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UNIVERSITY OF CALIFORNIA
A ccessions No. ^>_ $<>*''& Shelf No.
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RESUMPTION OF SPECIE PAYMENTS.
NOTES OF A CONFERENCE
COMMITTEE ON BANKING AND CURRENCY
HOUSE OF REPRESENTATIVES
HON. JOHN SHERMAN, SECRETARY OF THE TREASURY,
APRIL IST AND 4ra, 1878.
MEMBERS OIF THE COMMITTEE :
HON. A. II. BUCKNER, Chairman.
MESSRS. THOMAS EW1NG, AUGUSTUS A. HARDENBERGH, JESSE J. YEATES, WILLIAM
HARTZELL, HIRAM P. BELL, E. KIRKE HART, BENJ. T. EAMES, S. B. CHIT-
TENDEN, GREENBURY L. PORT, AND WILLIAM A. PHILLIPS.
GOVERNMENT PRINTING OFFICE.
RESUMPTION OF SPECIE PAYMENTS.
NOTES OF A CONFERENCE
. U.S. C^f
COMMITTEE ON BANKING AND CUERENCY
HOUSE OF REPRESENTATIVES
HON. JOHN SHERMAN, SECRETARY OF THE TREASURY,
APRIL IST AND 4Tii, 1878.
IMEMIBERS OF THE COMMITTEE : .
HON. A. H. BUCKNER, Chairman.
MESSRS. THOMAS EWING, AUGUSTUS A. HARDENBERGH, JESSE J. YEATES, WILLIAM
HARTZELL, HIRAM P. BELL, E. KIRKE HART, BENJ. T.1EAMES, S. B. CHIT-
TENDEN, GREENBURY L. FORT, AND WILLIAM A. PHILLIPS.
GOVERNMENT PRINTING OFFICE
COMMITTEE ON BANKING AND CURRENCY,
HOUSE OF EEPRESENTATIVES,
Washington, April 1, 1878.
Present, Mr. Btickner, chairman ;
Messrs. Ewiug, Hardenbergh, Hartzell, Bell, Eames, Chittenden, Fort,
The Hon. John Sherman, Secretary of the Treasury.
The chairman read to the Secretary a copy of the letter sent to him
on the 28th ultimo, in which were stated the several points upon which
the committee wished to be informed at the conference set for to-day.
The first was a statement showing the actual amount of gold and silver
coin and bullion belonging to or in the custody of the Treasury Depart-
ment on the 28th of March, where located, and what deductions were
to be made from it on account of actual existing demands against it.
Secretary SHERMAN. I can give you a statement up to the 28th of
February, 1878. I am not able now to give you the statement for the
month of March, but can do it to-morrow or next day, and I will prob-
ably attach it to my answer. This, however, is the general result of the
statement. We have at the Treasury, the different subtreasuries, assay-
offices, and depositories :
In gol 1 coin 118,351,709
In gold bullion 7,937,300
In subsidiary silver coin 5, 675, 494
And in silver bullion 2, 955, 577
(See Appendix No. 3.)
I have also got the comparative debt statement, but 1 think I had
better not put it in now, because I will have the complete statement
made to day. This being the first of the month, it could not be made
up until to-day. (See Appendix No. 5.)
The CHAIRMAN. The next point called for by the committee is a
statement of gold and silver coin and bullion in the Treasury, less the
items deducted in your statement made before the Senate Finance Com-
mittee, from 1865 to 1877, inclusive.
Secretary SHERMAN. The Treasurer has tried to give that statement,
as far as he can, but he could not give it complete, except as to the state-
ment made on the 1st of February. 1877. In this statement he savs
The committee, in their inquiry No. 2, asked for a statement similar to the above,
for each year from 1865. It has been found impracticable to comply, as to the years from
1865 to 187c, in the short time allowed, on account of the form in which reports from
assistant treasurers and mints and assay offices were made prior to 1877. In fact, to
make the statement as requested would necessitate correspondence with all the above
I told him that as this statement gives you the items a year ago, and
as you have also that statement for this year, that was all you would
probably want. The amount of gold and silver available on the 1st of
4: RESUMPTION OF SPECIE PAYMENTS.
February, 1877, was $11,936,771, after making the same deductions as
were made in the table given to the Finance Committee, on page 4.
