The financial standing of the Nation at the present time is excellent,
and the financial management of the Nation's interests by the
Government during the last seven years has shown the most satisfactory
results. But our currency system is imperfect, and it is earnestly to
be hoped that the Currency Commission will be able to propose a
thoroughly good system which will do away with the existing defects.
During the period from July 1, 1901, to September 30, 1908, there was
an increase in the amount of money in circulation of $902,991,399. The
increase in the per capita during this period was $7.06. Within this
time there were several occasions when it was necessary for the
Treasury Department to come to the relief of the money market by
purchases or redemptions of United States bonds; by increasing deposits
in national banks; by stimulating additional issues of national bank
notes, and by facilitating importations from abroad of gold. Our
imperfect currency system has made these proceedings necessary, and
they were effective until the monetary disturbance in the fall of 1907
immensely increased the difficulty of ordinary methods of relief. By
the middle of November the available working balance in the Treasury
had been reduced to approximately $5,000,000. Clearing house
associations throughout the country had been obliged to resort to the
expedient of issuing clearing house certificates, to be used as money.
In this emergency it was determined to invite subscriptions for
$50,000,000 Panama Canal bonds, and $100,000,000 three per cent
certificates of indebtedness authorized by the act of June 13, 1898. It
was proposed to re-deposit in the national banks the proceeds of these
issues, and to permit their use as a basis for additional circulating
notes of national banks. The moral effect of this procedure was so
great that it was necessary to issue only $24,631,980 of the Panama
Canal bonds and $15,436,500 of the certificates of indebtedness.
During the period from July 1, 1901, to September 30, 1908, the balance
between the net ordinary receipts and the net ordinary expenses of the
Government showed a surplus in the four years 1902, 1903, 1906 and
1907, and a deficit in the years 1904, 1905, 1908 and a fractional part
of the fiscal year 1909. The net result was a surplus of
$99,283,413.54. The financial operations of the Government during this
period, based upon these differences between receipts and expenditures,
resulted in a net reduction of the interest-bearing debt of the United
States from $987,141,040 to $897,253,990, notwithstanding that there
had been two sales of Panama Canal bonds amounting in the aggregate to
$54,631,980, and an issue of three per cent certificates of
indebtedness under the act of June 13, 1998, amounting to $15,436,500.
Refunding operations of the Treasury Department under the act of March
14, 1900, resulted in the conversion into two per cent consols of 1930
of $200,309,400 bonds bearing higher rates of interest. A decrease of
$8,687,956 in the annual interest charge resulted from these
operations.
In short, during the seven years and three months there has been a net
surplus of nearly one hundred millions of receipts over expenditures, a
reduction of the interest-bearing debt by ninety millions, in spite of
the extraordinary expense of the Panama Canal, and a saving of nearly
nine millions on the annual interest charge. This is an exceedingly
satisfactory showing, especially in view of the fact that during this
period the Nation has never hesitated to undertake any expenditure that
it regarded as necessary. There have been no new taxes and no increase
of taxes; on the contrary, some taxes have been taken off; there has
been a reduction of taxation.