and private, except duties on imports and interest on e public debt." Back of this fiat is the wealth of this Nation. Over 2,500,000,000 acres of land th all of the cities, villages, banks, farms, railroads, manufactories, including all the Id, silver and enlightenment, inventive genius, push, energy and fighting capacity of ,000,000 people. As there is not enough gold and silver to run the money business of the world or of is Nation, no alternative is left but to issue paper money in some form. To run a safe business the paper money used should be the best that can be issued, should be such that every man can readily pass it to another in any part of the nited States for the same value that he received it. The joint promise of 65,000,000 of people to pay a dollar in gold to the bearer is ore liable to be fulfilled than the promise of any State Bank or corporation. Being a legal tender it can always be paid out to depositors at its face value. Under ch a system banks have only to guard against a depositors' run, and are free from ns on circulation. An increase in the legal-tender paper money would result in more gold money turning to the Treasury. For the paper money of the Nation is free from taxation, id the gold and silver coin must pay taxes. This is a premium of over I per cent, r year, and would chase the greater part of the coin into the United States Treasury escape taxation. We are safe, in view of the foregoing facts, in asserting that only the General overnment can issue money. That all other efforts are delusive substitutes that build indebtednesses that they cannot legally extinguish and have properly been termed iper lies. The National money notes are readily received at face value, and each citizen can LSS them for the same value he received them for. ELASTICITY. But some one says that National money is not elastic. Well, you could not expect to be so unless you printed it on inclia rubber. No money is elastic. State Bank tes, National Bank notes, no notes are elastic. I make these absurd illustrations to nphasize the fallacy of elastic money. A money system may be elastic in a financial sense, but money is never elastic. But the system is not money, and an elastic system can use good money as readily 12 as bad money, and a non-elastic system will fail equally with bad money as with goo< money. The financial systems of the United States have been non-elastic. The financia systems of the States were elastic. Now, if we combine the desirable elastic systems of the States and the desirabl good money legal-tender of the United States we can have what has never yet beei I had in the United States safety and elasticity. What is the principle of elasticity so desired and sought after? It is this, that a I certain seasons of the year a large volume of money is required, at other seasons j smaller volume. The problem then is, how can we have this large volume whei| required and not pay or lose interest on it when idle. How did the State Banks do it ? Why, issued their own notes to meet the largi | demand, and let them lie idle in their vaults when not needed. Apply the same principle to a National issue. When not used they lie idle in thil United States Treasury with no cost or loss of interest to any one. When a large volume is required at a certain season, provide that on proper bond; | of the United States or of States, cities or counties that the National Banks can borrov' this money, say at I percent, or 2 per cent, interest to the Government and reloan itt dollars for each twenty-five miles he shall necessarily travel in the performance of his duty. SEC. 39. That persons holding stock as executors, guardians, adminis- trators, or trustees shall not be personally subject to. any liabilities as stock- holders, but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward, or person interested in said trust funds would be if they were respectively living and -competent to act and hold the stock in their own names. SEC. 40. That hereafter no national associations for the purpose of banking shall be formed except under the provisions of this act, and all banking institutions now under the provisions of prior acts of Congress shall be allowed to continue under such acts until their proper term of existence has expired. The currency issued under the provisions of this act shall be deemed a public use, and shall not be subject to taxation in the hands of citizens of the United States; but gold or silver coin or bull- ion shall be subject to taxation at its market or commercial bullion value. SEC. 41. That the present Comptroller of Currency shall hereafter be known as the Comptroller of Finance, under this act, and under such name shall, with the bureau now established, perform all duties required under the various acts of Congress relating to currency or a circulating medium. SEC. 42. That all acts or parts of an act in conflict with the provisions of this act are hereby repealed, and Congress may at any time amend, alter, or repeal this act. NOTE. In reference to this bill see House of Representatives document., Fifty-second Congress, second session, Report 2614, Part 2.. From the Los Angeles Evening Express, Nov. 10, 189:5. WANTS MORE MONEY. JU1>GJE WJDNJEY'S REMEDY FOR THE FINANCIAL, STRINGENCY. He Would Add !