that, in consideration for this aid, the United States could prescribe such terms and conditions as would carry out the object of the concessions and the fixed policy of this government. Vessels of the United States will, in all probability, carry the chief commerce through the canal, and it is for the interest of our people that the charges on these vessels shall be so low as to induce the largest possible number of their owners to avail themselves of the benefits of the canal.

The question, then, before those who were drafting a bill to secure government aid, was in what way this aid should be rendered without involving a departure from our established policy as stated by Mr. Cleveland, and without pecuniary loss or entangling alliances. The only method that was suggested was the one adopted by other nations under like circumstances, and especially by Great Britain in respect to the Suez Canal, namely, that the government should, in consideration of its guarantee, secure such a control of the majority of the stock as to enable it to protect the interests of the people, and such control of the expenditures on the work as certainly to limit the obligations of the company to the actual cost of the canal in money. These primary objects have been, it is thought, secured in the bill now pending, by an unconditional guarantee of payment of the principal and interest of the bonds of the company; by the application of the proceeds of these bonds, under the direction of United States engineers, to the work actually done; and by the transfer of $70,000,000 out of $100,000,000 in stock to the United States, with the power to vote at any meeting of the company and with a proper representation on the board of directors. These, and other provisions of the bill reported, will, it is confidently believed, not only secure the completion of the work at cost, but will place it in the power of the United States to protect their citizens in the full rights conceded by Nicaragua and Costa Rica, and will prevent the management of the work from falling into the hands of men who are indifferent or hostile to American interests in that portion of the world.

These objects being secured, the question arose as to what arrangement should be made with the American citizens who had, when the United States declined to construct the work, ob

tained concessions, and who had actually entered upon its construction. The act of their incorporation provided that it might be altered, amended, or changed, at the pleasure of the United States; but the exercise of this power without regard to the interests of the incorporators, and without neglect or forfeiture on their part, would have been a breach of the public faith. The only result would have been that the government would have been compelled to undertake the work itself, or, by declining to do so, would have maintained the dog-in-the-manger policy of refusing to execute, or to allow any other power to execute, a work of conceded importance to all the nations of the world. At the same time the public naturally objects to the use of the credit or the money of the United States to advance the personal interests and profit of individuals. It was therefore provided that the promoters of the Nicaragua Canal should be reimbursed only for the actual cost to them of the work already done, and that this cost should be ascertained by proper officers of the government and paid in the bonds of the Maritime Company guaranteed by the United States. In addition, it was provided that the promoters should have such reasonable allotment of the stock that they already own by virtue of the concession granted to them, as would be a just and fair compensation for their vested rights and for their services. By the terms of the contract entered into by the Maritime Company with the Construction Company, the latter is entitled to $12,000,000 in stock, in consideration for the concessions and privileges granted by Nicaragua and Costa Rica, which were transferred by the Construction Company to the Maritime Company. It was deemed, after careful consideration, that, as this stock has not yet been earned, the Maritime Company should be allowed to issue to the Construction Company stock of the former company to the value of $3,000,000, upon condition that all other stock of the Maritime Company, of every kind, name, and nature, issued or agreed to be issued, should be surrendered and canceled, except $6,000,000 stipulated to be given to Nicaragua for its concessions, and $1,500,000 to be given to Costa Rica. The value of this stock at first would be nominal, and its future value would depend entirely upon the value of the completed work. This proviso

is regarded by the Maritime and Construction Companies as harsh and illiberal, yet they have agreed to it, as well as to the other terms and conditions proposed in the pending bill.

The more I reflect upon the transcendent importance of the work proposed, upon the international difficulties which formerly surrounded the subject, upon the objections of a large portion of -our citizens to the direct construction of the work by the United States according to the plan proposed by the treaty, and upon the just claims of the American promoters of this enterprise who have been engaged in it, the more I am convinced that the aid to be given by the United States, if the bill should become a law, would be a wise act of public policy, second in importance to no other in the history of our country, and of general benefit in promoting our commerce and industry in every section. No doubt the cities along the Gulf of Mexico and the southern Atlantic coast will first feel the beneficial effect of this improvement, but it will extend to the people of every State, by the increase of their commerce and productions.

