he
favorable showing made by the revenues have made it possible for the
Secretary of the Treasury to take action under the provisions of section
3694, Revised Statutes, relating to the sinking fund. Receipts exceeded
expenditures for the first five months of the current fiscal year by
$13,413,389.91, and, as mentioned above, the Secretary of the Treasury
estimates that there will be a surplus of approximately $40,000,000 at
the end of the year. Under such conditions it was deemed advisable and
proper to resume compliance with the provisions of the sinking-fund law,
which for eight years has not been done because of deficiencies in the
revenues. The Treasury Department therefore offered to purchase during
November $25,000,000 of the 5 per cent loan of 1904, or the 4 per cent
funded loan of 1907, at the current market price. The amount offered
and purchased during November was $18,408,600. The premium paid by
the Government on such purchases was $2,263,521 and the net saving
in interest was about $2,885,000. The success of this operation was
sufficient to induce the Government to continue the offer to purchase
bonds to and including the 23d day of December, instant, unless the
remainder of the $25,000,000 called for should be presented in the
meantime for redemption.

Increased activity in industry, with its welcome attendant--a larger
employment for labor at higher wages--gives to the body of the people
a larger power to absorb the circulating medium. It is further true
that year by year, with larger areas of land under cultivation, the
increasing volume of agricultural products, cotton, corn, and wheat,
calls for a larger volume of money supply. This is especially noticeable
at the crop-harvesting and crop-moving period.

In its earlier history the National Banking Act seemed to prove a
reasonable avenue through which needful additions to the circulation
could from time to time be made. Changing conditions have apparently
rendered it now inoperative to that end. The high margin in bond
securities required, resulting from large premiums which Government
bonds command in the market, or the tax on note issues, or both
operating together, appear to be the influences which impair its public
utility.

The attention of Congress is respectfully invited to this important
matter, with the view of ascertaining whether or not such reasonable
modifications can be made in the National Banking Act as will render
its service in the