coinage of the silver bullion purchased under the Act of 1890. If this bullion, costing about $100,000,000, were coined into dollars, it would add over $150,000,000 to the existing sum of $455,818,122 to be kept at par with gold. This would be clearly in excess of the needs of the country for notes below $10.

pro

It is to be noted that the plan of the Commission, while viding a place for the silver dollars where they would circulate at par, does not thereby indicate that in the future no additional measures may wisely be adopted to render our monetary system wholly invulnerable. The retention of 455,000,000 of silver dollars in our circulation at double their real value, will require the constant maintenance of a gold reserve sufficient to create confidence in the ability of the government to redeem all the silver that may be sent in. It is possible that in emergencies and in times of political stress, when the credit of the government may be assailed, this may prove an element of weakness. It may be justly observed that, while in normal times no difficulties may arise from this silver circulation of a token character as proposed by the plan of the Commission, in the very time when the country may not be able to give it full protection this token silver may cause disturbance. If we had no form of money that was not of full value- that is, if the face value of every coin were no more than its bullion value — then, in time of emergency the Treasury would be entirely free from the necessity of providing against possible fear on this account and would not be obliged to keep larger gold reserves at just the time when every dollar of gold is needed elsewhere. Consequently, while the Commission postponed to the future the settlement of this particular question, it was believed that adequate provision had been made for preserving the silver dollars at par with gold in normal times. This is made absolutely certain, even in periods of stress, by the authority given to the Secretary to sell bonds for gold. Still, in order to lessen the necessity of such bond sales, if it is found that the burden of redemption is great, and large quantities of silver accumulate in the Division of Issue and Redemption, it is an imperative duty that the accumulated

dollars which the public refuses to purchase should eventually be reduced to bullion and sold at the discretion of the Secretary. After the other reforms provided in the scheme of the Commission have been accomplished, then it may be time to take up this matter and reduce the large amount of our token silver dollars to a sum which will never, even in the hour of stress, give the slightest ground for uneasiness to the Treasury. This, when carried out, it should be carefully noticed, would not imply contraction of the circulation. It would mean that the largest quantity of silver dollars would be out which could be safely used and yet maintained at par with gold. If the withdrawal of silver caused any real vacuum in the circulation, as indicated by business needs, then it would be promptly filled with gold, and token coinage would be replaced by a coinage always equal to its face value. How this vacuum would be filled is shown in the discussion of the Movement of Gold.

53. If it should be thought by objectors to the plan of the Commission that the requirement of redemption in gold of silver dollars, would create a new "endless chain," by which silver dollars could be used to deplete the gold reserve, just as has been done by the greenbacks, attention should be called to the accompanying provision advocated by the Commission, which permits the Secretary to reissue redeemed silver dollars only in exchange for gold coin (or United States notes redeemable in gold). This rule would prevent any possibility of silver dollars reappearing from the Treasury to be again presented for redemption, except after having left gold in their place.

54. The Treasury notes of 1890, it will be observed, are not treated by the Commission as a part of the silver circulation; they are included with the United States notes (greenbacks) in the measures for withdrawal of legal tender government paper money. For these notes, separate reserves and provisions as to redemption are established. This being the case, the silver bullion now behind the Treasury notes of 1890 should be used to strengthen the funds in the Division of Issue and Redemption, for the maintenance of the silver currency at par, and for the retirement of the demand obligations all of which draw on a common

fund. In brief, this asset in silver bullion, which it is forbidden to coin into more dollars, would be dead unless it can be gradually sold and turned into gold. Sufficient reasons have been given why it should not be coined into more silver dollars; hence, there is no other disposition of it possible except to sell it, gradually and with discretion, for what it will bring in gold.

LEGAL TENDER.

55. The essential idea of "legal tender" is that quality given to money by law which obliges the creditor to receive it in full satisfaction of a past debt when expressed in general terms of the money of a country. A debt is a sum of money due by contract, express or implied. When our laws, for instance, declare that United States notes are legal tender- and this is the only complete designation of a legal-tender money—for "all debts public and private," it must be understood that this provision does not cover any operations not arising from contract. Current buying and selling do not make a situation calling for legal tender; a purchaser cannot compel the delivery of goods over a counter by offering legal tender money for them, because, as yet, no debt has been created.'

Contracts made in general terms of the money units of the country must necessarily often be interpreted by the courts. The existence of contracts calling for a given sum of dollars and the necessity of adjudicating and enforcing such contracts, require that there should be an accurate legal interpretation of what a dollar is. As everyone knows, the name, or unit of account, is affixed to a given number of grains of a specified fineness of a certain metal. This being the standard, and this having been chosen by the concurring habits of the business world, it is fit that the law should designate that, when only dollars are mentioned in a contract, it should be satisfied only by the payment of that which is the standard money of the community.

"A contract payable in money generally is, undoubtedly, payable in any kind of money made by law legal tender, at the option of the debtor at the time of payment. He contracts simply to pay so much money, and creates a debt pure and simple; and by paying what the law says is money his contract is performed. But, if he agrees to pay in gold coin, it is not an agreement to pay money simply, but to pay or deliver a specific kind of money, and nothing else; and the payment in any other is not a fulfillment of the contract according to its terms or the intention of the parties." 25 Calif. 564, Carpenter vs. Atherton.

56. Since prices and contracts are expressed in terms of the standard article, it is clear that the legal-tender quality should not be equally affixed to different articles having different values, but called by the same name. This method would be sure to bring confusion, uncertainty, and injustice into trade and industry. No one who had made a contract would know in what he was to be paid. The legal-tender quality, then, should be confined to that which is the sole standard. And it is also obvious that when a standard is satisfactorily determined upon, and when various effective media of exchange, like bank (notes, checks, or bills of exchange, have sprung up, the legal-tender quality should not be given to these instruments of convenience. They are themselves expressed in, and are resolvable into, the standard metal; so the power to satisfy debts should be given not to the shadow, but to the substance, not to the devices drawn in terms of the standard, but only to the standard itself, even though, as a matter of fact, nine tenths of the debts and contracts are actually settled by means of these devices. So long as these instruments are convertible into, and thus made fully equal to, the standard in terms of which they are drawn, they will be used by the business community for the settlement of debts without being made a legal tender. And whenever they are worth less than the standard they certainly should not be made a legal tender, because of the injustice which in such a case they would work.

Having shown that the legal-tender quality is only a necessary legal complement of the choice of a standard, it will not be difficult to see that the state properly chooses an article fit to have the legal-tender attribute for exactly the reasons that governed the selection of the same article as a standard. The whole history of money shows that the standard article was the one which had utility to the community using it. As the evolution of the money commodity went on from cattle to silver and gold, so the legal-tender provisions naturally followed this course.

57. A state may select a valueless commodity as a standard, but that will not make it of value to those who would already give nothing for it; and so, it may give the legal-tender quality