Senator Thurman voted with the majority for the act of May 31,1878. directing the greenbacks to be reissued and kept in circulation. In his speech at Hamilton, Ohio, in August. 1878, he announced his adhesion to the resolutions of the Democratic State convention, and particularly to the resolution proposing a substitution of United States notes for national banknotes. "The question," he said, "is narrowed down to this: Shall our paper money be national bank-notes or greenbacks ?" This question, it will be seen, cannot be affected by any decision concerning the legal tender quality of the United States notes. Nobody disputes the right of Congress to borrow money, with or without interest, on time or on call; and if the notes are payable on demand in coin, they will be as good as coin, whether they are expressly declared a legal tender or not.

1 Congressional Record, Feb. 23,1879.

The question turns wholly on considerations of public economy and reasonable prudence. That the paper currency of the United States will ultimately be issued by the government alone, or exclusively by the banks, state or national, cannot be doubted. Until recently it was commonly expected that the government paper would gradually disappear; yet the displacement of the national bank-notes by treasury notes was proposed as long ago as 1867, by no less a personage than Mr, Randall, of Pennsylvania, since speaker of the national House of Representative Mr. Thurman's reasons for adopting this scheme are here given in his own words :

For every greenback it has issued the government has received value. That greenback has paid for services rendered, or materials furnished, or it has d charged a portion of the interest-bearing public debt. There is thus a saving to the government, or to the people, of an amount equal to interest upon the outstanding greenback circulation ; for, had the greenback not been issued, the government would have had to raise the money, by loan or taxation, to meet its expenditures. If it raised it by loan, it would, of course, have to pay interest upon the loan. If it raised it by taxation, the tax-payers lose the interest their money would have earned bad they not been compelled to give it to the government.

The greenbacks now outstanding amount to $346,681,016. Computing interest upon this sum at the lowest rate at which the government can borrow money, 4 per cent., and we have an annual saving to the people, resulting from the use of the greenback, of $13,367,240. But if the greenbacks were substituted for the $322,000,000 of national bank notes now outstanding, there would be a further saving to the people of 4 per cent. annually on that sum-namely, $12,880,000-making a total annual saving, by the use per cent. Every dollar of the public debt payable at the option of the government has been called in and refunded at that rate. The saving, therefore, is rightly set at 4 per cent., and on $650,000,000 amounts to $26,000,000 annually.

1 Congressional Globe, Jan. 7,1867, p. 325. Mr. Randall's bill was described in the title as "A bill to authorize the issue of treasury notes not bearing interest, to be used in providing a sinking fund for the extinguishment of the public debt." of the greenback, of $26,747,240. From this, however, deduct the taxes on their circulation paid by the banks, amounting to about $3,000,000 annually, and the net saving would be about $23,750,000. Perhaps, in strictness, this deduction for taxes ought not to be made, for it is probable that the banks throw the burden of the taxation upon their customers, who in turn shift it to the shoulders of those with whom they deal, until, like all other taxation, it finally falls upon the great body of consumers, the people.

This is at least an intelligible statement of the case. The banks have since surrendered $20,000,000 of their circulation, leaving about $300,000,000 outstanding. The volume of United States notes is about $350,000,000. Shall the United States, or the banks, hereafter issue these $650,000,-000 of currency ? Presented in this form, the question involves the assumption that the addition of $332,000,000 of gold and silver1 to the stock of money in the country, by the resumption of specie payments, will displace no part of the paper currency ; but let that pass.

The rate of interest is fairly taken at 4

1 This was the amount of gold and silver in the country June 30,1878, as estimated by the director of the Mint. Finance Report, 1878, p. 260.

The bank tax, however, is not correctly stated. $3,000,000 a year is the tax on a circulation of $300,000,000. But the alternative here presented is the issue of $650,000,-000 of currency by the United States or by the banks; and 1 per cent. of $650,000,000 would be $6,500,000. The treasury now loses a revenue of $3,500,000 a year by issuing its own notes to the amount of $350,000,000, and would lose $6,500,000 by issuing the whole volume of paper currency. Making this deduction, the apparent saving stands at $19,500,000 instead of $23,750,000, as estimated by Mr. Thurman.

The tax on circulation is properly deducted, for we are considering simply the effect of the proposed change upon the national treasury. For the same reason, the taxes on capital and deposits, and the local taxes, which are sometimes brought into the discussion, may be excluded, though if the national banks should be "wound up," as has been proposed,1 or go into voluntary liquidation, the share-holders would have the bonds, in which their capital is mostly invested, left upon their hands, and this portion of their property would no longer be subject to local taxation. The national taxes on capital not invested in United States bonds and on deposits are collected from the 3,709 State banks, trust companies, and private bankers, as well as from the 2,056 national banks; besides, the tax on deposits is a war measure, which ought long since to have been repealed, and cannot be regarded as a permanent source of revenue. The justice and propriety of the tax on circulation, however, is admitted by the banks themselves,2 and every dollar of of the circulation. If a similar reserve should be considered sufficient for the $300,000,000 more which it is proposed to send out, the total redemption fund would be $260,000,000, and the annual loss of interest would be $10,500,000. Mr. Thur-man's saving of $23,000,000 a year must accordingly be reduced to $9,000,000,which barely equals the probable loss of local taxes; and this small and doubtful economy depends on the supposition that 40 per cent. is an adequate reserve to protect a national currency issued from a single bureau and payable from a single fund.