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2d Session.




( No. 353.




F E B R U A R Y 3,



1894.—Ordered to be printed.

from the Committee on Coinage, Weights, and Measures,
submitted the following

[To accompany H. R. 4956.]

The Committee on Coinage, Weights, and Measures, to whom was
referred House bill 4956, submit the following report :
The bill, No. 4956, provides for the issuing of silver certificates in
amount equal to the gain or seigniorage that may accrue on the coinage
of the silver bullion now in the Treasury jmrchased under the act of
July 14, 1890.
This seigniorage is stated by the Secretary of the Treasury in his
last annual report to be $55,156,861.
The object of the bill is to make immediately available for the current expenses of the Government this amount of money. The certificates are authorized to be issued on the bullion and in advance of the
coinage should the exigencies of the Treasury require it. It is ijot
likely, however, that this will be necessary, since the bullion may be
coined at the rate of four to six millions per month if necessary.
There is no question at all that the coinage can be executed far beyond
any probability whatever of the demand for their redemption in silver
dollars. The bill in no respect alters the final result that would be
obtained by the execution of the law of July 14, 1890, authorizing the
purchase and disposition of this bullion. Section 3 of the act provides
as follows:
Tliat the Secretary of the Treasury shall each month coin two million ounces of
the silver bullion purchased under the provisions of this act into standard silver
dollars until the first day of July, eighteen hundred and ninety-one, and after that
time he shall coin of the silver bullion purchased under the provisions of this act as
much as may be necessary to provide for the redemption of the Treasury notes herein
provided for, and any gain or seigniorage arising from such coinage shall he accounted
for and paid into the Treasury.

It is clear that this bullion was dedicated to the redemption of the
Treasury notes issued in the purchase of the bullion by the coinage of
the bullion for such redemption, and that the law itself provides for
the payment of any gain or seigniorage into the Treasury.
The bill does not change the terms of the law in this respect, but
simply hastens its execution. This view of the law is held by the Sec#


retary of the Treasury and so stated in his annual report, above mentioned, on p. 53, as follows:
The act of July 14, 1890, that the Treasury notes issued in payment for silver bullion shall be redeemed in gold or silver coin at the discretion of the Secretary, and
when so redeemed may be reissued; but the same act also provides that no greater or
less amount of such notes shall be outstanding at any time than the cost of the silver bullion and the standard silver dollars coined therefrom then held in the Treasury purchased by such notes, and, consequently, when these notes are redeemed with
silver coined from the bullion purchased under the act, they can not be reissued, but
must be retired and canceled, for otherwise there would be a greater amount of
notes outstanding than the cost of the bullion and coined dollars 4 'then held in the
T r e a s u r y . I n this manner notes to the amount of $2,625,984 have been retired and
canceled since August last, and standard silver dollars have taken their place in
the circulation.

As stated before, the bill does not change the final result that would
follow from the execution of the act of July 14, 1890, but is designed
to facilitate and hasten its execution. The fact that the Secretary of
the Treasury has asked for the authority to issue two hundred millions'
worth of short time bonds, and for authority to use, at his discretion,
the proceeds for the payment of the current expenses of the Government, is in itself a sufficient reason for the passage of the bill, thus
utilizing the assets now in the Treasury instead of incurring the burden of a further bonded debt.
It is believed that the amount of funds provided by the bill will be
ample to tide over any exigency that may arise until Congress shall
meet next December. By that time we will be in a position to estimate
with greater precision the effect the fiscal legislation of this session
will have upon the revenues.
The following from the Director of the Mint will show approximately
the amount of silver dollars that can be coined per month:

R. P.

D E P A R T M E N T , January




Largest number of silver dollars coined in any one month under Bland act,
$3,600,265. Under Sherman act, $2,676,000.
R. E.




tfo doubt by running extra hours near twice the amount could be
coined. It is not at all probable that a demand for silver dollars will be
equal in amount that might be coined from month to month. If such
should be the case there could be no possibility of a demand that would
endanger the policy of the bill, which is that the coin now held in the
Treasury for the redemption of the certificates may be used.
The monthly statement for the past month of January shows that
there are nowin the Treasury 363,597,057 silver dollars;
outstanding against said coin $336,919,504, showing a difference of
$26,077,553 of silver dollars in excess of silver certificates that are
available for the redemption of the silver certificates.
Should it be necessary to issue $55,000,000 worth of certificates in
excess of the amount now authorized by law we would still have an
ample reserve of coin in the Treasury for their redemption. The
annual report of the Director of the Mint for the year 1893, on page 6,
shows a total coinage of 419,332,550 standard silver dollars. If certificates to the amount were issued, together with the amount authorized
by the bill, there would be, in round numbers, $474,000,000 of certificates on a reserve of $419,000,000 of coin.




