for that resistance to the tithes follows the path of the deepest agricultural distress, and goes before the formation of district farmers' clubs and a kind of Welsh league?

It is a pitiful spectacle this, of a peaceful people moving so surely towards bitter intestine conflict and social disorder from want of closer union and the good understanding which comes from mutual sympathy between the landlord and the tenant classes. And it seems to me that a stronger case for early legislative help can scarcely be conceived.

It has not been a pleasing task for me to expose the wounds of my native land. It would have been much more agreeable to speak of the attractive elements in the Welsh character; its artistic tendencies, its gentleness, its kindness, its idealistic traits, on which Mr. Matthew Arnold used to dwell. The Celt is always prone to sniff the air rather than deal stubbornly with hard matter in the material downright spirit of an Englishman. He has not the strong back and the rigid utilitarianism of the Scotchman, but he has a susceptibility to education and a love of poetry and music which I think you cannot rival. And if England and Scotland could but avert the danger that comes from the material side, and help Wales to realise the type that is written in its blood by removing the ills against which it is too weak to battle, I can easily conceive it as repaying the empire by a service, humbler in degree, but not different in kind from that which Greece gave to Rome. But it is hard for a Welshman to escape the illusions that rise from his blood, and it is better, perhaps, to appeal for help to Wales on the ground of simple justice and the hardest commercial utility, than on the promise of any ideal repayment in the future.

XXI-American Currency. By ANDREW S. M'CLelland, C.A.

[Read before the Economic Science Section, 6th February, 1888.]

THE Constitution of the United States of America provides that Congress shall have power "To coin money, regulate the value thereof, and of foreign coin," and that "No State shall coin money, emit letters of credit, or make anything but gold and silver coin a tender in payment of debts." The power of regulating banks and the issue of paper money was not, however, reserved to Congress, and is therefore under the control of each State. Where a State made no regulations there was free banking, and anyone could issue paper money; while even in those States which made laws regulating the issue of paper money, these were not of a character to provide adequate security for the payment of the

notes.

The notes issued in one State did not circulate, except at a discount, in other States, nor sometimes beyond the district in which they were issued. In 1815 the President, in his Message to Congress, drew attention to the great inconvenience experienced from the want of a uniform national currency, and it was proposed to remedy this evil by establishing a new Bank with such ample funds as would give universal confidence, and thus induce a free circulation in every part of the United States. The result was the Incorporation of the Bank of the United States in 1816capital $35,000,000, of which $7,000,000 was subscribed by the United States, who nominated five out of the twenty-five Directors composing the Board. In 1830 the circulation was $16,083,894, and the specie in hand $9,043,748. M'Culloch, writing in 1831, says, "The establishment of the Bank of the United States has been of material service by affording a currency of undoubted solidity readily accepted in all parts of the Union."

In the year following, General Jackson, the President, vetoed the Act renewing the Charter. This was followed by an excessive issue of notes by old banks, and also by new banks, which sprang

up in almost every village. The effect is thus described :"When there are so many separate and independent banks (1,400) the sphere of the influence and circulation of each is necessarily circumscribed, and when notes get to a distance from the place where they were issued, especially when they get into a different State, they circulate with difficulty and generally at a discount. Lists of banks are published with the rates of discount at which their notes are current, without which no traveller can leave his home and no shopkeeper can venture to transact his business." Combe, writing in 1839, says :-" Working men also complain of another grievance. There is no arrangement by distant banks for redeeming their currency in Philadelphia, and in consequence their notes are not received by the banks of this city. The only way of disposing of them is to carry them to the exchange brokers, who buy them at a discount corresponding to the distance and difficulties of sending them to their own head quarters and of obtaining Philadelphia money in return. Workmen complain that their masters buy up these notes at a discount and pay them over to them at par."

It is told of a Scotch merchant in Chicago of considerable wealth, that he much increased it by starting a bank in an obscure village in one of the Southern States, and taking its notes to Chicago and putting them into circulation there he being always willing to redeem them at a reasonable discount.

