Under this authority. Congress provided, in 1793, that the ratio should be one ounce of gold to fifteen ounces of silver; and on the 28th of June, 1834, it changed the ratio to one ounce of gold to sixteen ounces of silver.

It would appear that Congress somewhat overrated silver in 1793, and underrated it in 1834, but it is now certain that sixteen ounces of silver are not worth one ounce of gold, and if silver were coined without limit on that basis, it would eventually bring us to a single silver standard, and reduce gold to a commodity, or drive it to foreign countries-a result not intended by the act of February 28, 1878.

The average cost of the silver in a standard dollar, as shown by the purchases for the Government from the date of the resumption act to this time, measured by the gold standard, is $0.906, or in a ratio of 1 to 17.64. Upon this ratio a silver dollar, in order to be of equal value to a gold dollar, should contain 455.3 grains. As the expense of coining a silver dollar is equal to the value of about five grains of standard silver bullion, it is confidently believed that a silver dollar containing 450 grains, based upon a ratio of one of gold to about 17.5 of silver, could be safely coined, as demanded for use or exportation, without demonetizing gold or disturbing contracts or business, and with great advantage to the silver-mining interests of our country. Upon the facts stated, it would seem to be wise policy now, in the spirit of the Constitution, to regulate by law the coin-value of the two metals so as to conform to the market ratio.

The cost of recoining the silver dollars already issued into dollars of the weight suggested is estimated at about one per cent., or $728,477 50. Much confusion and delusion have arisen from treating as a profit the difference between the cost of the silver bullion coined into silver dollars and the face-value of the dollars coined therefrom. This difference, from February 28, 1878, the date of the act authorizing their coinage, to November, 1880, is $8,520,871 45. From this should be deducted the expense already incurred in distributing the coin and by wastage, which amounts to $262,008 01, leaving as the net nominal profit the sum of $8,258,863 44, of which $7,198,294 56 have been deposited in the Treasury, and $1,060,568 88 remain in the mints. This nominal profit is burdened with the necessity of receiving, and thus practically redeeming, these dollars at their nominal value in gold coin, and of reissuing, transporting, and maintaining them in circulation. This burden will soon exhaust the nominal profit. When held by the Government the coins are of no more real value than an equal weight of standard-silver bullion. To the extent of the difference between their

bullion and nominal value, they are purely fiat money. This nominal profit applied to the purchase of silver bullion would be sufficient to meet the entire cost of converting the present dollars into an equal number of the proposed dollars; or, in other words, if the present. dollars were converted into the less number of the proposed dollars, the nominal loss would be fully covered by the nominal profit now in the Treasury and the mints.

It may be better for Congress at the present time to confine its action to the suspension of the coinage of the silver dollar, and to await negotiations with foreign powers for the adoption of an international ratio; but, compelled by official duty to report upon this subject, the Secretary feels bound to express his conviction that it is for the interest of the United States now, as the chief producer of silver, to recognize the great change that has occurred in the relative market value of silver and gold in the chief marts of the world, to adopt a ratio for coinage based upon market value, and to conform all existing coinage to that ratio, while maintaining the gold eagle of our coinage at its present weight and fineness. He confidently believes that the effect of this measure would be to make our gold and silver coins the best international standards of value known. Already the double-eagle, issued without cost for coinage, and in greater sums than any other gold coin, and of equal value to any other coin, whether measured by weight or tale, is received without question in all commercial countries as the most convenient medium of exchange. It is believed that a silver dollar of the weight and ratio of the proposed coinage would be the best silver standard for international exchange, and that it would tend to fix the market value of silver bullion at the ratio proposed, and would thus, as far as practicable, avoid the changing relative value of the two metals, while giving a steady market for the silver product of our country.

In this connection, the attention of Congress is respectfully invited to the operation of the act approved June 9, 1879, requiring the redemption in lawful money, at the office of the Treasurer or any assistant treasurer of the United States, of the silver coins of the United States of smaller denominations than one dollar.

When fractional silver coins were authorized by the act approved February 21, 1853, they were made to contain 384 grains of standard silver to the dollar. This was subsequently changed by the coinage act of 1873 to 25 grammes or 385.8 grains. They thus contain 26.7 grains, or nearly 63 per cent., less than the standard dollar. Prior to 1853, by reason of the large production of gold in California, the standard4 Ab

silver dollar and its fractional parts had risen in market value above par in gold, and were largely exported. To prevent their exportation, and in accordance with the example of Great Britain, the policy was adopted, by that act, of reducing the weight of the minor silver coin, and this policy operated well until, in the spring of 1862, both gold and silver ceased to circulate as money. During the suspension of specie payments a remarkable decrease in the value of silver occurred, and now the market value of the silver in a dollar of the fractional coin is only 82 cents.

