. ; ! < . > &
Conservative.
the above balance , makes a net loss of
$205,278,480.
There are other large costs to bo
charged against the greenbacks the
cost of paper , engraving , printing , sort
ing , redeeming , counting , storing , etc. ,
which I find reported in nn official doc
ument at not less than one million dollars
lars per year. I am convinced that
there has been a net loss in cash to the
government of fully § 225,000,000 by
reason of the greenbacks since specie
payments were resumed in 1870 , because
if there had been no greenbacks these
bonds would never have been issued.
The government would have scraped
along somehow. It might have
borrowed some small amount on one-
year certificates. The spectacle of a
great , rich country that had paid off two
thousand millions of debt since the
Civil "War , issuing long bonds to pay
current expenses in time of peace ,
would have made the nation blaze with
indignation. Congressmen would not
have dared face their constituents with
such a record.
NO CERTAINTY ABOUT GREENBACK RE
DEMPTION.
Now I make bold to say that the gov
ernment of the United States is not to
be depended upon to redeem its legal-
tender notes. It may redeem them or
it may not. Suppose there had been a
president and a secretary of the Treas
ury in office from 1893 to 1896 who
agreed with the congress then occupy
ing seats in the capitol. The notes would
not have been redeemed. Suppose there
were a president and a secretary of that
laud now. You must bear in mind that
there is a party in this country which
does not think that redemption of the
greenbacks in either silver or gold is
necessary or desirable. I believe that
wo are to hear from them before this
conference closes. In short , when the
redemption of the paper currency de
pends upon the government , it depends
upon politics. It is a question of votes
and of haphazard in a case where cer
tainty is the very essence of the matter ,
and where uncertainty produces the
most direful consequences.
No doubt those who vote on one side
are as honest as those who vote on the
other. I do not question anj'body's hon
esty. I merely say that one side favors
redemption of the greenbacks on
demand in gold. The other side is op
posed to it , and some are opposed to re
demption either in gold or in anything ,
and these are honest , too. My vener
ated friend , the late Peter Cooper , was
one of this kind , and there was no hou-
ester man in this world than he.
I began by showing that the govern
ment's credit consists in keeping good
the promise printed on the greenback to
pay coined dollars on demand , and that
this credit cannot last a day longer than
the promise is fulfilled. I have shown
that when the pinch came , as it did
r-5
several times in 1898-1896 , the govern
ment's promise was only kept by good
luck. It was good luck that there were
laws on the statute book that could be
made available for the purpose. It was
good luck that we had a president and a
secretary of the treasury who were de
termined to use all their powers to the
end of keeping the promise. Can wo
expect to have such luck always ?
You may say that we are not likely to
have such troubles again. I hope wo
shall not , but I observe that there is a
political pai-ty whose chief although un
conscious aim is to bring on such
troubles. If anybody can guarantee
that that party will not succeed in its
aim I shall be glad , but even then the
chapter of accidents may cause the same
class of occurrences that we witnessed
in 1898-96. Either a shortage of revenue
or an adverse balance of trade may
at any time bring on such troubles. And
here I am moved to quote a few words
from Mr. A. D. Noyes's "Thirty Years
of American Finance. " You will agree ,
no doubt , that ex-Senator Sherman was
the foremost leader of the republican
party in matters of finance , and that we
are not likely , taking the average of
years , to have more sagacious guidance.
Well , Mr. Noyes , in summing up the
causes of the gold drain of 1893 , says :
"When Secretary Sherman was de
fending in 1879 and 1880 his own plan
of legal-tender issues , he was reminded
of the possibility that a heavy revenue
deficit might some time leave the Treas
ury with nothing but its gold re
serve from which to meet expenses. To
this he answered that it was 'not to be
presumed that congress will omit to pro
vide ample revenue. ' He cited further
the objection that the amount of notes
'may be enlarged by congress , and that
this power is liable to abuse , ' but his
reply was that under resumption of
specie payments 'there is no temptation
to over-issue. ' Fourteen years had
passed and congress had now enacted
one law destined to force a deficit on
the treasury ( the tariff of 1890) ) , and
another to increase without assignable
limit the issues of legal-tender notes ( the
silver purchase act of 1890) ) . That Mr.
Sherman himself should have voted for
both these measures , and constructed
one of them , is another notable instance
of the irony of history. "
After such an illustration I think that
any one must admit that the unhappy
experience of 1893 may be repeated at
some future time when wo least expect
it.
THE BANKING COMMITTEE'S BILL.
If we agree that doubts as to the re-
deemability of the legal-tender notes are
bad for business , what ought wo to do ?
I should say , redeem them while we
can , and put them out of existence.
They cannot do any harm if they do
not exist. But wo are told that the
people will never consent to the cancel
lation of the greenbacks or of any part
of them. I do not know whether that
is true or not , but I presume it is true
that it would bo a long time before the
college professors and the book and mag
azine writers , plus the splendid Indian
apolis convention and its monetary com
mission , could bring the people of the
United States up to their own point of
view. Meanwhile all the business of
the country may be paralyzed as it was
in 1893-97 There may bo other panics
and crises before the question is set
tled. Since the retirement of the green
backs does not seem to bo feasible at pre
sent , I give my hearty adhesion to the bill
of the banking and currency committee of
the house of representatives , which pro
poses to put upon the national banks
the burden of current redemption of the
greenbacks. Under this bill the green
backs will be kept alive and in circula
tion , although their form will be changed
in some slight measure , just enough to
identify the particular ones that each
bank shall redeem. The government
will bo responsible for them as it is now ,
but the current redemption of them
will be imposed upon the banks , and the .
banks will bo recompensed by having
the right to issue circulating notes of
equal amount against their general as
sets , protected by a safety fund which
the experience of other countries shows
to be ample.
BANKNOTES VS. GREENBACKS.
Now , a word in reference to bank
notes. You all know what bank checks
are. They are lawful orders for the
payment of money out of the bank's
cash reserves. They may bo drawn by
a bank's cashier or by the bank's depos
itors. A man may acquire the right to
draw checks on a bank by having depos
ited his own money there , or by having his
promissory note discounted by the bank.
If time allowed I could prove to you
that a banknote and a check are identi
cal in their nature ; that they are both
orders for the payment of money out of
the bank's cash reserves , and that they
arise from the same set of causes. If I
have a deposit in a bank I can draw it
in banlmotes , which the bank must pay
on presentation , or I can hand my check
to another man , which check the bank
must pay on presentation. If I have no
deposit , I can get my promissory note
discounted if my credit is good , and
then draw checks or banknotes as in the
former case , to the amount of the dis
count. The only difference between the
check and the banknote is a difference
of form. The banknote is really the
cashier's check on the bank , handsomely
engraved in order to prevent counter
feiting , and usually it stays out , i. e. ,
remains in circulation , longer than a
private individual's check. It answers
the same purpose as the greenback as an
instrument of exchange , although it is
*
not legal tender. There are two him,4 ;
dred millions of banlmotes in circula1 - * \ *
