that Congress, under its constitutional powers to lay taxes, to regulate commerce, and to regulate the value of coin, possesses ample authority to control the credit circulation which enters so largely into the transactions of commerce and affects in so many ways the value of coin.

’In the judgment of the Secretary the time has arrived when Congress should exercise this authority.  The value of the existing bank note circulation depends on the laws of thirty-four States and the character of some sixteen hundred private corporations.  It is usually furnished in greatest proportions by institutions of least actual capital.  Circulation, commonly, is in the inverse ratio of solvency.  Well-founded institutions, of large and solid capital, have, in general, comparatively little circulation; while weak corporations almost invariably seek to sustain themselves by obtaining from the people the largest possible credit in this form.  Under such a system, or rather lack of system, great fluctuations, and heavy losses in discounts and exchanges, are inevitable; and not unfrequently, through failures of the issuing institutions, considerable portions of the circulation become suddenly worthless in the hands of the people.  The recent experience of several States in the valley of the Mississippi painfully illustrates the justice of these observations; and enforces by the most cogent practical arguments the duty of protecting commerce and industry against the recurrence of such disorders.

     ’The Secretary thinks it possible to combine with this protection a
     provision for circulation, safe to the community and convenient for
     the Government.

’Two plans for effecting this object are suggested.  The first contemplates the gradual withdrawal from circulation of the notes of private corporations and for the issue, in their stead of United States notes, payable in coin on demand, in amounts sufficient for the useful ends of a representative currency.  The second contemplates the preparation and delivery, to institutions and associations, of notes prepared for circulation under national direction, and to be secured as to prompt convertibility into coin by the pledge of United States bonds and other needful regulations.

’The first of these plans was partially adopted at the last session of Congress in the provision authorizing the Secretary to issue United States notes, payable in coin, to an amount not exceeding fifty millions of dollars.  That provision may be so extended as to reach the average circulation of the country, while a moderate tax, gradually augmented, on bank notes, will relieve the national from the competition of local circulation.  It has been already suggested that the substitution of a national for a State currency, upon this plan, would be equivalent to a loan to the Government without interest, except on the fund to be kept in coin, and without