tanding issue at pleasure, by returning for cancellation their
own bills and withdrawing so many United States bonds as are pledged
for the bills returned.

In view of the great actual contraction that has taken place in the
currency and the comparative contraction continuously going on, due
to the increase of population, increase of manufactories and all the
industries, I do not believe there is too much of it now for the dullest
period of the year. Indeed, if clearing houses should be established,
thus forcing redemption, it is a question for your consideration whether
banking should not be made free, retaining all the safeguards now
required to secure bill holders. In any modification of the present
laws regulating national banks, as a further step toward preparing
for resumption of specie payments, I invite your attention to a
consideration of the propriety of exacting from them the retention as a
part of their reserve either the whole or a part of the gold interest
accruing upon the bonds pledged as security for their issue. I have not
reflected enough on the bearing this might have in producing a scarcity
of coin with which to pay duties on imports to give it my positive
recommendation. But your attention is invited to the subject.

During the last four years the currency has been contracted, directly,
by the withdrawal of 3 per cent certificates, compound-interest notes,
and "seven-thirty" bonds outstanding on the 4th of March, 1869, all of
which took the place of legal-tenders in the bank reserves to the extent
of $63,000,000.

During the same period there has been a much larger comparative
contraction of the currency. The population of the country has largely
increased. More than 25,000 miles of railroad have been built, requiring
the active use of capital to operate them. Millions of acres of land
have been opened to cultivation, requiring capital to move the products.
Manufactories have multiplied beyond all precedent in the same period
of time, requiring capital weekly for the payment of wages and for
the purchase of material; and probably the largest of all comparative
contraction arises from the organizing of free labor in the South. Now
every laborer there receives his wages, and, for want of savings banks,
the greater part of such wages is carried in the pocket or hoarded until
required for use.

These suggestions are thrown out for your consideration, without any
recommendation that they shall be ad