The circumstances attending the issue of the United States notes now in circulation impose upon the Government a peculiar obligation to provide for their speedy and certain redemption in coin. They were issued in the exercise of a power which can be called into use only in a time of supreme necessity, and were paid out for the support of an army composed of brave and patriotic citizens who had responded to the call of their country in the hour of its extreme peril. To suffer a promise made at such a time and under such circumstances to be dishonored by subsequent indifference or non-performance, would be little better than open repudiation, and would affect injuriously our national name and credit.

It is worthy of note that for the most part those who now oppose the redemption of legal-tender notes, and who ask for a further issue and continued and indefinite reissue of the notes now in circulation, were most strenuous in their opposition to such issues during the civil war. The acts authorizing such issues were denounced as in violation of sound principles of finance, and not warranted by the Constitution. Their constitutional validity was resisted at every point, and subjected to the test of judicial decision in almost every court in the country, both State and national. The supreme judicial tribunal of the nation upheld the acts as measures of necessity in a time of great exigency, but it has neither decided nor intimated that such power may be exercised by Congress in time of public tranquillity.. Indeed it is fairly inferable, from all the court has said in the various cases in which the question has been before it, that the issue of such notes in time of peace is not within the constitutional power of Congress. The language and argument of the court leave no reason to believe that it would sustain the claim of power to increase the volume of such issues or to reissue such as have been redeemed in obedience to law, when the public exigency no longer exists. Those who opposed such issues at a time of supreme necessity, and insist upon further issues when the emergency has passed away, put themselves in the attitude of opposing war measures in the midst of war, and advocating them in a time of profound peace. Congress carefully confined the operation of the act to the period of necessity by authorizing "the reissue from time to time, as the exigencies of the public interests shall require."

The government is bound, not only by economic considerations and proper regard for the interest of the people, but by express and repeated promises, to provide for the redemption in coin of all its issues of legal-tender notes. The original legal-tender act was regarded and

treated at the time of its adoption as a temporary measure, made necessary and justifiable only by the exigency of war, which taxed all the resources and energies of the nation. The first act authorizing such issues (February 25, 1862) is entitled "An act to authorize the issue of United States notes, and for the redemption or funding thereof, and for funding the floating debt of the United States"-language that significantly expresses the views of the Congress by which it was passed. It authorized the issue of $150,000,000 legal-tender notes, and made provision for funding them in bonds issued on the credit of the government, bearing interest in gold, and payable at a future day. This was the best the government could do in the midst of its struggle for existence and rightful supremacy. The state of the public credit did not admit the possibility of the immediate procurement of a suflicient amount of coin to redeem the notes absolutely. A well-settled principle of political economy forbade the issue of paper currency without providing for its redemption, and, in obedience thereto, Congress made the only practicable provision for the redemp tion of the notes which it authorized to be issued and stamped with the quality of legal tender. The act of July 11, 1862, which authorized a further issue of $150,000,000, contained a like provision, and further provided that any notes issued thereunder might be paid in coin, instead of being converted into bonds, at the discretion of the Secretary of the Treasury. The notes thus authorized were issued and accepted by the people upon the assurance that they had the right to fund them in gold-bearing bonds of the United States, and this consideration undoubtedly constituted an important element of their value, and gave them a quality in aid of their circulation and free acceptance in all business transactions. In the opinion of wise and patriotic men, who, as the representatives of the people, were charged with maintaining the indissolubility and supremacy of our national Union, it was necessary to resort to this extraordinary measure for the purpose of carrying the war to a successful termination. It was, in substance and effect, a national war loan, based upon the credit of the government, and coupled with a pledge for redemption, but the period of payment was to be thereafter determined when the public exigency would pernait. It was not in the minds of those who devised and consummated the scheme, that the government was about to enter upon the issue of an irredeemable paper currency, which should permanently take the place of the world's measure of values. Nor was it claimed by the most earnest advocate of the measure that the Constitution had givea to Congress power to issue a permanent paper eurrency as a

substitute for, and stamped by law with, the qualities which, in the estimation of political economists, could exist only in the precious metals. In the light of the experience of the civilized world, such a purpose would have been regarded as little better than financial madness, and its avowal by the authors of the legal-tender acts would surely have caused the defeat of the plan for exerting the borrowing power of the government by means of such issues.

But the purpose and meaning of the acts in question are not left open for forensic discussion, having been authoritatively settled by the unanimous opinion of the highest judicial tribunal known to our Constitution. As soon after the termination of the war as 1868, it was argued before the Supreme Court that the legal-tender notes of the United States were issued as money, a substitute for metallic currency, and that, having been made legal tender in payment of all debts, including (with certain exceptions) the government's own, of course, when presented for payment, if similar notes, being legal tender, were offered in exchange for them, the debt would be discharged, by a delivery of new notes of the same kind, and so ou ad infinitum. Το this argument the court replied:

"Apart from the quality of legal tender impressed upon them by acts of Congress, of which we now say nothing, their circulation as currency depends upon the extent to which they are received in payment, on the quantity in circulation, and on the credit given to the promises they bear. In other respects they resemble the bank notes formerly issued as currency.

