funds can be raised. This resource has its limits; but it is hoped that with a reasonable economy in making the appropriations the plans already set in operation will extend those limits so as to reach to the end the war.
The inherent objections which attend a Government currency are that it disturbs the standard of value and enhances prices. The facility with which it is created is a constant temptation to excess; and the danger of this excess, together with the doubt of an ability to pay, are the chief causes which affect its credit as a currency.
Thus far no want of confidence has been exhibited in our currency. It freely circulates everywhere, and the fact that the banking institutions receive and pay out Treasury notes in their own business is the most certain indication that their credit is unimpaired.
The other cause becomes active only when the total amount of circulation exceeds the usual business wants of the community. It operates without relation to the actual value of the circulation, so produce the same result. The effect is a necessary consequence of the relation between the whole circulating medium and the whole business and property of the community, and can only be modified by influences upon the cause. Every means, therefore, which will reduce the quantity of circulation becomes important, and should diligently be sought after.
It was with this view that Congress adopted two measures of relief-one, by which any excess in the quantity of currency might at once be permanently withdrawn and funded in 8 per cent. bonds; the other, by which the same effect could be produced for a time, through interest-bearing notes and deposits on call. Both plans are working well. The deposits have in fact been a permanent loan at 6 per cent. The interest notes, although current to a certain degree, are usually withdrawn from general circulation as soon as a sufficient amount of interest has accrued upon them to make them valuable as a temporary investment. It must be observed, however, that if this interest should remain in arrear for along or indefinite time, these notes encounter a difficulty which seriously impairs their value, namely, that of an uncurrent, they will not pass into general use unless the interest be paid annually. It will be seen that the issue of these notes already amounts to upward of $22,000,000. Much of it has doubtless been taken under the belief that the interest would be paid like other interest, and I have encouraged this belief by stating that I would recommend to Congress that the interest should be paid annually. I earnestly hope that Congress will approve this recommendation. The payment could be stamped annually on the note, without encumbering it with a coupon; and in this way it is believed the objects intended by the issue would be effected.
I would also recommend that the notes be issued of a less denomination than $100. The large amount of money in the hands of private capitalists is the fund which we must induce to be loaned for the uses of the Government. From the war tax returns and from estimates as to such States as have not yet made complete returns, this fund may be sent down at $700,000,000, and one of the best means for procuring the use of part of it by the Government seems to be through these notes, which answer the double purpose of currency and investment.
I have also to report that the acceptance of deposits on call at 6 per cent. has operated well. It will be seen that nearly $30,000,000