Crawfordsville Weekly Journal, Crawfordsville, Montgomery County, 6 December 1895 — Page 10

FINANCES,

The Chief Topic of Cleveland's Message.

Be Recommends the Issuance of Low-Rate Bonds to Retire the Greenbacks.

The President Reports Our Foreign Relations in a Satisfactory Condition.

Additional Tariff Lobulation for Revenue JKot Kncournged—Recommends the Observance of International Relationship With Spain—Tho Retiring feea, the Venezuela and tho

Alaska Boundary Questions.

"Washington, Dec. 3.—To the Congress of tho United States: The present assemblage of the legislative branch of our government occurs at a timo when the Interests of our people and tho needs of the country give special prominence to the condition of our foreign relations and the exigences of our national finances. The reports of tho heads of the several administrative departments of the gov«rnment fully and plainly exhibit what has teen accomplished within the scope of their •respective duties and present such recommendations for the betterment of our country's condition as patriotic and intelligent labor and observations suggest.

I therefore deem my executive duty adequately performed at this time by presenting »o the congress the important phases of our situation as related to our intercourse with foreign nations, and Ja statement of the financial problems which confront us. omitting, except as thoy are related to these topics, any 'reference to departmental operations.

I earnestly invite, however, not only tho careful consideration but the severely critical ^scrutiny of the congress and my fellow countrymen to the reports concerning these departmental operations. It justly and fairly examined they furnish proof of asiduous and' painstaking care for the public welfare, I press the recommendations they contain upon tho respectful attention of those charged with the duty of legislation, because I believe their adoption would promote tho peoples good.

By amendatory legislation in January last, the Argentine Republic, recognizing the value of the large market opened to the free importation of its wool under our last tariff act has admitted certain products of the United States •to entry at reduced duties. It is pleasing to -note that the efforts we have made to enlarge 'the exchanges of trade on sound basis of mutual benefit are In this Instance appreciated by the country from which our woolen factories draw their needful supply of raw material.

The missions boundary dispute between tho Argentine Republic and Brazil, referred to the president of the United States as arbitrator, during the term of my predecessor, and which •was submitted to me for determination, resuited in an award in favor of Brazil upon the historical and documentary evidence presented. thus ending a long-protracted controversy, avA again demonstrating tho wisdom and de^•sirability of settling International boundary disputes hv recource to friendly arbitration. .Negotiations are progressing for a revival of the United states and Chilean claims commission. whose work was abruptly terminated last year by tho expiration of the stipulated time within which awards could be made.

The close of the momentous struggle between Chi -a and Japan, while relieving the diplomiuic agents of this government of the delicate duty they undertook at the request of both countries of rendering such service to subjects of either belligerent within tho territorial limits of tho other, as our neutral position permitted, •^-.•developed a domestic condition in tho Chinese empire which has caused much anxiety and 'Called for prompt and careful attention. •Either as a result of a weak control by the central government over the provincial administratlons. following a diminution of traditional governmental authority under the stress of an overwhelming national disaster or a manifestation upon good opportunity of tho aversion of tho Chinese population to all foreign •ways and undertakings, there have occurred

In widely separated provinces of China serious outbreaks of the fanatical spirit against foreigners.which, unchecked by local authorities, if not actually connived at by them, have culinitiated in mob attacks on foreign missionary stations, causing much destruction of property. and attended with personal injuries as well as loss of life. Although but ono American citizen was reported to have been actually wounded, and although the destruction of property may have fallen more heavily upon the missionaries of other nationalities than our own, it plainly behooved this government to tike the most prompt and decided action to «uard against similar or perhaps more dreadful calamities befalling hundreds or Amprlcan mission stations which have grown up throughout the interior of China under the rule of Toleration custom and imperial edict. The demands of the United States and other powers for the degradation and punishment of the responsible officials of the respective cities and provinces who by neglect or otherwise had permitted uprising and for the adoption of stern measures by the emperor's government foiM'ne protection of the life and property of foreigners, were followed by tho disgrace and •dis-.::issal of certain provincial officials found derelict In duty, and the punishment by death •of a number of those adjudged guilty of actual participation in the outrages.

Our relations with the states of the German •empire are. in some aspects, typical of a condition ol things elsewhere found in countries •whose production and trade are similar to our ov n, The close rivalries of competing industries: the influence of the delusive doctrine that the internal development of a nation is promoted and its wealth increased by a policy "which, in undertaking to reserve Its home markets for the exclusive use of its own producers. necessarily obstructs their sales in foreign markets and prevents free access to the products of the world.

Our relations with Great Baitain, always intimate and important, have demanded during "the past year even a greater share of consider stion than is usual.

Several vexatious questions were left unde•y termlued by the decision of the Bering sea arbitration tribunal. The application of the priciples laid down by tho august body has not been followed by the results they were intended to accomplish, either because the principles themselves lacked in breadth and definlteneas or because their execution has teen more or less Imperfect Much correspondence has been exchanged between the two governments on the subject of preventing the exterminating slaughter of seals.

