Register, and the utmost precaution being taken to prevent the abstraction of any portion of the canceled notes. National bank notes, after having been in circulation, are also received in the office of the Treasurer of the United States. They are then assorted and their amount charged to the bank which issued them, the paper itself being separated, those fit for use being sent back to the bank and those which are badly damaged being destroyed under the same circumstances as treasury notes.

The chief sources of revenue of the United States are the duties on imports, postage, and the more or less direct internal revenue taxes. To these are added the amounts received from the sale of public lands or other public property, and the amounts imposed as fines and forfeitures for infraction of the statutes. It sometimes happens that all of these resources are not sufficient for the current expenses of a nation, or that important undertakings are inaugurated which shall be for the permanent benefit of the people and in the cost of which, it is generally agreed, future generations should share. There is a point, differing perhaps with different nations, beyond which it becomes difficult and costly to collect revenue, and when the limit of the returns from current taxation has been reached, it becomes necessary to pledge the future ability of the people to pay taxes for the purpose of raising money for the immediate necessities. Bonds or pledges that a percentage will be added to the tax rate sufficient to ultimately pay the funds thus advanced have been issued in the United States, largely in the payment of the cost of the Civil War; occasionally in order to make up a deficit caused by a too low estimate of the revenue-producing powers of a tariff on imports, and in some instances to provide funds to carry on the work of a tremendous public improvement, such as the building of the Panama Canal. While the preparation and issuance of such bonds for the United States is under the direction of the Register of the Treasury, the Treasurer receives the amounts accruing from the bond issues and conducts the payment of interest and of the principal when the bonds become due.

Bonds of the United States are in demand not only on account of their value as an investment, but on account of the privileges which they convey under the banking and revenue laws. It is cus

tomary to advertise a bond issue to be sold by allotment so that one person or combination shall not control the whole. In addition to the care of Federal funds, the Treasurer of the United States acts in a fiduciary capacity or as trustee of the several funds which are under the care of the United States. These include miscellaneous trust funds and the funds formed by the amounts returnable to Porto Rico and the Philippine Islands on account of duties paid on imports from those islands coming into the United States. He is also the trustee and custodian of the United States bonds deposited by national banks to secure their circulation. He is fiscal agent for the several bond issues of dependencies, including the land bond issue of the Philippine Islands and the Panama Canal bond issue. The Treasurer of the United States is also the regulator of the small change of the country. Under provisions of law the cost of transporting silver dollars and subsidiary coin between different parts of the country and for the convenience of persons who are supplied through the various banks, the cost of the transportation of such coin is paid by the United States, and the Treasurer of the United States has the direction of the supply of coin and is accustomed to make such shipments and transfers as may be necessary to prevent the accumulation of subsidiary silver coin in one location and a consequent scarcity in another.

THE COMPTROLLER OF THE CURRENCY.

The issue of bonds or evidence of indebtedness by the United States serves an additional purpose to that of providing money for the immediate necessities of the country. It has not been regarded as being sound national policy for the United States to issue currency or mediums of circulation in excess of the amount which could be paid upon demand from the reserve of gold and silver in the Treasury. While a conservative and carefully guarded undertaking of this character which should make the Treasury of the United States a gigantic bank of issue, and with outstanding notes which would be based upon the national credit, could be established, legally, it has been held that there was undue risk in the matter that in time of stress there would be a temptation to an over-issue of notes which would at some point result in the depreciation of the purchasing

power of the notes from their face value and might bring about a disastrous condition of the national finances. For this reason it has been held to be safer that the money or circulating medium of the country should be based upon private assets, the security of the notes and the genuineness of the assets being guaranteed by the United States. To this end the United States offers to persons who will associate themselves as banking corporations and who purchase a given amount of the bonds of the United States permission to issue bank notes within the limits of the total amount of the bonds thus purchased. The bonds issued to the banking associations are not delivered directly to them, but are held by the Treasurer of the United States as a trustee and subject to any demand which may be made upon the bank for the fulfilment of their promise to pay as evidenced by their outstanding bank notes. Of late years, as the demand for the privilege has increased and the issue of United States bonds has not maintained a corresponding place, approved bonds other than those of the United States have been accepted and are deposited in the Treasury as guarantees of national bank circulation by those who have the privilege of issuing national bank notes, a privilege which is made profitable to them by provisions of law which prevent the issuance of circulating notes by other banks, the notes of other than national banks being subject to a ten per cent. internal revenue tax. Interest paid by merchants, manufacturers and others for the use of currency affords to the national banks a return for the investment made in United States bonds and for the expense involved in keeping up the system and a profit on their banking operations. The national bank circulation of the United States, with the notes issued by the United States itself on the basis of its actual possession of cash, enables the operations of commerce and manufacturing to be carried on conveniently and a total volume of circulation is secured which would be impossible of attainment unless the nation itself should go into a system of credit currency which, as has been said, has generally been deemed to be inadvisable.

