"NEW YORK, _February 9, 1885_.
"MY DEAR SIR,--I have received your letter containing a
copy of an amendment in relation to the coinage of silver, which it
is proposed should be inserted in a bill now pending in Congress,
and asking my judgment upon the subject.
"I have some delicacy in saying a word that may be construed by
anybody as interfering with the legislation of the present Congress.
But so grave do I deem the public emergency that I am willing
as a private citizen to say that I think some legislation of the
character suggested is eminently desirable.
Very respectfully yours,
"GROVER CLEVELAND."
DRAFT OF A LETTER TO THE HONORABLE HUGH MCCULLOCH, SECRETARY OF THE
TREASURY
"GREYSTONE, YONKERS, N. Y., _February 11, 1885_.
"DEAR MR. MCCULLOCH,--I am much obliged for the kind
attention you gave to my inquiries. I have been delayed in writing
to you my acknowledgments, from the lack of leisure to add some
observations which I desired to make. And if compelled to differ
with you in any respect, I need not say that it is with a high and
respectful appreciation of your opinions and abilities in finance.
"I agree that a currency strictly limited in amount so as not
to exceed, but rather to be less, than the effective demand for
necessary public use, may be kept in circulation at a rate higher
than its intrinsic value. But that is true only on very stringent
conditions.
"As to making a market for silver coin by withdrawing bank-notes
and treasury notes of less denomination than five dollars--and
ultimately of less denomination than ten dollars--there are grave
difficulties. In your letter it is remarked:
"'You say that fifty millions of silver is about all that the
country can absorb. This is true; and it is true simply because
we keep in circulation upwards of fifty millions of one and two
dollar notes. If these notes were withdrawn, their place would
immediately be filled with silver and gold. If the five-dollar
notes were also retired, all of the silver dollars now in the
Treasury vaults would be in circulation, as they ought to be.
On this point, permit me to call your attention to page 34 of
my report. I wish you could see your way clear to use your
great influence in favor of the retiring of the one and two
dollar United States notes, to be followed in due time by the
retirement of all notes below ten dollars.'
"The habits of the people, and their unanimous and strong preference
for the portable currency of paper over the cumbrous currency
of silver, interpose an almost insurmountable obstacle to such
a measure. Borrowing the idea from the practice of England, and
supported by most economical writers, that measure has been often
advocated, and sometimes attempted to be put in practice. But the
expedient has never made much progress, and it has been resisted and
rejected by the people at every opportunity.
"About fifty years ago a law was passed, by the State of New York,
suppressing bank-notes of a less denomination than five dollars.
Although in my general views friendly to free banking, I justified
myself in supporting the measures on the ground that it was
legitimate to apply an artificial restraint to an artificial system.
Enclosed is a copy of the resolutions drawn by myself, opposing the
repeal of that law.
"On that issue, more than on any other single question, the party
of Jackson and Van Buren was overthrown in the State of New York in
the election of 1838. William L. Marcy was defeated as a candidate
for re-election as Governor, and 'Small-Bill' Seward was elected
in his place. The law was immediately repealed. The question had
some special disadvantages at that time; but the indications of the
popular wishes were unquestionable.
"I understand from members of my family, that ladies shopping at
retail stores in New York city almost universally refuse to take
silver dollars. Even one silver dollar is considered an incumbrance,
is, in fact, too large to be carried in a ladies _porte-monnaie_,
while several of them are quite out of the question.
"I understand, also, that our small notes are very popular in
Canada, and in the Bahama Island, being preferred to silver coin.
"I think that the best way of making a market for silver through the
small circulation, is for the government to receive the silver at
its intrinsic value, and to issue certificates against it dollar for
dollar.
"Among your observations on the question of the expediency of making
the nominal value of the silver dollar correspond to its intrinsic
value, it is suggested:
"'Another objection might be that the adoption of this standard
would probably operate to prevent joint action, by the leading
commercial nations, in fixing a ratio of silver to gold which
would be concurred in by all nations; and, perhaps, thus delay
or frustrate that which would seem to be very desirable. No
legislation by the United States alone, would be effectual in
fixing the rules of silver outside of its own boundaries. Joint
action of the principal powers appears to be the only mode
through which a satisfactory solution of the question can be
reached.
"'If there is no hope that such an arrangement can be made, it
would be desirable that the intrinsic value of the silver dollar
should be brought so nearly as possible to its nominal value.'
"After looking over the discussions of the last two International
Conferences, I cannot avoid the conclusion that it is hopeless to
make any further attempt to obtain the co-operation of the leading
commercial powers in fixing a ratio between gold and silver coins,
and that the contingency in which you would deem it 'desirable that
the intrinsic value of the silver dollar shall be brought as nearly
as possible to its nominal value,' has already occurred.
"The statement of the Treasurer accompanying your letter for January
26, 1885, is as follows:
Gold coin $172,439,478
Gold bullion 64,195,150
------------
Total gold assets $236,634,628
Gold certificates outstanding 107,917,890
------------
Amount of gold actually owned $128,716,738
By the statement of the Treasurer for January 31st, it
appears that United States notes on hand were
$43,958,468 83, against which were certificates of deposit,
$30,130,000, leaving a balance of $13,818,468 83
National bank notes 13,880,647 67
Deposits in nat. banks 13,491,186 39
Gold actually owned 128,716,738 00
---------------
Total gold assets $169,917,040 89
Trust Funds:
Five per cent. nat. bank $12,980,825 43
Fund for redemption of notes of nat. banks "failed in
liquidation" and reducing circulation 39,671,925 54
Undistributed assets of failed nat. bank 416,131 41
--------------
_Amount forward_ $53,068,882 38
_Brought forward_ $53,068,882 38
Agency for paying D. C. bonds 444,161 55
Treasury transfer checks and drafts outstanding 2,490,273 13
Interest due and unpaid 1,966,923 86
Matured bonds and interest 250,148 90
Called bonds and interest 5,203,077 78
Old debt 756,188 31
P. O. Department acct 2,712,968 02
Disbursing officers' balances 25,298,865 44
Fund for redemption of nat. gold notes 146,774 09
Miscellaneous 86,681 64
--------------
$92,424,945 10
$169,917,040 89
92,424,945 10
---------------
Balance gold assets $77,492,095 79
"These two statements are for different periods. The results,
therefore, are not exact. They afford, however, the basis of a
conjecture as to the actual condition of the Treasury. Although
the amount really belonging to the Treasury, and over which it has
permanent control, is very much reduced, I presume it ventures to
use, for temporary purposes, temporary balances liable to be drawn
at the will of other parties and trust funds, upon the assumption
that the balances are likely to remain about the same, as a bank
uses its deposits.
"Renewing the assurance of my high consideration and best wishes, I
remain,
"Very truly yours."