The insufficiency of the British patrol ol Sehrlng sea, under the regulations agreed on 3y the two governments has been pointed out, «nd only two British ships have been on police duty during this season in these waters. The meed of a more effective enforcement of existVj.i. 4 tig regulations, as well as the adoption of such additional regulations as experience has shown to be absolutely necessary to carry out the Intent of the award, have been earnest^

urged spon tho British government, but thus fur without- effective results. In tho meantimo the depletion of the seal hsrds by means of polagio hunting has so alarmingly progressed that unless their slaughter Is at onco effectively checked their extinction within a few years seems to bo a matter of absoluto certainty. 'iho understanding by which tho United States was to pay, and Great Britain to receive, a lump sum of $4 .'5.000 in full settlement of all British claims for damages arising from our seizure of British sealing vessels unauthorized under the award of the Paris tribunal of arbitration, was not confirmed by the last congress which declined to make tho necessary appropriation. I am still of tho opinion that this arrangement was a judicious and advantageous one for tho government, and I earnestly recommend that it bo again considered and sanctioned. If, however, this does not meet with tho favor of congress, it certainly will hardly dissent from the proposition that the government is bound by every consideration of honor and good fa th to provide for tho speedy adjustment of these claims by arbitration as tho only other alternative. A treaty of arbitration has therefore been agreed upon, and will be immediately laid before tho senate.

The completion o" the preliminary survey of that Alaskan boundary which follows the contour of the coast from tho souther most point of the Prince of Wales island until It strikes tho one hundred and forty-flrst meridian at or near the summit of Mount St. Elias awaits further necessary appropriation. which is urgently recommended. This survey was undertaken under provisions of tho convention entered Into by this cotfntry and Great Britain, July 2:', 189-', and the sup. plementary convention of February 3, 189!.

As to the remaining section of tho Alaskan boundary, which follows the one hundred and iorty-ilrst meridian northwardly from Mount St. Elias to the frozen ocean, the settlement of which Involves tho physical location of tho meridian mentioned, no conventional agreement has yet been made.

It being apparent that the boundary dispute between Great Britain and the republic of Venezuela concerning the limits of British Guiana, was approaching an acute stage, a definite statement of the interest of the policy of the United States as regards tho controversy seemed to bo required both on its own account and in view of it3 relations with the friendly powers directly concerned. In July last, therefore. a dispatch was addrossed to our ambassador at London for communication to the British government. In which tho attitude of the United States was fully and distinctly set forth. Tho general conclusions therein reached and formulated are in substance that the traditional and established policy of this government is firmly opposod to a forciblo increase by any European power of its territorial possessions on this contlnont: that this policy is as well founded in principle as it is strongly supported by numerous precedents: that as a consequence the United States is bound to protest against the enlargement of the area of British Guiana in derogation of the rights and against the will of Venezuela that, considering the disparity In the strength of Great Britain and Venezuela the territorial dispute between them can be reasonably settled only by friendly and impartial arbitration and that the resort to such arbitration should Include the whole controversy, and is not satisfied if one of tho powers concerned is permitted to draw an arbitrary lino through the territory in debate and to declare that it will surnbit to arbitration only the portion lying on one side of it. In view of these conclusions the dispatch in question called upon the British government for a definite answer to the question whether it would or would not submit the territorial controversy between itself and Venezuela in its entirety to impartional arbitration

Tho answer of the British government has not yet.been received but is expected shortly, when further communication on the subject will-probably bo made to the congress

Mr. Thurston, the Hawaiian minister, having furnished this government abundant reasons for asking that ho be recalled, that course was pursued, and his successor has lately been received.

The deplorable lynching of several Italian laborers in Colorado was naturally followed by international representation and I am happy to say that the best efforts of tho state in which the outrages occurred have been put forth to discover and punish the authors of this atrocious crime.

These manifestations against helpless aliens may be traced through successive stagos to the vicious padroni system, which, unchecked by out* immigration and contract labor statues controls theso workers from the moment of landing on our shores, and forms them :u distant and often rude regions, where their cheapening competition in the fields of bre.id winning toil brings them In collision with other labor interests. While welcoming, as we should, those who seek our shores to merge themselves in our body politic and win personal competence by honest effort, we can not regard such assemblages of distinctively alien laborers, hired out in the mass to tho profit of alien speculators and shipped hither and thither as the prospect of gain may dictate, as otherwise than repugnant to the spirit of our civilization, deterrent to individual advancement, and hindrances to the building up of stable communities resting upon tho wholesome ambitions of tho citizen and constituting the primo factor in the prosperity ane progress of our nation. If legislation can reach this growing evil, it certainly should be attempted.

The boundary dispute which lately threatened to embroil Guatemala and Mexico has happily yielded to pacific counsels, and its determination has by the joint agreement of the parties, been submitted to the sole arbitration of the United States minister to Mexico.