This table (Appendix No. 2) contrasting with that table will show the
condition of the Treasury as to gold and silver then and on the 1st of
February of this year. The amount a year ago was $11,938,771, and the
amount on the 1st of February this year was $71,775,860, making the
increase of gold and silver available between the 1st of February, 1878
and the 1st of February, 1877, $59,839,089.
This statement (handing it to the committee) will give you the amount
in silver coin, in silver bullion, in gold coin, &c.
There was another fact which I thought the committee would desire
to have in this connection. I thought that the committee would want
to know the distribution of this money on the 28th of March, 1878. We
had in gold coin and standard silver dollars $114,666,958 ; in fractional
silver coin $5,736,639; and in gold and silver bullion $13,664,914. The
amount of silver standard dollars included in this is estimated at
$454,711. (See Appendix No. 4.)
The CHAIRMAN. The third inquiry is the amount of bonds sold up to
February 1, 1878, and not paid for.
Secretary SHERMAN. If that question means simply to inquire as to
the amount of bonds not paid for at that date, my answer is that they
are all paid for. There are no bonds issued unless they are paid for ;
but I suppose that what the committee means by this question is to as-
certain the amount of bonds actually sold for resumption purposes, and
also for refunding purpose. I have the distribution here; but in direct
answer to the question it will be perhaps sufficient for me to say that
there are no bonds which have not been paid for. We take subscrip-
tions, but never issue the bonds until we get the money. An arrange-
ment has been made with the Bank of Commerce, in New York, by
which we allow that bank to collect currency and coin drafts for bonds,
and when the coin is paid into the Treasury the bonds are sent to the
person. The actual amount of bonds sold under the resumption act and
under the refunding act is as follows :
Under the resumption act
5 percent, bonds of 1881 $17,494,350
4 per cent, bonds of 1891 15,000,000
4 percent, bonds of 1907 25,000,000
The bonds issued on account of refunding are as follows:
5 percent, bonds of 1881 490,000,000
4| per cent, bonds of 1B91 185,000,000
4 per cent, bonds of 1907 55,000,000
Which last sum added to the $57,494,350 on account of resumption
makes the total $788,290,550.
I ought to say that the proceeds of all the bonds that were sold under
the refunding act were applied to the payment of an equal amount of
5-20 bonds bearing 6 per cent, interest.
The CHAIRMAN. These bonds were sold at par, were they not ?
Secretary SHERMAN. Yes, sir; par in coin. We paid out of the
Treasury one-half of 1 per cent, for commissions and expenses.
The CHAIRMAN. The fourth inquiry is as to the usual amount of an-
nual coin liabilities of the government, stating separately the liabilities
for interest, sinking-fund, foreign service, &c.
RESUMPTION OF SPECIE PAYMENTS. 5
Secretary SHERMAN. I have this for last year. It is as follows :
Coin in fcerest paid during fiscal year 1877 $92, 883, 431 27
Amount applied to the sinking-fund during fiscal year 1877 447, 500 00
Amount paid for diplomatic service during fiscal year 1877 755, 286 06
Amount paid for foreign naval service during fiscal year 1877 2, 224, 124 49
Amount of customs refunds during fiscal year 1877 - 5, 247, 800 65
Amount expended for refunding national debt, parting and refining
bullion, &c., during fiscal year 1877 901,927 30
Total 102,460,069 77
You are aware that under the law importers ver}- often deposit money
in advance of their entries, and then, when their entries are liquidated,
the excess is returned to them. That system is adopted in order to
enable them to get their goods quickly. Also in some cases where dis-
putes arise as to the amount of duties, if the duties are paid in excess,
the excess is refunded. These refunds are in the ordinary current course
The CHAIRMAN. This total of $102,460.60 is the coin payments for
the last fiscal year ?
Secretary SHERMAN. Yes, sir; divided up in the way I have stated.
The CHAIRMAN. The fifth question which the committee desired you
to answer, is the amount of fractional currency redeemed and carried to
the-account of the sinking fund, and what applications of coin, if any,
have been made on account of the sinking fund during the current fiscal
Secretary SHERMAN. The answer to that is :
The amount of fractional currency applied to the sinking fund in 1876 was $7,0f 2,142.09,
and in 1877, $14,043,458.05. So far in this fiscal year the redemptions of fractional cur-
reccy amount to $3,382,621.45, making a total of .$24,488,2.1.59 applied to that fund.
