NATIONAL BANK NOTES, DEPOSIT CURRENCY. National banks October 5, 1897, - $1,869,491,310 State banks 1895-6, Loan and trust companies, Private banks, 223,827,755 695,659,914 586,468,156 59,116,378 $3,210,735,758 In connection with their enumeration above there is given herewith a brief description of each kind : (1) Gold Coins of the denominations of $20, $10, $5, and $2.50, weighing 25.8 grains to the dollar and .900 fine, or 23.22 grains fine gold. They are a "legal tender in all payments at their nominal value when not below the standard weight and limit of tolerance provided by law for the single piece, and, when reduced in weight below such standard and tolerance, a legal tender at valuation in proportion to their actual weight;" receivable for all public dues and formerly exchangeable for gold certificates. Gold bullion is admitted to free coinage. By the act of February 12, 1873, it was enacted that the one-dollar gold piece, "at the standard weight of 25.8 grains, shall be the unit of value." (2) Gold Certificates, now issued under the act of July 12, 1882, for gold coin deposited in the Treasury, in denominations of $10,000, $5000, $1000, $500, $100, $50, and $20; not a legal tender; "receivable for customs, taxes, and all public dues," and redeemable in gold at the Treasury or any subtreasury. (3) Standard Silver Dollars, each containing 412.5 grains of standard silver .900 fine, or 3714 grains of pure silver, coined for government account; "a legal tender at their nominal value for all debts and dues, public and private, except where otherwise expressly stipulated in the contract;" receivable for all government dues and exchangeable for silver certificates. (4) Subsidiary Silver, coined for government account in denominations of 50, 25, and 10 cents, .900 fine, containing 25 grammes to the dollar (or 385.809+ grains standard silver, or 347.228+ grains of pure silver); a legal tender in all sums not exceeding $10 in full payment of all dues, public and private; " receivable for government dues to $10, and exchangeable for lawful money at the office of the Treasurer or any Assistant Treasurer of the United States in sums of $20 or any multiple thereof. (5) Minor Coins, coined on government account in denominations of 5 cents and I cent; a "legal tender at their nominal value for any amount not exceeding 25 cents in any one payment;" receivable to the amount of 25 cents for all governmental dues; and redeemable in lawful money at the office of the Treasurer and the several Assistant Treasurers and depositories of the United States when presented in sums of not less than $20. (6) Silver Certificates, issued against standard silver dollars, in denominations of $1,000, $500, $100, $50, $20, $10, $5, $2, and $1; not a legal tender for debts, public and private; receivable for customs, taxes, and all public dues; exchangeable for standard silver dollars or smaller coin, and redeemable in standard silver dollars. (7) United States Notes (greenbacks), issued under the acts of February 25, 1862, July 11, 1862, and March 3, 1863, in denominations of $1, $2, $5, $10, $20, $50, $100, $500, $1000, $5000, and $10,000; a "legal tender in payment of all debts, public and private, within the United States, except for duties on imports and interest on the public debt;" redeemed when presented since January 1, 1879, in gold coin at the subtreasuries in New York and San Francisco, and reissued. (8) Currency Certificates, issued under the act of June 8, 1872, in denominations of $5000 and $10,000, upon deposit of United States notes, payable to order, and not a legal tender, nor receivable in exchange for anything other than legal-tender notes; but available as lawful reserve by national banks. (9) Treasury Notes, issued under the act of July 14, 1890, in payment for silver bullion; a "legal tender for all debts, public and private, except where otherwise expressly stipulated in the contract;" receivable for customs, taxes, and all public dues, and "redeemable on demand in coin" at the office of the Treasurer or any Assistant Treasurer of the United States. There were issued in all $155,931,002, but cancellations have reduced the amount to $106,348,280, on January 1, 1898. (10) National Bank Notes, issued by the national banks of the United States in accordance with the act of June 3, 1864, to the extent of 90 per cent. of the par of government bonds deposited by such banks with the Treasury; not a full legal tender; receivable at par "in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except duties on imports; and also for all salaries, and other debts and demands owing by the United States to individuals, corporations and associations within the United States, except interest on the public debt and in redemption of the national currency;" receivable also by every national banking association for any debt or liability to it; and redeemable at the Treasury of the United States (in United States notes). (11) The Deposit Currency appears as the credit to depositors in the banks; and on these sums as given above, checks, drafts, and the like, are drawn, creating a medium for exchanging goods, which, as shown by the clearing-house returns of the United States, performs transactions annually to the large sum of more than $50,000,000,000. Not a legal tender for any payments whatever. 