The commission appointed under the convention of February 18, 1889. to set new monuments along the boundary between the United States and Mexico, has completed its task.

The president recommends an appropriation for the relief of the Negroes who emigrated to Mexico from Alabama, where they suffered privations and were temporarily assisted by the war department.

During tho Corinto affair the kindly offices of the United States were invoked and employed in the peaceful settlement.

Cuba is again gravely disturbed. An insurrection in some respects moro active than the last preceding revolt, now exists in a lnrge part of the eastern interior of the island, menacing even some populations on the coast Besides deranging the commercial exch:inres of the island, of which our country lakes the predominant share, this flagrant condition of hostilities by arousing sentimental sympathy and Inciting adventurous support among our people, has entailed earnest effort on the part of this government to enforce obedience to our neutrality laws and to prevent tho territory of the United States from being abused as a vantage ground from which to aid those in arms against Spanish sovereignty.

Whatever may oe the traditional sympathy of our countrymen as individuals with a people who seem to be struggling for larger autonomy and greater lreedom deepened as such sympathy naturally must be in behalf of our neighbors, yet. tho plain duty of their government is to observe in good faith the recognized obligations of international relationship. The performance of this duty should not be made more difficult by a disregard on part of our citizens of the obligations growing out of their allegiance to their country, which should restrain them from violating as individuals tie neutrality which the nation, of which they aie members, is bound to observe in is relations to friendly soverneign states.

Though neither the warmth of our people's sympathy with the Cuban insurgents nor our loss nnd material damage consequent upon the futile endeavors thus far made to restore peace and order, nor any shock our humane sensibilities may have received from the cruelties which appear to especially characterize this sanguinary and fiercely conducted war, have in the least shaken the determination of tho government to honestly fulfill every International obligation: yet it is to be earnestly hoped, on ever.v ground, that the devastation of armed conflict may apceuiiv ue swjeu ouu order and quiet restored to the distracted island, bringing in their train tho activity and thrift of peaceful pursuits. One notable instance of interference by Spain with passing American ships has oc

curred. On March 8th last the AUianca. bound' from L'olors to New .York, following the eu:tomary track for vessels near the Cuban shore, but outside the three-mile limit was fired upon by a Spanish trunbaat. Protest was promptly made by the Unitci1, States ngainst this act as not being justified by a state of war, nor permissible in respect of'vessels on. tho usual paths of commerce, nor tolerable in view ol tho wanton peril occasioned to innocent lifu and property. The act was disavowed, with full expression of regret, and assurance of nonreoccurrence of such just cause of complaint, while the offetidlng.offlcer was relieved of hia command.

Occurrences in Turkey have continued tn excite concern. The reported massacres ol Christians in Armenia and the development there and in other districts of a spirit oi fanatical hostility to Christian influences, naturally excited apprehension for the safety of the devoted men and women who. as dependents of tho foreign missionary societies in the United States, reside In Turkey under the guarantee of law and usage, and in the legitimate pirformance of their educ: tional and religious mission. No efforts have been spared in their behalf, and their protection in person and property has been earnestly and vigorously enforced by every means within our power.

I regret, however, that an attempt on our part to obtain better information concerning the true condition of affairs in the disturbed quarter of tho Ottoman empiret by sending thither the United .States consul at Sivas, to make investigation and re port, was thwarted by tho objections of the Turkish government. This movement on our part was in no sense meant as a gratuitous entanglement of the United States in the socalled eastern question, nor as an officious interference with the right and duty which belong by treaty to certain great European power.-, calling for their intervention in political matters affecting the good government and religious freedom of the non-.viussulman subjects of the sultan, but it arose solely from our desire to have an accurate knowledge of the conditions in our efforts to care for those entitled to our protection.

The Ottoman government has latoly issued an imperial irade exempting forever from taxation an American college for girls at Scutari. Repeated assurances have also been obtained by our envoy at Constantinople that similar institutions maintained and administered by our countrymen shall bo secured in the enjoyment of all rights, and our citizens throughout the empire shall bo protected.

On the demand of our minister orders have been issued by tho sultan that Turkish soldiers shall guard and escort to the coast American refugees, and theso orders have been carried out. and our latest intelligence gives assurance of the present personal safety of our citizens and missionaries.

Jn view of the growth of our interests in foreign countries and the encouraging prospects for a general expansion of our commerce, the question of an improvement in the consular service has increased in importance and urgency. Though there is no doubt that the great body of consular offices are rendering valuable services to the trade and industries of the country, some plan of appointment and control which would tend to secure a higher average of efficiency can not be denied.

I am thoroughly convinced that in addition to their salaries our ambassadors and ministers at foreign countries should be provided by the government with official residences. The salaries of theso officers are comparatively small and in most cases insufficient to pay, with other necessary expenses, the cost of maintaining household establishments in keeping with their important and delicate functions.