$30O,OOO,OOO United States Currency to the Circulating Medium The Repeal Law. Judge R M. Widney, President of the University Bank and well known writer on financial subjects, was asked by the EXPRESS for his views on the effect of the silver purchase repeal. He replied: "The effect of the repeal of the Sher- man silver act in itself is not of much consequence, but it may become the precedent for very important action by Congress. Its first effect is to pre- vent a monthly increase of over $3,000,000 per month in our volume of money. This, in our present money stringency, is a great evil. But a coun- ter effect of the repeal may be to in- duce eastern capitalists to more freely put in circulation their hoarded money. This would be a temporary benefit, but there is not to exceed probably $20,000,000 that would be from this cause placed in circulation. It is more probable that such capital- ists will wait to see the result of re- peal. In this case the general money market will grow worse. "The resources, commerce and busi- ness of this nation are so great that it will take not less than $300,000,000 new money added to our present volume to place the country on a prosperous basis. This cannot be done by the use of either gold or silver, for there is not enough of them. We should use all of our gold and silver and supplement it with at least $300,000,000 U. S. currency exchangeable for gold or silver at par, under such rules and regulations as will best subserve the interests of the people. "The repeal of the Sherman act now clears the way for Congress to act free from the silver question. If Congress will now perfect a financial system, increasing our volume of currency, giving it the safety and stability of a constitutional amendment, we can at once enter upon our grandest era of national prosperity. "But it' Congress leaves our financial situation as it now is, we will enter upon a period of danger aud disaster greater than any in the past. Every nation is short in its money volume, and no nation can help any other. There will arise an international struggle for existing money, followed by a domestic struggle of the same kind, resulting in the hoarding of money to a greater extent than ever before. More industries must close up and the army of the unemployed will be increased. They will not starve, and tailing to get work they will drift into organized bands and plunder for a living. No local effort to give employment will be sufficient to meet their wants. The remedy must be as broad as the cause that has thrown them out of employ- ment. The closed industries from which they have been discharged must be revived. This can only be done by increasing our volume of money, the lack of which closed our industries. The sessions of Congress since 1891 are responsible for the present disaster. The political parties have been fighting for office and plunder. Their great object has been to give each other a "black eye," or put the other "in a hole," in order to make party capital for the next campaign. "Had Congress given the people proper financial legislation the nation today would be in a full tide of prosperity. "Europe bought our bonds and se- curities at a low figure. We could re- purchase them now at a still lower figure, but have not the money. If our currency volume were increased, our gold could go abroad and buy our securities while at a low figure, thus relieving our people of this debt to foreigners, and at the same time fur- nish capital for our domestic wants." From the Los Angeles Kvonini; Kxuivss, Nov. 1"., is-*:;. JUDGE WIDSEY ON METALLIC COINS. What He Consid rs to Be the Pioper Use of Gold mut Silver. Judge R. M. Widney, President of the University Bank, in conversation with an EXPRESS reporter, on the coinage question, said: "The present use of silver at 412> grains to the dollar, opens up a profit- able field for counterfeiting. At pres- ent price for silver the silver dollar contains 56 cents worth of silver. Yet backed by 44 cents worth of govern- ment credit it passes for 100 cents. The counterfeiter of silver dollars, making dollars of standard weight and fineness, clears 44 cents on each dollar for his work. Or on each $100,000 he makes $44,000. In the present expert condition of the engraver's art, dies can be made as perfect as any used by the mint. Tbis open field for counter- feiting is free coinage, except the me- chanical cost, which is very small, the counterfeiter reaping a rich harvest. "The Treasury Department reports that there are several million more of silver dollars in circulation than have ever been coined by the mint, showing that the work is extensively carried on. A million dollars of counterfeit means $440,000 profit to the operators. The only way to avoid this and use silver, is for our government to buy silver at its commercial value and issue certificates for it. For silver change, in half dol- lars and less, increase the weight so that the com contains silver nearly up to its commercial