Democratic Sentinel, Volume 2, Number 43, Rensselaer, Jasper County, 6 December 1878 — THE FINANCES. [ARTICLE]

THE FINANCES.

ANNUAL REPORT OF SECRETARY SHERMAN. Tlie annual report of the Secretary of the Treasury upon the state of the finances of the country is an unusually lengthy document. Upon the subject of specie resumption the Secretary says: Tlie important duty imposed on this department by the Resumption act, approved Jan. 14. 1875, has been steadily pursued during the past,year. Tlie plain purpose of the act is to secure to all interests and all classes the benefits of a sound currency, redeemable in coin, with the least possible disturbance of existing rights and contracts. Three of its provisions have been substantially carried into execution by the gradual substitution of fractional coin for fractional currency, by the free coinage of gold and by free banking. There remains only the completion of preparations for resumption in coin on the Ist day of January, 1879, and its maintenance thereafter upon the basis of existing law. At the date of my annual report to Congress in December, 1877, it was deemed necessary, as a preparation for resumption, to accumulate in the treasury a coin reserve of at least 40 per cent, of United States notes outstanding. At that time it was anticipated that, under the provisions of the Resumption act, the volume of United States notes would be reduced to $300,000,000 by the Ist of January, 1879, or soon thereafter, and that a reserve in coin of $120,000,000 would then be sufficient. Con gress, however, in view of the strong popular feeling against a contraction of the currency, by the act approved May 31, 1878, forbade the retirement of any United States notes after that date, leaving the amount in circulation $346,681,016. Upon the principle of safety upon which the department was acting, that 40 per cent, of coin was the smallest reserve upon wliich resumption could prudently be commenced, it became necessary to increase the coin reserve to $138,000,000. At the close of the year 1877 this coin reserve, in excess of coin liabilities, amounted to $63,1,16.050.96. of which $15,000,060 were obtained by the sale ot 4 , (> per cent., and $25,000,600 by the sale of 4 per cent, bonds, the residue being surplus revenue. Subsequently, on the 11th day of April. 1878 the Secretary entered into a contract with certain bankers in New York and London—the parties to the previous contract of June 9, 1877, already communicated to Congress—for the sale of $50,006,000 per cent, bonds for resumption purposes. The bonds were sold at a premium of ll<j per c.-nt. and accrued interest, less a commission of jjj of 1 per cent. The contract has been fulfilled, and the net proceeds. $50,500,060; have been paid into the treasury in-gold. The $5,500,000 coin paid on the Halifax award have been replaced by the sale of that amount of 4 per cent, bonds sold for resumption purposes, making the aggregate amount of bonds sold for these purposes $95,500,000, of which $65,600,000 were 4}-a per cent, bonds, aud $30,500,600 4 per cent, bonds. To this has been added the surplus revenue from time to time. Tlie amount of coin held in the treasury on the 23d day of November last, in excess of coin sufficient to pay all accrued coin liabilities, was $141,888,100, and constitutes the coin reserve prepared for resumption purposes. This sum xrill be diminished somewhat on the Ist of January next by reason of the large amount of interest accruing on that day in excess of the coin revenue received meanwhile. In anticipation of resumption, ap<l in view of the fact that the redemption of United States notes is mandatory only at the office of the Assistant Treasurer in the city of New York, it was deemed important to secure the co-operation of the associated banks of that city in the ready collection of drafts on those banks and in the payment of treasury drafts held by them. A satisfactory arrangement has been made by which all drafts on the banks held by the treasury are to be paid at the ClearingHouse, and all drafts on the treasury held by them are to be paid to the Clearing-House at the office of the Assistant Treasurer, in United States notes; and, after tlie Ist of January, United States notes are to be received by them as coin. This will greatly lessen the risk aud labor of collections both to the treasury and the banks. Every step in these preparations for resumption has been accompanied with increased business and confidence. The accumulation of coin, instead of increasing its price, as was feared by many, has steadily reduced its premium in the market. The depressing and ruinous losses that followed the panic of 1873 had not diminished in 1875, when the Resumption act passed; but every measure taken in the execution or enforcement of thia act has tended to lighten these losses and to reduce the premium on coin, so that now it is merely nominal. The present condition of our trade, industry and commerce, hereafter more fully stated, our ample reserves, and the general confidence inspired in our financial condition, seem to justify the opinion that we are prepared to commence and maintain resumption from and after the first day of January, A. D. 1879. The means and manner of doing this are left largely to the discretion of the Secretary, but, from the nature of the duty imposed, he must restore coin and bullion, when withdrawn in the process of redemption, cither by the sale of bonds, or the use of tlie surplus revenue, or of the notes redeemed from time to time.