By command of tho people a customs revenue system designed for the protection and benefit of favored classes at the expense of the great mass of our countrymen, and which, while Inefficient for the purpose of revenue, curtailed our trade relations and impeded our entrance to the markets of the world, has been superceded by a tariff policy which in principle is based upon a denial of the right of the government to obstruct the avenues to our peoples' cheap living or lessen their comfort and contentment, for the sake of according cspecial advantages to favorites, and which, while encouraging our Intercourse and trade with other nations, recognize the fact that American self-reliance, thrift and ingenuity can build up our country's industries and develop its resources more surely than enervating paternalism.

The compulsory purchase and coinage of sliver by the government unchecked.and unregulated by business conditions and heedless-of our currency needs, which for more than fifteen years diluted our circulating medium, undermined confidence abroad in our linitnciol ability, and at last culminated in distress ar.d panic at home has been recently stopped by the repeal of the lawvi which forced this reckless scheme upon the country.

The things thus accomplished, notwithstanding their extreme importrnce an 1 beneficent effects, fall far short of curing the monetary evils from which we suffer as a result of long indulgence in ill-advised financial expedients. The currency denominated United States notes and commonly known as greenbacks. was issued in large volume during the late civil war and intended originally to meet the exigencies of that period. It will be seen by a reference to the debates lu congress at tho time the laws were passed authorizing the issue of theso notes that their advocates declared they were intended for only temporary use and to meet the emergency of war. In almost, If not all the laws, relating to them some provision was made contemplating their voluntary or compulsory retirement. A large quantity of t'uem, however, were kept on foot and mingled with tho currency of the country so that at the close of the year 1874' they amounted to 3£8l,999.073.

Immediately after that date and in January, 1875. a law was passed providing for the resumption of specie payments by which the secretary of the treasury was required whenever additional circulation was issued to national banks to retire United States notes equal in amount to 80 percent, of such additional national bank circulation until such notes were reduced to $300,000,000. This law further provided that on and after the first day of January, 1879, the United States notes then outstanding should be redeemed in coin, and in order to provide aud prepare for such redemption the secretary of the treasury was authorized not only to use any surplus revenues

i.i

the government, but to issue bonds of tho United States and dispose of them for coin, and to use the proceeds for tho purposes contemplated by tho statute, in May. 1878. and before the date thus appointed for the redemption and retirement of thct-e notes, another statute was passed forbidding their further cancellation and retirement. Some of them had. however, been previously redeemed and cancelled upon tho issuo of additional national bank circulation, as permitted by the law of 1875, so that the amount outstanding at the time of the passage of the act forbidding their further retirement was $346,081,010. The law of 1S78 did not stop at distinct prohibition, but contained, in addition, the following express provision: -'And when any of said notes may be redeemed or bo received into tho treesury, under any law. from any source whatever, and shall belong to the United States, they shall not be retired, canceled or destroyed, but they shall be reissued, and paid out again and kept in circulation."

This was the condition of affairs on the first day of January, 1879,which had been fixed upon four years before as the date for entering upon the redemption and retirement of all these notes, and for which such abundant means had been provided. Tho government was put in the anomalous situation of owing to tho holders of its notes, debts payable in gold on demand, which could neither be retired by receiving such notes in discharge of obligations due the government, nor canceled by actual payment In gold. It was forced to redeem without redemption and to pay without acquittance. There has been issued and sold $'jr,iOO.Oou of the bonds authorized by tho resumption act of 1875. The proceeds of which together with other gold in the treasury and a gold fund deemed sufficient to meet the demands which might be made upon It for the redemption of tho outstanding United States notes. This fund together with such other gold as might be from time to time in the treasury available for the same purpose, has since been called ou]

gold reserve, and $100,000,000 has been regarded as an adequate amount to accomplish its object This fund amountod on the 1st day of January, 1879, to tll4.193.300, and though thereafter constantly fluctuating It did not fall below that in July, 1PM. In April, 18J3. for tho first linn slnct its establishment. this reservo amounted to less than 100.000,000, containing at that date only il7.011.3.S0.

In the meantime and in July, 1P90. an act had been passed desiring larger government monthly purchases of silver than r.ad boen required under previous laws, and providii that in payment for such silver, treasury noli of tho United States should be issued, payable on demand in gold or silver coin, at tho discretion of the secretary of tho treasury. It was, however, declared in the act to be tho established policy of the United States to maintain the two metals on a parity with each other upon the present legal ratio, or such ratio as maj* be provided by law. In view of this declaration it was not deemed permissible for the secretary of tho treasury to exercise the discretion in terms conferred on him by refusing to pay gold on these notes when demanded because by such discrimination in favor of the gold dollar the so-called parity of tho two metals would be destroyed, and grave and dangerous consequences wou.d bo precipitated by affirming or accentuating the constantly widening disparity between their actual values under the existing ratio it thus resulted that the treasury notes Issued iti payment of silver purchases under tho law of K-00 were necessarily treated us gold obligi tions, at the option of the holder. These notes on the 1st day of November, U1M, when tho law compelling the monthly purchase of silver was repealed, amounted to more than il5",000,000. Tho notes of this description now outstanding added to tha United States notes still undiminished by redemption or cancellation constitute a volume of gold obligations ^mounting to nearly jSOO.OUO.CO). Theso obligations are the instruments which, ever since we have had a gold reserve, have been u^ed to deplete It.