value. That is the five-cent piece would be as large as a dime, the dime as large as a 20-cent piece, the 25-cent piece would be as large as the half dollar, and it again as large as the dollar. "The diameter and thickness could both be increased so as to produce a convenient coin. This would do away with nickles, a coin intrinsically worth only about 1 cent and counterfeited by the wholesale. The gold and silver purchased by the government should be ran into ingots of certain weight and fineness and sold at its commer- cial value for currency to those need- ing it for payment of foreign debts. The legal tender currency based on the commercial value of gold and sil- ver and exchangeable therefor at their commercial value would meet every requirement for domestic use, with the silver coins above referred to. "In paying foreign debts gold and silver are weighed and used only at bullion value. No more gold or silver should therefore be coined than may be used for domestic purposes. All the balance of the gold and silver should be run into ingots of the value of say $50, $100 or $1000, or whatever size was found most convenient. Gold coin in circulation looses by wear, sweating, splitting and filling and plug- ging and is therefore not adapted to circulation with advantage. "The coin bags used by the Bank of England and for oceanic shipment are carefully preserved and periodically burned, and the ashes washed out and the fine gold powder saved and melted. "Civilization is rapidly passiug the age wherein gold or silver coins to any great amount will be used. Those metals will be stored and paper money exchangeable for the bullion or coins issued for commercial use. Some one says this is a new plan and therefore objectionable. Quite the contrary. The Bank of Venice, the first bank in the world, one that stood for over 400 years, was based on this principle. It grew up from the demands of trade and met the wants so fully that it stood through the centuries Gold and silver were stored by weight and fine- ness and certificates issued therefor which were used for all domestic pay- ments. The coin was only called for when needed for foreign payments." From tin- [^08 Angeles K\riiiim' K\|>ivss. Nov. IT.. 1893. THE FINANCIAL STBIKGEISCT. Judge Widney Does Not Think TarilV Was the Cause. the Judire It. M. Widney, President of the University Bank, talked instruc- tively to an EXPRESS reporter as fol- lows: "The tariff question is alleged by many to be the cause of tLe present depressed financial condition of the country. A careful consideration of the facts will show such not to be the case only incidentally. "The financial stringency and conse- quent depression antedates the entire tariff agitation. The McKinley act became a law in 1891, subsequent to several serious panics. "On October 3, 1878, the New York banks had issued $22,410,000 Clearing House certificates. These were retired in 1874. "On May 24, 1884, they were again forced to issue $21,885,000, and the last were canceled in September, 1885. "In November, 1890, they agaiD issued to the amount of $15,205,000. All of these were canceled in December, 1890. "In 1893, these bonds were again run short of money and issued $41,490,000 Clearing House certificates, which were canceled in November, 1893. "The issue of Clearing House certifi- cates are among the last resorts of banks to make up a circulating medium in the existence of stringent money times, and are considered conclusive evidence among financiers of extreme danger. "It will be seen from the above that in the last twenty years we have had four stringencies, three of which antedated all tariff and free coil. age agitation." "If it were announced by Congress that the McKinley tariff would not be changed, the industries of the country could not materially open up, for they can not get the actual money to operate on. A limited number could, but the industries generally could not, for the volume of money does not exist. "No silver or tariff legislation will solve the problem, for neither or both are the cause. The cause antedates both of these, as shown by the statis- tics above. "The stringencies of 1873, 1884, 1S90, 1893, explain the political landslides of recent years. "The business of the country has been in a bad condition. The masses of the people felt the pressure. They knew neithnr 1 he cause nor the remedy. They trusted to their political doc- tors. "In the first Cleveland campaign the voters knew that the Republican doc- tor had failed to give relief. The Dem- ocratic political doctors assured to the voters that they could effect a cure, and the people voted them into office. "They failed as completely as the Re- publicans, and the voters again tried the Republican medicos, and elected Harrison on the express promise that they could bring relief. But they again failed, and the condition of the country grew worse. "In the last campaign the Democrats alleged that they hnd the healing balm; that the tariff and the Sherman act wero the evils, and that they would cure both. "The masses suffering under the effect of growing stringency of money, voted Cleveland in with