redeem in gold but the Government.  The banks are not required to redeem in gold.  The Government is obliged to keep equal with gold all its outstanding currency and coin obligations, while its receipts are not required to be paid in gold.  They are paid in every kind of money but gold, and the only means by which the Government can with certainty get gold is by borrowing.  It can get it in no other way when it most needs it.  The Government without any fixed gold revenue is pledged to maintain gold redemption, which it has steadily and faithfully done, and which, under the authority now given, it will continue to do.

The law which requires the Government, after having redeemed its United States notes, to pay them out again as current funds, demands a constant replenishment of the gold reserve.  This is especially so in times of business panic and when the revenues 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.