No coin applications have been made to the sinking fund during the current fiscal
year, except the redemptions of bonds heretofore called, amounting to $67,700.
Some cases occurred where bonds were sent on by parties by mistake,
and we redeemed them ; and they were put into the sinking fund.
After that we adopted the habit of returning bonds that were sent by
The CHAIRMAN. The next question is, what is meant by balances in
the sinking-fund accounts ? Of what items are those balances made
Secretary SHERMAN. It is very natural for any person, lawyer or
business man, to be misled by the use of the word " balance" in these
sinking-fund accounts. A balance may not be a balance of money
in hand ; and, in this particular case, the word " balance " means
either an amount of the sinking fund which has not been made good
by the purchase of bonds, or an excess of the amount required by law.
These are called balances, and this table on page 18 of the Finance
Report shows very fully how the sinking fund is made up, and of what
items it is composed. This table goes back to 1860, and shows at the
end of that fiscal year a balance to new account ; that is, the balance to
new account is a balance in this case of an amount paid more than
the law required into the sinking fund, and therefore it is put to the
credit of the sinking-fund for the next year.
Then, the next year, they had not bought quite as many bonds for
the sinking fund as the sinking-fund law required, and so there was a
balance of $1,234,000 which was carried to the credit of the sinking
fund to be made up the next year, and so on. These balances con-
tinued, amounting to somewhere between half a million and a million
and a half of dollars. Sometimes thev would be on the one side and
6 RESUMPTION OF SPECIE PAYMENTS
sometimes on the other, and they were carried forward until 1873 or
1874, when, after the panic, the revenues fell off, and they failed to
make good the sinking fund. The amount of deficit in making good the
sinking fund in 1874 was stated at $16,305,000. Mr. Bristow, I am
told, declined to carry forward this balance to the next year because it
was apparent that, from the condition of the finances, he would not be
able to make good that balance in addition to the sinking fund for the
next year, and therefore the balance was dropped. It represents simply
the amount which the government failed to apply to the sinking fund.
Instead of carrying it forward in his accounts, the Secretary dropped
it. That is what I did last year, and what Mr. Morrill had done. We
did not undertake to carry forward the deficiency in one year to swell
the sinking fund for the next year.
Mr. BELL. Then this term " balance" applied to the sinking fund in-
dicates either the excess or the deficit in the sinking fund for the year ?
Secretary SHERMAN. That is all. At first the balances were carried
forward arid were made good the next year, because they did not
amount to much ; but when the deficit became so great, and when it be-
came apparent that it could not be made good, the Secretary just dropped
it. Now, last year we were deficient in the sinking fund 80,235,000,
simply because we could not, out of the surplus revenue, make good
The CHAIRMAN. On the whole, have not the deficiencies in the sink-
ing-fund account been more than made good since the passage of the
Secretary SHERMAN. Yes. You will find a statement of that in Mr.
Morrill's report. The sinking fund was never kept as an account in the
TreasuTy Department until after the refunding act of 1870. A section
in the refunding act provided for the stating of the account of the sink-
ing fund, and then it was first commenced. Up to that time a statement
was made showing how far the sinking fund had been kept under the
act of February, 1862, and it was found that by the application of the
surplus revenue to the payment of the debt, the stipulations of the sink-
ing fund act had been largely exceeded, to the amount of $200,000,000.
Now the sinking-fund account is regularly kept, and the exact state-
ment of it is shown by Mr. Morrill's reports and also by my annual re-
The CHAIRMAN. Have you the report of the examiners at the sub-
treasury office, New York, as to the coin there?
Secretary SHERMAN. Yes, sir; I have the preliminary report uf Mr.
E. O. Graves, which is as follows:
TREASURY OF THE UXITKI) STATES,
Washington, March 29, 1876.
SIR: I have the honor to submit a preliminary report upon the examination of the
office of the assistant treasurer of the United States in New York, recently made under
my direction in pursuance of the instructions given in your letter of the llth instant.
The funds found in the possession of that office at the close of business on the 12th in-
stant, at which time I took charge (exclusive of currency and coupons in process of
redemption and not charged to the cash), were as follows, the coin * being verified by
weight and the notes, currency, and securities by actual count and examination of each
ndividual obligation :
Gold coin.. $100,051,280 00
Gold bars 3,367,713 26
Coin checks, paid on March 12, 1878, but not charged up 1, 069, 114 78
Silver coin 1,396,436 *S
Coin certificates 3,197,900 00
United States notes 32,614,479 00
National currency 428,711 n
Fractional currency and minor coin.. ... 194. 0-* '.'.'