The power to sellany of the bonds described i> the Refunding act continues after (s well as before resumption. Though it may not be often used, it is essential to enable this department to meet emergencies. By its exercise it is anticipated that the treasury at any time can readily obtain coin to reinforce the reserve already accumulated. United States notes must, however, be the chief means under existing law with which the department must restore coin and bullion when withdrawn in process of redemption. The notes, when redeemed, must necessarily accumulate in the treasury until their superior use and convenience for circulation enables the department to exchange them at par for coin or bullion. The act of May 31,1575. already referred to. provides that when United States notes are redeemed or received in the treasury under any law, from any source whatever, and shall belong to the United States, they shall not be retired, canceled, or destroyed, but shall be reissued and paid out again and kept in circulation. The power to reissue United States notes was coiiteried by section 3.579, Revised Statutes, and was not limited by the Resumption act. As this, however, was questioned, Congress wisely removed the doubt. Notes redeemed are like other notes received into the treasury. Payments of them can be made only in consequence of appropriations made by law, or for the purpose of bullion, or for the refunding of the public debt. The current receipts from revenue are sufficient to meet the current expenditures as well as the accruing interest on the public debt. Authority is eoufented by the Refunding act to redeem 6 per cent, bonds as they become redeemable, by the proceeds of the sale of bonds bearing a lower rate of interest, The United States notes redeemed under the Resumption act are, therefore, the principal means provided for the purchase of bullion or coin with which to maintain resumption, but should only be paid out when they can bo used to replace an equal amount of .coin withdrawn from the resumption fund. They may, it is true, be used for current purposes like other money, but when so used their place is filled by money received from taxes or other sources of revenue. In daily business, no distinction need le maue between moneys from whatever source received, but they may properly be applied to any of the purposes authorized by law. No doubt coin liabilities, such as interest or principal of the public debt, will be ordinarily paid and willingly received in United States notes, but, when demanded, such payments will be made in coin: and United States notes and coin will be used in the purchase of bullion. This method has already been adopted in Colorado ard North Carolina, and arrangements are being perfected to purchase bullion in this way in all the mining regions of the United State i. By the act approved June 8, 1878, the Secretary of the Treasury is authorized to constitute any superintendent of a mint or assayer of any assay office an Assistant Treasurer of the United States to receive gold coin or bullion on deposit. By the Legislative Appropriation bill, approved July 19, 1878, the Secretary of the Treasury is authorized to issue coin certificates in payment to depositors of bullion at the Several mints and assay offices of the United States. These provisions, intended to secure to the producers of bullion more speedy payment, will necessarily bring into the mints and treasury the great body of the precious metals mined in the United States, and will tend greatly to the easy and steady supply of bullion for coinage. United States notes, when at par with coin, will be readily received for bullion instead of coin certificates, and with great advantage and convenience to the producers. Deposits of coin in the treasury will, no doubt, continue to be made after the Ist of January, as heretofore. Both gold and silver coin, from its weight and bulk, will naturally seek such a safe deposit, while notes redeemable in coin, from their superior convenience, will be circulated instead. After resumption, the distinction between coin and United States notes should be, as far as practicable. abandoned in the current affairs of the Government; and, therefore, no coin certificates should be issued except where expressly required by the provisions of law, as in the case of silver certificates. The gold certificates hitherto issued by virtue of the discretion conferred upon the Secretary will not be issued after the Ist of January next. The necessity for them during a suspension of specie payments is obvious, but no longer exists when by law every United States note is. in effect, a coin certificate. The only purpose that could bo subserved by their issue hereafter would be to enable persons to convert their notes into coin certificates, and thus contract the currency and hoard gold in the vaults of the treasury without the inconvenience or risk of its custody. For convenience United States notes of the same denomination as the larger coin certificates will be issued.