This reserve, as has been stated, had fallen in April, 1S93, to *97.1)11.3:!0. It lias from th:t time to the present, with very few and unimportant upward movements, steadily decreased. except as it has been temporarily replenished by tho sale of bonds. Among the causes for this constant and uniform shrinking in this fund may be mentioned the great falling off of exports under the operation of the tariff law until recently in forco. which crippled our exchange of commodities with foreign nations and necessitated to some extent the payment of our balances in gold: the unnatural Infusion of silver into our currency and tho increasing agitation for its free and unlimited coinage, which have created apprehension as to our .disposition or ability to continue gold payments: tho consequent lioardii.g of gold at home and the stoi)page of investments of foreign capital as well as the return of our securities already sold abroad and tho high rate cl foreign exchange. which induced the shipmei of our gold to be drawn against, as a matte ol speculation.

Its replenishment being necessary, and no other manner of accomplishing it being possible resort was had to the issuo and sale of bonds provided for by the resumption act of 187.i. Fiffv millions of these bonus wore sold, yielding 8 033.295 71. which was added to the reserve fund of gold then on hand. As a ref-ult of this operation this reserve which had suffered constant and largo withdrawals in the meantime stood on the tith day of March. 194, at the sum of jlu7.4lfl.S0J. Its depletion was, however, immediately thereafter so accelerated that on the 30th day of June. 1S94. it had fallen to i04,S73.o.'5. thus losing by withdrawals more than 41.000,000 in five months and dropping slightly below its situation when the sale of :50.0U0,0(iU in bonds was effected for its replenishment. This depressed condition grew worse, and on the 24tli day of November, 181M, our gold reserve being reduced to J57.669.01 it became necessary to again strengthen it. This was done by another sale of bonds amounting to Siio.ouo.ooo. from which there was realized $5S,538.5uo, with which the fund was increased to $111,142,021 on the 4th day of December, 1894.

Between tho 4th day of December. 1S94, and early in February, 1895—a period of scarcely more than two months after the second reinforcement of our gold reserve by the sale of bonds—it had lost by withdrawals more than iC9.000.000. and had fallen to £41,340.181.

The president then calls attention to his' communication to congress January 28, 1895, recommending that the secretary be authorized to issue low rate gold bonds, which was refused.

In February, 1895, therefore, the situation was exceedingly critical. With a reservo perilously low and a refusal of congressional aid, everything indicated that theond of gold payments by the government was imminent. The results of prior bond issues had been exceedingly unsatisfactory and the large withdrawals of gold immediately succeeding their public sale in open market gave rise to a reasonable suspicion that a largo part of the gold paid into tho treasury upon such sales was promptly drawn out again by the presentation of United States notes or treasury notes and found its way to the hands ol those who had only temporarily parted with it in the purchase of bonds.

It became apparent for tho third timo, in less than thirteen months that the gold reserve must once more bo strengthened by the issue of high rate bonds, says the president, and, an agreement was therefore made with a number of financiers and bankers whereby it was stipulated that bonds described in the resumption act of 1875, payable In coin thirty years after their date, bearing interest at the rate of 4 per cent, per annum, and amounting to about }62.oao,Oi.O, should be exchanged for gold, receivable by weight amounting to a little more than $65.too.ooo. This gold was to bo delivered in such installments as would complete the delivery within about six months from the date of the contract, and at least one-half of the amount was to be furnished from abroad. It was also agreed by those supplying this gold that during the continuance of the contract they would by every means In their power protect the government against gold withdrawals.

Tne contract also provided if congress would authorize the issue of bonds payable by their terms in gold and bearing interest at the ra of three per cent, per annum might within ten days be substituted at par for the four per cent, bonds described in the agreement. On the day this contract was made Its terms were communicated to congress by special executive message, in which it was stated that more than sixteen millions of dollars wonld be saved to the government If gold bonds bearing three per cent, interest were authorized to be substituted for these mentioned in contract.

The congress having declined to grant the necessary authority to secure this saving, ti contract unmodified was curried out, resulting in a gold reserve amounting to $107.571,2 Oon tie 8th day of July, Though the contract mentioned stayed for a time the tide of gold withdrawal, its good results could not bo permanent. Rcceat withdrawals have reduced the reservo from $107,571,230 on the 0th day of July, 1895. to i79.333.966. About ilG.000.000 has been withdrawn during the month of November.

