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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