In 1861, at the commencement of the Civil War, it is estimated that there were $200,000,000 of bank notes in circulation, of which $150,000,000 were issued by banks in the loyal States. The necessities of the war early compelled the Government to borrow $50,000,000 from the New York banks, against which they issued "Demand Notes," which were not at first a legal tender. (Outstanding at 30th June, 1886, $57,445.) In 1862 an Act of Congress authorised the issue of $150,000,000 Treasury Notes, which were declared to be a legal tender, except for customs and interest on the national debt. The next year an Act was passed "to provide a national currency by a pledge of United States Stocks, and to provide for the circulation and redemption thereof." By this Act a company of not less than five persons, on satisfying the Comptroller of Currency of certain requirements as to capital, and on forwarding an amount of United States Bonds to the Treasury, received in exchange currency circulating notes" to the extent of 90 per cent, of the

bonds. The tax on this bank was fixed at 1 per cent., and a tax of 10 per cent, was put on the issue of all other banks. The natural consequence was that all the existing banks issuing paper money became National Banks, and the currency over the whole States became uniform. The limit of notes issued under this Act was $300,000,000. As long as the rate of interest on the bonds continued high (6 per cent.) the business was very profitable to the banks, but now that the interest has been reduced to 3 per cent., they find it no longer profitable, and a gradual redemption of the notes is going on. At 21st January, 1888, there were in the Treasury $7,024,551 notes of the National Banks in process of redemption. At 1st January the United States Treasury had been paid "lawful money" to redeem National Bank notes which were not yet presented

The annual percentage of redemption is 25-22, so that it will be four years before these notes are all out of circulation. There has been no default by a National Bank in payment of their notesthe bonds deposited by those who failed in 1873 covering the notes issued by them. During the war the States continued the issue of Treasury "Demand Notes," which in 1864 amounted to $447,300,203. (In circulation January, 1888, $346,738,120.) These bear that the United States will pay "Bearer Five Dollars," and are endorsed, "This note is a legal tender at its face value for all debts, public and private, except duties on imports, and interest on the public debt."

In 1873 gold was declared to be the standard, and specie payments were resumed. A question now arose whether the Treasury, after they had redeemed the legal tender notes in gold, could reissue them, and the question was tried before the Supreme Court. Their decision seemed to be that Congress had no power to authorise the issue by the Treasury of notes, even if payable in gold on demand, but they held that the reissue of notes authorised by the Acts of 1863 was lawful, being only a continuation of an Act forced on the nation by the Civil War. These notes, therefore, bear on their face a reference to the Act

under which they were first issued, a note issued in 1880 having marked on it, at the side, "Act of March 3rd, 1863."

In 1878 what is called the Bland Bill was passed, at the instance of "the Silver Ring of the West," which directed the Treasury to purchase silver to the extent of from $2,000,000 up to $4,000,000 worth per month, to coin it into silver dollars, and to issue Certificates for the amount of dollars coined. Originally these Certificates were not to be of less amount than $20, but recently the denomination or limit has been reduced to $1.

"that there has been deposited in the Treasury of the United "States

"One Silver Dollar,

"Payable to Bearer on Demand,"

and is endorsed

"United States Silver Certificate."

"This Certificate is receivable for Customs, Taxes, and all Public Dues, and when so received may be reissued."

It has been said that this Certificate is a legal tender, but I think that is doubtful. The endorsement on the Treasury Note declares it to be a legal tender "except for customs and interest on the public debt;" on the Certificate there is no declaration that it is a legal tender, but one only to the effect that it is to be "receivable for customs," &c., which the note is not. Whether the Certificates are a legal tender or not, they circulate freely at the par value, although if they represent merely one dollar in silver they are worth only 70 cents. Prior to the passing of the Bland Bill, the parties who promoted it had a Bill passed directing the coining by the Treasury of what is called a "Trade Dollar," that is to say, a dollar of the exact weight and fineness of the Mexican dollar, which it was hoped could be exported to China; but, unfortunately, the Chinaman would not have it, and "Trade Dollars" remain in hand to the amount of $6,695,000. Some years ago a considerable number of these were in circulation, and were a source of annoyance to strangers who innocently took them as change, and found they could only be passed for 70 cents.

This "Trade Dollar" is by weight of silver worth almost eight cents more than the currency dollar, and the market price at present is 74 cents; so that for $740 Silver Certificates you can purchase 1,000 dollars of superior value.