a mighty vote. "But the debate in the extra session of Congress drew forth the declaration from all the parties that the Sherman silver act cut very little figure in the case. It was repealed and no benefit has come from it. The tariff agitation has been of damaging effect. The masses again s-aw that the political doctors were ignorant of the disease, its cauee and its remedy. In the re- cent State elections they have ex- preseed their dissatisfaction. The Populists proposed remedies, but the few people they put in office, as Mrs. Lease of Kansas said recently, are miserable failures, and the shrinking vote shov. s loss of public confidence. "I draw the following conclusions from the facts cited: "The people have been suffering for over twenty years from ctiii^es, un- known to them, the effect of which has been to make tinu s grow worse every year, until it has reached the calami- ties of 1893. "They also know that they are in a country capable of supporting a popu- lation of over 600,000,000, yet with about one-tenth of that number, there is distress, suffering and lack of em- ployment for anxious and willing hands. "They have looked to our politicians and self-constituted leaders, expecting them professionally to know the disease, the cause and the remedy. "They know that they have been fooled. Bad has gone to worse. The people do not care a fig for either the Republican, Democratic or Populist party or leaders. "What they want is a remedy, such that in a country capable of support- 600,000,000 people, starvation, want and ruin shall not stalk abroad among 60,- 000,000 people. Finally these land slides will grow into an avalanche, and either able statesmen who can and will solve the problem of so governing this nation that present inexcusable evils shall be remedied, or will eventually destroy the government. The unem- ployed offer for sale their labor, to get food and clothing. No one buys, for the money is not in circulation, there is a money stringency, a money famine, a stagnation everywhere for want of it, and the remedy withheld. "The remedy is a fundamental re- vision of our financial and monetary system, and no more patchwork." From the Los Angeles Herald, May 27, 1894 THE GOLD RESERVE And Its Maintenance by the Sale of Bonds. [BY R. M. WIDNEY.] Not long ago the secretary of the United States sold United States r> uda to replenish the depleted gold receive. In justification of such action ni'uvi was said b* those uvorable to tfu> me.ir-- ure, they anting such a course to be* the only solution. Recent events show that the aforesaid solution did not solve, and that the re- serve is now below the $100,000,000 limit. If the bond plan is kept up by the treasury department it will result in running all gold-redeemable currency into interest bearing bonds, ami will thus either increase our interest-bearing debt indefinitely or it will retire all of our gold-redeemable currency. Should the government reissue each currency when once taken in fjr gold it would again and again be presented at the United 8 ates treasury for gold redemp- tion, and tije gold reserve would as often fall below the hundred million limit, necessitating again the issue o/ more bonds to sell for gold to redeem c'i.- rency, which again put in circulation would again come back to take out gold and run the supply theieof beljw the hundred-million limit, to again cause the sale of bonds for gold, etc., e c. The outcome of sue t a system will be to enable f;he owners of gold to turn mer chandige into gold interest-bearing bondd just as long as the treas- ury department will keep up its end of the game. Because when the gold is taken out of the treas- ury for gold currency surrendered, the government must pay out this same gold- redeemable currency lor expenses. Owners of merchandise will receive this currency for their articles, and as such currency accumulates in bank or in the hands of goldites, it will be again run in on the treasury and gold taken out, to be resold to the treasury for more interest- bearing bonds This process can end, if carried out, only in the bankruptcy of the United States and the financial enslavement of the people. If to avoid this the treasury should refine to reissue the gold-redeemable currency, then the end would be that all such currency would be turned into gold bonds and our volume of money would becontactel several hundred millions of dollars by ',he retirement of all of our currency. This would so contract our volume of money that we would be reduced to a condition of insolvency. That is, debtors could not get money on thr-ir property to meet their obliga- tions to creditors. There would not be enough money to transact business, a id the financial an 1 commercial panics of the past would only be zephyrs compared to the cyclone that would carry destruc- tion over the land. Evidently this thimble-rigging racket is being systematically worked for all it is worth, by some financial power, on the United States treasury. It increases our interest-bearing debt and decreases our volume of money. It increases our debt and decreases our power to pay the debt. What is trie