In view of the great actual contraction that has taken place in the
currency and the comparative contraction continuously going on, due
to the increase of population, increase of manufactories and all the
industries, I do not believe there is too much of it now for the dullest
period of the year. Indeed, if clearing houses should be established,
thus forcing redemption, it is a question for your consideration whether
banking should not be made free, retaining all the safeguards now
required to secure bill holders. In any modification of the present
laws regulating national banks, as a further step toward preparing
for resumption of specie payments, I invite your attention to a
consideration of the propriety of exacting from them the retention as a
part of their reserve either the whole or a part of the gold interest
accruing upon the bonds pledged as security for their issue. I have not
reflected enough on the bearing this might have in producing a scarcity
of coin with which to pay duties on imports to give it my positive
recommendation. But your attention is invited to the subject.
During the last four years the currency has been contracted, directly,
by the withdrawal of 3 per cent certificates, compound-interest notes,
and "seven-thirty" bonds outstanding on the 4th of March, 1869, all of
which took the place of legal-tenders in the bank reserves to the extent
of $63,000,000.
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