are insufficient to meet the
expenses of the Government. At such times the Government has no other
way to supply its deficit and maintain redemption but through the
increase of its bonded debt, as during the Administration of my
predecessor, when $262,315,400 of four-and-a-half per cent bonds were
issued and sold and the proceeds used to pay the expenses of the
Government in excess of the revenues and sustain the gold reserve. While
it is true that the greater part of the proceeds of these bonds were
used to supply deficient revenues, a considerable portion was required
to maintain the gold reserve.

With our revenues equal to our expenses, there would be no deficit
requiring the issuance of bonds. But if the gold reserve falls below
$100,000,000, how will it be replenished except by selling more bonds?
Is there any other way practicable under existing law? The serious
question then is, Shall we continue the policy that has been pursued in
the past; that is, when the gold reserve reaches the point of danger,
issue more bonds and supply the needed gold, or shall we provide other
means to prevent these recurring drains upon the gold reserve? If no
further legislation is had and the policy of selling bonds is to be
continued, then Congress should give the Secretary of the Treasury
authority to sell bonds at long or short periods, bearing a less rate of
interest than is now authorized by law.

I earnestly recommend, as soon as the receipts of the Government are
quite sufficient to pay all the expenses of the Government, that when
any of the United States notes are presented for redemption in gold and
are redeemed in gold, such notes shall be kept and set apart, and only
paid out in exchange for gold. This is an obvious duty. If the holder of
the United States note prefers the gold and gets it from the Government,
he should not receive back from the Government a United States note
without paying gold in exchange for it. The reason for this is made
all the more apparent when the Government issues an interest-bearing
debt to provide gold for the redemption of United States notes--a
non-interest-bearing debt. Surely it should not pay them out again
except on demand and for gold. If they are put out in any other way,
they may return again to be followed by another bond issue to redeem
them--another interest-bearing debt to redeem a non-interest-bearing
debt.

In my view, it is of the utmost importance that the Government
sho