RESUMPTION OF SPECIE PAYMENTS. 7
Redeemed legal-tender certificates of deposit, June 8, 1872 $3, 335, 000 00
Coin coupons 8,368 10
Coupons of District of Columbia bonds 110 41
Treasurer's checks for registered interest on District of Columbia bonds 273 75
Redeemed call bonds and interest...^ 2,013 48
Treasurer's coin quarterly-interest checks :
Funded loan of 1881 48,168 03
Funded loan of 1891 832,383 02
Funded loan of 1907 3,603 50
Receipts for advances on salaries of employe's 2, 421 00
Cash for petty expenses in cashier's hands 15 00
Seven-thirty notes purchased, being balance of amount of counterfeit
7-30 notes purchased, aud for which judgment has been obtained in
favor of the United States 8,750 31
Total 146,560,829 84
Total as shown by assistant treasurer'r report of March 12, 1878. 146, 566, 996 35
Deficit 6,166 51
Only $1,777.51 of the deficit arose in the seven and one-half years during which the
present incumbent has held the office of assistant treasurer, and of that amount $1,500
is due to a single shortage discovered in a package of notes received from a bank in
payment of a draft, but which the bank refused to make good. This leaves a deficit
from all other causes during the present assistant treasurer's incumbency of but
$277.51; a most remarkable record considering the vast amount of money which haa
passed through his hands. The items composing the entire deficit will be explained
in full in my final report.
Very respectfully, your obedient servant,
E. O. GRAVES.
To Hon. JOHN SHERMAN,
Secretary of the Treasury.
The items of this deficit bad been reported and known at tbe depart-
ment, so tbat tbere was no actual variation between the statement as
made by the assistant treasurer and the actual count. Perhaps I ought
to say that this count occurred also here in Washington in July last, at
the time that Mr. Giltillan took possession of the Treasurer's Office.
Every item and paper was counted before he gave his receipt for the
money, aud everything was found to be correct, except a small item of
$1,831, of which we have a full account.
Mr. CHITTENDEN. I have prepared four questions in the interest of
those whom I represent, to which I should like to have your answer:
First. With silver dollars and silver certificates full legal tender for
all debts, including the customs and the public debt, is not gold practi-
cally demonetized ; and how will you renew your supplies, or prevent
its exclusive use as merchandise in foreign commerce?
Second. Is there no danger that tbe national banks, in taking care of
themselves, will hoard greenbacks enough to exhaust your gold reserves
when the day for resumption comes ?
Third. Is it not probable that, before you have coined 100,000,000 of
the new silver dollars, with greater activity in foreign trade, they will
be exported at their bullion value to settle trade balances, and with what
effect upon the price of silver bullion ?
Fourth. Does not your success in resuming coin payments with our
so-called double standard depend absolutely upon an advance in the
price of silver bullion in London to about 59 pence sterling per ounce ?
I have not spoken with any member of the committee in framing these
questions. They were framed at my own table, and 1 am influenced only
by my correspondence aud by questions asked of me by those whom I
Secretary SHERMAN. I would a great deal rather, inthis connection,
give the committee the facts and let the committee draw its own infer-
8 RESUMPTION OF SPECIE PAYMENTS.
ences, than attempt to give my own opinions. But I have no objections
to answering any of those questions. I think that a certain amount of
silver dollars issued will not have the effect which Mr. Ohittenden thinks.
I believe we can maintain at par in gold a certain amount of silver dol-
lars; precisely what amount I would not like to say, because that is a
question of opinion. But I have the idea that we can maintain at par
in gold no less than $50,000,000; perhaps more say from $50,000,000
to $100,000,000 ; but whenever those silver dollars become so abundant
and so burdensome that the people would not have them and would not
take them, and that they would not circulate, then undoubtedly they
would gradually sink to the value of the bullion in them. That is my
opinion, but I do not think it wise for either this committee or myself
to discuss this question much, because the silver bill is a law, and, what-
ever we may think of its effects, the public mind will not be satisfied
until that law is fairly tried. The effect of the silver bill is not going to
be very rapid, nor will the fall in silver be anything like so rapid as is
probably feared, and long before the silver dollar can sink to the value
of silver bullion, Congress will undoubtedly correct the law if it were to
have that effect. If, on the other hand, it should have the effect, which
is anticipated, of raising the mass of silver up to the standard of gold,
then Mr. Chittendeu need not be afraid. Therefore, I say that I do not
think I ought to give my opinion further on that subject. I have not
changed my mind about the silver bill, although the newspapers say
that I have. I think that (as a matter of policy) the silver bill, which
makes silver available to pay bonds issued by the United States either
before or after the refunding or resumption acts, is not good policy. I
have stated that over and over again publicly, and 1 do not deny it.