This would be more than ami>le for all redemption purposes, but, as
stated before, the bullion can be coined from time to time, so as to have
a dollar in coin behind every certificate, at least this can be so after
the first two or three months from the passage of the bill. Under existing law no particular silver dollar is held for the redemption of any
specified certificate.
The coin deposited is a special bailment or trust, only in the sense
that there shall be no more certificates issued than there are dollars
held for purposes of redemption. The bill does not contemplate any
change in this regard, except for a short period and for the special
purpose of making immediately available the certificates issued on the
gain or seigniorage specified.
It is recommended by the committee that the bill do pass.


Mr. C H A R L E S W . STONE, of Pennsylvania, from the Committee on
Coinage, Weights, and Measures, submitted the following as the




(To accompany the bill H. R. 4956.)

There are in the U. S. Treasury 140,699,853 fine ounces of silver, for
the purchase of which and other silver bullion heretofore coined there
were given Treasury notes issued under the act of 1890, and of which
$153,085,151 are now outstanding.
This silver bullion now in the Treasury cost the Government $126,758,280 and its coinage value is $181,914,961, although its present market value is only $97,156,052.
Bearing these figures in mind, we proceed to the consideration of the
bill referred to the committee.
Its propositions are twofold, first, the issuing of silver certificates
against the "seigniorage," so called, and the subsequent coinage
thereof, and second, the coinage of the silver bullion in the Treasury
exclusive of the so-called u seigniorage" and the subsequent issuing of
silver certificates therefor, and incidentally the destruction instead of
the reissue of the Treasury notes thereafter redeemed.
It will be noticed that an entirely different order of proceeding is
prescribed for different portions of the silver bullion on hand, divided
by a supposed distinction between the 44 seigniorage " and the bulk of
the bullion, and hence the two sections of the bill, so distinct from each
other, may be considered separately.
The first section deals with what is termed the " seigniorage," and
proceeds on an entirely erroneous conception of what seigniorage is.
Without going into the derivation of the word or the learning of the
lexicographers, it is safe to say that under every definition ever given
in connection with money up to this time seigniorage is a result of
coinage and only comes into existence when coinage has been actually
completed. An examination of the use of the word in our statutes will
verify this assertion. The act of 1890, under which all the bullion now
in the Treasury was purchased, provides as follows:
That the Secretary of the Treasury shall each month coin two million ounces of
the silver bullion purchased under the provisions of this act into standard silver
dollars until the lirst day of .July, eighteen hundred and ninety-one, and after that
time he shall coin of the silver bullion purchased under the provisions of this act as
much as may be necessary to provide for the redemption of the Treasury notes herein
provided for, and any gain or seigniorage arising from such coinage shall be accounted
for and jjaid into the Treasury.

The act of 1878 provides "and any gain or seigniorage arising from
this coinage shall be accounted for and paid into the Treasury as provided for under existing laws relating to the subsidiary coinage," and
exactly the same phraseology is found in the act of 1876 providing
for the issue of certain silver coins.
Referring to the act of 1853, providing for this subsidiary coinage
and being the first law authorizing the purchase of silver bullion for
coinage purposes, we find it provided that the Director of the Mint
"shall charge himself with the gain arising from the coining of such
bullion into coins of nominal value exceeding the intrinsic value thereof."




Although this measure of the gain arising to the Government from silver coinage remained authoritative for twenty years, it is not accurate, as
the " intrinsic " value was a varying element in the comparison and did
not always mark the real gain correctly. Hence, in the Bevised Statutes of 1874, the phraseology was changed as follows: "The gain arising from the coinage of bullion purchased into coins of greater nominal
or face value than the cost," and this may be accepted as the modern
American idea of seigniorage. Hence it will be seen that there is and
can be no "seigniorage" of bullion as long as it remains bullion, and
the first section of the bill seeks to deal with something which does not
But the majority of the committee, erroneously as we think, seek to
change and broaden the meaning of the word seigniorage to cover the
difference between the cost of the bullion on hand and its estimated
coinage value, or what it would produce if coined. This difference,
however, is not substance, not bullion, not coin, not anything tangible
or corporeal, it is simply the faith and credit of the nation. Four hundred and twelve and one-half grains of standard silver are not a dollar.
They only become such when they have engrafted upon them the guarantee of the Government, not simply of the amount and purity of the
silver, but that its exchangeable value shall always be and remain 100
cents, not in other silver simply, but in any money of the nation.
Whenever the Government is unable to make good this guarantee the
coin sinks at once to its commercial value.
The real intrinsic value of the bullion in the Treasury can not be
increased by legislation. You can increase its exchangeable value by
adding the element of the nation's credit, and that increased value
remains so long as the credit remains intact, but you can give equal
exchangeable value to copper by the same process, only that a larger
element of national credit must be added. You can go further and
issue intrinsically worthless paper certificates or obligations based
entirely on the credit of the nation, and while that credit remains
unimpaired and untarnished these obligations become a part of the
currency, equally acceptable with the hybrid certificates issued against
a combination of the real value of the bullion and the added credit of
the nation, as proposed by this bill. Any of these devices for an
enlarged currency can be resorted to in an emergency if the necessity
of the nation requires, but the credit of the nation ought never be
traded upon except in case of necessity, and then it should be done
boldly and frankly, with no juggling or sleight of-hand devices to mislead the people as to the real nature of the transaction. If such necessity exists to day let it be frankly stated and fairly demonstrated and
not hidden behind manufactured definitions and false methods-tending
to mislead the people.
J.t should be noted that this bill does not contemplate any increase
of the metallic money in circulation, but rather a further issue of paper
currency in the form of silver certificates. What is a silver certificate?
It is not a note or obligation, but simply a statement of fact. The act
of 1878 provided that "any holder of coin? authorized by said act,
might deposit it with the Treasurer of the United States and receive a
certificate stating the fact that such coin had been deposited. Such
certificate reads as follows:
This certifies that there has been deposited in the Treasury of the United States
one silver dollar, payable to the bearer on demand.
Washington, 1). C.