solution of this riddle by the financial sphinx that is proposing the question, and is financially eating us up for not answering it? The plain answer is, change the sys- tem ; alter the points at which the trick is played. To illustrate, and at the same time approach the point by degrees: What is a United S ates bond? It ia nothing more or less than a clnster of green- backs fastened together and sold at a discount, but lacks oeing a legal tender. The legal phraseology of a greenback ia : The Uuited States of America will pay the bearer flve hundred dollars on demand. Thi , note is a lesjal tender, tte. The United States bond reads: Tbe United States of America is indebted to the bearer in tne sum of five hundred dollars Payable July 1, 1907. To this bond ia attached 40 coupons, to represent the semi-annual payment of interest, say at 4 per cent, for 20 years. The coupon reads as follows: The United States of America will pay the bearer ten dollars on the day of - , 18 . The greenback, the bond and thb coupon are of the sume iegul obligation, a promise to pay: the greenb*ek on demand; rhe bond in 20 year*; the coupons at given intermediate dates. Add th value of the 40 coupons to the face value of the bond and thev represent a par value of $900 in green- backs. That is, selling a $500 4 per cent 20 year coupon bond for par (,$500) is the same as selling $900 in greenback* for $500, payable 20 years .hence without interest. But the bond is not a legal tender and can not be used as money, and its exist- ence and use produce no compensation. A greenback, however, circulates as money, and by its use produced a value equal to the rate of interest. It is of value to the people of the United States in its use. Therefore if selling bonds to buy gold were stopped we cjuM buy gold with greenbacks bv issuing on the same basis as the bonds, to say the least That 19, $900 in greenbacks redeemable in gold 20 years hence would bring at least as much as a bond, $500, giving $400 bonus for the gold. In this case the $900 cur- rency would go into circulation und in- crease our volume of money, and our gold obligation would be the same. The bond is only the promise of the nation unsecured ; so is the cou- pon, so is the greenback. Each has Dack of it the power, the good faith and wealth of the nation, nothing more, nothing less. One is as good as the other, and neither ia better than the other. The power, faith and ability of the nation to meet the obligations is the real basis of value in each ; hence, all financial talk about the bonds possess- ing n element of value not in the trreen- back, is financial sleight-of-han $ to fojl the people. The bond is not as good as the green- back for the ueopleof the United States, for it is not a legal tender, end we get no money use out of it and tr e coupon, wh re- as, from the greenback we get an an- nual money use. Owing to the fact that the greenback has a money use, it would not take $900 in greenbacks, redeemable in gold 20 years hence, to buy $500 in gold. In fact such greenbacks would to- day buy goid either at par or at a slight premium. Because, if the owner of $500 in goid could get $510 ia legal tender currency, he could net the $10 by the exchange and have the $510 with which to pay any of his debts, whereas, before, the gold could only pay $500 of debts. Therefore, to issue legal tender green- backs redeemable 20 years hence in gold, and with them buy goid is better for the people then to sell bonds. But the bonds are better for the money owners, because they are sold at such a discount, and they keep down the volume of money; thus increasing the purchasing power of money. How long will the people etand this transparent fraud? One other important change should be made in our financial system. The treasurer should have the power to charge a premium on all gold or silver taiten for export England, France, Germany and other nations exercise this power, to letain gold and silver. The United States aloue is open to free plunder by foreign financiers in this re- spect, and daily the plundering goes on. It may be safely said that the Ameri- can financial system is the biggest fool system on the lace of the earth, and can only be accoun ed for on the basin either of want of sense, consummate villiany or criminal care- lessness. Oar financial ayatern should be remodeled throughout and placed on a scientific business basis. We should have American money for American business, and enough of it to obviate the necessity oi any foreign en mey ever coming here. Wt now pay annually over $100,000,000 in interest and profits for the use of foreign money. This would give employment to over 200,000 persons at $1.50 per day for 300 days in '.he year. This alone would materially aid in solving our labor question, and with in increased volume of currency, instead of bonds, our industries would s )on be active and all laborers em- ployed. But why should we perpetuate the folly of buying gold at all for domestic money use? Or with ihe balance ot for- eign trade in our favor, why buy gold at all? From the Los Angeles Herald, July 7, 1894. THE GREAT STRIKE OF 