favor the shipments have created uneasiness, though they may partly be accounted for by the payments for interest and the expenses of tourists. As money remains abundant and a good demand. prevails for our bonds, the Secretary could easily sell bonds enough now to strengthen his reserves. A considerable portion, if not all, of the gold shipped recently could thus be drawn back again. It may be that foreign capitalists will criticise our action, when we make such a sacrifice, to continue purchases of silver, while Austria strains her resources to enable her to adopt the gold standard. But they will let us have the money on reasonable terms while we enjoy their confidence. It may not be considered with the same complacency in this country when we have to increase our national debt and the burdens of taxation so that we can further stimulate an industry which is neither one of the most important nor the most useful.

Bimetallists claim that we will not have money enough without silver for the increasing business of this country. Did not Germany thrive after it abolished its use? Has Holland or Sweden complained of scarcity of the circulating medium? Can anybody gainsay that the commerce of Great Britain has not increased in a greater ratio than the supply of gold since this metal was adopted as the standard, in 1816? While France still keeps a supply of silver, it does not use it. None of these nations will return to it. They are fully satisfied with gold as the sole measure of their values. An attempt to make any given quantity of this white metal the supply of which seems inexhaustible and the value unfathomable equal to it would clearly jeopardize their best interests. Since the Latin Union agreed to the proportion of 15 parts of silver to 1 part of gold in 1865, circumstances have entirely changed.

"Silverites" flatter themselves that free coinage would give a stable value to their favorite metal, even if we adopt it alone as our measure of values. If they study the reports which reach us from India, South America, and Mexico, they will find that European capital has ceased to flow there, and that producers, merchants, and bankers alike 'in those countries are in a constant state of excitement and worry because they do not know from day to day how much their silver dollars are worth. We are no more independent of the rest of mankind than they While we have larger resources, our needs are greater for their development.

are.

After the Secretary has obtained the gold which he may need, the question remains how long he will have to continue sales of bonds for

the same purpose. Since our surplus has disappeared, we shall need fifty-six millions a year until the Sherman act is repealed. Its repeal is the only safe course to pursue to rid ourselves of the danger. When we thus cut loose from silver it will no doubt decline at first, and our accumulation will proportionately diminish in value. But it would be better to sacrifice even the whole of it than to let the threat of a vitiated currency hang over our heads any longer. Foreigners would have no inducement then to part with our sound securities. The interest on them would be reinvested here, and we could draw from England what gold would be due us for merchandise balances. Confidence in our credit would be strengthened so that railroad and other corporations would not find the difficulty they have recently encountered in placing new issues of their bonds.

I was about to close this paper when news came that the Senate had passed a free-coinage act, and simultaneously the report that silver had declined to 874 cents an ounce, which reduces the value of the standard dollar to 67 cents. This decline seems to indicate that our legislation is losing influence, so that we may not be able to bolster up the value of silver much longer. In passing now so radical a measure, the Senate has insulted the President of the United States and the nations whom he recently invited to confer with us about the possibilities of bimetallism. It shows a reckless indifference to our interests and the well-known opinions, held by a majority of the people we trade with, to declare what shall be the measure of our values. If we were isolated and transacted business among ourselves only, we could adopt wampum for our currency, and it would concern us alone. But our intercourse with others is considerable. During the eleven months which ended May 31 we exported merchandise to the value of $965,366,794, while our imports amounted in the same period to $755,305,633. The aggregate of our transactions in securities, specie, and redemption of credits must swell the total amount of our annual business with the outside world to nearly four thousand million dollars. As long as we borrow more money than we lend and sell more merchandise than we buy, our interests demand that the measure of our values shall be identical with the one which is used by the people with whom we have dealings. If we had a different measure, of a fluctuating value, our creditors would want to be paid for the risk of taking it, and our customers would find it to their advantage to depreciate it in order to buy our commodities as cheaply as possible.