"But, on the other hand, it is equally clear that these notes are obligations of the United States. Their name imports obligation. Every one of them expresses upon its face an engagement of the nation to pay the bearer a certain sum. The dollar note is an engagement to pay a dollar, and the dollar intended is the coin dollar of the United States-a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the Government."

This authoritative declaration of the Supreme Court defines clearly and precisely the meaning and intent of Congress in the acts which authorized the issue, and should be accepted as conclusive of the obligation and duty of the government to provide for the payment in specie of all such issues.

Nor is this all. Subsequent to this decision, and for the purpose of putting a quietus upon the mischievous discussion of the subject, Congress, on the 18th day of March, 1869, declared by public act that "the United States solemnly pledges its faith to make provision at the earliest practicable period for the redemption of the United States notes in coin."

These provisions of the various acts of Congress, which were passed with the approval of the Executive, the clear adjudication of the Supreme Court, as well as the plainest principles of political economy, and proper regard for the public welfare, commit the government to the redemption in coin of the notes issued under the circumstances before stated. National faith and honor could not be more distinctly or unequivocally pledged to the performance of a plain duty.

In view of these solemn and repeated pledges, it seems idle to resort to the consideration of elementary principles of finance to prove the evils of an irredeemable paper currency. In the face of such pledges, disregard of which would bring national dishonor, and serious, if not irreparable, injury to the public credit, it can hardly be necessary to discuss questions of expediency, or to point out the ills which the experience of the civilized world shows must follow a violation of wellknown laws of political economy.

It is among the first and most important functions of government to give to its people a sound and stable currency, having a fixed relation to the standard of values in general use among nations. The true matter with which government has to do is not so much a question of volume as of soundness and stability of the currency. When it has established a currency of fixed and stable value, having a known relation to that of other powers, and furnishing a uniform medium of exchange, the volume may and should be left to be determined by the wants of trade and business. Natural causes, aided by individual effort and enterprise, will regulate the volume of currency far more wisely and with greater safety to business than acts of Congress imposing artificial limits, subject to increase or diminution at every session.

The existing provision of law making United States notes legal tender for all debts, both public and private, with certain exceptions relating to transactions with government, is an artificial barrier to the use of gold and silver, tending not only to prevent the flow of gold toward this country, but promoting the shipment abroad of our own production of the precious metals. For this reason Congress should abolish the legal-tender quality of the notes, as to all contracts made, and liabilities arising after a fixed day. The first day of January, 1879, being already fixed by law as the time when the redemption of United States notes then outstanding shall begin, it would be proper and safe to provide that such notes shall not be legal tender for contracts made, or liabilities incurred after the first day of January, 1877. Such an act would not too suddenly change the value of the notes, and would not affect injuriously either debtors or creditors, but would

remove a present obstruction to the retention of our gold and silver production, and create a demand for the return of gold now abroad, thus promoting final resumption by preparing the country for it.

In furtherance of the purpose of the act of the last Congress to provide for the resumption of specie payments, the Secretary recommends that authority be given for funding legal-tender notes into bonds bearing a low rate of interest. Such bonds should run for a longer period of time than those now authorized for refunding the interest-bearing debt, and should be made available to national banks for deposit to secure their circulation and other liabilities to the government, and should bear a rate of interest so low as not to cause too rapid absorption of the notes. It seems probable that a bond bearing interest at the rate of four per cent., would invite the funding of a sufficient amount of legal-tender notes to lessen materially the sum of gold which, in the absence of such provision, must be accumulated in the treasury by the 1st of January, 1879, to carry out the imperative requirements of the act of January 14, 1875. If it be apprehended that authority to the Secretary to fund an unlimited amount of notes might lead to too sudden contraction of the currency, Congress could limit the amount to be funded in any given period of time. The process being in no sense compulsory as to the holders of United States notes, and the rate of interest on the bonds being made low, it is not probable that currency which could find profitable employment would be presented for redemption in such bonds. Only the excess of notes above the needs of business would seek such conversion. Authority to the Secretary of the Treasury to redeem and cancel two million of legal-tender notes per month by this process would greatly facilitate redemption at the time now fixed by law, and besides would have the advantage of publicity as to the exact amount to be withdrawn in any given month. Bonds issued for this purpose should be of the denomination of fifty and one hundred dollars, and any multiple thereof, in order to meet the convenience of all classes of holders of United States notes. The faith of the government now stands pledged to resumption on and after January 1, 1879, and to the final redemption and removal from the currency of the country of the legal-tender notes as fast as they shall be presented for redemption, according to the provisions of the act of January 14, 1875. To resume on the 1st of January, 1879, without further legislation, would require the accumulation of a large amount of gold in the treasury in order to avert the possibility of failure of the plan. Such an amount of gold can be procured with difficulty, and not without more or less embarrassing effect upon the