1894. Its Business, Legal and Political Aspects Its Rights and Wrongs. [BY R. M. WIDNKY OF LOS ANGELES.] The present great strike will go into history as "the great strike of 1894." It will be discussed and analyzed by cool heads and disinterested minds as a phe- nomenon of remarkable peculiarity. It occurred when millions were out of em- ployment and anxious to get work and many wera in a distressed and tttarving condition. Bui the strike did uot occur among these. It occurred among those who were fortunate enough to be in lucrative em- ployment. A remarkable degree of con- tentment and satisfaction existed be tween the employed and employers, an baa been publicly expressed by botn the strikers and the employers. As stated in the strikers' advocate published in Oakland. Pullman cut down the wages of the men engaged in putting vestibules on his cars and re- fused to restore the former wages. A strike resulted in his shops, which was followed by a boycott on all Pullman cars in use by the public. This resulted in a boycott of ail train- carrying such cars, even where they were declared to be United States mail trains. Then fol- lowed a boycott of all freight and pas- senger traffic on all railroads refusing to cut out Pullman cars. From this result ed a stopping of ail interstate commerce and mail trains on the railroads. The above is a general statement of the tie- up and the stopping of all railroad tran- sit. The United States authorities, by court and otherwise, have undertaken to enforce inter-state traffic and the running of regular mail trains as they have hereto- fore run Mr. Deb-, presidentof the A.R U., has given his orders to the members of the A. R U., which are of such a char- acter that the members must either dis- obey Debs or disobey the United States laws and the processes of its courts. With the foregoing outline picture in our minds, first, what is the business aspect and who are the losers? Pullman is losing almost nothing, for the impeded passenger traffic will sim- ply double up when the trains again move, and Pullman's receipts will only be delayed a cbort time. The railroad companies are not under any expense to the mass of employees, they are out on the strike, no coal is be- ing consumed, t ere are no running ex- penses, no wear and tear on machinery, so their loss is but a trifle. All the freight, except perishable articles, is simply accumulating, and the railroads will take in the freight and passenger money a little later, and so they are not losing very much. Al destruction of their property by mob violence can be recovered from the communities in which it occurs. The great loss is upon the strikers. Over 50,000 men are out under the strike, representing a daily average in wages of about $3 per day, or a daily loss of some $150,000. This is a real loss that can never be repaired. A day's Ictbor lost, is lost forever. The hands ot time will not turn backward. Tomor- row may never come, and today, and in each day can only bn done the work for that day. In no day can the work of a former day be done, without losing the work of that day. Hence the 10 days' loss to the strikers in wages represents not less than $1,500,000. A dead loss! Lost irreparably, lost forever; and thn original party, Pullman, and the rail- roads, secondarily, onlv postponed in their receipts for delayed passengers and freight. Another class injured is the producers of perishable freight. The innocent fruit and vegetable producers who have labored a year to produce a perishable crop arn injured. Estimates oi their loss for Caiifornia are as high as $50,000 to $75,000 per day, which for the 10 day.-' strike is now $500,000 to $750,000 K dead loss to innocent, hard-working people; a loss that no one proposes to pay them for. Mr. Roberts, president of one of the striking orders, in San Francisco, the Examiner reports, refuses to allow per ishable goods or fruits to be moved, say- ing that the producers will have to stand the loss so far as he is concerned The railroad officials are reported to have offered to move the perishable freight if allowed to do so on ordinary freight trains. The noticeable feature of the business aspect is that Mr. Debs is damaging the strikers by his orders to the amount of $150,000 per day; is damaging California fruit producers $75,000 per day, and is not damaging Pullman, the alleged ag- gressor and party to blame, to any mate- rial extent; is damaging the railroads to a very limited extent, and is damaging the innocent 65,000,000 people to an un- told extent. WHAT is THE LEGAL ASPECT ? In brief, Mr. Debs has placed himself and all officers and members of the American Railway union under the laws of the state and federal governments in a conspiracy. I believe that the members of the order in this respect have been misled. They are fundamentally law abiding, but having joined the order for common good, as they supposed at the time, and leeling that thev were in honor bound, as they understand it, to obey the order of Debs, they have unwittingly been placed in a legal position that they wou'd not have intentionally entered. Many condemn the law of