It is not predictable how low a valuation silver can reach if the

production continues to increase in the same ratio. Our silver dollars would have already a lower value than our legal tenders reached during the darkest hour of the Rebellion if we had not upheld silver by purchases, and by the liberality with which we now furnish a gold dollar in exchange for one of paper which represents sixtyeight cents' worth of silver. That we coin and stamp them legal tenders makes the white tokens of no greater value than our fiat could make irredeemable paper. The financial distress and mad speculation which occurred when our legal-tender dollar declined in value to thirty-four cents remain fresh in our memories. The credit of the nation was pledged for their ultimate redemption. The free-coinage act does not provide for the redemption of silver by gold, the only metal which has a fixed value now. Consequently our credit would sink with the value of the white metal, to which our fortunes would be linked.

To repeal the Sherman act would leave us with an unsalable stock of silver larger than that held by any other nation, which would remain, a monument to our folly, for many years. To continue it must lead eventually to national bankruptcy, an end to which free coinage can bring us more speedily.

LOUIS WINDMÜLLER.

REPEAL OF THE STATE BANK TAX.

If the United States Government could go into the banking business, the whole question concerning the supply of a flexible currency would be easily settled. Whenever a larger volume was needed to move the crops or to meet any legitimate demand for increased circulation, the Treasurer could issue the government notes at a fair rate of interest, upon good security, to any amount that should be required. As soon as these had served their calling, they would be returned in payment of the obligations of the borrowers, and thus all unnecessary inflation would be avoided. There are many who insist that this is one of the proper functions of a government by the people and for the people, and that our Federal authorities ought to be empowered by a change in the Constitution to exercise this prerogative, and to lend the Treasury notes or certificates to be used as currency whenever these can serve any useful purpose.

There are some plausible arguments in support of this theory, but the valid objections far outweigh all that can be said in its favor. It would soon become a vast engine for political corruption. Not the best security, but the partisan purpose to be accomplished would direct the distribution of the loans; and schemes of political aggrandizement with plans for pecuniary profit, by the control of the issues for speculative ventures, would bring the whole system into disrepute and lead to its suppression. No other form of issue from the hands of the Government will meet the requirement. What is wanted is a volume of circulation that fairly represents the movement of produce and merchandise, coming out when the movement begins and retiring when the market is reached and the property passes into the channels of consumption. No issue of a government currency can meet this want and be regulated by it unless the authorities will discount the business paper that represents the property, and receive back the issues when the need has ceased and the notes and drafts have matured.

The national banks under the present system can furnish some aid by inscribed credits and the use of checks, but this will not do for the interior, where the crops are to be paid for and some form of cur

rency used as money is actually required. The bank-notes secured by bonds at Washington must be kept in perpetual use to pay the cost of the issue, and the volume cannot be enlarged and contracted to adjust itself to the demands of trade. Nothing ever served the purpose so well as a bank-note put out on the credit of a well-established institution in exchange for business paper which represented some actual value of produce or merchandise for the movement of which the currency was used. The sound banker whose promises to pay were as good as gold had all sorts of imitators, and for this reason many restrictions were placed upon bank issues which greatly lessened their usefulness. To keep irredeemable paper out of the market—the promises of institutions without means or character-a great variety of safeguards were adopted, which would be wholly unnecessary at the present day. It was the want of suitable means of communicating with every part of the country, with the object of demanding immediate redemption of the unworthy notes, which gave any facilities for what was known as "wild-cat" banking.

The project of repealing the present prohibitory tax of 10 per cent on the issue of State banks is a very hopeful movement in favor of a most welcome change in the financial condition of the country. There need be no fear of any toleration of a depreciated bank-note circulation should this restriction be removed. There is not a State in the Union which would authorize or allow it; and if it were attempted anywhere, the facilities for collection are now so great that it would be crushed out at once. The best features of the former statutes would be preserved in new State legislation, and the natural law of supply and demand would govern all the rest of the needed restrictions. The tax which it is proposed to repeal is in itself unconstitutional. It is not levied for revenue, but for prohibition; and the fundamental law nowhere gives to the Federal Congress the right to suppress by its action the issues of the State banks. There would follow from its repeal the most perfect currency for business purposes the world has ever known. Flexible in its character, redeemable at all central points, and thus always at par throughout every portion of the country, and meeting the needs of the hour in its answer to every legitimate demand, it would prevent pressures and stringency in the money market, and injure no one but the greedy speculator who makes his cent per cent in a financial crisis.

DAVID M. STONE.