The amount coined prior to November 1, 1880, under the provisions of the resumption act, which substituted silver coin for fractional currency, was $42,974,931. To this has been added a very large sum issued before the war, and again introduced into circulation since the resumption of specie payments. It is difficult to determine the amount of such old coinage in circulation, but it is believed to exceed $22,000,000 Prior to the act of June 9, 1879, this fractional coin filled the channels of circulation, especially in commercial cities, and gave rise to the passage of that act. At that date there was in the Treasury $6,813,589 fractional coin; on the 1st of November, 1880, the amount was $24,629,489, from which it appears that $17,815,900 has been redeemed with lawful money. The whole amount in the Treasury is counted as a part of its reserve, although it is a legal-tender only in sums not exceeding ten dollars, and is, therefore, not available as cash for general purposes. It would seem wise that the excess not needed for change should be coined into standard dollars, and that any further fractional coin, hereafter needed, should contain silver of approximate relative value to the standard coin. The nominal profit heretofore derived from this coinage is quite sufficient to cover the cost of this change. It is also respectfully suggested that the act of July 9, 1879, should be repealed. When fractional coin is issued as money, it should be treated like other coin, to be received by the Government upon the same conditions as by the people, but not, like paper money, to be redeemed. If it must be classed as money to be redeemed, it should be supported by a reserve, like other redeemable money.

NATIONAL BANKS.

The report of the Comptroller of the Currency contains much information in reference to the national-banking system, and gives tables showing the resources and liabilities of the national banks from the date of their organization to the present time, and also tables showing the number, capital, and deposits of the State banks, savings-banks,

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REPORT OF THE SECRETARY OF THE TREASURY.

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and private bankers of the country, by States and geographical divisions, for a series of years.

SAN FRANCIS

The capital stock of the national banks on October 1, 1880, was $457,553,850; surplus, $120,518,583; and the total circulation outstanding, $343,949,893.

National banks are organized in every State of the Union except Mississippi, and in every Territory except Arizona; and the total number in operation is 2,095, which is the greatest number that has been in operation at any one time.

The Comptroller devotes considerable space to the discussion of the operations of the national banks since the date of resumption of specie payments, and the evils as well as the benefits which are likely to arise from the large addition of coin to the circulating medium made since that date.

The capital stock of the national banks is $47,000,000 less and the surplus nearly $14,000,000 less than at the corresponding date in 1875. The loans of the banks at the date of their last returns were $1,037,000,000, and the individual deposits $873,000,000, the highest points reached since the organization of the system, the loans being $207,000,000 greater and the individual deposits $253,000,000 greater than in October, 1878, while the capital and surplus at the previous date were $5,000,000 in excess of their present amounts.

The individual deposits and the public, private, and bank deposits, not deducting the amount due from banks and the amount of the clearing-house exchanges, have increased more than $322,000,000, and amount to the unprecedented sum of $1,155,000,000.

The Comptroller states that the abundance of money, and the low rates of interest, have made it difficult for capitalists to find satisfactory investments, and that he has, therefore, examined the statements of the banks for a series of years to ascertain if the banks have found use for their increased deposits. The amount of the loans of the banks in New York city, in October, 1879 and 1880, was 70.8 per cent. of the capital, surplus, and net deposits; while in 1878, it was 65.4 per cent.; in 1877, 68 per cent.; and in 1876, 65.1 per cent.; and the loans are now proportionably higher than at any time since 1873. The resources of the banks in the other principal cities of the country are shown by their reports for October 1, last, to have been then more fully employed than they were at the corresponding dates for the two previous years, although their business was not so much extended as it was during the four years following the crisis of 1873. The ratio of the loans of the banks in the country districts to their

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capital, surplus, and net deposits was, on October 1, 7.3 per cent. less than it was at the corresponding date in 1875, and 5.2 per cent. less than in 1877. The opportunities for using money in this group of banks is not in proportion to the increase of their deposits, and their balances in other banks have by no means diminished.

The tables given by the Comptroller show that, during the past two years, the loans of the banks in the city of New York have been extended to a much greater degree proportionably than the loans in other parts of the country, and that the cash reserves of the banks in New York have been unprecedentedly low. While the aggregate lawful-money reserve has, as far as known, always been held by this class of banks, it has frequently been very close, some of the banks expanding their loans beyond reasonable limits, and relying upon imports of gold and purchases of bonds by the Treasury to replenish their deficient

reserves.

The act of June 20, 1874, repealed the law requiring reserves to be held upon circulation, thus largely reducing the amount of legal reserve required. The enormous increase of individual and bank deposits during the last year should not be accompanied with a proportional increase of loans, since such increase would, it is believed, have the effect, indirectly, of increasing the market prices of many railroad and other stocks and bonds largely beyond their actual value. The banks in New York city hold more than $100,000,000 of the funds of other banks, which are payable on demand, and it is of the greatest importance that they should at all times exhibit great strength if they would keep themselves in condition for an adverse balance of trade, and for the legitimate demands of those dealers who confide in them.

The Comptroller gives some interesting tables showing the amount of coin and currency in the country on the day of resumption of coin payments, and on November 1 of the present year, together with the amount of coin and currency in the Treasury and in the banks, and the amount in the hands of the people outside of these depositories, from which it will be seen that while the amount in the Treasury and in the banks has increased more than $50,000,000 during that period, the amount in the hands of the people has also increased more than $195,000,000.

The most gratifying exhibit in the condition of the national banks is, that they are now doing business upon a specie basis, the amount of gold coin held by the national banks having increased since the day of resumption from $35,039,201 to $102,851,032, which is but about $18,000,000 less than the whole cash reserve required by law.