The Comptroller of the Currency is the directive officer of this system and exercises powers and prerogatives not usual among the subordinate officers of departments. The terms of his appoint

ment differ altogether from those of the usual appointed officers, as he is appointed by the President, by and with the advice and consent of the Senate, for a term of five years. He can, however, be sooner removed by the President upon statement of the reasons for removal to the Senate. The salary of the Comptroller is $5,000 a year. Within fifteen days of the time of notice of his appointment he is required to take and subscribe to the oath of office and to give the United States a bond in the sum of $100,000 conditioned for the faithful performance of his duties. While he is under the general direction of the Secretary of the Treasury, the Comptroller of the Currency has practically independent functions with regard to the national banking system. When a banking corporation has complied with the terms of the banking act, has secured the necessary amount of approved bonds, and deposited them with the Treasurer of the United States, the Comptroller of the Currency prepares appropriate plates for the printing of notes for the bank, and these, when signed by the bank officers, become legal tender in the United States. Although the validity of the outstanding notes of the national banks is secured by the amount of the deposited bonds in the United States Treasury, it would be possible for the bank officers to accumulate liabilities in other directions, so that the stockholders and depositors in the banks would be defrauded of the amounts they had invested or entrusted to the institution. All of the national bank notes are sent to the United States Treasury for redemption and in case a bank should fail to honor its circulating notes when they have become due, and are offered to be redeemed, the necessary amount to reimburse the United States for the redemption would be raised by the sale of the bonds in the Treasury as a deposit from the bank. This, however, gives no guarantee to the depositors and for the protection of these the national banking laws provide for the maintenance of an adequate reserve of gold or notes of the United States and for quarterly statements of the condition of national banks, severe penalties of fine or imprisonment being imposed for falsification with regard to these reports.

The Comptroller of the Currency has under his direction a force of bank examiners who examine the condition of banks at stated intervals, and also upon the appearance of an unsatisfactory state

ment, and who are paid by the banks themselves for making the examination. In addition to this payment, a small tax is imposed upon the bank circulation for the purpose of carrying on the central means of redemption and return of bank notes to their points of origin. If it appears that a bank is insolvent, or its assets have been seriously impaired, the Comptroller of the Currency is required to take charge of the bank's affairs and to appoint a receiver who is often the examiner who was charged with the duty of making an investigation into the condition of the institution. Accordingly as the condition of the bank may be hopeless or as financial assistance is afforded to it, the affairs of the bank are either liquidated and the bank finally closed or they are carried on by the receiver until such time as the bank is placed in a perfectly solvent condition, when it may be restored to the control of private officers.

The Comptroller of the Currency is required to make an annual statement to Congress of the condition of each banking association, together with facts relative to banks which have become involved in difficulties during the year and results of the liquidation of banks which have been closed. He is also required to secure from the States the necessary information which will enable him to report to Congress the resources and liabilities of the banks and banking institutions which have been organized under State laws, but which have, under the national banking act, no power of issuing circulating notes.

THE REGISTER OF THE TREASURY.

The Register of the Treasury is appointed by the President, by and with the advice and consent of the Senate, and is entitled to a salary of $4,000 a year. He signs and issues all bonds of the United States, and all bonds issued under national auspices. He transmits to the Treasurer of the United States a list of the registered bonds showing the names of persons who are entitled to receive interest thereon. Of the two classes of bonds issued by the United States, the unregistered are subject to the payment of interest upon the presentation of the interest coupon. Those which are registered, however, can only profit the persons whose names are registered at the Treasury as the proper payees of amounts becoming due.