By existing law customs duties and the interest of the public debt are payable in coin, and a portion of the duties was specifically pledged as a special fund for the payment of the interest, thus making one provision dependent upon the other. As we cannot, with due regard to the public honor, repeal the obligation to pay coin, we ought not to impair or repeal the means provided to procure coin. When, happily, our notes are equal to coin, they will he accepted as coin, both by the public creditor and by the Government; but this acceptance should he left to the option of the respective parties, and the legal right on both sides to demand coin should be preserved inviolate. The Secretary Is of the opinion that a change of the law is not necessary to authorize this department to receive United States notes for customs duties on and after the Ist day of January, 1H79, while they are redeemable and arc redeemed on demand in coin. After resumption it would seem a useless inconvenience to require payment of such duties in coin rather than in United States notes. The Resumption act, by clear implication, so far modifies previews laws as to permit payments in United States notes as well as in coin. The provision for coin payment was made in the midst of war when the notes were depreciated and the public necessities required an assured revenue in coin to* support the public credit. This alone justified the refusal by the Government to take its own notes for the taxes levied by it. It has now definitely assumed to pay these notes in coin, and this necessarily implies the receipt of these notes as coin. To refuse them is only to invite their presentation for coin. Any other construction would require the notes to be presented to the Assistant Treasurer in New York for coin, and. if used in the purchase of bonds, to be returned to the same officer, or, if used for the payment of customs duties, to be carried to the Collector of Customs, who must daily deposit in the treasury all money received by him. It is not to be assumed that the law requires this indirect and inconvenient process after the notes are redeemable in coin on demand of the holder. They are then at a parity with coin, and both should be received indiscriminately. If United States notes are received for duties at the port of New York, they should be received for the same purpose in all other ports of the United States, or an unconstitutional preference would be given to that port over other ports. If this privilege is denied to the citizens of other ports, they con’d make such use of these notes only by transporting them to New York and transporting the coin to their homes for payment: and all this, not not only without benefit to the Government, but with a loss in returning the coin again to New York, Where it is required for redemption purposes. The provision in the law for redemption in Naw York was believed to be practical redemption in all parts of the United States. Actual redemption was confined to a single place from the necessity of maintaining only one coin reserve and where the coin could be easily accumulated and kept. With this view of the Resumption act, the Secretary will feel it to be his duty, unless Congress otherwise provides, to direct that after the Ist day of January next, and while United States notes are redeemed at the treasury, they be received the same as coin by the officers of this department in all payments in all parts of the United States. If any further provision of law is deemed necessary by Congress to authorize the receipt of United States notes for customs dues or for bonds, the Secretary respectfully submits that this authority should continue only while the notes Are redeemed in coin. However desirable continuous resumption may be, and however confident we may feel in its maintenance, yet the experience of many nations has proven that it may be impossible in periods of great emergency. In such events the public faith demands that the customs duties shall be collected in coin and paid to the public creditors, and this pledge should never be violated or our ability to perform it endangered. The tendency of late among commercial nations is to the adoption of a single standard oi gold and the issue of silver for fractional coin. We may, by ignoring this tendency, give temporarily-increased value to the stores of silver held in Germany and France unfit* our market absorbe them, but by adopting a silver standard as nearly equal to gold as practicable we make a market for our large production of silver, and furnish a full, honest dollar that will be hoarded, transported, or circulated, without disparagement or reproach. It is respectfully submitted that the United States, already so largely interested in trade with all parts of tlie world, and becoming, by its population, wealth, commerce and productions a leading member of the family of nations, should not adopt a standard of less intrinsic value than other commercial nations.

The last survivor of Napoleon’s expedition to Egypt has just died at the Invalides in Paris. This veteran, Darrey by name, who had almost attained his hundredth year, was fond of relating how he was put on duty in Egypt on the day the murderer of Kleber was executed. Kleber was assassinated in Cairo in June, 1800, by a fanatic, named Soleyman, who, after having been condemned to death, had his right hand burned off, and was then impaled. Tortured by thirst, he called for something to drink, and Darray, touched with compassion, gave him a glass of water.