exceed revenue; 2d, the danger of lavish and corrupt expenditure, stimulated by facility of expansion; 3d, the danger of fraud in management and supervision; 4th, the impossibility of providing it in sufficient amounts for the wants of the people whenever expenditures are reduced to equality with revenue or below it.

’These objections are all serious.  The last requires some elucidation.  It will be easily understood, however, if it be considered that a government issuing a credit circulation cannot supply, in any given period, an amount of currency greater than the excess of its disbursements over its receipts.  To that amount, it may create a debt in small notes, and these notes may be used as currency.  This is precisely the way in which the existing currency of United States notes is supplied.  That portion of the expenditure not met by revenue or loans has been met by the issue of these notes.  Debt in this form has been substituted for various debts in other forms.  Whenever, therefore, the country shall be restored to a healthy normal condition, and receipts exceed expenditures, the supply of United States notes will be arrested, and must progressively diminish.  Whatever demand may be made for their redemption in coin must hasten this diminution; and there can be no reissue; for reissue, under the conditions, necessarily implies disbursement, and the revenue, upon the supposition, supplies more than is needed for that purpose.  There is, then, no mode in which a currency in United States notes can be permanently maintained, except by loans of them, when not required for disbursement, on deposits of coin, or pledge of securities, or in some other way.  This would convert the treasury into a government bank, with all its hazards and mischiefs.

’If these reasonings be sound, little room can remain for doubt that the evils certain to arise from such a scheme of currency, if adopted as a permanent system, greatly overbalance the temporary though not inconsiderable advantages offered by it.

     ’It remains to be considered what results may be reasonably
     expected from an act authorizing the organization of banking
     associations, such as the Secretary proposed in his last Report.

’The central idea of the proposed measure is the establishment of one sound, uniform circulation, of equal value throughout the country, upon the foundation of national credit combined with private capital.

     ’Such a currency, it is believed, can be secured through banking
     associations organized under national legislation.