16. After getting possession of the facts as to the various kinds of money in the United States, and the denominations of each, it will add to a proper understanding of the existing situation to discover the work done by each of these forms of money. There are several tests at our disposal, and these will be treated in the following order: (a) The classified receipts by the banks on given days. (c) The money used in international payments. In 1871, at the request of James A. Garfield, then Chairman of the Committee on Banking and Currency of the House, the Comptroller obtained returns from fifty-two banks selected from three groups, namely, largest city banks, banks in smaller cities, small country banks. The figures showed that of all the receipts over the counters of those banks ($157,000,000) only 12 per cent. ($19,370,000) was in coin or notes, and 88 per cent. was in checks, drafts, and commercial bills. In 1881, 1890, 1892, and 1896 more careful examinations were made, showing the following results as to the percentages of the different kinds of money actually used by the people of the United States in their dealings with banks: 17. Also the actual average percentage of checks and credit instruments used in making payments in retail trade, has been shown by the Comptroller of the Currency to be about 55. In short, over one-half of the retail trade is performed by banking. expedients. And since of large transactions over 90 per cent.. are likewise done without the usual forms of money, it has been shown that, taking the mercantile business of the country as a whole, retail and wholesale, over 80 per cent. of all the money work is done by checks, drafts, and other credit instruments.' 18. A brief glance at the immense amounts of our international trade also shows that very large transactions are settled by relatively small sums of metallic money. Taking merely the figures for 1896, it is found that the exports and imports of merchandise and of gold and silver coin and bullion were as follows: From this table it appears that in settling transactions amounting to $1,662,331,612, all told, gold and silver coin and bullion (including ore) were used to only about 14 per cent. Since much of this gold and silver bullion was itself sent as merchandise, the real percentage is much less than 14. 'See Report of Comptroller of Currency 1896, and KINLEY, Journal of Political Economy, March 1897. THE STANDARD. 19. In the preceding sections, attention has been confined to the two functions of money known (1) as the Standard or Common Denominator of Value, and (2) as the Medium of Exchange. Concerning transactions begun and ended on the spot nothing more need be said; but the fact of contracts over a period of time introduces a new and important element the time element. Whenever a contract is made covering a period of time, within which serious changes in the economic world may take place, then difficulties may arise as to what is a just standard of payVarious articles might serve equally well as a standard for exchanges performed on the spot, but it is not so when any one article is chosen as a standard for deferred payments. Without much regard to theory, the world has in fact used the same standard for transactions whether settled on the spot, or whether extending over a period of time. ments. 20. In order to work with perfection as a standard for deferred payments, the article chosen as that standard should place both debtors and creditors in exactly the same absolute, and the same relative, position to each other at the end of a contract that they occupied at its beginning; this implies that the chosen article should maintain the same exchange value in relation to goods, rents, and the wages of labor at the end as at the beginning of the contract, and it implies that the borrower and lender should preserve the same relative position as regards their fellow producers and consumers at the later as at the earlier point of time, and that they have not changed this relation, one at the loss of the other. This makes demands which any article that can be suggested as a standard cannot satisfy. And yet it is a practical necessity of society that some one article should in fact be selected as the standard. The business world has thus been forced to find some commodity which while admittedly never capable of perfection-provides |