conspiracy, and intimate that it was a tricky, secret enactment sprung on the laboring man. Such ia not the case. The laws relating to conspiracy are fundamentally the same for over 400 years. Blackstone stated in his day that a conspiracy "may be to injure public trade, to affect public health, to violate public police, to insult public justice, or to do any act iteelf illegal." In fact, the whole law of conspiracies was in that day vastly more strict than the above. It made all combinations to interfere be- tween employer and employee in any injurious mannei to either aide a crim- inal offense. The first statute of Cali- fornia made it a conspiracy "to commit any act injurious to trade or commerce, or for the perversion or obstruction of justice or due administration of ths laws." The same are the substance of the United States laws from the foundation of the government. Mr. Debs by his orders has placed himself and members of the order in violation of these laws. Now, the laws of the land must be en- forced or we have an end of government. The whole power of the army and navy and of our police and militia force are pledged to enforce the laws of the land. The question in tae United States is not now between Pullman and Debs or the American Railway union. It is between the military power of the United Sutea and persons plunged unwittingly into a conspiracy. It is a question whether congress and the laws are the govern- ment or Debs and his orders are the gov- ernment. Whether the Lord is God or Baael is God, as Klieha of old said on Mt. Carmel. Mr. Debs has blundered, fearfully blundered, as a general in managing this fight. In his use of power he has evi- dently lost his head and placed thou- sands of peaceable, patriotic, law-abid- ing citizens unwittingly in open hostility to the civil and military power of the nation. There can be only one outcome to the contest as it is now waged. No arbitration can occur between the United States and hostile citizens. Had Mr. Debs boycotted the Pullman shops and never let another car come out, and noc interfered with those in public use. he would have had the sup- port of the public. But he has now brought about a conflict between the laws of the nation and himself. Under the laws the arrest and convic- tion of Mr. Debs and his officers is only a question of time and procesfl of court. The members of the American Rail- way union are entitled to the benefit of the fact that they were honestly misled and did not know the result of their acts. I must say that the members of the order in Los Aneeles have shown rare good sense and self-respect in the law- abiding manner in which they have thus far acted. Some hot expressions are certainly excusable under the cir- cumstances. I am personally acquaint- ed with large numbers of them, and be- lieve they will abide by the laws of the land and orders of the court in all cases where they conflict with Mr. Debs' or- ders. The political aspect is brief. The highest allegiance of each and all of us is to this government. No government is or ever will be perfect, or satisfactory to all. The Almighty could not make such a government. He tried it thou- sands of years ago and the peoplo were not satisfied, and ran it themselves into a fine smashup. This ia the best government up to date on earth. If it goes down it will be replaced with a more centralized form, with less liberty. The greatest menace to European forms of government is the success of American republics. If the day of civil turmoil ever comes and Europe can furnish her armies to aid one side in establishing a monarchical form of government on the the ruins of the republic ehe will, in self defense, most certainly do it. Therefore, our citizens who tind themselves under Mr. Debs' orders, jeopardizing the safety of our form of government, should thor- oughly reconsider the matter. My judgment is that they should, in the interest of law and order, home and country, notify Mr. Debs that as Ameri- can citizens they will obey the laws of and processes of court until such times as he shall remove the conflict of au- thority. I would suggest further, that in jus- tice to the innocent public and the suf- fering producers whose hard-earned products for a year are about to be de- stroyed, that they should at once offer to return to the discharge of their duties without conditions until the legal aspect of the trouble is settled. In no manner should we justify or ex- cuse the wrongs of Pullman, or of the corporations, nor of congress, nor of the strikers, but we should endorse the right of each as it exists. The rights and wrongs must, however, be administered pursuant to our laws, and not in violation thereof. The foregoing views are respectfully submitted to the careful consideration of my fellow citizens, and especially to those who are directly involved in the great strike of 1894. YC_ 1 50 I I U.C.BERKELEY LIBRARIES UNIVERSITY OF CALIFORNIA LIBRARY This book is DUE on the last date stamped below. Fine schedule: 25 cents on first day overdue 50 cents on fourth day overdue One dollar on seventh day overdue. JUN 15 v """x* s*^ $*" V i ^^ ii^' 'Xx*