The foreign statement of events and conditions develops the fact that after Increasing our interest-bearing bonded indebtedness more than $10::,000,0)0, to save our gold reserve, wo are nearly where we started, having now in such reserve $79,333,900, as against 405,438,377 in February, 1894, when the first bonds wore Issued. Thongh' the amount of gold drawn from the treasury appears to te very large, as gathered from the facts and figures herein presented, it actually was much larger, considerable sums having been acquired by the treasury within the several periods stated without the issue of bonds.

On the 28th of January, 1895. it was reported by the secretary of the treasury that more than $172.0011,000 In gold had been withdrawn for hoarding on shipment during tho year preceding. He now reports that from Jannary 1, 1879, to July 14, 1890. a period of more than 11 years, only a little over $28,000,010 was withdrawn and that between July 14, 1890. the date of the passage of the law for an increased purchase of silver, and the'1st day of December, 1893, or within less than five and half years, there was withdrawn nearly *375,000.000. making a total of more than £403,030.000 drawn from the treasury in gold since January 1, 1879, tho date fixed in 1875 for the retirement of tho United States notes, Nearly $327,000,000 ot the gold thus withdrawn

has boen paid out on these United States iiot.esi and yet-every one of the £46.000,000 is «l! uncancelled nnd ready to do service in future gold depletions.

More than *70.' O'J.CO.I in gold hrs, since their creation in IS.K), been paid out from the treasury upon tho notes given on the purchase cf silver by the government: and .vet the whole, amounting to J155. OJ.eOO. except a little more than J16.000,i0J, which have been retired by changes for silver at tho request of the hollers, remains outstanding and prepared to jo their older and more experienced allies in future raids upon the treasury gold reserve. In other words, the government has paid :n gold more than nine-tonths of its Uniti tates notes and still owes them ail. It h: fl paid in gold about one-half of its notes giv( for silver purchase.-: without extinguishing 1 such payment one dollar of these notes. When added to all this we arc reminded that to carry on this astounding financial scheme tho government has incurred a bonded indebtidness of 195,500,000 in establishing a gold reserve, and of 3sl62.315.40ii in efforts to maintain it that an annual Interest charge on suea bondod Indebtedness is moro than $11.000,000: that a continnance in our present course may result in further bond issue--, and that we liavo suffered or are threaten'd with all this for the sake of supplying gold fcr foreign shipment or facilitating its hoarding ac home a situation is exhibited which certainly ought to arrest attention and provoke iminedinte legislative relief. I am convinced tho onlv thorough and practical remedy for ouiMroubii is found in tho retirement and cancellation of our United States notes, commonly called greenbacks, and the outstanding treasury notes issued by tho government in payment of silver purchases under the act of 189!).

I beliove this could be quite readily accomplished by the exchange of theso notes for United States bonds of small as well as largo denominations bearing a low rate of interest, 'ihey should be long-term bonds thus increasing their desirability as investment and bt ceause their l.vment could bo well postponed to a poriod far removed from present financial burdens and perplexities when with increased prosperity and resources they would be moto oasilv met. To further insure the cancellation of these notes and also provide a way by v. hich gold may be added to our currency in lieu of them, a feature in tho plan should be an authority given to the secretary-of the treasury to dispose of the bonds abroad for gold if necessary to complete the contemplated redemption and cancellation. permitting him to use tho proceeds of such bonds to take up und cancel any of the notes that may be in tho treasury or that may be received by the government on any account.

In any event the bonds proposed would stand for the extinguishment of a troublesome indebtedness, while in tho path we now follow there lurks the menace of unending bonds with our indebtedness still undischarged aud aggravated in every feature The obligations necessary to fund this indebtedness woald not equal in amount those from which we have been relieved since 1881 by anticipation and payment bevond the requirements of the sinking fund out or our surplus revenues

The currency withdrawn by the retirement of the United States notes and treasury notes, amounting to probably less than ISO.' 0 .o o, might be supplied by such gold as would be used on the if retirement, or by an increase in the circulation of our national banks, 'ihough the aggregate capital of thd.se now in e: i?tence amounts to more than 5-6C4.0a).0U0. their outstanding circulation, based on bond security, amounts to onlv about »i00.Ub!).0.K). They are authorized to issue notes amounting to 9 per cent, of t'ne bonds deposited to secure their circulation, but in no event eyotid the amount of their capital stock, and they are obliged to pay one per cent, tax on the circulation they issue.

I think they ought to bo allowed to issi circulation equal to the par vaiue of the bom they ceposil to secure ii. and that the tax en their circulation should be reduced to onefourth one pc1. cent., which would undoubtedly meet all the expenses the government incur.on their account. In addition, they Miouid be allowed to substitute or deposit in lieu of the bonds now required as security for tneir circulation those which would be issued for the purpose of retiring the Uuited Sates notes and treasury notes he banks already existing, if thev desired to avail themselves of the provisions of law thus modified, could issue circulation in addition to that already outstanding, amounting to $478.(K)0,0 0. which would near or quite equal the currency proposed to re cancelled At any rate I should confidently expect to see the existing national banks or others to bo organized avail themselves, of tho proposed encouragements to issue circulation and promptly fill any vacuum and supply every currency need. It has always seemed to me that the provisions of law regarding the capital of national banks which operate as a limitation to their location fails to make proper compensation for the suppression of state banks which came near to the people in all sections of the country and readily furnished them with banking accommo iations and facilities.