of the Treasury*

1). N .


Treasurer of the United Statu*-




This bill requires the Secretary of the Treasury to issue $55,156,681
of such certificates when not one single silver dollar for which such certificates are to issue has been deposited in the Treasury. Every certificate would bear on its face a lie. What emergency has arisen that
justifies such disregard of truth and fact!
The existing law, while defining the trust imposed on the silver
bullion in the Treasury, gives to the Secretary of the Treasury abundant power to coin it just as rapidly as necessary to comply with the
terms of this trust, and makes the seigniorage available as fast as, by
such coinage, it comes into existence.
No further legislation on the subject is necessary. Abundant legal
power now exists. It is only the embarrassment of the financial situation that prevents its exercise, as is fully evident from the recent
report of the Secretary of the Treasury. His strong statement of the
difficulty encountered in keeping in circulation the silver dollars and
silver certificates is only another demonstration of the impolicy of at
this time forcing the substitution of silver certificates for the Treasury
notes in our currency as contemplated by this bill.
It may be properly noted that this bill does not in any way enlarge
the market for silver, nor benefit the silver owner, nor contemplate the
use of any more silver as money than is already represented in our
currency. It simply provides for the u watering77 (if we may use a
term which has obtained a recognized and definite meaning in financial
nomenclature) to the extent of $55,000,000 of the paper now in circulation and representing the silver bullion in the Treasury, and this,
too, when the amount of this outstanding paper already exceeds the
real value of the bullion which it represents by over $56,000,000.
This bill has two very evident purposes. First, to authorize the
issuing of practically fiat paper currency by the Government to the
amount of $55,158,161 to aid in meeting the impending and existing
deficit, to be used, as expressed in the bill, "for the payment of the
current expenditures of the Government,77 and second, to replace the
present Treasury notes with an exclusively silver obligation andincrease
the preponderance of the silver element in our national currency.
We dissent from the wisdom and propriety of either purpose. If
there is, and is likely to be, a deficit in the Treasury, the one honest,
straightforward course is to provide revenue sufficient to meet it, and
the other frank mode of proceeding is to authorize the issuance of the
obligations of the Government, and honestly say they are based on the
nation7s credit, and issued to meet its necessities, and not seek to
obscure the issue by any such devious devices as are embodied in this
The second purpose is equally unwise. The outstanding Treasury
notes are payable in gold or silver, at the discretion of t^e Secretary of
the Treasury, bearing in mind the declared policy of the Government
to maintain the parity between the two metals upon the legal ratio, but
the intimation of a purpose by the Secretary of the Treasury to pay
these obligations in silver only was one of the important factors which
unsettled confidence and produced distrust in the early months of last
summer. The speedy and forced redemption of the Treasury notes
would either quickly exhaust the Governments store of gold, which is
not now equal to one-half the volume of the outstanding Treasury
notes, to say nothing of the greenbacks and gold certificates, and thus
force a resort to sale of more bonds to replenish it, or the Government
would be forced to redeem only in silver, and when the fear of silver
payments wrenched the nation7s credit who can estimate the results of







the actual fact of such payments. The consummation of this policy
would be surely taking a long stride forward in our financial progress
toward gfn exclusively silver basis.
The minority of your committee do not regard sporadic and fragmentary financial legislation as wise. Our monetary system, so far as
silver forms a part of it, ought either to be let alone until the forces
operating and that must continue to operate on other nations shall
force them to a willingness to cooperate in proper and wise international action fixing the relations of gold and silver in the monetary
systems of the world on a basis universally recognized and respected,
and thus made stable and permanent, or if this country is to act by and
for itself alone, regardless of its relations to the commercial world, it
should be by well considered, conservative, and comprehensive legislation simplifying and readjusting our entire monetary system; and in
the view of the minority of your committee the passage of this bill would
be an obstacle in the way of the attainment of either of these ends.

C H A R L E S T R A C E V.
I. K A Y N E R .