, thus showing that $18,000,000 United States notes had
been withdrawn from the depositaries into the treasury in advance
of their need for such payment. These sums were fully secured by
the deposit with the government of bonds to the amount of such
deposits and a further sum of bonds to the amount of five per cent.
of the deposit.

I felt that the withdrawal of this great sum in advance of the
presentation of the called bonds would necessarily create an
injurious contraction of the currency. To meet this condition of
affairs, upon the advice of the treasurer at Washington and the
assistant treasurer at New York, and the pressing complaints of
business men not interested in depositary banks, I issued this
order:

"Treasury Department, August 13, 1879.
"Hon. James Gilfillan, Treasurer United States.

"Sir:--With a view to closing as soon as practicable the accounts
of the department with depositary banks on loan account, without
unnecessary disturbance of the money market or the withdrawal of
legal tenders from current business, you will please receive from
such depositaries in payment called bonds to be credited when passed
through the loan division. You will require from such depositaries
sufficient money in addition to the called bonds, to insure the
withdrawal of all deposits on loan account on or before the 1st of
October next. The letter of the department of March 26 is modified
accordingly.

"Very respectfully,
"John Sherman, Secretary."

It was said that this was done to relieve the banks, and especially
the First National and the National Bank of Commerce, of New York,
which in closing out the refunding operations had, as already
stated, made large subscriptions for themselves and others, and it
was intimated that I was interested in these banks. This innuendo
was without foundation or excuse, and was made merely to create a
political sensation. This order was made, not at the request of
the banks, for they were entirely prepared to pay the money, but
at the urgent demand of business men, that the currency should not
be withdrawn from the banks where it was employed in active business,
and be deposited in the treasury where it would lay idle.

I thus explained the matter to the Chamber of Commerce, and to the
public at large. I felt that it would not be advisable for me to
drain the money market of legal tenders, and to hoard them in the
treasury to await the presentation of called bonds.