Any inconvenience or embarrassment arising from theso restrictions on tho location uf national banks might well be remedied by better adapting the present sys-tem to the ere. tion of banks in smaller communities or b' permitting banks of large capital to establish branches in such localities as would serve the people-so regulated and restrained as to secure their safe and conservative control and management.

If we should bo relieved from maintaining a gold reserve under conditions that constitute it the barometer of our solvemy and if our treasury should no longer be the foolish purveyor of gold for nations abroad or for speculation and hoarding by our citizens at home I should expect to see gold resume its natural and normal functions in the business affairs of the country and cease to be ail object attracting the timid watch of our people and exciting their sensitive imaginations. I do not overlook the fact that the cancellation of the treasury notes issued under the silver purchasing act of 1890 would leave the treasury in the actual ownership of sufficient silver Including seigniorage, to coin nearly $178,000,000 In standard dollars.

It is worthy of consideration whether this might not. from time to time, be converted into dollars or fractional coin and slowly put into circulation, as in the judgment of the secretary of the treasury the necessities of the country should require.

In the present stage of our difficulty it is not easy to understand how the amount of our revenue receipts directly affects it The important question is not the quantity of money received In revenue payments, but the kind of money we maintain and our ability to continue in sound financial condition.

In government possession does not in the least contribute toward giving us that ltind of sale financial standing or condition which is built on gold alone. If It Is said that these notes, if held by the government, can be used to obtain gold for our reserve, tha answer Is easy. Tl people draw gold from the treasury on demand upon United States notes and treasury notes, but tho proposition that the treasury can. on demand, draw gold from the people upon them, would be regarded in these days with wonder and amusement. And even if this cGuld te done, there is nothing to prevent those thus parting with their gold from regaining it the next day, or the next hour, by the presentation of the notes they received in exchange for it.

Tie secretary of the treasury might use suc h' notes taken from a surplus revenue to buy gold in the market. Of course, he could not do this without paying a premium. Private holders of gold, unlike the government, having no parity to maintain, would not be restrained from making the best bargain possible when they furnished gold to the treasury: but tho moment the secretary of the treasury bought gold on any terms above par he would ostablish a general und universal premium upon it, thus breaking down the parity between gold and silver which tho government is pledged to maintain, and opening the way to new and serious complications. In tne meantime the premium would remain the same.

It may be claimed that a large revenue and redundant recoipts might favorably affect the situation under discussion by affording an opportunity of retaining these notes in the treasury when received and thus prevent their presentation for gold. Such retention to be useful ought to be at least assurably permanent: and this is precisely what is prohibited, so far as United States notes are concerned. by the law of 1878 forbidding their future retirement.

It will moreover be readily seen that th

government would not refuse to pay out United States notes and treasury notes in curTent transactions when demanded and insist on paying out silver alone and still maintain the parity between the metal anuthecuirency represenslng gold. Besides, the accumulation in the treasury of currency of any kind exacted from the people brought through taxation is justly regarded as an evil

Perhaps it is supposed that sufficient revenue receipts would in a sentimental way improve the situation by inspiring confidence in our solvency and allaying the fear of pecuniary exhaustion.

At no time when bonds have been issued has there been any consideration of the question of paying tho expenses of government with their proceeds. There was no necessity to. consider that question. At the time of each bond issue we had a safe surplus in the treasury for ordinary operations, exclusive of the gold in our reserve. In Fobruary, 1894, when the first issue of bonds was made, such surplus amounted to over $18,000,000. In November, when tho second issuo was made, it amounted to more than ?4- ,0U0,0U0. nnd in February, 18.15, when bonds for tho third time were issued, such surplus amounted to moro than $100,000,000. It now amounts to J98.072,428.30.

On July 1. 1892. more than a year and a half before the first bonds were issued, to replenish the gold reserve, there was a net balance in the treasury exclusive of such reserve, of less than l3.000.0C0. but tho gold reserve amounted to more than $114,000,000, which was the quieting feature of tho situation. It was when tho stock of gold began rapidly to fall that fright supervened and our securities held abroad were returned for sale and debts owod abroad were pressed for payment. In the meantime extensive shipments of gold and other unfavorable indications caused restlessness and fright among our people at home, thereupon the goneral state of our funds, exclusive of gold becamo also Immaterial to them, und thoy, too, drew gold from the treasury for hoarding against all contingencies. This is plainly shown by the large increase in tho proportion of gold with drawn which was retained by our own people as time and threatening incidents progressed. inasmuch as the withdrawal of our gold has resulted largely from fright, there is nothing apparent that will prevent its continuance or recurrence, with its natural consequences, except such a chango in our financial methods as will reassure tho frightened and make tho desire for gold less intense. It is not clear how an Increase in revenue, unless it bo in gold, can satisfy thoso whoso only anxiety is to gain gold from the government's store.