To reject or to neglect the opportunity now offered would leave this enterprise to the chances of failure, or transfer its control to commercial rivals whose interests and fixed policy would lead them to convert a great highway of nations into a dependency more formidable than Gibraltar and more troublesome than Canada. A commercial company in India has been converted into a vast empire; the single port of Hong Kong is made to dominate a great population in China; the control of the Suez Canal and of Egypt has been purchased in the stock marketthese are sufficient warnings to the American people to avail themselves of the opportunity now open to them to protect their coastwise trade, and at the same time, with little cost and no risk, to contribute to the world one of the greatest achievements of mind over matter that has ever been undertaken.

JOHN SHERMAN.

SILVER AS A CIRCULATING MEDIUM.

THE country is misled, to some extent, by the claim that our currency is upon a gold basis. It is only partially so. The part played by gold in financial affairs is important, but it is subordinate. Gold certificates circulate as currency, and, together with gold coin, constitute a portion of the reserve in the national banks. Thus gold adds to the volume of currency, and for the purposes of business it is quite immaterial whether or not the metal itself is in circulation. In point of economy and convenience, the currency of a country should always be of paper. For this there are many reasons. The abrasion of metals by use is a very considerable item of loss, and this is true especially of gold. A hundred thousand gold dollars cannot be transferred, coin by coin, from one receptacle to another, without an appreciable loss. Small coins of silver show the results of use after a few years. Again, the inexpert public are more easily deceived by false coins than by counterfeit notes, and spurious coins are more easily produced than spurious notes. A million dollars in silver weigh about 30 tons, and a like value in gold weighs about one sixteenth as much. The substitution of subsidiary silver coins for fractional paper currency imposed a loss upon the government, in the cost of production, of not less than $350,000.

These facts warrant the conclusion that the use of coin, whether of gold or of silver, is both inconvenient and expensive. The continuous use of paper can be secured only by the presence of confidence on the part of the users. That confidence can be maintained only by the promise of a party supposed to be responsible, and that promise must be sustained by the possession of a quantity of coin by the debtor party quite equal to any demand that can be made by the holders of the promises. This condition is fulfilled by our gold and silver certificates, each one of which represents an equivalent of gold or silver coin in the treasury of the United States. There is, therefore, as much rea

son for confidence as can be found in any currency scheme that has ever been devised. Under this system a man who deposits gold and receives a gold certificate can command gold at any time, and a man who deposits silver and receives a silver certificate can obtain silver whenever he may choose to ask for it.

The difficulty which the country is called upon to meet is not a result of this system, but of the fact that the extraordinary production of silver has worked a reduction of its value in comparison with gold. In 1860 silver was more valuable than gold, measured in conformity to the legal ratio existing in the United States. On that basis the silver in a silver dollar would purchase the gold in a gold dollar and leave a remainder of four cents. That condition was due to the extraordinary returns from the gold placer mines of California. Coincident with the exhaustion of the placers came the invention of the power drill, by Charles Burleigh, and the more practical use of dynamite as an agent for blasting rocks. In the last 20 years, and more especially in the last 10 years, a most wonderful progress has been made in processes for the economical use of coal and in devices for the reduction of metallic ores. Since about the year 1870 the production of silver has been in excess of the production of gold, as compared with the demand for each metal as coin and in the arts. Nor should the fact be overlooked that the demand of the arts must be first met, as the workers have always the ability to use coin if the supply of bullion should be inadequate. As wealth increases, the demand of the arts for the more precious metal increases in a corresponding ratio. The experience of recent years seems to justify the opinion that the earth's treasure of gold is less, relatively, than its treasure of silver, and that the movement of events, under the inexorable laws of supply and demand, tends toward the greater use of silver as currency, or as the basis of currency, and toward the less frequent use of gold.

For 14 years this process has been going on, until in the United States the circulation of gold does not much exceed $130,000,000, while the circulation of silver is not less than $310,000,000. For the last 12 or 15 years it would not have been practicable to limit the currency of the country to gold and to