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THE TREASURY RESERVE FUND.
SPEECH
OF
HOJI. PRESTON B. PLUMB,
OF'
K A N S A S ,
IN THE SENATE OF THE UNITED STATES,
,
Monday April 14, 18go.
W a s h in g t o n , D . C . :
R a m s e y & B is b e e , P r in t e r s .
The Treasury Reserve Fund.
SPEECH
OP
Hon. PRESTON B. PLUMB,
(XF* KLAJN'S-A.S,
I n t h e S e n a t e o f t h e U n it e d S t a t e s ,
Monday, April ljf, 1890.
Mr. PLUMB introduced a bill (S. 3517) providing for the disposition o f certain
funds in the Treasury; which was read the first time by its title.
Mr. PLUMB. I ask that the bill be read at length.
The bill was read the second tftne at length, as follows:
B e it enacted, etc., That the money required to be deposited with the Treasurer of the United
States for the redemption o f national-bank: circulation by section 5222 of the Revised Statutes, and
under section 4 of an act approved June 20, 1874, entitled “ An act fixing the amount of United
States notes,'providing for a redistribution o f the national-bank currency, and for other purposes,”
shall be covered into the Treasury and treated as funds available for the reduction of the public
debt, and for current expenditures o f the Government. And all funds held in the Treasury for
the payment of matured debt and interest due and unpaid on the public debt shall be similarly
treated, and hereafter no funds available for the reduction of the public debt or for the payment
of current expenses above the sum o f $10,000,000 shall be retained in the Treasury: Provided , That
this shall not be construed to permanently diminish the fund of $100,000,000 now held for the re
demption o f Treasury notes.
Mr. PLUMB. Mr. President, I wish to call the attention of the Finance Com
mittee particularly to this bill, and in connection with the condition o f financial
affairs now existing.
Out o f $1,650,000,000 o f money, all told, in this country, $250,000,000, some
times much more and sometimes a trifle less, are held in the Treasury o f the
United States. Of the remaining $1,400,000,000 more than $700,000,000 are held
for the purposes o f reserve by the different banks, private, State, and national.
Less than $700,000,000 o f money is, therefore, available for manual delivery for the
uses o f the 65,000,000 people of the United States—only about $10 per capita. This
is aU the money available for the purposes for which money, as contradistinguished
from credit, is to-day used in the United States.
Mr. President, the system o f finance which we have built up and maintained
to this time has brought about this result. It has its merits. It has its great de
fects, and one o f the greatest o f its defects is the retention in the Treasury of the
United States o f this very large sum o f money upon the theory, in the first place,
that it is needed, a theory which is disputed by every known fact, and upon the
further theory relating to a condition o f things which existed a few years ago,
that the Secretary o f the Treasury is to be the arbiter o f the financial destinies o f
the people of the United States.
It is stated in the public prints that in pursuance o f the policy o f controlling
the finances of the country the Secretary o f the Treasury contracted the currency
during the month of February over $10,000,000, at a time when every legitimate
interest was craving an enlargement rather than a diminution o f currency supply.
I believe that this retention o f money in the Treasury and that this assumption
on the part of the Secretary to do that which might once have been proper, but
which now constitutes a menace to the business o f this country, ought to be pro
hibited by law.
A Senator who sits in front o f me has asked me for what nominal purpose the
$250,000,000 in the Treasury are held. One hundred million dollars is held in
assumed obedience to the law o f 1882, which, it is claimed, authorizes the reten
tion of a sum o f gold for the redemption of the legal-tender notes—the greenbacks.
4
Some sixty-odd million dollars is held for the redemption o f national-bank notes;
that is to say, the notes o f banks which have either gone out o f business wholly
or which are retiring a portion o f their circulation. Between $5,000,000 ana
$6,000,000 is held for the purpose o f the redemption o f such notes of national
banks as from time to time come into the Treasury and are found on inspection
to be unfit for further circulation.
About $7,000,000, as I now recall it, are held for the purpose of the payment
o f interest on coupons which have not been presented, and on such portions o f
the debt as has from time to time matured but the evidences o f which have not
been presented to the Treasury for payment. Some o f it probably never will be
presented. It is not certain for what purpose the remainder is held. I have given
all possible scrutiny to the statement o f the Treasurer and I can not definitely
tell. The confusion o f subjects and of amounts is such that I think it is impossi
ble for any one to tell precisely the purpose in view in the retention o f about
$75,000,000. But it is there, because the statement shows the net balance to be
about $250,000,000.
Mr. REAGAN. I will suggest to the Senator, if he will look at the finance
report he will find the balance there stated.
Mr. PLUMB. It is enough to know that it is not held there for any useful
purpose. I do not think the law requires any o f it to be held there except such
portion as, in the discretion o f the Secretary, is necessary to meet the obligations
o f the Government. I admit that he may even under that theory hold as large
a sum as is now in the Treasury, although I should think it would be a very ex
traordinary use of discretion to {lo so.
But tnis is the fact: From every quarter we have abundant evidence that
the country needs, for the transaction of its business, that this money should be
paid out. For all useful purposes it might as well be in the bottom o f the sea as
to be in the Treasury. During the last year nearly $40,000,000, or a little over
$40,000,000, o f national-bank circulation was retired. W e have had, to meet that,
the coinage o f silver to the amount o f $2,000,000 per month and the coinage o f
gold, but the experience o f the country abundantly shows that we need not only
these two agencies but we need an amount o f paper money equal to the maxi
mum which has ever been outstanding. Yet, the advancing tide of metallic
money has been met and overcome by the receding tide o f paper money. When
the country needs more it gets less.
The business of the country is languishing. New enterprises are held in
abeyance. Old enterprises are struggling to keep on their feet, and there is dread
and apprehension where there ought to be hopefulness and confidence and enter
prise. That condition o f things will continue until relief is afforded, and that re
lief under present conditions can only come by legislation, because legislation,
combined with executive action, has brought the country to its present condition,
so far as that relates to the volume of money outstanding. W e are told that we
shall have legislation some o f these days upon the silver question; when, no one
knows, or how, no one know s; but whatever we do will result in only a gradual
and I fear a very small addition to that which the country now has in the shape
o f money for the transaction o f its business. This measure, or something like it,
if it passes, will give immediate relief. The money can be disbursed during the
next thirty or sixty days, not only without hurt but with great advantage to the
business o f all the people.
It is a conservative measure, far below what I would like to see d o n e ; but
what is proposed will help, and even a little may make the difference between
prosperity and adversity.
I venture thus early and briefly to call the attention o f the Finance Commit
tee to this measure in the hope that they will either report it, or something for
the accomplishment o f the same purpose, at their next meeting. I f favorably, so
much the better; but if unfavorably, the Senate will have a chance to vote upon
it, and thus do its part in settling a question o f the greatest possible moment to
the people.
The VICE-PRESIDENT. The bill will be referred to the Committee on
Finance.
@FedFRASER