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Executive Mansion, August 8, 1893.
To the Congress of the United States:
Volume: IX Pages: 401-405
(extract) "The
existence of an alarming and extraordinary business
situation, involving the welfare and prosperity of all
our people, has constrained me
to call together in extra session the people's
representatives in Congress, to the end that through a
wise and patriotic exercise of the legislative duty,
with which they solely are charged, present evils may be
mitigated and dangers threatening the future may be
averted.
Our unfortunate plight is not the result of untoward
events nor of conditions related to our natural
resources, nor is it traceable to any of the afflictions
which frequently check national growth and prosperity.
With plenteous crops, with abundant promise of
remunerative production and manufacture, with unusual
invitation to safe investment, and with satisfactory
assurance to business enterprise, suddenly financial
distrust and fear have sprung up on every side. Numerous
moneyed institutions have suspended because abundant
assets were not immediately available to meet the
demands of frightened depositors. Surviving corporations
and individuals are content to keep in hand the money
they are usually anxious to loan, and those engaged in
legitimate business are surprised to find that the
securities they offer for loans, though heretofore
satisfactory, are no longer accepted. Values supposed to
be fixed are fast becoming conjectural, and loss and
failure have invaded every branch of business.
I believe these things are principally chargeable to
Congressional legislation touching the purchase and
coinage of silver by the General Government. This
legislation is embodied in a statute passed on the 14th
day of July, 1890, which was the culmination of much
agitation on the subject involved, and which may be
considered a truce, after a long struggle, between the
advocates of free silver coinage and those intending to
be more conservative. Undoubtedly the monthly purchases
by the Government of 4,500,000 ounces of silver,
enforced under that statute, were regarded by those
interested in silver production as a certain guaranty of
its increase in price. The result, however, has been
entirely different, for immediately following a
spasmodic and slight rise the price of silver began to
fall after the passage of the act, and has since reached
the lowest point ever known. This disappointing result
has led to renewed and persistent effort in the
direction of free silver coinage.
Meanwhile not only are the evil effects of the
operation of the present law constantly accumulating,
but the result to which its execution must inevitably
lead is becoming palpable to all who give the least heed
to financial subjects. This law provides that in payment
for the 4,500,000 ounces of silver bullion which the
Secretary of the Treasury is commanded to purchase
monthly there shall be issued Treasury notes redeemable
on demand in gold or silver coin, at the discretion of
the Secretary of the Treasury, and that said notes may
be reissued. It is, however, declared in the act to be
"the established policy of the United States to maintain
the two metals on a parity with each other upon the
present legal ratio or such ratio as may be provided by
law." This declaration so controls the action of the
Secretary of the Treasury as to prevent his exercising
the discretion nominally vested in him if by such action
the parity between gold and silver may be disturbed.
Manifestly a refusal by the Secretary to pay these
Treasury notes in gold if demanded would necessarily
result in their discredit and depreciation as
obligations payable only in silver, and would destroy
the parity between the two metals by establishing a
discrimination in favor of gold.
Up to the 15th day of July, 1893, these notes had been
issued in payment of silver-bullion purchases to the
amount of more than $147,000,000. While all but a very
small quantity of this bullion remains uncoined and
without usefulness in the Treasury, many of the notes
given in its purchase have been paid in gold. This is
illustrated by the statement that between the 1st day of
May, 1892, and the 15th day of July, 1893, the notes of
this kind issued in payment for silver bullion amounted
to a little more than $54,000,000, and that during the
same period about $49,000,000 were paid by the Treasury
in gold for the redemption of such notes.
The policy necessarily adopted of paying these notes in
gold has not spared the gold reserve of $100,000,000
long ago set aside by the Government for the redemption
of other notes, for this fund has already been subjected
to the payment of new obligations amounting to about
$150,000,000 on account of silver purchases, and has as
a consequence for the first time since its creation been
encroached upon.
We have thus made the depletion of our gold easy and
have tempted other and more appreciative nations to add
it to their stock. That the opportunity we have offered
has not been neglected is shown by the large amounts of
gold which have been recently drawn from our Treasury
and exported to increase the financial strength of
foreign nations. The excess of exports of gold over its
imports for the year ending June 30, 1893, amounted to
more than $87,500,000.
Between the 1st day of July, 1890, and the 15th day of
July, 1893, the gold coin and bullion in our Treasury
decreased more than $132,000,000, while during the same
period the silver coin and bullion in the Treasury
increased more than $147,000,000. Unless Government
bonds are to be constantly issued and sold to replenish
our exhausted gold, only to be again exhausted, it is
apparent that the operation of the silver-purchase law
now in force leads in the direction of the entire
substitution of silver for the gold in the Government
Treasury, and that this must be followed by the payment
of all Government obligations in depreciated silver.
At this stage gold and silver must part company and the
Government must fail in its established policy to
maintain the two metals on a parity with each other.
Given over to the exclusive use of a currency greatly
depreciated according to the standard of the commercial
world, we could no longer claim a place among nations of
the first class, nor could our Government claim a
performance of its obligation, so far as such an
obligation has been imposed upon it, to provide for the
use of the people the best and safest money.
Continue: Special Session Message of
President Grover Cleveland , on August 8, 1893.
[Continue on next page]
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