and book accounts, without recourse to any actual money whatever. The money itself is used as an instrument only in the petty transactions of life. Yet such is the delusion regarding the necessity for a certain quantity of real or coined money, or for substitute money redeemable in coin, to be kept in actual circulation, that a panic nearly happened last summer because it was assumed that an undue proportion of these various kinds of money or currency would be called into the treasury and would not be reissued for lack of appropriations. Even the most sagacious bankers then appealed to the treasury for relief, as if this country did not hold a demand check upon the reserves of gold coin throughout the world sufficient to meet any such temporary difficulty! The panic was allayed, but allayed only by the very judicious action of the Treasury Department; but the cause of the panic was very soon removed by the import of over $30,000,000 in gold coin in response to our drafts during the summer and early autumn.
The whole volume of the coin of the world is at our disposal if we choose to draw upon it as we did last summer. If right consideration be given to existing conditions there could perhaps be no better use for the excess of revenue derived by Government from taxation than its application to the payment of that part of the demand debt, to wit, $250,000,000, which is not now covered by gold in the treasury. There could then be no objection to the continued circulation of United States notes in place of the coin itself; their form could be changed; they could be made into gold certificates corresponding to the silver certificates. Then the whole financial system of the country would be placed upon a solid foundation such as it had never before reached. If such a course were adopted, the excess of revenue over necessary expenses and probable appropriations by the present Congress would be likely to amount to about the sum of uncovered notes, viz., 8250,000,000, in the interval between the present time and the time when the four and a half per cent bonds would become due and payable in 1891. Any excess of revenue at that time could then be applied to the payment of such four and a half per cent bonds. Is it not a financial absurdity to buy bonds not yet due at a high premium, and to make a forced loan by the issue of notes due on demand for that purpose?
It may, therefore, be time enough to shape legislation on the mere ground of an alleged excess of revenue, when the legal tender notes and the four and a half per cent bonds shall all have been paid, and not before.
There may be other reasons for reducing taxation. The purpose of this memorandum is simply to treat the alleged excess of revenue and to show that there is as yet none above the positive