But the silver bill is the law. We are not infallible. It cannot operate
quickly in that way, and therefore we had better give it the full benefit
of an experiment, in the certainty that, if Congress finds that it has the
effect which is now anticipated, Congress can at any moment stop the
issue of silver dollars. I think that that is as far as I ought to answer
Mr. CHITTENDEN. It is not my object to embarrass the Secretary in
any way in these questions.
The CHAIRMAN. The Secretary is of the opinion that u Sufficient to
the day is the evil thereof;" that we will take care of the present, and
let the future take care of itself.
Secretary SHERMAN. If you allow me, I can now, in connection with
your question in regard to my opinion as to the practicability of resump-
tion, and especially in regard to an interview published in the news-
papers between Mr. Ewing and bankers in New York, give you my
opinion. I have read that interview with a great deal of attention, be-
cause I know many of the gentlemen who took part in it.
The CHAIRMAN. It is proper for me on the part of the committee to
say that it was not intended that that interview should be made public;
but the report of it was surreptitiously obtained in some way.
Secretary SHERMAN. I do not think there was the slightest objection
to publishing it.
The CHAIRMAN. Only probably on account of confidential relations.
Mr. EWING. We told those gentlemen at the conference that we had
our secretary for the purpose of taking down their statements, not with
a view to publishing them, but merely for the information of the com-
mittee, and the committee feels exceedingly annoyed about the publica-
tion, because it seems like a violation of that understanding; but the
RESUMPTION OF SPECIE PAYMENTS.
paper was surreptitiously obtained, and the committee does not feel at
fault about it.
Mr. CHITTENDEN. Special pains were taken at New York to exclude
Secretary SHERMAN. It is pretty hard to exclude newspaper re-
porters ; but I think it was right enough to have that conference pub-
lished. It presents the opinions of very intelligent gentlemen, whose
business it is to be familiar with the subject, and their opinions are en-
titled to full weight. I can only give you my general reply to them.
My reply would be about this : These gentlemen assume three prop-
ositions. First, that we cannot sell enough 4 per cent, bonds to pre-
pare for resumption; second, that the national banks can throw upon
the government the burden of resumption of bank-notes as well as
of United States notes; third, that resumption requires the resump-
tion and cancellation, without power of reissue, of United States notes
below $300,000,000. To these I answer, that I believe that, with such
auxiliary legislation as is pending in both houses, we can sell enough
4= per cent, bonds to prepare for resumption ; but, if I am mistaken
in this, we can sell either 4 or 5 per cent, bonds, which they admit
will command gold, silver, and bank-notes, to maintain resumption.
Some of these gentlemen have proposed to me that, if I sell them 4^ per
cent, bonds at par in coin, they will guarantee enough coin for resump-
tion ; and I have some better offers from other banks and bankers, so
that, on this point, it is only a question of rate of interest on bonds.
When it becomes clear that money cannot be had for 4 per cent., it is
time enough to pay 4J. The silver bill has crippled my power to sell
4 per cent, bonds, but a wise savings bill, that will enable me to deal
directly with the people, would go far to repair this. Upon the second
point: It may as well be understood that the national banks cannot
throw upon the government the burden of redeeming their notes. The
attempt would be suicide. They are bound to redeem their notes on
demand at the Treasury with United States notes or coin, and to main-
tain in their vaults very large reserves of United States notes. Any
effort of theirs to force the redemption of their reserves of United States
notes in coin would at once cause the government to withdraw all gov-
ernment deposits from them, to present all bank-notes held or received
by the government for redemption, and, if need be, to exchange United
States notes for bank-notes.
JSuch a struggle as these gentlemen contemplate would end in their
losing their power to issue circulating notes at all. Their talk about
forming a line to break the government is not discreet and is not dan-