It can not. therefore, be safe to rely upon Increased revenue as a cure for our present troubles

Bonds wero issued to obtain gold for tho maintenance of our national credit. "As has been shown, tho gold thus obtained has been drawn again from t'ne treasury upon United States notes and treasury notes. This operation would have been promptly prevented if possible: out these notes having thus boen passed to the treasury, they became tho money of the government, liko any other ordinary government funds and there was nothing to do but to use them in paying government expenses when needed. The president emphatically repeats that the gold thus obtained was aot used for government expenses.

It is neither unfair nor unjust to charge a large share of our present financial perplexitles and dangers to the operations of the laws of 1878 and 1890 compelling tho purchase of silver b\- the government, which not onlv furnished a new treasury obligation upon which its gold could be withdrawn, but so increased the fear of an overwhelming flood of silver and a forced descent to silver payments that oven the repeal of these laws did not entirely cure the evils of their existence.

While I have endeavored to make a plain statement of the disordered condition of our currency and tho present dangers menacing our prosperity, and to suggest a' way which leads to a safer financial system 1 have constantly had in mind the fact that many of my countrymen, whose sincerity I do not doubt, insist that cure for the ills now threatening us may be found in the single and simple remedy of the freo coinage of silver. They contend that our mints shall be at onco thrown open to the free, unlimited an I independent coinage of both gold and silver dollars, of full legal tender quality, regardless of tho action of any other government, and in full view of tho fact that the'ratio between tho metals which they suggest, calls for one hundred cents worth of gold in the gold dollar at the present standard and only fifty cents in intrinsic worth of silver iu the silver dollr.r.

Were there infinitely stronger reasons than can be adduced fo.-hoping that action would secure for us a bimeitallic currency moving on lines of parity, an experiment so novel and .-.o hazardous as tfca proposed might well sthgger those who believe, that stability is an imperative condition of sound money.

No government, no human contrivance or act of legislation, has ever been able to hold the two metals together In free coinage at a ratio appreciably different from that which is established in the markets of the world.

Twice in our earlier history our law-makers, in attempting to establish a bimetallic currency. undertook free roinage upon a ratio which accidentally varied from the actual relative values of the two metals not more than three per cent. In both cases, notwithstanding greater difficulties and cost of transportation than now exist the coins whose intrinsic worth was undervalued in the ratio, gradually and surely disappeared from our circulation and went to other countries where their real value wa's better reeogui'zed. Acts of congress were Impotent to create equality where natural causes decreed oven slight inequality. Twice in our recent history we have signally filled to raise by legislation the value of silver. Under an act of congress passed in 1873 the government was required for more than twelve years to expend annually at least $.'4,000.000 In the purchases of silver bullion, for coinage

The act of July 14, 1890. in a still bolder effort increased the amount of silver the government was campelled to purchase and forced it to become the buyer annually of 54,000,000 ounces, or practically the entire product of our mines. Under both laws silver rapidly and steadily declined in value. The prophecy and the .expressed hopo and expectation of those In the congress who led in tho passage of the last mentioned act that it would re-establish and maintain the former tnx party between the two metals are still fresh in our memory.

The president, on reviewing theso experiences, says that our attempt to accomplish this by the freo coinage of silver at a ratio differing widely from actual relative values would bo the signal for the complete departure of gold from our circulation, the immediate and large contraction of our circulating medium and a shrinkage in the real value and monetary efficiency ol all othor forms of currency as they settled to the level of silver monometallism. Every one who receives a fixed salary und every worker for wages would find the dollar In his hand ruthlessly scaled'down to the point of bitter disappointment if not to pinching privation.

A change in our standard to silver monometallism would also bring on a collapse of the entire system of credit which, when based on a standard which Is recognized and adoptod by the world of business, is many times more potent and useful than the entire volume of currency, and is safely capable of almost indefinite expansion to meet tho growth of trade and enterprise.

The president then goes on to argue at great ienth the dangers of a headlong plunge to free coinage in the name of blmettallsm, and claims that even the continued agitation of the subject" adds greatly to the difficulties of a dangerous financial situation already forced upon us, and in conclusion says:-'I especially entreat tho peoji e's representatives in the congress, •who are charged with the responsibility of Inaugurating measures for the safety and prosperity of our common country, to promptly and effectively consider the Ills of our critloal financial plight. I have suggested a remedy •which my judgment approves. 1 desire, h9Wever. to assure congress that I am prepared to co-operate w.th them in perfecting another measure promising thorough and practical relief and that I will gladly labor with them in every patriotic endeavor to further the interests and guard the welfare of our countrymen whom in our respective places of duty we have undertaken to serve.

GROVER CLEVELAND

Exkqdtivk Mansion, Deo. 3,18)5,