PROFESSOR TAUSSIG'S LECTURE.

Professor Paussig delivered a most interesting address last night in Sever 11 on the "Present Condition of the Currency of the United States." He explained the condition of our currency and the remedies suggested with clearness and force and held the attention of the audience until the end.

For convenience sake a table was put on the blackbord showing the condition of the currency last month. (N. B. The figures given represent millions of dollars. Subsidiary coins, i.e., under one dollar, are not taken into account.) Legal tender notes are of two kinds: (a) U. S. Notes, commonly known as "greenbacks," 346.7; (b) Treasury Notes of 1890, 139.6.

Total. In Treas-In Circuury. lation.

(1) Legal tenders, 486.3 91.2 395.1

(2) Silver dollars

and certificates, 423.3 28.4 394.9

(3) National Bank

Notes, 207.6 6.4 201.2

(4) Gold, 609.8? 79.3 530.5

The gold is divided as follows: In U. S. banks, 79.3; in national banks, 162.9; elsewhere, 367.6?

Class (a) of the legal tender notes, the "greenbacks," are the result of the financial legislation of the Civil War. For the last sixteen years their volume has been fixed, because, on being presented for redemption, they are reissued. Identical in legal qualities are the Treasury Notes, issued in pursuance of the Sherman Act of 1890. Although, in theory, they may be shifted into silver notes or silver dollars, as a fact, they, too, have remained a fixed quantity. There is a general impression that these notes are different from the U. S. Notes, in that, while the latter will always be redeemed in gold, the former may at some future date be redeemed in silver. But the community may rest assured that this will never happen.

The silver dollars and certificates (class 2) were issued from 1878 to 1890. These two forms of currency are practically equivalent. The Act of 1878 provided that any time the silver dollars might be put in the treasury and exchanged for silver certificates. Owing to the clumsiness of the silver dollar this is actually what has taken place, so that the certificates are much more numerous than the dollars. But, as this was not the expectation in 1878, the silver certificates were not made legal tender. As they constitute no claim upon the holdings of the government except for silver, the only way they effect the legal tender situation is to fill up a gap, which would otherwise be filled by gold coin.

The National Bank notes (class 3) circulate like the silver certificates, but can not draw gold from the U. S. treas ury.

The gold of class 4 includes the bullion in the treasury and is of two kinds (a) gold in the banks and among the people and (b) gold in the treasury, which may be drawn out by legal tender notes.

We can find out with very slight error the amount of money in the United States, because currency of the first three classes does not go out of the country. The only difficulty is with class 4. We know, of course, the amount of gold in the treasury and the national Banks, but the estimate of the amount of gold elsewhere cannot be found out accurately. The treasury estimate of 367.6 millions is probably far too high, although it is difficult to put one's finger exactly on the error. One hundred and fifty milions would more nearly represent the true state of affairs.

Now, it is perfectly evident to every one that our finances are in a bad state. The fundamental difficulty is that there is too much money in the United States, more than there would be of specie, if there were no paper substitutes. The familiar reasoning of economists is that, when there is a redundancy of the currency, prices rise, imports come in and gold flows out. The outflow of specie in 1893 and 1895 is generally looked on as a proof of the superabundance of currency. But this is not at all certain and economists have much to learn about such occurrences. One of the other evidence of too much currency is the accumulation of cash in commercial centres, especially New York.

An illustration of the hap-hazard legislation in the United States is that practically the whole mass of paper money is made to depend for convertibility upon gold. For the legal tender notes are redeemable in gold and the silver certificates, circulating side by side, are practically as good as legal tenders and the national bank notes are convertible into the latter. But the United States has never been able to find an effective method for maintaining the gold reserve. In fact, the trouble lies in the fact that the U. S. treasury performs two functions that should never be united, (a) that of financial agent to the government, (b) the duty of maintaining a gold reserve. The latter function should not be made to depend upon the revenues of the government. The present low condition of the treasury has been the result of the low returns from revenue, due to the McKinley tariff act, and the big appropriations of the Harrison administration.

The remedies for the present financial difficulties may be divided into two kinds, proximate and ultimate. The only proximate remedy is to get rid of some of the excess of currency. The best way in which to accomplish this would be to destroy the treasury notes of 1890. Something of this sort is going on, in fact. The U. S. treasury has begun to accumulate these notes and to store them away in vaults If the government had had a surplus revenue in 1893 and 1895 the solution of their difficulties would have been simple enough; for, after redeeming legal tender notes they could have put them aside. This was done in 1884-5, when the secretary of the treasury, having a large surplus, held back the silver dollars.

The object of the three issues of bonds that have been made was to make up

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