credit of the individual bank, which throughout the country would cause great losses, as in olden time; or else the paper inoney rests upon the credit of the associated banks. But if any town or city may form a bank that may join this association, then how will it be possible to exclude banks which would pay their five per cent or more into the redemption fund, issue their thousands of paper money, and then fail? If the strong National Bank of Illinois fails under our present system, what might we expect under the proposed system? Associated credit can be made successful only by the most careful espionage which shall exclude the one dishonest or incapable party, whose evil deeds would bring to naught the good deeds of the ninetynine honest and capable. The clearing-house associations succeed only by using the strictest care in admitting none but the best, and in holding them relentlessly to the laws of the association. Each bank must be above suspicion. It is a misnomer to call bank bills, which pass from hand to hand and are universally received in all parts of the country, as a matter of course, by both buyers and sellers, notes and to classify them with checks and promissory notes. They are money; no less money because they are made of paper than they would be if made of copper, nickel, silver, or gold. We have already learned that no individual, nor corporation, should be allowed, as in former times, to coin money: we are fast learning that no individual, no corporation, should be allowed to print money. Money is money, whether made of one substance or another. If our government, and no one else, is to be trusted to make and issue $27,000,000 of token money, called minor coins, and $75,000,000 of subsidiary silver, and $441,000,000 of silver dollars out of pieces worth about fifty cents, surely it may be trusted to make $1,000,000,000 of paper money that shall be as good or even better than gold.

If the government of the United States cannot be trusted to make these paper dollars, who in the nation can be? If the whole people acting constitutionally and deliberately cannot do it, it must be a difficult thing to prove that a small fraction of the people, moved largely by self-interest, can accomplish it.

II. There are those who believe that the United States should not only coin money, but should also supply the people with all the paper money needed. They are at once confronted with the objection, that all such money is political money, and therefore necessarily not good. The answer is, that all paper money is either the creature of the law, or else it is not. If it is not, it is an unmitigated nuisance. If it is the creature of the law, then it is political money. Though paper money be issued by the banks, it is none the less subject to political exigencies.

This objection set aside, the real question at issue is simply this, Is it not only possible, but also certain, that the United States government can supply the people with paper money as good as gold? If this money be as good as gold, if it be convertible on demand anywhere in the country into gold without discount or delay, then will there be no danger of inflation, no trouble as to foreign exchange. If it be as good as gold, then is it better than gold; for there is no abrasion, there is no real loss if it be destroyed, there is a great saving in counting, in carrying it, in stor ing it. If in order to make a thousand millions of paper money as good as gold, it should be necessary to keep dollar for dollar of gold in the vaults of the treasury and make every piece of paper money a gold certificate, even that would be an immense gain to the nation and to each indi vidual.

But this would not be necessary.

1. The first essential for success in making government notes as good as gold is that the issue department of the

treasury be entirely distinct from every other department. The revenues and expenditures of the government should be separated altogether from the department making and issuing paper money, just as distinct as the mint is from the internal revenue department.

2. The second essential is that the government keep on hand gold enough, for the sole purpose of paying on demand its paper money, whatever amount experience shall prove necessary: 33 per cent would doubtless be amply sufficient. From 1879 to 1890, $100,000,000 in gold was enough to redeem $400,000,000 of greenbacks. It was only after there were added $500,000,000 of silver certificates, and the notes of 1890 to the greenbacks for the $100,000,ooo of gold to sustain, and after the government was forced to draw upon the $100,000,000 of gold to pay its large deficits in current expenses, at a time too when international complications made an excessive foreign demand for gold, that the reserve fund of gold proved too small for the increased burdens put upon it.

3. The third essential is that the issue department as a rule (the exception will be stated later) should not pay out a paper dollar except in exchange for gold. If the system. were to start from the beginning, of course there would be a surplus of $666,666,666 to invest in the public debt, or in some other security; but, as it is, we have already in circulation besides that in the treasury more than $1,000,000,000 in paper money, for which the government is responsible.

4. The fourth essential is that the government shall have the sole power to issue paper money as it has to coin money.

5. The fifth essential is that this money shall be legal tender the same as gold for all debts, public and private. Besides these five essentials, the plan provides that, if more than a $1,000,000,000 is demanded for the transac

tions of the business world, the amount may be secured by issuing paper money in exchange for gold dollar for dollar. If in the course of time this demand should prove to be permanent, the excess above $1,000,000,000 could be provided by the issue department investing paper money in government bonds to such an amount as the surplus of gold over the 33 per cent of issue would allow.

How this system, when adopted, would work can be readily seen. As the six different sorts of money are received by the government, they will be cancelled and in their place the new bills, payable on demand in gold, issued. This policy would soon simplify our system of pa per money and make counterfeiting still more difficult.

This money would act to all intents and purposes the same as specie. It would automatically check inflation. If there were too much money in circulation, paper would be changed to gold, and the gold exported until the equilibrium should be reached. If there were not enough paper money, by presenting gold for it at the treasury, it could be secured to any amount.

It may be asked, Would it not be difficult for the treasury to procure and keep three hundred and thirty-three and one-third millions of gold in its vaults as the basis of this paper money? October 1, 1897, the treasury had in gold coin and bullion $184,561,664, and since has refused large quantities of gold offered to it. It would be neces sary to procure only $148,771,669 additional gold. There was at the same date reported by the treasury in circulation $528,098,753 in gold. The comptroller of the cur rency reported, July 14, 1896, that the national banks held $161,853,560 in gold; the amount to-day is probably still greater. By calling in the national bank notes, therefore, the government by that means alone could secure the needed gold. To withdraw its circulation a national bank must deposit with the treasury lawful money to the amount

of its outstanding circulation. To do this the banks would, many of them, be obliged to deposit more or less of their gold. To withdraw from circulation two hundred and twenty-six millions of banknotes, by decreasing the supply, would increase the demand for paper; so as to make it more desirable than gold. Men would be anxious to exchange their gold for paper. The treasury has in its vaults $148,771,669 of notes which could be put into circulation to fill the vacancy left by the banknotes. A temporary contraction of the currency might ensue which would probably be a good rather than an evil. But as soon as the legitimate demands of business called for more money, it could be furnished in the way indicated. With the new gold-mines and the new processes of working old mines, the world's stock of gold is rapidly increasing. This fact, taken with the fact of our rapidly developing resources, proves that the United States can, procure all the gold it requires. If all other means should fail, bonds could be sold, and speedily bring the gold.

But once procured, could the treasury keep the gold? Undoubtedly. If there should be a run on the treasury and a $100,000,oco of gold withdrawn, then there would be $100,000,000 of paper money locked up in the treasury. The gold withdrawn would be exported or hoarded. Hence the currency would be contracted, discounts would be raised, prices would fall; so that people would import gold from abroad or else by the increased price get it from hoards. Once in their possession, they would exchange it at the treasury for paper money worth more to them for daily use than gold. So the drain on the treasury would be stopped.

Certain objections may be raised against the proposed plan.

1. First, that it would leave four hundred millions of silver in the hands of the government: what shall be done